Kandi Technologies Group,Inc.: Exhibit10.1 - Filed by newsfilecorp.com






Execution Version 

SECURITIES PURCHASE AGREEMENT 

     This SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated as of August 29, 2014, is by and
among Kandi Technologies Group, Inc., a Delaware corporation with headquarters
located at Jinhua City Industrial Zone, Jinhua, Zhejiang Province, People’s
Republic of China, Post Code 321016 (the “Company”), and each of the
investors listed on the Schedule of Buyers attached hereto (individually, a
“Buyer” and collectively, the “Buyers”). 

RECITALS 

     A.     The
Company and each Buyer desire to enter into this transaction to purchase the
Common Shares (as defined below) and Warrants (as defined below) set forth
herein pursuant to a currently effective shelf registration statement on Form
S-3, which has at least $300,000,000 of unallocated securities, including Common
Stock (as defined below) and warrants registered thereunder (Registration Number
333-196938) (the “Registration Statement”), which Registration Statement
has been declared effective in accordance with the Securities Act of 1933, as
amended (the “1933 Act”), by the United States Securities and Exchange
Commission (the “SEC”). 

     B.     Each
Buyer wishes to purchase, and the Company wishes to sell at the Initial Closing
(as defined below), upon the terms stated in this Agreement, (i) the aggregate
number of shares of common stock, $0.001 par value per share, of the Company
(the “Common Stock”) set forth opposite such Buyer’s name in column (3)
on the Schedule of Buyers (which aggregate amount for all Buyers shall be
4,127,908 shares of Common Stock and shall collectively be referred to herein as
the “Initial Common Shares”), and (ii) a warrant to initially acquire up
to the aggregate number of shares of Common Stock set forth opposite such
Buyer’s name in column (5) on the Schedule of Buyers, as evidenced by a
certificate in the form attached hereto as Exhibit A-1 (the
“Initial Warrants”) (as exercised, collectively, the “Initial Warrant
Shares”). 

     C.     Subject
to the terms and conditions set forth in this Agreement, each Buyer with an
Initial Purchase Price (as defined below) of at least $30 million may, in its
sole option, elect to participate in one or more Additional Closings (as defined
below) (each, a “Major Buyer”) for the purchase by such Major Buyer, and
the sale by the Company, of (i) up to such aggregate number of shares of Common
Stock set forth opposite such Major Buyer’s name in column (4) on the Schedule
of Buyers (which aggregate amount for all Major Buyers shall be 1,744,186 shares
of Common Stock and shall collectively be referred to herein as the
“Additional Common Shares”, and together with the Initial Common Shares,
the “Common Shares”), and (ii) a warrant to initially acquire up to the
aggregate number of shares of Common Stock set forth opposite such Major Buyer’s
name in column (6) on the Schedule of Buyers (subject to a proportional decrease
if such Major Buyer does not elect to acquire all of the Additional Common
Shares eligible to be purchased by such Major Buyer at such Additional Closing
(i.e. 18% warrant coverage)), as evidenced by a certificate in the form attached
hereto as Exhibit A-2 (the “Additional Warrants”, and
together with the Initial Warrants, the “Warrants”) (as exercised,
collectively, the “Additional Warrant Shares”, and together with the
Initial Warrant Shares, the “Warrant Shares”). 

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




AGREEMENT 

     NOW, THEREFORE, in consideration of
the premises and the mutual covenants contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each Buyer hereby agree as follows: 

	1. 	
      PURCHASE AND SALE OF COMMON SHARES AND
      WARRANTS.



    (a)      Common
Shares and Warrants.

     
(i)      Initial Closing. The Company shall issue and
sell to each Buyer, and each Buyer severally, but not jointly, shall purchase
from the Company on the Initial Closing Date (as defined below), such aggregate
number of Initial Common Shares as is set forth opposite such Buyer’s name in
column (3) on the Schedule of Buyers along with Initial Warrants to initially
acquire up to that aggregate number of Initial Warrant Shares as is set forth
opposite such Buyer’s name in column (5) on the Schedule of Buyers. 

    
(ii)      Additional Closings. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 1(b)(ii) below
with respect to any Additional Closing, the Company shall issue and sell to each
Major Buyer electing to participate in such Additional Closing, and each such
Major Buyer severally, but not jointly, shall purchase from the Company on the
Additional Closing Date (as defined below), with respect to such Additional
Closing such aggregate number of Additional Common Shares as is set forth in the
applicable Additional Closing Notice (as defined below) of such Major Buyer, but
not to exceed such aggregate number of Additional Common Shares opposite such
Major Buyer’s name in column (4) on the Schedule of Buyers along with Additional
Warrants to initially acquire up to that aggregate number of Additional Warrant
Shares as is set forth opposite such Major Buyer’s name in column (6) on the
Schedule of Buyers (subject to a proportional decrease if such Major Buyer does
not elect to acquire all of the Additional Common Shares eligible to be
purchased by such Major Buyer at the Additional Closing (i.e. 18% warrant
coverage)). 

    
(ii)      Limitations on Exercise. The parties hereto
acknowledge and agree that the aggregate number of Warrant Shares initially
issuable upon exercise of Warrants to be purchased by the Buyers as described in
this Section 1, the recitals and the Schedule of Buyers have been calculated
without regard to any limitations on exercise set forth in the applicable
Warrants. 

2




    (b)    
Closings.

    
(i)     Initial Closings. The initial closing (the
“Initial Closing”) of the purchase of the Common Shares and the
Warrants by the Buyers shall occur at the offices of Greenberg Traurig, LLP,
MetLife Building, 200 Park Avenue, New York, NY 10166 or such other place as the
parties shall agree. The date and time of the Initial Closing (the “Initial
Closing Date”) shall be 10:00 a.m., New York time, on the third
(3rd) Trading Day (as defined in the Warrants) after the date hereof
(or such earlier date as is mutually agreed to by the Company and each Buyer).
As used herein “Business Day” means any day other than a Saturday, Sunday
or other day on which commercial banks in New York, New York are authorized or
required by law to remain closed. 

    
(ii)     Additional Closings. 

     
(1)     Additional Closing Dates. Subject to the
satisfaction (or waiver) of the conditions set forth in this Section 1(b)(ii),
the date and time of each additional closing (each, an “Additional
Closing”, and together with the Initial Closing, each, a “Closing”)
shall be 10:00 a.m., New York time on the third (3rd) Trading Day after the
Company shall have received an Additional Closing Notice from a Major Buyer (or
such later date as is mutually agreed to by the Company and such Major Buyer)
(each, an “Additional Closing Date” and together with the Initial
Closing, each a “Closing Date”).

     
(2)     Additional Closing Mechanics.

     
(A)     Subject to Section 1(b)(ii)(2)(B) below, any Major
Buyer may, in its sole option, elect to effect an Additional Closing by delivery
of a written notice in the form attached hereto as Exhibit B
(each, an “Additional Closing Notice”, and the date thereof, each, an
“Additional Closing Notice Date”) to the Company at any time after the
date hereof, but not after 11:59 p.m., New York time, on November 17, 2014
(provided that such period shall be extended by the number of Trading Days
during such period and any extension thereof contemplated by this proviso on
which the Registration Statement is not effective or any prospectus contained
therein is not available for use by the Buyer) setting forth (w) such aggregate
number of Additional Common Shares to be purchased by such Major Buyer at such
Additional Closing (which aggregate number (together with any Additional Shares
of Common Stock previously issued to such Major Buyer) may not exceed such
aggregate number of Additional Common Shares opposite such Major Buyer’s name in
column (4) on the Schedule of Buyers), (x) such aggregate number of Additional
Warrant Shares initially issuable upon exercise of the Additional Warrant to be
purchased by such Major Buyer at such Additional Closing (which aggregate number
(together with any Warrant Shares initially issuable upon exercise of any
Additional Warrants previously issued to such Major Buyer) shall not exceed the
aggregate number of Additional Warrant Shares as is set forth opposite such
Major Buyer’s name in column (6) on the Schedule of Buyers (subject to a
proportional decrease if such Major Buyer does not elect to acquire all of the
Additional Common Shares eligible to be purchased by such Major Buyer at the
Additional Closing (i.e. 18% warrant coverage)), (y) the applicable Additional
Purchase Price for such Major Buyer and (z) the applicable Additional Closing
Date. Upon delivery of an Additional Closing Notice, such Major Buyer shall be
deemed for all corporate purposes to have become the holder of record of such
Additional Common Shares and such Additional Warrant specified in such
Additional Closing Notice to be delivered to such Major Buyer (or its designee)
on such applicable Additional Closing Date, irrespective of the date such
Additional Common Shares are credited to the Major Buyer’s (or its designee’s)
DTC (as defined below) account or the date of delivery of the certificates
evidencing such Additional Warrants (as the case may be). 

3




     
(B)     Limitations on Additional Closings.
Notwithstanding anything herein to the contrary, a Major Buyer shall not have
the right to deliver more than three Additional Closing Notices and the
Additional Purchase Price at any such Additional Closing shall not be less than
$3,000,000. In addition, a Major Buyer shall not have the right to deliver an
Additional Closing Notice (and no Additional Closing Notice in violation of this
Section 1(b)(ii)(2)(B) shall be valid or accepted by the Company), to the extent
(but only to the extent) that such Major Buyer together with any of its
affiliates would beneficially own in excess of 4.99% (the “Maximum
Percentage”) of the Common Stock after giving effect to such issuance of
Additional Common Shares as set forth on the applicable Additional Closing
Notice. To the extent the above limitation applies, the determination of whether
an Additional Closing Notice is valid (vis-à-vis other convertible, exercisable
or exchangeable securities owned by such Major Buyer or any of its affiliates)
and of which such securities shall be exercisable (as among all such securities
owned by such Major Buyer) shall, subject to such Maximum Percentage limitation,
be determined on the basis of the first submission to the Company for
conversion, exercise or exchange (as the case may be). No prior inability to
deliver a valid Additional Closing Notice pursuant to this paragraph shall have
any effect on the applicability of the provisions of this paragraph or the
ability of such Major Buyer to deliver a subsequent Additional Closing Notice.
For the purposes of this paragraph, beneficial ownership and all determinations
and calculations (including, without limitation, with respect to calculations of
percentage ownership) shall be determined in accordance with Section 13(d) of
the 1934 Act (as defined below) and the rules and regulations promulgated
thereunder. The provisions of this paragraph shall be implemented in a manner
otherwise than in strict conformity with the terms of this paragraph to correct
this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Maximum Percentage beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to properly
give effect to such Maximum Percentage limitation. The holders of Common Stock
shall be third party beneficiaries of this paragraph and the Company may not
waive this paragraph without the consent of holders of a majority of its Common
Stock. For any reason at any time, upon the written or oral request of a Major
Buyer, the Company shall within one (1) Business Day confirm orally and in
writing to such Major Buyer the number of shares of Common Stock then
outstanding, including by virtue of any prior conversion or exercise of
convertible or exercisable securities into Common Stock or pursuant to any other
agreement, including, without limitation, securities issued pursuant to this
Agreement. By written notice to the Company, any Major Buyer may increase or
decrease the Maximum Percentage of such Major Buyer to any other percentage not
in excess of 9.99% specified in such notice; provided that (x) any such increase
will not be effective until the 61st day after such notice is delivered to the
Company, and (y) any such increase or decrease will apply only to such Major
Buyer sending such notice and not to any other Major Buyer. 

4




     (c)    
Purchase Price. The aggregate purchase price for the Initial Common
Shares and the Initial Warrants to be purchased by each Buyer (each, an
“Initial Purchase Price”) shall be the amount set forth opposite such
Buyer’s name in column (7) on the Schedule of Buyers. The aggregate purchase
price for any Additional Common Shares and related Additional Warrants purchased
by a Major Buyer at an Additional Closing shall equal the product of (x) $17.20
and (y) such number of Additional Closing Shares set forth in the applicable
Additional Closing Notice of such Major Buyer (each, an “Additional Purchase
Price”, and together with the Initial Purchase Price, each, a “Purchase
Price”). 

