exhibit4_5.htm


    Exhibit
4.5

    
 

    SERIES
A PREFERRED


    


    PURCHASE
AGREEMENT

     

    Dated
as of December 31, 2008

     

    by
and among

    


    WORLD
RACING GROUP, INC.


    


    and


    


    THE
PURCHASERS LISTED ON EXHIBIT A

    


    
      
        
           


        

        
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    SERIES
A PREFERRED PURCHASE AGREEMENT

    


    This
SERIES A PREFERRED PURCHASE AGREEMENT (this “Agreement”), dated as
of December 31, 2008 by and among World Racing Group, Inc., a Delaware
corporation (the “Company”), and the
purchasers listed on Exhibit A (each a
“Purchaser” and
collectively, the “Purchasers”), for the
purchase and sale of shares of the Company’s 10% Cumulative Perpetual Series A
Preferred Stock (the “Series A Preferred
Stock”) and shares of the Company’s Series E-1 Convertible Preferred
Stock (the “Series E-1
Preferred”) by the Purchasers.

    


    The
parties hereto agree as follows:

    ARTICLE
I

     

     

    PURCHASE
AND SALE OF SERIES A PREFERRED STOCK

     

    Section
1.1 Purchase and Sale of
Preferred Stock.

     

    (a) Upon the
following terms and conditions, the Company shall issue and sell to the
Purchasers, and the Purchasers shall purchase from the Company, shares of Series
A Preferred Stock (each a “Preferred Share” and
collectively the “Preferred Shares”) at
a price per share of $10,000.00 (the “Per Share Purchase
Price”) for an aggregate purchase price of up to Ten Million Dollars
($10,000,000) (the “Purchase
Price”).  Each Purchaser shall pay the portion of the Purchase
Price set forth opposite its name on Exhibit A, as the same may
be amended or supplemented from time to time.  The designation,
rights, preferences and other terms and provisions of the Series
A  Preferred Stock are set forth in the Certificate of Designation of
the Relative Rights and Preferences of the Series A Preferred Stock attached
hereto as Exhibit
B (the “Certificate of Designation”).  The Company and the
Purchasers are executing and delivering this Agreement in accordance with and in
reliance upon the exemption from securities registration afforded by Section
4(2) of the U.S. Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the “Securities Act”),
including Regulation D (“Regulation D”),
and/or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the investments
to be made hereunder.

     

    (b) Upon the
following terms and conditions without additional consideration, each of the
Purchasers shall be issued  2,850 shares of Series E-1 Preferred (the
“Series E-1
Shares”) for each Preferred Share purchased, as set forth opposite such
Purchaser’s name on Exhibit A , provided, however, in lieu of
Series E-1 Shares, 28,500  shares of the Company’s common stock shall
be issued to the Purchasers in the Initial Closing (as defined in Section 1.2)
(the “Common
Shares”) for each Preferred Share purchased.  The Preferred
Shares and the Series E-1 Shares and/or Common Shares are sometimes collectively
referred to herein as the “Securities”.

    


    
      
        
           


        

        
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    Section
1.2 Purchase Price and
Closing.  In consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Company agrees to issue and sell to the Purchasers and, in consideration of
and in express reliance upon the representations, warranties, covenants, terms
and conditions of this Agreement, the Purchasers, severally but not jointly,
agree to purchase the number of Preferred Shares and Series E-1 Shares and/or
Common Shares set forth opposite their respective names on Exhibit
A.  The Preferred Shares may be funded in multiple closings
under this Agreement, with each closing being defined as the “Closing”.  An
initial Closing under this Agreement (the “Initial Closing”)
shall take place on December 31, 2008 (the “Initial Closing Date”) and
shall be funded in the amount of Three Million Five Hundred Thousand Dollars
($3,500,000).  Any additional Closings shall each be defined as the
“Additional
Closing.”  Each Closing under this Agreement shall take place
at the offices of the Company, provided, that all of
the conditions set forth in Article IV hereof and applicable to such Closing
shall have been fulfilled or waived in accordance herewith.  At each
Closing and upon receipt by the Company of the appropriate
purchase price from each Purchaser (i.e., a purchase price equal to the number
of Preferred Shares to be purchased by such Purchaser multiplied by the Per
Share Purchase Price), the Company shall deliver or cause to be delivered
to each such Purchaser (x) a certificate
for the number of Preferred Shares set forth opposite the name of such Purchaser
on Exhibit A ,
(y) a certificate for the number of Series E-1 Shares set forth opposite the
name of such Purchaser on Exhibit A and/or a
certificate for the number of Common Shares set forth opposite the name of such
Purchaser on Exhibit
A and (z) any other documents required to be delivered pursuant to
Article IV hereof.  Each
Purchaser shall deliver each of the documents
required to be delivered by it pursuant to Article IV hereof as well
as its
portion of the Purchase Price by wire transfer to the Company prior to each
Closing.