     (d)     Payment
of Purchase Price; Deliveries. On each Closing Date, (i) each Buyer
participating in such Closing shall pay its respective Purchase Price to the
Company for the Common Shares and the Warrants to be issued and sold to such
Buyer at such Closing, by wire transfer of immediately available funds in
accordance with the Company’s written wire instructions (less, in the case of
the lead Buyer, the amounts withheld pursuant to Section 4(g)) and (ii) the
Company shall (A) cause Corporate Stock Transfer, Inc. (together with any
subsequent transfer agent, the “Transfer Agent”) through the Depository
Trust Company (“DTC”) Fast Automated Securities Transfer Program, to
credit such aggregate number of Common Shares that such Buyer is purchasing at
such Closing to such participating Buyer’s or its designee’s balance account
with DTC through its Deposit/Withdrawal at Custodian system, (B) deliver to each
participating Buyer the Warrant such Buyer is purchasing at such Closing, in
each case, duly executed on behalf of the Company and registered in the name of
such Buyer or its designee and (C) deliver to each such Buyer the other
documents, instruments and certificates set forth in Section 6(a)(ii) duly
executed on behalf of the Company. 

     (e)     Failure
to Timely Deliver Common Shares. If the Company shall fail, for any reason
or for no reason (other than the applicable Buyer’s failure to deliver the
applicable Purchase Price at such applicable Closing), with respect to any Buyer
participating in the applicable Closing on the applicable Closing Date, to issue
and credit such Buyer’s (or its designee’s) balance account with DTC for such
number of Common Shares to which such Buyer is entitled at such Closing and if
on or after such Closing Date such Buyer (or any other Person in respect, or on
behalf, of such Buyer) purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such Buyer of all
or any portion of the number of shares of Common Stock, or a sale of a number of
shares of Common Stock equal to all or any portion of the number of Common
Shares that such Buyer so anticipated receiving from the Company, then, in
addition to all other remedies available to such Buyer, the Company shall,
within three (3) Business Days after such Buyer’s request and in such Buyer’s
discretion, either (i) pay cash to such Buyer in an amount equal to such Buyer’s
total purchase price (including reasonable brokerage commissions and other
reasonable out-of-pocket expenses, if any) for the shares of Common Stock so
purchased (including, without limitation, by any other Person in respect, or on
behalf, of such Buyer) (the “Buy-In Price”), at which point the Company’s
obligation to credit such Buyer’s (or its designee’s) balance account with DTC
for the number of Common Shares to which such Buyer is entitled at such Closing
(and to issue such Common Shares) shall terminate, or (ii) promptly honor its
obligation to so issue and credit such Buyer’s (or its designee’s) balance
account with DTC for the number of Common Shares to which such Buyer is entitled
at such Closing and pay cash to such Buyer in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of Common Shares
multiplied by (B) the lowest Closing Sale Price (as defined in the Warrants) of
the Common Stock on any Trading Day during the period commencing on such Closing
Date and ending on the date of such issuance and payment under this clause
(ii).

5





	2. 	
      BUYER’S REPRESENTATIONS AND
  WARRANTIES.



     Each Buyer, severally and not jointly,
represents and warrants to the Company with respect to only itself as of the
date hereof and as of the Closing Date and each applicable Additional Closing
Date, in the case of a Major Buyer participating in an Additional Closing: 

     (a)     
Organization; Authority. Such Buyer is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents (as
defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder. 

     (b)     
Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and constitutes the
legal, valid and binding obligations of such Buyer enforceable against such
Buyer in accordance with its terms, except as such enforceability may be limited
by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies. 

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

6




     Certain Trading Activities. Solely
with respect to the Initial Closing, such Buyer has not directly or indirectly,
nor has any Person acting on behalf of or pursuant to any understanding with
such Buyer, engaged in any transactions in the securities of the Company
(including, without limitation, any Short Sales (as defined below) involving the
Company’s securities) during the period commencing as of the time that such
Buyer was first contacted by the Placement Agent (as defined below) regarding
the specific investment in the Company contemplated by this Agreement and ending
immediately prior to the execution of this Agreement by such Buyer, excluding
any transaction in any securities of the Company that relates to the exercise or
assignment by a third party of any option sold or bought by such Buyer prior to
the initial date of contact of such Buyer. “Short Sales” means all “short
sales” as defined in Rule 200 promulgated under Regulation SHO under the
Securities Exchange Act of 1934, as amended (the “1934 Act”) (but shall
not be deemed to include the location and/or reservation of borrowable shares of
Common Stock). 

	3. 	
      REPRESENTATIONS AND WARRANTIES OF THE
    COMPANY.



     The Company represents and warrants to
(x) each of the Buyers as of the date hereof and as of the Closing Date and (y)
each Major Buyer participating in an Additional Closing as of each of the
applicable Additional Closing Notice Date and the applicable Additional Closing
Date: 

     (a)     
Organization and Qualification. Each of the Company and each of its
Subsidiaries are entities duly organized and validly existing and in good
standing under the laws of the jurisdiction in which they are formed, and have
the requisite power and authorization to own their properties and to carry on
their business as now being conducted and as presently proposed to be conducted.
Each of the Company and each of its Subsidiaries is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect.
“Material Adverse Effect” means any material adverse effect on (i) the
business, properties, assets, liabilities, operations (including results
thereof), condition (financial or otherwise) or prospects of the Company or any
Subsidiary, either individually or taken as a whole, (ii) the transactions
contemplated hereby or in any of the other Transaction Documents or (iii) the
authority or ability of the Company to perform any of its obligations under any
of the Transaction Documents. Other than the Persons (as defined below) set
forth in the Company’s Quarterly Report on Form 10-Q, as filed with the SEC in
the SEC Documents (as defined below), the Company has no Subsidiaries.
“Subsidiaries” means any Person in which the Company, directly or
indirectly, (A) owns any of the outstanding capital stock or holds any equity or
similar interest of such Person or (B) controls or operates all or any part of
the business, operations or administration of such Person, and each of the
foregoing, is individually referred to herein as a “Subsidiary.”

     (b)     
Authorization; Enforcement; Validity. The Company has the requisite power
and authority to enter into and perform its obligations under this Agreement and
the other Transaction Documents and to issue the Securities in accordance with
the terms hereof and thereof. The execution and delivery of this Agreement and
the other Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Common Shares, the issuance of the Warrants and
the reservation for issuance and issuance of the Warrant Shares issuable upon
exercise of the Warrants) have been duly authorized by the Company’s board of
directors and (other than the filing with the SEC of one or more prospectus
supplements required by the Registration Statement pursuant to Rule 424(b) under
the 1933 Act (collectively, the “Prospectus Supplement”) supplementing
the base prospectus forming part of the Registration Statement (the
“Prospectus”) and any other filings as may be required by any state
securities agencies) no further filing, consent or authorization is required by
the Company, its board of directors or its stockholders or other governing body.
This Agreement has been, and the other Transaction Documents will be prior to
the Initial Closing, duly executed and delivered by the Company, and each
constitutes the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with its respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution
may be limited by federal or state securities law. “Transaction
Documents” means, collectively, this Agreement, the Warrants, the
Irrevocable Transfer Agent Instructions (as defined below) and each of the other
agreements and instruments entered into or delivered by any of the parties
hereto in connection with the transactions contemplated hereby and thereby, as
may be amended from time to time.

7




      (c)    
Issuance of Securities; Registration Statement. The issuance of the
Common Shares and the Warrants are duly authorized and, upon issuance and
payment in accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and non-assessable and free from all preemptive or
similar rights, taxes, liens, charges and other encumbrances with respect to the
issue thereof. As of each Closing, the Company shall have reserved from its duly
authorized capital stock not less than 100% of the maximum number of shares of
Common Stock issuable upon exercise of the Warrants (without taking into account
any limitations on the exercise of the Warrants set forth therein). The issuance
of the Warrant Shares is duly authorized, and upon exercise in accordance with
the Warrants, the Warrant Shares, when issued, will be validly issued, fully
paid and non-assessable and free from all preemptive or similar rights, taxes,
liens, charges and other encumbrances with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common Stock.
The issuance by the Company of the Securities has been registered under the 1933
Act, the Securities are being issued pursuant to the Registration Statement and
all of the Securities are freely transferable and freely tradable by each of the
Buyers without restriction. The Registration Statement is effective and
available for the issuance of the Securities thereunder and the Company has not
received any notice that the SEC has issued or intends to issue a stop-order
with respect to the Registration Statement or that the SEC otherwise has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened in writing to do so.
The “Plan of Distribution” section under the Registration Statement permits the
issuance and sale of the Securities hereunder and as contemplated by the other
Transaction Documents. Upon receipt of the Securities, each of the Buyers will
have good and marketable title to the Securities. The Registration Statement and
any prospectus included therein, including the Prospectus and the Prospectus
Supplement, complied in all material respects with the requirements of the 1933
Act and the 1934 Act and the rules and regulations of the SEC promulgated
thereunder and all other applicable laws and regulations. At the time the
Registration Statement and any amendments thereto became effective, at the date
of this Agreement and at each deemed effective date thereof pursuant to Rule
430B(f)(2) of the 1933 Act, the Registration Statement and any amendments
thereto complied and will comply in all material respects with the requirements
of the 1933 Act and did not and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. The Prospectus and
any amendments or supplements thereto (including, without limitation the
Prospectus Supplement), at the time the Prospectus or any amendment or
supplement thereto was issued and at each Closing Date, complied, and will
comply, in all material respects with the requirements of the 1933 Act and did
not, and will not, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Company meets all of the requirements for the use of Form S-3 under the 1933 Act
for the offering and sale of the Securities contemplated by this Agreement and
the other Transaction Documents, and the SEC has not notified the Company of any
objection to the use of the form of the Registration Statement pursuant to Rule
401(g)(1) under the 1933 Act. The Registration Statement meets the requirements
set forth in Rule 415(a)(1)(x) under the 1933 Act. At the earliest time after
the filing of the Registration Statement that the Company or another offering
participant made a bona fide offer (within the meaning of Rule 164(h)(2) under
the 1933 Act) relating to any of the Securities, the Company was not and is not
an “Ineligible Issuer” (as defined in Rule 405 under the 1933 Act). The Company
(i) has not distributed any offering material in connection with the offer or
sale of any of the Securities and (ii) until no Buyer holds any of the
Securities, shall not distribute any offering material in connection with the
offer or sale of any of the Securities to, or by, any of the Buyers (if
required), in each case, other than the Registration Statement, the Prospectus
or the Prospectus Supplement. In accordance with Rule 5110(b)(7)(C)(i) of the
Financial Industry Regulatory Authority Manual, the offering of the Securities
has been registered with the SEC on Form S-3 under the 1933 Act pursuant to the
standards for Form S-3 in effect prior to October 21, 1992, and the Securities
are being offered pursuant to Rule 415 promulgated under the 1933 Act. 

8




     (d)     No
Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Common Shares, the Warrants and Warrant Shares and the reservation for
issuance of the Warrant Shares) will not (i) result in a violation of the
Certificate of Incorporation (as defined below) (including, without limitation,
any certificates of designation contained therein) or other organizational
documents of the Company or any of its Subsidiaries, any capital stock of the
Company, or Bylaws (as defined below), (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party or (iii) result in a violation
of any law, rule, regulation, order, judgment or decree (including, without
limitation, foreign, federal and state securities laws and regulations and the
rules and regulations of the Nasdaq Global Select Market (the “Principal
Market”)) applicable to the Company or any of its Subsidiaries or by which
any property or asset of the Company or any of its Subsidiaries is bound or
affected, except, in the case of clause (ii) or (iii) above, to the extent such
violations that could not reasonably be expected to have a Material Adverse
Effect.

     (e)    
Consents. The Company is not required to obtain any consent from,
authorization or order of, or make any filing or registration with (other than
the filing with the SEC of the Prospectus Supplement and any other filings as
may be required by any state securities agencies), any court, governmental
agency or any regulatory or self-regulatory agency or any other Person in order
for it to execute, deliver or perform any of its obligations under, or
contemplated by, the Transaction Documents, in each case, in accordance with the
terms hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain at or prior to the
applicable Closing have been obtained or effected on or prior to such Closing
Date, and neither the Company nor any of its Subsidiaries are aware of any facts
or circumstances which might prevent the Company from obtaining or effecting any
of the registration, application or filings contemplated by the Transaction
Documents. The Company is not in violation of the requirements of the Principal
Market and has no knowledge of any facts or circumstances which could reasonably
lead to delisting or suspension of the Common Stock in the foreseeable
future.

9




     (f)    
Acknowledgment Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that each Buyer is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as
defined in Rule 144 promulgated under the 1933 Act (or a successor rule thereto)
(collectively, “Rule 144”)) of the Company or any of its Subsidiaries or
(iii) to its knowledge, a “beneficial owner” of more than 10% of the shares of
Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The
Company further acknowledges that no Buyer is acting as a financial advisor or
fiduciary of the Company or any of its Subsidiaries (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated
hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such
Buyer’s purchase of the Securities. The Company further represents to each Buyer
that the Company’s decision to enter into the Transaction Documents has been
based solely on the independent evaluation by the Company and its
representatives. 

     (g)    
Placement Agent’s Fees. The Company shall be responsible for the payment
of any placement agent’s fees, financial advisory fees, or brokers’ commissions
(other than for Persons engaged by any Buyer or its investment advisor) relating
to or arising out of the transactions contemplated hereby. Other than FT Global
Capital, Inc. (the “Placement Agent”), neither the Company nor any of its
Subsidiaries has engaged any placement agent or other agent in connection with
the offer or sale of the Securities. 

     (h)      No
Integrated Offering. None of the Company, its Subsidiaries or any of their
affiliates, nor any Person acting on their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would cause this offering of the Securities
to require approval of stockholders of the Company under any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated for quotation. None of
the Company, its Subsidiaries, their affiliates nor any Person acting on their
behalf will take any action or steps that would cause the offering of any of the
Securities to be integrated with other offerings of securities of the Company.


10




     (i)    
Dilutive Effect. The Company understands and acknowledges that the number
of Warrant Shares will increase in certain circumstances. The Company further
acknowledges that its obligation to issue the Warrant Shares upon exercise of
the Warrants in accordance with this Agreement and the Warrants is absolute and
unconditional, regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company. 

     (j)    
Application of Takeover Protections; Rights Agreement. The Company and
its board of directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, interested stockholder,
business combination, poison pill (including, without limitation, any
distribution under a rights agreement) or other similar anti-takeover provision
under the Certificate of Incorporation, Bylaws or other organizational documents
or the laws of the jurisdiction of its incorporation or otherwise which is or
could become applicable to any Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s
issuance of the Securities and any Buyer’s ownership of the Securities. The
Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any stockholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of shares of Common Stock or a
change in control of the Company or any of its Subsidiaries. 

     (k)     SEC
Documents; Financial Statements. During the two (2) years prior to the date
hereof, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the 1934 Act (all of the foregoing filed prior to the
date hereof and all exhibits included therein and financial statements, notes
and schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”). The Company has
delivered to the Buyers or their respective representatives true, correct and
complete copies of each of the SEC Documents not available on the EDGAR system.
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company included in the
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto as in effect as of the time of filing. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which will not be material, either individually or in the
aggregate). No other information provided by or on behalf of the Company to any
of the Buyers which is not included in the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein not misleading, in the light of the
circumstance under which they are or were made. The Company has not been
informed by its independent accountants that they recommend that the Company
amend or restate any of the Financial Statements or that there is any need for
the Company to amend or restate any of the Financial Statements. 

11




     (l)    
Absence of Certain Changes. Since the date of the Company’s most recent
audited financial statements contained in a Form 10-K, except as disclosed in
the SEC Documents filed subsequent to such Form 10-K, there has been no material
adverse change and no material adverse development in the business, assets,
liabilities, properties, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company or any of its Subsidiaries.
Since the date of the Company’s most recent audited financial statements
contained in a Form 10-K, neither the Company nor any of its Subsidiaries has
(i) declared or paid any dividends, (ii) sold any assets outside of the ordinary
course of business or (iii) made any material capital expenditures, individually
or in the aggregate. Neither the Company nor any of its Subsidiaries has taken
any steps to seek protection pursuant to any law or statute relating to
bankruptcy, insolvency, reorganization, receivership, liquidation or winding up,
nor does the Company or any Subsidiary have any knowledge or reason to believe
that any of their respective creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a
creditor to do so. The Company and its Subsidiaries, individually and on a
consolidated basis, are not as of the date hereof, and after giving effect to
the transactions contemplated hereby to occur at the applicable Closing will not
be, Insolvent (as defined below). “Insolvent” means, (A) with respect to
the Company and its Subsidiaries, on a consolidated basis, (1) the present fair
saleable value of the Company’s and its Subsidiaries’ assets is less than the
amount required to pay the Company’s and its Subsidiaries’ total Indebtedness
(as defined below), (2) the Company and its Subsidiaries are unable to pay their
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured or (3) the Company and its Subsidiaries
intend to incur or believe that they will incur debts that would be beyond their
ability to pay as such debts mature; and (B) with respect to the Company and
each Subsidiary, individually, (1) the present fair saleable value of the
Company’s or such Subsidiary’s (as the case may be) assets is less than the
amount required to pay its respective total Indebtedness, (2) the Company or
such Subsidiary (as the case may be) is unable to pay its respective debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured or (3) the Company or such Subsidiary
(as the case may be) intends to incur or believes that it will incur debts that
would be beyond its respective ability to pay as such debts mature. Neither the
Company nor any of its Subsidiaries has engaged in any business or in any
transaction, and is not about to engage in any business or in any transaction,
for which the Company’s or such Subsidiary’s remaining assets constitute
unreasonably small capital. 

     (m)      No
Undisclosed Events, Liabilities, Developments or Circumstances. No event,
liability, development or circumstance has occurred or exists, or is reasonably
expected to occur or exist with respect to the Company, any of its Subsidiaries
or any of their respective businesses, properties, liabilities, prospects,
operations (including results thereof) or condition (financial or otherwise)
that (i) would be required to be disclosed by the Company under applicable
securities laws on a registration statement on Form S-1 filed with the SEC
relating to an issuance and sale by the Company of its Common Stock and which
has not been publicly announced, (ii) could have a material adverse effect on
any Buyer’s investment hereunder or (iii) could have a Material Adverse Effect.


12




     (n)     Conduct
of Business; Regulatory Permits. Neither the Company nor any of its
Subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation, any certificate of designation, preferences or rights of any
other outstanding series of preferred stock of the Company or any of its
Subsidiaries or Bylaws or their organizational charter, certificate of formation
or certificate of incorporation or bylaws, respectively. Neither the Company nor
any of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except in all cases for
possible violations which could not, individually or in the aggregate, have a
Material Adverse Effect. Without limiting the generality of the foregoing, the
Company is not in violation of any of the rules, regulations or requirements of
the Principal Market and has no knowledge of any facts or circumstances that
could reasonably lead to delisting or suspension of the Common Stock by the
Principal Market in the foreseeable future. Since the date of the Company’s last
Annual Report on Form 10-K filed with the SEC, (i) the Common Stock has been
listed or designated for quotation on the Principal Market, (ii) trading in the
Common Stock has not been suspended by the SEC or the Principal Market and (iii)
the Company has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the Common Stock from
the Principal Market. The Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit. 

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

     (p)    
Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance with
all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective
as of the date hereof, and all applicable rules and regulations promulgated by
the SEC thereunder that are effective as of the date hereof. 

     (q)    
Transactions With Affiliates. Other than the grant of stock options
disclosed in the SEC Documents, none of the officers, directors or employees of
the Company or any of its Subsidiaries is presently a party to any transaction
with the Company or any of its Subsidiaries (other than for ordinary course
services as employees, officers or directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or, to the
knowledge of the Company or any of its Subsidiaries, any corporation,
partnership, trust or other Person in which any such officer, director or
employee has a substantial interest or is an employee, officer, director,
trustee or partner. 

13




      (r)    
Equity Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of (i) 100,000,000 shares of Common Stock, of
which, 43,930,257 are issued and outstanding and 1,793,310 shares are reserved
for issuance pursuant to securities (other than the Common Shares and the
Warrants) exercisable or exchangeable for, or convertible into, shares of Common
Stock and (ii) 10,000,000 shares of preferred stock, none of which are issued
and outstanding. 56,069,743 shares of Common Stock are authorized but unissued
shares. All of such outstanding shares are duly authorized and have been, or
upon issuance will be, validly issued and are fully paid and non-assessable.
13,617,654 shares of the Company’s issued and outstanding Common Stock on the
date hereof are owned by Persons who are “affiliates” (as defined in Rule 405 of
the 1933 Act and calculated based on the assumption that only officers,
directors and holders of at least 10% of the Company’s issued and outstanding
Common Stock are “affiliates” without conceding that any such Persons are
“affiliates” for purposes of federal securities laws) of the Company or any of
its Subsidiaries. With the exception of Excelvantage Group Limited, which owns
approximately 27.3% of the Company’s issued and outstanding shares of Common
Stock, to the Company’s knowledge, no Person owns 10% or more of the Company’s
issued and outstanding shares of Common Stock (calculated based on the
assumption that all Convertible Securities (as defined below), whether or not
presently exercisable or convertible, have been fully exercised or converted (as
the case may be) taking account of any limitations on exercise or conversion
(including “blockers”) contained therein without conceding that such identified
Person is a 10% stockholder for purposes of federal securities laws). Except as
disclosed in the SEC Documents: (i) none of the Company’s or any Subsidiary’s
capital stock is subject to preemptive rights or any other similar rights or any
liens or encumbrances suffered or permitted by the Company or any Subsidiary;
(ii) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, or exercisable or exchangeable for, any capital stock
of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional capital stock of the Company or any
of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of the
Company or any of its Subsidiaries; (iii) there are no outstanding debt
securities, notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing Indebtedness of the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries is or may become
bound; (iv) there are no financing statements securing obligations in any
amounts filed in connection with the Company or any of its Subsidiaries; (v)
there are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except pursuant to this Agreement); (vi) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) neither the Company nor any Subsidiary has any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement; and (ix) neither the Company nor any of its Subsidiaries have any
liabilities or obligations required to be disclosed in the SEC Documents which
are not so disclosed in the SEC Documents, other than those incurred in the
ordinary course of the Company’s or its Subsidiaries’ respective businesses and
which, individually or in the aggregate, do not or could not have a Material
Adverse Effect. The Company has furnished to the Buyers true, correct and
complete copies of the Company’s Certificate of Incorporation, as amended and as
in effect on the date hereof (the “Articles of Incorporation”),
and the Company’s bylaws, as amended and as in effect on the date hereof (the
“Bylaws”), and the terms of all securities convertible into, or
exercisable or exchangeable for, shares of Common Stock and the material rights
of the holders thereof in respect thereto. 

14




     (s)    
Indebtedness and Other Contracts. Neither the Company nor any of its
Subsidiaries (i) except as set forth in the SEC Documents, has any outstanding
Indebtedness (as defined below), (ii) is a party to any contract, agreement or
instrument, the violation of which, or default under which, by the other
party(ies) to such contract, agreement or instrument could reasonably be
expected to result in a Material Adverse Effect, (iii) is in violation of any
term of, or in default under, any contract, agreement or instrument relating to
any Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (iv) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company’s officers, has or is
expected to have a Material Adverse Effect. For purposes of this Agreement:
“Indebtedness” of any Person means, without duplication (A) all
indebtedness for borrowed money, (B) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (including,
without limitation, “capital leases” in accordance with generally accepted
accounting principles) (other than trade payables entered into in the ordinary
course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not assumed or
become liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or
otherwise, of that Person with respect to any indebtedness, lease, dividend or
other obligation of another Person if the primary purpose or intent of the
Person incurring such liability, or the primary effect thereof, is to provide
assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such liability will be protected (in whole or in part)
against loss with respect thereto; and “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and a government or any
department or agency thereof. 

15




     (t)     Absence
of Litigation. Except as disclosed in the SEC Documents, there is no action,
suit, proceeding, inquiry or investigation before or by the Principal Market,
any court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened in writing against or
affecting the Company or any of its Subsidiaries, the Common Stock or any of the
Company’s or its Subsidiaries’ officers or directors which is outside of the
ordinary course of business or individually or in the aggregate material to the
Company or any of its Subsidiaries. No director, officer or employee of the
Company or any of its subsidiaries has willfully violated 18 U.S.C. §1519 or
engaged in spoliation in reasonable anticipation of litigation. There has not
been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the SEC involving the Company, any of its Subsidiaries or
any current or former director or officer of the Company or any of its
Subsidiaries. The SEC has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company under the
1933 Act or the 1934 Act, including, without limitation, the Registration
Statement. 

     (u)    
Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for, and neither the Company nor any such
Subsidiary has any reason to believe that it will be unable to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect. 

     (v)    
Employee Relations. Neither the Company nor any of its Subsidiaries is a
party to any collective bargaining agreement or employs any member of a union.
The Company believes that its and its Subsidiaries’ relations with their
respective employees are good. No executive officer (as defined in Rule 501(f)
promulgated under the 1933 Act) or other key employee of the Company or any of
its Subsidiaries has notified the Company or any such Subsidiary that such
officer intends to leave the Company or any such Subsidiary or otherwise
terminate such officer’s employment with the Company or any such Subsidiary. No
executive officer or other key employee of the Company or any of its
Subsidiaries is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive
officer or other key employee (as the case may be) does not subject the Company
or any of its Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with all federal,
state, local and foreign laws and regulations respecting labor, employment and
employment practices and benefits, terms and conditions of employment and wages
and hours, except where failure to be in compliance would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. 

     (w)    
Title. The Company and its Subsidiaries have good and marketable title in
fee simple to all real property, and have good and marketable title to all
personal property, owned by them which is material to the business of the
Company and its Subsidiaries, in each case, free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company and any of its Subsidiaries. Any real property and
facilities held under lease by the Company or any of its Subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company or any of its Subsidiaries.

16




     (x)    
Intellectual Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service mark registrations, service names, patents, patent rights,
copyrights, original works, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights and all
applications and registrations therefor (“Intellectual Property Rights”)
necessary to conduct their respective businesses as now conducted and as
presently proposed to be conducted. None of the Company’s or its Subsidiaries’
Intellectual Property Rights have expired, terminated or been abandoned, or are
expected to expire, terminate or be abandoned, within three years from the date
of this Agreement. The Company has no knowledge of any infringement by the
Company or any of its Subsidiaries of Intellectual Property Rights of others.
There is no claim, action or proceeding being made or brought, or to the
knowledge of the Company or any of its Subsidiaries, being threatened, against
the Company or any of its Subsidiaries regarding their Intellectual Property
Rights. The Company is not aware of any facts or circumstances which might give
rise to any of the foregoing infringements or claims, actions or proceedings.
The Company and each of its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their Intellectual
Property Rights. 

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

     (z)    
Subsidiary Rights. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such Subsidiary. 

17




     (aa)      Tax
Status. The Company and each of its Subsidiaries (i) has timely made or
filed all foreign, federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, (ii) has
timely paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company and its
Subsidiaries know of no basis for any such claim. The Company is not operated in
such a manner as to qualify as a passive foreign investment company, as defined
in Section 1297 of the U.S. Internal Revenue Code of 1986, as amended. 

     (bb)    
Internal Accounting and Disclosure Controls. The Company and each of its
Subsidiaries maintains internal control over financial reporting (as such term
is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles, including that (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management’s
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference. The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in
ensuring that information required to be disclosed by the Company in the reports
that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the
SEC, including, without limitation, controls and procedures designed to ensure
that information required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and
its principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure. Neither the Company nor any of its
Subsidiaries has received any notice or correspondence from any accountant or
other Person relating to any potential material weakness or significant
deficiency in any part of the internal controls over financial reporting of the
Company or any of its Subsidiaries. 

     (cc)      Off
Balance Sheet Arrangements. There is no transaction, arrangement, or other
relationship between the Company 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 1934 Act filings and is not so disclosed or that
otherwise could be reasonably likely to have a Material Adverse Effect. 

     (dd) Investment Company
Status. The Company is not, and upon consummation of the sale of the
Securities will not be, an “investment company,” an affiliate of an “investment
company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment
company” as such terms are defined in the Investment Company Act of 1940, as
amended.

18




     (ee)    
Acknowledgement Regarding Buyers’ Trading Activity. It is understood and
acknowledged by the Company that (i) following the public disclosure of the
transactions contemplated by the Transaction Documents, in accordance with the
terms thereof, none of the Buyers have been asked by the Company or any of its
Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its
Subsidiaries, to desist from effecting any transactions in or with respect to
(including, without limitation, purchasing or selling, long and/or short) any
securities of the Company, or “derivative” securities based on securities issued
by the Company or to hold any of the Securities for any specified term; (ii) any
Buyer, and counterparties in “derivative” transactions to which any such Buyer
is a party, directly or indirectly, presently may have a “short” position in the
Common Stock which was established prior to such Buyer’s knowledge of the
transactions contemplated by the Transaction Documents; and (iii) each Buyer
shall not be deemed to have any affiliation with or control over any arm’s
length counterparty in any “derivative” transaction. The Company further
understands and acknowledges that following the public disclosure of the
transactions contemplated by the Transaction Documents pursuant to the Press
Release (as defined below) one or more Buyers may engage in hedging and/or
trading activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value
and/or number of the Warrant Shares deliverable with respect to the Securities
are being determined and such hedging and/or trading activities, if any, can
reduce the value of the existing stockholders’ equity interest in the Company
both at and after the time the hedging and/or trading activities are being
conducted. The Company acknowledges that such aforementioned hedging and/or
trading activities do not constitute a breach of this Agreement or any other
Transaction Document or any of the documents executed in connection herewith or
therewith. 

     (ff)    
Manipulation of Price. Neither the Company nor any of its Subsidiaries
has, and, to the knowledge of the Company, no Person acting on their behalf has,
directly or indirectly, (i) taken any action designed to cause or to result in
the stabilization or manipulation of the price of any security of the Company or
any of its Subsidiaries to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities (other than the Placement Agent),
or (iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company or any of its
Subsidiaries. 

     (gg)      U.S.
Real Property Holding Corporation. Neither the Company nor any of its
Subsidiaries is, or has ever been, and so long as any of the Securities are held
by any of the Buyers, shall become, a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company and each Subsidiary shall so certify upon any Buyer’s
request. 

     (hh)    
Registration Eligibility. The Company is eligible to register the
issuance and sale of the Securities to the Buyers using Form S-3 promulgated
under the 1933 Act. 

      (ii)    
Transfer Taxes. On the applicable Closing Date, all stock transfer or
other taxes (other than income or similar taxes) which are required to be paid
in connection with the issuance and sale of the Securities to be sold to each
Buyer hereunder will be, or will have been, fully paid or provided for by the
Company, and all laws imposing such taxes will be or will have been complied
with. 

19




     (jj)     Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries is
subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”)
and to regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”). Neither the Company nor any of its Subsidiaries or
affiliates owns or controls, directly or indirectly, five percent (5%) or more
of the outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any equity that is
subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its Subsidiaries or affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve. 

     (kk)     Public
Utility Holding Act. None of the Company nor any of its Subsidiaries is a
“holding company,” or an “affiliate” of a “holding company,” as such terms are
defined in the Public Utility Holding Act of 2005. 

    
(ll)       Federal Power Act. None of the
Company nor any of its Subsidiaries is subject to regulation as a “public
utility” under the Federal Power Act, as amended. 

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


     (nn)     Real
Property. Each of the Company and its Subsidiaries holds good title to all
real property, leases in real property, or other interests in real property
owned or held by the Company or any of its Subsidiaries (the “Real
Property”) owned by the Company or any of its Subsidiaries (as applicable).
The Real Property is free and clear of all mortgages, defects, claims, liens,
pledges, charges, taxes, rights of first refusal, encumbrances, security
interests and other encumbrances (collectively “Encumbrances”) and is not
subject to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except for (a) liens for current
taxes not yet due and (b) zoning laws and other land use restrictions that do
not impair the present or anticipated use of the property subject thereto. 

     (oo)    
Fixtures and Equipment. Each of the Company and its Subsidiaries (as
applicable) has good title to, or a valid leasehold interest in, the tangible
personal property, equipment, improvements, fixtures, and other personal
property and appurtenances that are used by the Company or its Subsidiary in
connection with the conduct of its business (the “Fixtures and
Equipment”). The Fixtures and Equipment are structurally sound, are in good
operating condition and repair, are adequate for the uses to which they are
being put, are not in need of maintenance or repairs except for ordinary,
routine maintenance and repairs and are sufficient for the conduct of the
Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as
conducted prior to the applicable Closing. Each of the Company and its
Subsidiaries owns all of its Fixtures and Equipment free and clear of all
Encumbrances except for (a) liens for current taxes not yet due and (b) zoning
laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto. 

     (pp)    
Illegal or Unauthorized Payments; Political Contributions. Neither the
Company nor any of its Subsidiaries nor, to the best of the Company’s knowledge
(after reasonable inquiry of its officers and directors), any of the officers,
directors, employees, agents or other representatives of the Company or any of
its Subsidiaries or any other business entity or enterprise with which the
Company or any Subsidiary is or has been affiliated or associated, has, directly
or indirectly, made or authorized any payment, contribution or gift of money,
property, or services, whether or not in contravention of applicable law, (a) as
a kickback or bribe to any Person or (b) to any political organization, or the
holder of or any aspirant to any elective or appointive public office except for
personal political contributions not involving the direct or indirect use of
funds of the Company or any of its Subsidiaries. 

20




     (qq)      Money
Laundering. The Company and its Subsidiaries are in compliance with, and
have not previously violated, the USA Patriot Act of 2001 and all other
applicable U.S. and non-U.S. anti-money laundering laws and regulations,
including, without limitation, the laws, regulations and Executive Orders and
sanctions programs administered by the U.S. Office of Foreign Assets Control,
including, without limitation, (i) Executive Order 13224 of September 23, 2001
entitled, “Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001));
and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V. 

     (rr)    
Management. Except as set forth in Schedule 3(rr) hereto, during
the past five year period, no current or former officer or director or, to the
knowledge of the Company, stockholder of the Company or any of its Subsidiaries
has been the subject of: 

      (i)
     a petition under bankruptcy laws or any other
insolvency or moratorium law or the appointment by a court of a receiver, fiscal
agent or similar officer for such Person, or any partnership in which such
person was a general partner at or within two years before the filing of such
petition or such appointment, or any corporation or business association of
which such person was an executive officer at or within two years before the
time of the filing of such petition or such appointment; 

    
(ii)      a conviction in a criminal proceeding or a named
subject of a pending criminal proceeding (excluding traffic violations that do
not relate to driving while intoxicated or driving under the influence); 

    
(iii)      any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining any such person from, or otherwise
limiting, the following activities: 

    
     (1)      Acting as a futures
commission merchant, introducing broker, commodity trading advisor, commodity
pool operator, floor broker, leverage transaction merchant, any other person
regulated by the United States Commodity Futures Trading Commission or an
associated person of any of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing any conduct or
practice in connection with such activity; 

         
(2)      Engaging in any particular type of business
practice; or 

          (3)
     Engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of securities laws or commodities laws; 

21




    
(iv)     any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any authority barring, suspending or
otherwise limiting for more than 60 days the right of any such person to engage
in any activity described in the preceding sub paragraph, or to be associated
with persons engaged in any such activity; 

     (v)
     a finding by a court of competent jurisdiction in a
civil action or by the SEC or other authority to have violated any securities
law, regulation or decree and the judgment in such civil action or finding by
the SEC or any other authority has not been subsequently reversed, suspended or
vacated; or 

    
(vi)     a finding by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or finding has
not been subsequently reversed, suspended or vacated. 

     (ss)    
Registration Rights. No holder of securities of the Company has rights to
the registration of any securities of the Company because of the filing of the
Registration Statement or the issuance of the Securities hereunder that could
expose the Company to material liability or any Buyer to any liability or that
could impair the Company’s ability to consummate the issuance and sale of the
Securities in the manner, and at the times, contemplated hereby, which rights
have not been waived by the holder thereof as of the date hereof.
     

     (tt)    
Compliance With FINRA Rule 5110. At the time the Registration Statement
was declared effective by the SEC, and as of the date hereof and as of the
Initial Closing Date, the Company has (i) a 1934 Act reporting history in excess
of 36 months and (ii) an aggregate market value of voting stock held by
non-affiliates of in excess of $150 million. 

     (uu)    
Disclosure. The Company confirms that neither it nor any other Person
acting on its behalf has provided any of the Buyers or their agents or counsel
with any information that constitutes or could reasonably be expected to
constitute material, non-public information concerning the Company or any of its
Subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Transaction Documents. The Company understands and
confirms that each of the Buyers will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to
the Buyers regarding the Company and its Subsidiaries, their businesses and the
transactions contemplated hereby, including the schedules to this Agreement,
furnished by or on behalf of the Company or any of its Subsidiaries is true and
correct and does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Each press release issued by the Company or any of its Subsidiaries during the
twelve (12) months preceding the date of this Agreement did not at the time of
release contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. No event or circumstance has occurred or information exists with
respect to the Company or any of its Subsidiaries or its or their business,
properties, liabilities, prospects, operations (including results thereof) or
conditions (financial or otherwise), which, under applicable law, rule or
regulation, requires public disclosure at or before the date hereof or
announcement by the Company but which has not been so publicly disclosed. The
Company acknowledges and agrees that no Buyer makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2. 

22





	4. 	
      COVENANTS.



     (a)    
Maintenance of Registration Statement For so long as any of the Warrants
remain outstanding, the Company shall use its best efforts to maintain the
effectiveness of the Registration Statement for the issuance thereunder of the
Warrant Shares, provided that if at any time while the Warrants are outstanding
the Company shall be ineligible to utilize Form S-3 (or any successor form) for
the purpose of issuance of the Warrant Shares, the Company shall promptly amend
the Registration Statement on such other form as may be necessary to maintain
the effectiveness of the Registration Statement for this purpose. If at any time
following the date hereof the Registration Statement is not effective or is not
otherwise available for the issuance of the Securities or any prospectus
contained therein is not available for use, the Company shall immediately notify
the holders of the Securities in writing that the Registration Statement is not
then effective or a prospectus contained therein is not available for use and
thereafter shall promptly notify such holders when the Registration Statement is
effective again and available for the issuance of the Securities or such
prospectus is again available for use. 

     (b)    
Prospectus Supplement and Blue Sky. Immediately prior to execution of
this Agreement, the Company shall have delivered to the Buyers, and as soon as
practicable after execution of this Agreement the Company shall file, the
Prospectus Supplement with respect to the Initial Common Shares, the Initial
Warrants and the Initial Warrant Shares as required under, and in conformity
with, the 1933 Act, including Rule 424(b) thereunder. Immediately prior to each
Additional Closing Date, the Company shall have delivered to the Buyers, and as
soon as practicable after the Additional Closing Notice Date the Company shall
file, the Prospectus Supplement with respect to the Additional Common Shares,
the Additional Warrants and the Additional Warrant Shares related to such
Additional Closing as required under, and in conformity with, the 1933 Act,
including Rule 424(b) thereunder. If required, the Company, on or before the
applicable Closing Date, shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for, or to, qualify the
Securities for sale to the Buyers at the applicable Closing pursuant to this
Agreement under applicable securities or “Blue Sky” laws of the states of the
United States (or to obtain an exemption from such qualification), and shall
provide evidence of any such action so taken to the Buyers on or prior to such
Closing Date. Without limiting any other obligation of the Company under this
Agreement, the Company shall timely make all filings and reports relating to the
offer and sale of the Securities required under all applicable securities laws
(including, without limitation, all applicable federal securities laws and all
applicable “Blue Sky” laws), and the Company shall comply with all applicable
federal, state and local laws, statutes, rules, regulations and the like
relating to the offering and sale of the Securities to the Buyers. 

     (c)    
Reporting Status. Until the date on which no Warrants are outstanding
(the “Reporting Period”), the Company shall timely file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would no
longer require such filings or otherwise permit such termination. 

23




     (d)     Use of
Proceeds. The Company shall use the net proceeds from the sale of the
Securities hereunder solely for general working capital purposes. Without
limiting the foregoing, except as set forth on Schedule 4(d), none of
such proceeds shall be used, directly or indirectly, (i) for the satisfaction of
any debt of the Company or any of its Subsidiaries (other than payment of trade
payables incurred after the date hereof in the ordinary course of business of
the Company and its Subsidiaries and consistent with prior practices), (ii) for
the redemption of any securities of the Company or (iii) with respect to any
litigation involving the Company or any of its Subsidiaries (including, without
limitation, (A) any settlement thereof or (B) the payment of any costs or
expenses related thereto). 

     (e)    
Financial Information. The Company agrees to send the following to each
Buyer during the Reporting Period (i) unless the following are filed with the
SEC through EDGAR and are available to the public through the EDGAR system,
within one (1) Business Day after the filing thereof with the SEC, a copy of its
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any interim
reports or any consolidated balance sheets, income statements, stockholders’
equity statements and/or cash flow statements for any period other than annual,
any Current Reports on Form 8-K and any registration statements (other than on
Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the
following are filed with the SEC through EDGAR and are available to the public
through the EDGAR system, on the same day as the release thereof, facsimile
copies of all press releases issued by the Company or any of its Subsidiaries
and (iii) copies of any notices and other information made available or given to
the stockholders of the Company generally, contemporaneously with the making
available or giving thereof to the stockholders. 

     (f)    
Listing. On or prior to each Closing Date, the Company shall promptly
secure the listing or designation for quotation (as the case may be) of all of
the Common Shares and Warrant Shares related to such Closing upon each national
securities exchange and automated quotation system, if any, upon which the
Common Stock is then listed or designated for quotation (as the case may be)
(subject to official notice of issuance) (but in no event later than the
applicable Closing Date) and shall maintain such listing or designation for
quotation (as the case may be) of all the shares of Common Stock from time to
time issuable under the terms of the Transaction Documents on such national
securities exchange or automated quotation system. The Company shall maintain
the Common Stock’s listing or designation for quotation (as the case may be) on
the Principal Market, The New York Stock Exchange, the NYSE Amex, or the Nasdaq
Global Market (each, an “Eligible Market”). Neither the Company nor any
of its Subsidiaries shall take any action which could be reasonably expected to
result in the delisting or suspension of the Common Stock on an Eligible Market.
The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 4(f). 

 

24




     (g)    
Fees. The Company shall reimburse Greenberg Traurig, LLP for all costs
and expenses incurred by it or its affiliates in connection with the
transactions contemplated by the Transaction Documents (including, without
limitation, all legal fees and disbursements in connection therewith,
structuring, documentation and implementation of the transactions contemplated
by the Transaction Documents and due diligence and regulatory filings in
connection therewith) in a non-accountable amount equal to $30,000, which amount
shall be withheld by the lead Buyer from its Purchase Price at the Initial
Closing or paid by the Company on demand by Greenberg Traurig, LLP if the lead
Buyer terminates its obligations under this Agreement in accordance with Section
7 (as the case may be), in either case, less $15,000 which was previously
advanced to Greenberg Traurig, LLP by the Company. The Company shall be
responsible for the payment of any placement agent’s fees, financial advisory
fees, transfer agent fees, DTC fees or broker’s commissions (other than for
Persons engaged by any Buyer) relating to or arising out of the transactions
contemplated hereby (including, without limitation, any fees payable to the
Placement Agent, who is the Company’s sole placement agent in connection with
the transactions contemplated by this Agreement). The Company shall pay, and
hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, reasonable attorneys’ fees and out-of-pocket expenses)
arising in connection with any claim relating to any such payment. Except as
otherwise set forth in the Transaction Documents, each party to this Agreement
shall bear its own expenses in connection with the sale of the Securities to the
Buyers.

     (h)     Pledge
of Securities. Notwithstanding anything to the contrary contained in this
Agreement, the Company acknowledges and agrees that the Securities may be
pledged by a Buyer in connection with a bona fide margin agreement or other loan
or financing arrangement that is secured by the Securities. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Buyer effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document. The Company hereby agrees to execute and deliver such documentation as
a pledgee of the Securities may reasonably request in connection with a pledge
of the Securities to such pledgee by a Buyer. 

25




     (i)    
Disclosure of Transactions and Other Material Information. The Company
shall, on or before 8:30 a.m., New York time, on the date of this Agreement, (i)
issue a press release (the “Press Release”) reasonably acceptable to the
Buyers disclosing all the material terms of the transactions contemplated by the
Transaction Documents and (ii) file a Current Report on Form 8-K describing all
the material terms of the transactions contemplated by the Transaction Documents
in the form required by the 1934 Act and attaching all the material Transaction
Documents (including, without limitation, this Agreement (and all schedules to
this Agreement) and the form of Warrants) (including all attachments, the
“Initial 8-K Filing”). From and after the issuance of the Press Release,
the Company shall have disclosed all material, non-public information (if any)
delivered to any of the Buyers by the Company or any of its Subsidiaries, or any
of their respective officers, directors, employees or agents in connection with
the transactions contemplated by the Transaction Documents. The Company shall,
on or before 8:30 a.m., New York time, on the first (1st) Business
Day after any Major Buyer delivers an Additional Closing Notice to the Company,
file a Current Report on Form 8-K (each, an “Additional 8-K Filing”, and
together with the Initial 8-K Filing, the “8-K Filings”) reasonably
acceptable to the Buyers, disclosing that a Major Buyer (without disclosing the
identity of such Major Buyer in the body of such Additional 8-K Filing) has
elected to deliver an Additional Closing Notice and attaching such Additional
Closing Notice and all material Transaction Documents with respect to such
Additional Closing (to the extent not previously included in a filing with the
SEC). From and after the filing of each Additional 8-K Filing, the Company shall
have disclosed all material, non-public information (if any) provided to such
Buyers by the Company or any of its Subsidiaries or any of their respective
officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Company shall not, and the
Company shall cause each of its Subsidiaries and each of its and their
respective officers, directors, employees and agents, not to, provide any Buyer
with any material, non-public information regarding the Company or any of its
Subsidiaries from and after the issuance of the Press Release without the
express prior written consent of such Buyer. In the event of a breach of any of
the foregoing covenants or any of the covenants contained in Section 4(n) by the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees and agents (as determined in the reasonable good faith
judgment of such Buyer), in addition to any other remedy provided herein or in
the Transaction Documents, such Buyer shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material, non-public information without the prior approval by the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees or agents. No Buyer shall have any liability to the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees, stockholders or agents, for any such disclosure. Subject
to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall
issue any press releases or any other public statements with respect to the
transactions contemplated hereby; provided, however, the Company shall be
entitled, without the prior approval of any Buyer, to make any press release or
other public disclosure with respect to such transactions (A) in substantial
conformity with the 8-K Filings and contemporaneously therewith and (B) as is
required by applicable law and regulations (provided that in the case of clause
(A) each Buyer shall be consulted by the Company in connection with any such
press release or other public disclosure prior to its release). Without the
prior written consent of the applicable Buyer, the Company shall not (and shall
cause each of its Subsidiaries and affiliates to not) disclose the name of such
Buyer in any filing (other than the 8-K Filings), announcement, release or
otherwise. Notwithstanding anything contained in this Agreement to the contrary
and without implication that the contrary would otherwise be true, the Company
expressly acknowledges and agrees that no Buyer has had, and no Buyer shall have
(unless expressly agreed to by a particular Buyer after the date hereof in a
written definitive and binding agreement executed by the Company and such
particular Buyer (it being understood and agreed that no Buyer may bind any
other Buyer with respect thereto)), any duty of confidentiality with respect to,
or a duty not to trade on the basis of, any information regarding the Company or
any of its Subsidiaries. 

26




     (j)    
Additional Issuance of Securities. The Company agrees that for the period
commencing on the date hereof and ending on the date immediately following the
sixty (60) Trading Day anniversary of the Initial Closing Date (provided that
such period shall be extended by the number of Trading Days during such period
and any extension thereof contemplated by this proviso on which the Registration
Statement is not effective or any prospectus contained therein is not available
for use) (the “Restricted Period”), neither the Company nor any of
its Subsidiaries shall directly or indirectly issue, offer, sell, grant any
option or right to purchase, or otherwise dispose of (or announce any issuance,
offer, sale, grant of any option or right to purchase or other disposition of)
any equity security or any equity-linked or related security (including, without
limitation, any “equity security” (as that term is defined under Rule 405
promulgated under the 1933 Act), any Convertible Securities, any preferred stock
or any purchase rights) (any such issuance, offer, sale, grant, disposition or
announcement (whether occurring during the Restricted Period or at any time
thereafter) is referred to as a “Subsequent Placement”). Notwithstanding
the foregoing, this Section 4(j) shall not apply in respect of the issuance of
(i) shares of Common Stock or standard options to purchase Common Stock to
directors, officers, employees or consultants of the Company or any of its
Subsidiaries in their capacity as such pursuant to an Approved Share Plan (as
defined below) (it being expressly understood and agreed that lawyers, law
firms, accountants, accounting firms and other similar professional advisors and
professional advisory firms are not consultants), provided that (A) all such
issuances (taking into account the shares of Common Stock issuable upon exercise
of such options) after the date hereof pursuant to this clause (i) do not, in
the aggregate, exceed more than 750,000 shares of Common Stock (adjusted for
stock splits, stock combinations and other similar transactions) and (B) the
exercise price of any such options is not lowered, none of such options are
amended to increase the number of shares issuable thereunder and none of the
terms or conditions of any such options are otherwise materially changed in any
manner that adversely affects any of the Buyers; (ii) shares of Common Stock
issued upon the conversion or exercise of Convertible Securities (other than
standard options to purchase Common Stock issued pursuant to an Approved Share
Plan that are covered by clause (i) above) issued prior to the date hereof,
provided that the conversion price of any such Convertible Securities (other
than standard options to purchase Common Stock issued pursuant to an Approved
Share Plan that are covered by clause (i) above) is not lowered, none of such
Convertible Securities (other than standard options to purchase Common Stock
issued pursuant to an Approved Share Plan that are covered by clause (i) above)
are amended to increase the number of shares issuable thereunder and none of the
terms or conditions of any such Convertible Securities (other than standard
options to purchase Common Stock issued pursuant to an Approved Share Plan that
are covered by clause (i) above) are otherwise materially changed in any manner
that adversely affects any of the Buyers; (iii) shares of Common Stock issued
pursuant to a bona fide firm commitment underwritten public offering with a
nationally recognized underwriter that generates gross proceeds to the Company
in excess of $25,000,000 (but expressly excluding “at-the-market offerings” (as
defined in Rule 415(a)(4) under the 1933 Act) and “equity lines of credit”);
(iv) shares of Common Stock issued in connection with strategic alliances,
strategic mergers and acquisitions and strategic partnerships, provided that (A)
the primary purpose of such issuance is not to raise capital as determined in
good faith by the Buyers, (B) the purchaser or acquirer of such shares of Common
Stock in such issuance solely consists of either (1) the actual participants in
such strategic alliance or strategic partnership, (2) the actual owners of such
assets or securities acquired in such merger or acquisition or (3) the
stockholders, partners or members of the foregoing Persons, (C) the number or
amount (as the case may be) of such shares of Common Stock issued to such Person
by the Company shall not be disproportionate to such Person’s actual
participation in such strategic alliance or strategic partnership or ownership
of such assets or securities to be acquired by the Company (as applicable) and
(D) all such issuances of Common Stock after the date hereof pursuant to this
clause (iv) do not, in the aggregate, exceed more than 2,000,000 shares of
Common Stock (adjusted for stock splits, stock combinations and other similar
transactions); (v) standard warrants to purchase Common Stock and the shares of
Common Stock issuable upon exercise of such warrants issued solely to placement
agents solely as compensation for services rendered to the Company in their
capacity as such in connection with a Subsequent Placement, provided that (A)
all such issuances (taking into account the shares of Common Stock issuable upon
exercise of such warrants) after the date hereof pursuant to this clause (i) do
not, in the aggregate, exceed more than 750,000 shares of Common Stock (adjusted
for stock splits, stock combinations and other similar transactions), (B) the
exercise price of any such warrants is not lower than the Exercise Price (as
defined in the Warrants) and (C) the exercise price of any such warrants is not
lowered, none of such warrants are amended to increase the number of shares
issuable thereunder and none of the terms or conditions of any such warrants are
otherwise materially changed in any manner that adversely affects any of the
Buyers; (vi) the Common Shares, (vii) the Warrants and (viii) the Warrant Shares
(each of the foregoing in clauses (i) through (viii), collectively the
“Excluded Securities”). “Approved Share Plan” means any employee benefit plan
which has been approved by the board of directors of the Company prior to or
subsequent to the date hereof pursuant to which shares of Common Stock and
standard options to purchase Common Stock may be issued to any employee,
officer, director or consultant for services provided to the Company or any of
its Subsidiaries in their capacity as such. “Convertible Securities”
means any capital stock or other security of the Company or any of its
Subsidiaries that is at any time and under any circumstances directly or
indirectly convertible into, exercisable or exchangeable for, or which otherwise
entitles the holder thereof to acquire, any capital stock or other security of
the Company (including, without limitation, Common Stock) or any of its
Subsidiaries. 

27




     (k)    
Reservation of Shares. So long as any of the Warrants remain outstanding,
the Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, no less than 100% of the maximum number of
shares of Common Stock issuable upon exercise of all the Warrants (without
regard to any limitations on the exercise of the Warrants set forth therein).


     (l)     Conduct
of Business. The business of the Company and its Subsidiaries shall not be
conducted in violation of any law, ordinance or regulation of any governmental
entity, except where such violations would not result, either individually or in
the aggregate, in a Material Adverse Effect. 

     (m)    Variable
Rate Transaction. From the date hereof through the one (1) year anniversary
of the Initial Closing Date, the Company and each Subsidiary shall be prohibited
from effecting or entering into an agreement to effect any Subsequent Placement
involving a Variable Rate Transaction. “Variable Rate Transaction” means
a transaction in which the Company or any Subsidiary (i) issues or sells any
Convertible Securities either (A) at a conversion, exercise or exchange rate or
other price that is based upon and/or varies with the trading prices of, or
quotations for, the shares of Common Stock at any time after the initial
issuance of such Convertible Securities, or (B) with a conversion, exercise or
exchange price that is subject to being reset at some future date after the
initial issuance of such Convertible Securities or upon the occurrence of
specified or contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock, other than pursuant to a
customary “weighted average” anti-dilution provision or (ii) enters into any
agreement (including, without limitation, an “equity line of credit” or an
“at-the-market offering”) whereby the Company or any Subsidiary may sell
securities at a future determined price (other than standard and customary
“preemptive” or “participation” rights). Each Buyer shall be entitled to obtain
injunctive relief against the Company and its Subsidiaries to preclude any such
issuance, which remedy shall be in addition to any right to collect damages.


     (n)    
Participation Right. From the date hereof through the first anniversary
of the Initial Closing Date, neither the Company nor any of its Subsidiaries
shall, directly or indirectly, effect any Subsequent Placement unless the
Company shall have first complied with this Section 4(n). The Company
acknowledges and agrees that the right set forth in this Section 4(n) is a right
granted by the Company, separately, to each Buyer. 

    
(i)      At least three (3) Trading Days prior to any
proposed or intended Subsequent Placement, the Company shall deliver to each
Buyer a written notice of its proposal or intention to effect a Subsequent
Placement (each such notice, a “Pre-Notice”), which Pre-Notice shall not
contain any information (including, without limitation, material, non-public
information) other than: (A) a statement that the Company proposes or intends to
effect a Subsequent Placement, (B) a statement that the statement in clause (A)
above does not constitute material, non-public information and (iii) a statement
informing such Buyer that it is entitled to receive an Offer Notice (as defined
below) with respect to such Subsequent Placement upon its written request. Upon
the written request of a Buyer within two (2) Trading Days after the Company’s
delivery to such Buyer of such Pre-Notice, and only upon a written request by
such Buyer, the Company shall promptly, but no later than one (1) Trading Day
after such request, deliver to such Buyer an irrevocable written notice (the
“Offer Notice”) of any proposed or intended issuance or sale or exchange
(the “Offer”) of the securities being offered (the “Offered
Securities”) in a Subsequent Placement, which Offer Notice shall (1)
identify and describe the Offered Securities, (2) describe the price and other
terms upon which they are to be issued, sold or exchanged, and the number or
amount of the Offered Securities to be issued, sold or exchanged, (3) identify
the Persons (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (4) offer to issue and sell to or
exchange with such Buyer in accordance with the terms of the Offer thirty
percent (30%) of the Offered Securities, provided that the number of Offered
Securities which such Buyer shall have the right to subscribe for under this
Section 4(n) shall be (a) based on such Buyer’s pro rata portion of the
aggregate number of Common Shares purchased hereunder by all Buyers (the
“Basic Amount”), and (b) with respect to each Buyer that elects to
purchase its Basic Amount, any additional portion of the Offered Securities
attributable to the Basic Amounts of other Buyers as such Buyer shall indicate
it will purchase or acquire should the other Buyers subscribe for less than
their Basic Amounts (the “Undersubscription Amount”). 

28




    
(ii)     To accept an Offer, in whole or in part, such Buyer
must deliver a written notice to the Company prior to the end of the third
(3rd) Business Day after such Buyer’s receipt of the Offer Notice
(the “Offer Period”), setting forth the portion of such Buyer’s Basic
Amount that such Buyer elects to purchase and, if such Buyer shall elect to
purchase all of its Basic Amount, the Undersubscription Amount, if any, that
such Buyer elects to purchase (in either case, the “Notice of
Acceptance”). If the Basic Amounts subscribed for by all Buyers are less
than the total of all of the Basic Amounts, then such Buyer who has set forth an
Undersubscription Amount in its Notice of Acceptance shall be entitled to
purchase, in addition to the Basic Amounts subscribed for, the Undersubscription
Amount it has subscribed for; provided, however, if the Undersubscription
Amounts subscribed for exceed the difference between the total of all the Basic
Amounts and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”), such Buyer who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Basic Amount of such Buyer bears to
the total Basic Amounts of all Buyers that have subscribed for Undersubscription
Amounts, subject to rounding by the Company to the extent it deems reasonably
necessary. Notwithstanding the foregoing, if the Company desires to modify or
amend the terms and conditions of the Offer prior to the expiration of the Offer
Period, the Company may deliver to each Buyer a new Offer Notice and the Offer
Period shall expire on the third (3rd) Business Day after such Buyer’s receipt
of such new Offer Notice. 

    
(iii)     The Company shall have five (5) days from the
expiration of the Offer Period above (A) to offer, issue, sell or exchange all
or any part of such Offered Securities as to which a Notice of Acceptance has
not been given by a Buyer (the “Refused Securities”) pursuant to a
definitive agreement(s) (the “Subsequent Placement Agreement”), but only
to the offerees described in the Offer Notice (if so described therein) and only
upon terms and conditions (including, without limitation, unit prices and
interest rates) that are not more favorable to the acquiring Person or Persons
or less favorable to the Company than those set forth in the Offer Notice and
(B) to publicly announce (1) the execution of such Subsequent Placement
Agreement, and (2) either (a) the consummation of the transactions contemplated
by such Subsequent Placement Agreement or (b) the termination of such Subsequent
Placement Agreement, which shall be filed with the SEC on a Current Report on
Form 8-K with such Subsequent Placement Agreement and any documents contemplated
therein filed as exhibits thereto. 

29




    
(iv)      In the event the Company shall propose to sell
less than all the Refused Securities (any such sale to be in the manner and on
the terms specified in Section 4(n)(iii) above), then such Buyer may, at its
sole option and in its sole discretion, reduce the number or amount of the
Offered Securities specified in its Notice of Acceptance to an amount that shall
be not less than the number or amount of the Offered Securities that such Buyer
elected to purchase pursuant to Section 4(n)(ii) above multiplied by a fraction,
(A) the numerator of which shall be the number or amount of Offered Securities
the Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Buyers pursuant to this Section 4(n) prior to
such reduction) and (B) the denominator of which shall be the original amount of
the Offered Securities. In the event that any Buyer so elects to reduce the
number or amount of Offered Securities specified in its Notice of Acceptance,
the Company may not issue, sell or exchange more than the reduced number or
amount of the Offered Securities unless and until such securities have again
been offered to the Buyers in accordance with Section 4(n)(i) above. 

    
(v)      Upon the closing of the issuance, sale or exchange
of all or less than all of the Refused Securities, such Buyer shall acquire from
the Company, and the Company shall issue to such Buyer, the number or amount of
Offered Securities specified in its Notice of Acceptance. The purchase by such
Buyer of any Offered Securities is subject in all cases to the preparation,
execution and delivery by the Company and such Buyer of a separate purchase
agreement relating to such Offered Securities reasonably satisfactory in form
and substance to such Buyer and its counsel. 

    
(vi)      Any Offered Securities not acquired by a Buyer or
other Persons in accordance with this Section 4(n) may not be issued, sold or
exchanged until they are again offered to such Buyer under the procedures
specified in this Agreement. 

    
(vii)      The Company and each Buyer agree that if any
Buyer elects to participate in the Offer, neither the Subsequent Placement
Agreement with respect to such Offer nor any other transaction documents related
thereto (collectively, the “Subsequent Placement Documents”) shall
include any term or provision whereby such Buyer shall be required to agree to
any restrictions on trading as to any securities of the Company or be required
to consent to any amendment to or termination of, or grant any waiver, release
or the like under or in connection with, any agreement previously entered into
with the Company or any instrument received from the Company. 

30




     (viii)   
Notwithstanding anything to the contrary in this Section 4(n) and unless
otherwise agreed to by such Buyer, the Company shall either confirm in writing
to such Buyer that the transaction with respect to the Subsequent Placement has
been abandoned or shall publicly disclose its intention to issue the Offered
Securities, in either case in such a manner such that such Buyer will not be in
possession of any material, non-public information, by the fifth
(5th) Business Day following delivery of the Offer Notice. If by such
fifth (5th) Business Day, no public disclosure regarding a
transaction with respect to the Offered Securities has been made, and no notice
regarding the abandonment of such transaction has been received by such Buyer,
such transaction shall be deemed to have been abandoned and such Buyer shall not
be in possession of any material, non-public information with respect to the
Company or any of its Subsidiaries. Should the Company decide to pursue such
transaction with respect to the Offered Securities, the Company shall provide
such Buyer with another Offer Notice in accordance with, and subject to, the
terms of this Section 4(n) and such Buyer will again have the right of
participation set forth in this Section 4(n). The Company shall not be permitted
to deliver more than one Offer Notice to such Buyer in any sixty (60) day
period, except as expressly contemplated by the last sentence of Section
4(n)(ii). 

     (ix)      The
restrictions contained in this Section 4(n) shall not apply in connection with
the issuance of any Excluded Securities. The Company shall not circumvent the
provisions of this Section 4(n) by providing terms or conditions to one Buyer
that are not provided to all.

     (o)     
 Passive Foreign Investment Company. The Company shall conduct its
business in such a manner as will ensure that the Company will not be deemed to
constitute a passive foreign investment company within the meaning of Section
1297 of the U.S. Internal Revenue Code of 1986, as amended. 

      (p)     
Exercise Procedures. The form of Notice of Exercise included in each of
the Warrants set forth the totality of the procedures required of the Buyers in
order to exercise the Warrants. No additional legal opinion, other information
or instructions shall be required of the Buyers to exercise their Warrants. The
Company shall honor exercises of the Warrants and shall deliver the Warrant
Shares in accordance with the terms, conditions and time periods set forth in
the Warrants. 

     (q)      
Closing Documents. On or prior to fourteen (14) calendar days after each
Closing Date, the Company agrees to deliver, or cause to be delivered, to each
Buyer and Greenberg Traurig, LLP executed copies of the Transaction Documents,
Securities and other documents required to be delivered to any party pursuant to
Section 6 hereof with respect to such Closing.

	5. 	
      REGISTER; TRANSFER AGENT INSTRUCTIONS;
    LEGEND.



     (a)     
Register. The Company shall maintain at its principal executive offices
(or such other office or agency of the Company as it may designate by notice to
each holder of Securities), a register for the Common Shares and the Warrants in
which the Company shall record the name and address of the Person in whose name
the Common Shares and the Warrants have been issued (including the name
and address of each transferee), the number of Common Shares held by such Person
and the number of Warrant Shares issuable upon exercise of the Warrants held by
such Person. The Company shall keep the register open and available at all times
during business hours for inspection of any Buyer or its legal representatives.


31




     (b)    
Transfer Agent Instructions. The Company shall issue irrevocable
instructions to the Transfer Agent in the form previously provided to the
Company (the “Irrevocable Transfer Agent Instructions”) to issue
certificates or credit shares to the applicable balance accounts at DTC,
registered in the name of each Buyer or its respective nominee(s), for the
Common Shares and the Warrant Shares in such amounts as specified from time to
time by each Buyer to the Company upon delivery of the Common Shares or the
exercise of the Warrants (as the case may be). The Company represents and
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5(b) will be given by the Company to
the Transfer Agent with respect to the Securities, and that the Securities shall
otherwise be freely transferable on the books and records of the Company. If a
Buyer effects a sale, assignment or transfer of the Securities, the Company
shall permit the transfer and shall promptly instruct the Transfer Agent to
issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to each
Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach
of its obligations under this Section 5(b) will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this
Section 5(b), that each Buyer shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required. Any fees
(with respect to the Transfer Agent, counsel to the Company or otherwise)
associated with the issuance of such opinion shall be borne by the Company. 

     (c)    
Legends. Certificates and any other instruments evidencing the Securities
shall not bear any restrictive or other legend.

	6. 	
      ADDITIONAL CLOSING DELIVERIES OF THE
    COMPANY.



     (a)    
Deliveries. The Company shall deliver to each Buyer participating in the
applicable Closing on such applicable Closing Date each of the following: 

    
(i)     The opinion of Pryor Cashman LLP, the Company’s
counsel, dated as of such Closing Date, in the form previously provided to the
Company. 

    
(ii)     A copy of the Irrevocable Transfer Agent
Instructions, in the form previously provided to the Company, that have been
delivered to and acknowledged in writing by the Transfer Agent. 

    
(iii)     A certificate evidencing the formation and good
standing of the Company and each of its Subsidiaries in each such entity’s
jurisdiction of formation issued by the Secretary of State (or comparable
office) of such jurisdiction of formation as of a date within ten (10) days of
such Closing Date. 

    
(iv)     A certificate evidencing the Company’s
qualification as a foreign corporation and good standing issued by the Secretary
of State (or comparable office) of each jurisdiction in which the Company
conducts business and is required to so qualify, as of a date within ten (10)
days of such Closing Date. 

32




    
(v)     A certified copy of the Certificate of Incorporation
as certified by the Secretary of State of the Company’s jurisdiction of
formation within ten (10) days of such Closing Date. 

    
(vi)     A certificate, in the form previously provided to
the Company, executed by an officer of the Company and dated as of such Closing
Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the
Company’s board of directors in a form reasonably acceptable to such Buyer, (ii)
the Certificate of Incorporation and (iii) the Bylaws, each as in effect at such
Closing. 

    
(vii)     A letter from the Transfer Agent certifying the
number of shares of Common Stock outstanding on such Closing Date immediately
prior to such Closing. 

    
(viii)    A letter on the letterhead of the Company, duly
executed by the Chief Executive Officer of the Company, setting forth the wire
amounts of each Buyer participating in such Closing and the wire transfer
instructions of the Company. 

    
(ix)      Such other documents, instruments or
certificates relating to the transactions contemplated by this Agreement as such
Buyer or its counsel may reasonably request. 

	7. 	
      TERMINATION.



     In the event that the Initial Closing
shall not have occurred with respect to a Buyer within five (5) days after the
date hereof, then such Buyer shall have the right to terminate its obligations
under this Agreement with respect to itself at any time on or after the close of
business on such date without liability of such Buyer to any other party;
provided, however, (a) the right to terminate this Agreement under this Section
7 shall not be available to such Buyer if the failure of the transactions
contemplated by this Agreement to have been consummated by such date is the
result of such Buyer’s breach of this Agreement and (b) the abandonment of the
sale and purchase of the Common Shares and the Warrants shall be applicable only
to such Buyer providing such written notice, provided further that no such
termination shall affect any obligation of the Company under this Agreement to
reimburse such Buyer for the expenses described in Section 4(g) above. Nothing
contained in this Section 7 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement or the other Transaction Documents or to impair the right of any party
to compel specific performance by any other party of its obligations under this
Agreement or the other Transaction Documents. 

	8. 	
      MISCELLANEOUS.



     (a)    
Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
other Transaction Documents shall be governed by the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdiction other than the
State of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or under any
of the other Transaction Documents or in connection herewith or therewith or
with any transaction contemplated hereby or thereby or discussed herein or
therein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Nothing contained herein shall be deemed or operate to preclude any Buyer from
bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company’s obligations to such Buyer or to enforce
a judgment or other court ruling in favor of such Buyer. The Company hereby
appoints CT Corporation System, with offices at 111 Eighth Avenue, New York, New
York 10011, as its agent for service of process in New York. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT
MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY. 

33




     (b)    
Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page
were an original thereof. 

     (c)    
Headings; Gender. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. Unless the context clearly indicates otherwise, each pronoun herein
shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof. The terms “including,” “includes,” “include” and words of like
import shall be construed broadly as if followed by the words “without
limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import
refer to this entire Agreement instead of just the provision in which they are
found. 

     (d)    
Severability. If any provision of this Agreement is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s). 

34




     (e)      Entire
Agreement; Amendments. This Agreement, the other Transaction Documents and
the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein supersede all other prior oral or written
agreements between the Buyers, the Company, their affiliates and Persons acting
on their behalf solely with respect to the matters contained herein and therein,
and this Agreement, the other Transaction Documents, the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein
contain the entire understanding of the parties solely with respect to the
matters covered herein and therein; provided, however, nothing contained in this
Agreement or any other Transaction Document shall (or shall be deemed to) (i)
have any effect on any agreements any Buyer has entered into with the Company or
any of its Subsidiaries prior to the date hereof with respect to any prior
investment made by such Buyer in the Company or (ii) waive, alter, modify or
amend in any respect any obligations of the Company or any of its Subsidiaries,
or any rights of or benefits to any Buyer or any other Person, in any agreement
entered into prior to the date hereof between or among the Company and/or any of
its Subsidiaries and any Buyer and all such agreements shall continue in full
force and effect. Except as specifically set forth herein or therein, neither
the Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. For clarification purposes, the
Recitals are part of this Agreement. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and each of
the Buyers. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party. No consideration shall be
offered or paid to any Person to amend or consent to a waiver or modification of
any provision of any of the Transaction Documents unless the same consideration
also is offered to all of the parties to the Transaction Documents, all holders
of Common Shares or all holders of the Warrants (as the case may be). The
Company has not, directly or indirectly, made any agreements with any Buyers
relating to the terms or conditions of the transactions contemplated by the
Transaction Documents except as set forth in the Transaction Documents. Without
limiting the foregoing, the Company confirms that, except as set forth in this
Agreement, no Buyer has made any commitment or promise or has any other
obligation to provide any financing to the Company, any Subsidiary or otherwise.
As a material inducement for each Buyer to enter into this Agreement, the
Company expressly acknowledges and agrees that (A) no due diligence or other
investigation or inquiry conducted by a Buyer, any of its advisors or any of its
representatives shall affect such Buyer’s right to rely on, or shall modify or
qualify in any manner or be an exception to any of, the Company’s
representations and warranties contained in this Agreement or any other
Transaction Document, (B) nothing contained in the Registration Statement, the
Prospectus or the Prospectus Supplement shall affect such Buyer’s right to rely
on, or shall modify or qualify in any manner or be an exception to any of, the
Company’s representations and warranties contained in this Agreement or any
other Transaction Document and (C) unless a provision of this Agreement or any
other Transaction Document is expressly preceded by the phrase “except as
disclosed in the SEC Documents,” nothing contained in any of the SEC Documents
shall affect such Buyer’s right to rely on, or shall modify or qualify in any
manner or be an exception to any of, the Company’s representations and
warranties contained in this Agreement or any other Transaction Document. 

35




     (f)    
Notices. Any notices, consents, waivers or other communications required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) Business Day after deposit with an overnight
courier service with next day delivery specified, in each case, properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be: 

If to the Company:

Kandi Technologies Group, Inc.

Jinhua City Industrial Zone 
Jinhua, Zhejiang Province 
People’s
Republic of China 
Post Code 321016 
Telephone: (86-0579) 82239851

Facsimile: (86-0579) 82239855 
Attention: Chief Executive Officer 

With a copy (for informational
purposes only) to: 

Pryor Cashman LLP 
7 Times Square

New York, NY 10036-6569 
Telephone: (212) 326-0199 
Facsimile: (212)
798-6366 
Attention: Elizabeth F. Chen, Esq. 

If to the Transfer Agent: 

Corporate Stock Transfer 
3200
Cherry Creek Dr. South 
Suite 430 
Denver, CO 80209 
Facsimile: (303)
282-5800 
Attention: Carylyn Bell 

If to a Buyer, to its address and facsimile number set forth on
the Schedule of Buyers, with copies to such Buyer’s representatives as set forth
on the Schedule of Buyers, 

with a copy (for informational
purposes only) to: 

Greenberg Traurig, LLP 
MetLife
Building 
200 Park Avenue 
New York, NY 10166 
Telephone: (212)
801-9200 
Facsimile: (212) 805-9222 
Attention: Michael A. Adelstein, Esq.


or to such other address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change, provided that Greenberg Traurig, LLP shall only be provided copies
of notices sent to the lead Buyer. Written confirmation of receipt (A) given by
the recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by an overnight courier service shall
be rebuttable evidence of personal service, receipt by facsimile or receipt from
an overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively. 

36




     (g)    
Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns,
including, as contemplated below, any assignee of any of the Securities. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each of the Buyers, including, without
limitation, by way of a Fundamental Transaction (as defined in the Warrants)
(unless the Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Warrants). A Buyer may assign some or
all of its rights hereunder in connection with any transfer of any of its
Securities without the consent of the Company, in which event such assignee
shall be deemed to be a Buyer hereunder with respect to such assigned rights.


     (h)     No
Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person, other than the Indemnitees referred to in Section 8(k). 

     (i)    
Survival. The representations, warranties, agreements and covenants shall
survive the Closings. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder. 

     (j)     Further
Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby. 

     (k)    
Indemnification.

    
(i)      In consideration of each Buyer’s execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each holder of any Securities and all of their stockholders, partners,
members, officers, directors, employees and direct or indirect investors and any
of the foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”) from and against any
and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified Liabilities”), incurred by any
Indemnitee as a result of, or arising out of, or relating to (A) any
misrepresentation or breach of any representation or warranty made by the
Company in any of the Transaction Documents, (B) any breach of any covenant,
agreement or obligation of the Company contained in any of the Transaction
Documents or (C) any cause of action, suit or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company) and arising out of or resulting from (1) the
execution, delivery, performance or enforcement of any of the Transaction
Documents, (2) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Securities, (3)
any disclosure properly made by such Buyer pursuant to Section 4(i), or (4) the
status of such Buyer or holder of the Securities as an investor in the Company
pursuant to the transactions contemplated by the Transaction Documents. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.

37




    
(ii)     Promptly after receipt by an Indemnitee under this
Section 8(k) of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving an Indemnified
Liability, such Indemnitee shall, if a claim in respect thereof is to be made
against the Company under this Section 8(k), deliver to the Company a written
notice of the commencement thereof, and the Company shall have the right to
participate in, and, to the extent the Company so desires, to assume control of
the defense thereof with counsel mutually satisfactory to the Company and the
Indemnitee; provided, however, that an Indemnitee shall have the right to retain
its own counsel with the fees and expenses of such counsel to be paid by the
Company if: (A) the Company has agreed in writing to pay such fees and expenses;
(B) the Company shall have failed promptly to assume the defense of such
Indemnified Liability and to employ counsel reasonably satisfactory to such
Indemnitee in any such Indemnified Liability; or (C) the named parties to any
such Indemnified Liability (including any impleaded parties) include both such
Indemnitee and the Company, and such Indemnitee shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnitee and the Company (in which case, if such Indemnitee
notifies the Company in writing that it elects to employ separate counsel at the
expense of the Company, then the Company shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the Company),
provided further, that in the case of clause (C) above the Company shall not be
responsible for the reasonable fees and expenses of more than one (1) separate
legal counsel for the Indemnitees. The Indemnitee shall reasonably cooperate
with the Company in connection with any negotiation or defense of any such
action or Indemnified Liability by the Company and shall furnish to the Company
all information reasonably available to the Indemnitee which relates to such
action or Indemnified Liability. The Company shall keep the Indemnitee
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. The Company shall not be liable
for any settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the Company shall not unreasonably
withhold, delay or condition its consent. The Company shall not, without the
prior written consent of the Indemnitee, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect to such Indemnified
Liability or litigation, and such settlement shall not include any admission as
to fault on the part of the Indemnitee. Following indemnification as provided
for hereunder, the Company shall be subrogated to all rights of the Indemnitee
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice
to the Company within a reasonable time of the commencement of any such action
shall not relieve the Company of any liability to the Indemnitee under this
Section 8(k), except to the extent that the Company is materially and adversely
prejudiced in its ability to defend such action. 

38




     (iii)
     The indemnification required by this Section 8(k) shall
be made by periodic payments of the amount thereof during the course of the
investigation or defense, within ten (10) days after bills are received or
Indemnified Liabilities are incurred. 

    
(iv)      The indemnity agreement contained herein shall be
in addition to (A) any cause of action or similar right of the Indemnitee
against the Company or others, and (B) any liabilities the Company may be
subject to pursuant to the law. 

     (l)    
Construction. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any party. No specific
representation or warranty shall limit the generality or applicability of a more
general representation or warranty. Each and every reference to share prices,
shares of Common Stock and any other numbers in this Agreement that relate to
the Common Stock shall be automatically adjusted for stock splits, stock
dividends, stock combinations and other similar transactions that occur with
respect to the Common Stock after the date of this Agreement. 

     (m)    
Remedies. Each Buyer and each holder of any Securities shall have all
rights and remedies set forth in the Transaction Documents and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. Furthermore, the
Company recognizes that in the event that it fails to perform, observe, or
discharge any or all of its obligations under the Transaction Documents, any
remedy at law may prove to be inadequate relief to the Buyers. The Company
therefore agrees that the Buyers shall be entitled to seek specific performance
and/or temporary, preliminary and permanent injunctive or other equitable relief
from any court of competent jurisdiction in any such case without the necessity
of proving actual damages and without posting a bond or other security. 

39




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

     (o)     Payment
Set Aside; Currency. To the extent that the Company makes a payment or
payments to any Buyer hereunder or pursuant to any of the other Transaction
Documents or any of the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred. Until the Warrants are no longer outstanding, the
Company shall not effect any stock combination, reverse stock split or other
similar transaction (or make any public announcement or disclosure with respect
to any of the foregoing) without the prior written consent of each of the
Buyers, such consent not to be unreasonably withheld, conditioned or delayed.
Unless otherwise expressly indicated, all dollar amounts referred to in this
Agreement and the other Transaction Documents are in United States Dollars
(“U.S. Dollars”), and all amounts owing under this Agreement and all
other Transaction Documents shall be paid in U.S. Dollars. All amounts
denominated in other currencies (if any) shall be converted into the U.S. Dollar
equivalent amount in accordance with the Exchange Rate on the date of
calculation. “Exchange Rate” means, in relation to any amount of
currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S.
Dollar exchange rate as published in the Wall Street Journal on the relevant
date of calculation. 

     (p)    
Independent Nature of Buyers’ Obligations and Rights. The obligations of
each Buyer under the Transaction Documents are several and not joint with the
obligations of any other Buyer, and no Buyer shall be responsible in any way for
the performance of the obligations of any other Buyer under any Transaction
Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as, and the Company acknowledges that the Buyers do not so
constitute, a partnership, an association, a joint venture or any other kind of
group or entity, or create a presumption that the Buyers are in any way acting
in concert or as a group or entity with respect to such obligations or the
transactions contemplated by the Transaction Documents or any matters, and the
Company acknowledges that the Buyers are not acting in concert or as a group,
and the Company shall not assert any such claim, with respect to such
obligations or the transactions contemplated by the Transaction Documents. The
decision of each Buyer to purchase Securities pursuant to the Transaction
Documents has been made by such Buyer independently of any other Buyer. Each
Buyer acknowledges that no other Buyer has acted as agent for such Buyer in
connection with such Buyer making its investment hereunder and that no other
Buyer will be acting as agent of such Buyer in connection with monitoring such
Buyer’s investment in the Securities or enforcing its rights under the
Transaction Documents. The Company and each Buyer confirms that each Buyer has
independently participated with the Company in the negotiation of the
transaction contemplated hereby with the advice of its own counsel and advisors.
Each Buyer shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out
of any other Transaction Documents, and it shall not be necessary for any other
Buyer to be joined as an additional party in any proceeding for such purpose.
The use of a single agreement to effectuate the purchase and sale of the
Securities contemplated hereby was solely in the control of the Company, not the
action or decision of any Buyer, and was done solely for the convenience of the
Company and not because it was required or requested to do so by any Buyer. It
is expressly understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the Company and a
Buyer, solely, and not between the Company and the Buyers collectively and not
between and among the Buyers. 

40




     (q)    
Judgment Currency. 

    
(i)      If for the purpose of obtaining or enforcing
judgment against the Company in any court in any jurisdiction it becomes
necessary to convert into any other currency (such other currency being
hereinafter in this Section 8(q) referred to as the “Judgment Currency”)
an amount due in U.S. Dollars under this Agreement or any other Transaction
Document, the conversion shall be made at the Exchange Rate prevailing on the
Trading Day immediately preceding: (A) the date actual payment of the amount
due, in the case of any proceeding in the courts of New York or in the courts of
any other jurisdiction that will give effect to such conversion being made on
such date or (B) the date on which the foreign court determines, in the case of
any proceeding in the courts of any other jurisdiction (the date as of which
such conversion is made pursuant to this Section 8(q)(i) being hereinafter
referred to as the “Judgment Conversion Date”). 

    
(ii)      If in the case of any proceeding in the court
of any jurisdiction referred to in Section 8(q)(i) above, there is a change in
the Exchange Rate prevailing between the Judgment Conversion Date and the date
of actual payment of the amount due, the applicable party shall pay such
adjusted amount as may be necessary to ensure that the amount paid in the
Judgment Currency, when converted at the Exchange Rate prevailing on the date of
payment, will produce the amount of U.S. Dollars which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial
order at the Exchange Rate prevailing on the Judgment Conversion Date.

    
(iii)      Any amount due from the Company under this
provision shall be due as a separate debt and shall not be affected by judgment
being obtained for any other amounts due under or in respect of this Agreement
or any other Transaction Document. 

41




     IN WITNESS
WHEREOF, Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above. 


	COMPANY: 
	  
	KANDI TECHNOLOGIES GROUP, INC. 
	  
	  
	  
	By:      
      _________________________
	             Name: Hu
      Xiaoming 
	             Title:
      Chief Executive Officer 







     IN WITNESS
WHEREOF, Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written above. 


	BUYER: 
	  
	[OTHER BUYERS] 
	  
	  
	  
	  
	By:      
      _________________________
	             Name:

	             Title:
  







SCHEDULE OF BUYERS 

	(1) 	 	(2)	 	 	(3) 		 	(4)	 	 	(5)	 	 	(6) 		 	(7) 		 	(8) 	
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	Aggregate 	 	 	Aggregate 	 	 	Aggregate 	 	 	Aggregate 	 	 	  	 	 	  	 
	  	 	  	 	 	Number of 	 	 	Number of 	 	 	Number of 	 	 	Number of 	 	 	  	 	 	Legal 	 
	  	 	  	 	 	Initial 	 	 	Additional 	 	 	Initial 	 	 	Additional 	 	 	Initial 	 	 	Representative’s 	 
	  	 	  	 	 	Common 	 	 	Common 	 	 	Warrant 	 	 	Warrant 	 	 	Purchase 	 	 	Address and 	 
	Buyer 	 	Address and Facsimile Number 	 	 	Shares 	 	 	Shares (*) 	 	 	Shares 	 	 	Shares (*) 	 	 	Price 	 	 	Facsimile Number 	 


(*) Subject to adjustment for stock
splits, stock dividends, recapitalizations and similar events. 




Exhibit B 

Form of Additional Closing Notice 

TO BE EXECUTED BY A MAJOR BUYER TO ELECT TO 
EFFECT AN
ADDITIONAL CLOSING 

KANDI TECHNOLOGIES GROUP, INC. 

     The undersigned hereby exercises its
right pursuant to Section 1(b)(ii) of that certain Securities Purchase
Agreement, dated August__, 2014, by and among Kandi Technologies Group, Inc., a
Delaware corporation (the “Company”) and the investors party thereto (the
“Securities Purchase Agreement”) to effect an Additional Closing (as
defined in the Securities Purchase Agreement) as described below. Capitalized
terms not defined herein shall have the meaning as set forth in the Securities
Purchase Agreement. 

1.    
Additional Closing Notice Date:
_________________

2.     Additional Closing
Date: _________________** 

    
     ** Insert Third (3rd) Trading Day after the
Additional Closing Notice Date 

3.     Securities
to be issued: 

          (a)
     _________ Additional Common Shares; and


          (b)
     an Additional Warrant to purchase up to
_______Additional Warrant Shares. 

4.    
Additional Purchase Price. The undersigned shall pay the Additional
Purchase Price in the sum of $___________________to the Company on or prior to
the Additional Closing Date in accordance with the terms of the Securities
Purchase Agreement. 

5.     Delivery of
Securities. The Company shall deliver the Additional Common Shares and
Additional Warrant described above to the undersigned, or its designee or agent
as specified below: 


 The certificate with respect to
the Additional Warrant should be delivered to the following name and to the
following address: 

	 	Issue to: 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 






     The Additional Common Shares should be
delivered by Deposit/Withdrawal at Custodian as follows:

	 	DTC Participant: 	 
	 	 	 
	 	DTC Number: 	 
	 	 	 
	 	Account Number: 	 




	Date: _____________ ___, ______ 
	 
	____________________________
	Name of Major Buyer 
	  	  
	By: 	________________________  
		Name: 
		Title: 
	 	 
	         	Tax ID:_____________________ 
	 	 
	      	Facsimile:___________________








Schedule 4 (d) 

The Company may use proceeds to pay for professional service
fees and expenses in connection with litigation matters.