     

    ARTICLE
II                                

     

    REPRESENTATIONS
AND WARRANTIES

     

    Section
2.1 Representations and
Warranties of the Company.  The Company hereby represents and
warrants to the Purchasers as follows, as of the date hereof (or other
applicable date as stated in this Section 2.1) except as set forth on the
Disclosure Schedule attached hereto with each numbered Schedule corresponding to
the section number herein:

     

    (a) Organization, Good Standing
and Power.  The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power to own, lease and operate its properties
and assets and to conduct its business as it is now being
conducted.  The Company does not have any Subsidiaries (as defined in
Section 2.1(g)) or own securities of any kind in any other entity except as set
forth on Schedule
2.1(g).  The Company and each such Subsidiary (as defined in
Section 2.1(g)) is duly qualified to do business as a foreign corporation and is
in good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary except for
any jurisdiction(s) (alone or in the aggregate) in which the failure to be so
qualified will not have a Material Adverse Effect.  For the purposes
of this Agreement, “Material Adverse
Effect” means any effect on the business, results of operations, assets
or condition (financial or otherwise) of the Company that is material and
adverse to the Company and its Subsidiaries (as hereafter defined) taken as a
whole, and/or any condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company from entering
into and performing any of its obligations under the Transaction Documents (as
defined below) in any material respect; provided, however, that Material Adverse Effect shall not be deemed to
include: (i) changes in applicable law or (ii) any effect resulting from the
public announcement of the transactions contemplated by this Agreement
or the consummation of the transactions contemplated by this
Agreement.

    


    
      
        
           


        

        
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    (b) Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and perform this Agreement, by and among the Company,
and the Purchasers (together with any additional documents required to be
executed in connection with the transaction contemplated by this Agreement, the
“Transaction
Documents”), and to issue and sell the Securities in accordance with the
terms hereof and to complete the transactions contemplated by the Transaction
Documents.  The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly and validly authorized by all necessary
corporate action, and, except as set forth on Schedule 2.1(b), no
further consent or authorization of the Company, its Board of Directors or
stockholders is required.  When executed and delivered by the Company,
each of the Transaction Documents shall constitute a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as rights to indemnity and contribution may be limited by federal
or state securities laws and except as such enforceability may be limited by
applicable bankruptcy, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application.


    
      
        
           


        

        
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    (c) Capitalization.  The
authorized capital stock of the Company as of the date hereof is set forth on
Schedule
2.1(c).  All of the outstanding shares of the Common Stock and
any other outstanding security of the Company have been duly and validly
authorized and validly issued, fully paid and nonassessable and were issued in
accordance with the registration or qualification provisions of the Securities
Act, or pursuant to valid exemptions therefrom.  Except as provided in
this Agreement or as set forth on Schedule 2.1(c) ,
including the rights, preferences and privileges of the Company’s Series A
Convertible Preferred Stock, no shares of Common Stock or any other security of
the Company are entitled to preemptive rights, registration rights, rights of
first refusal or similar rights and there are no outstanding options, warrants,
scrip, rights to subscribe to, call or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company.  Furthermore, except (i) as set forth in this
Agreement, (ii) for stock options and restricted stock issued by the Company to
its employees, directors and consultants, (iii) as set forth in the Commission
Documents (as defined in Section 2.1(f)), and (iv) as set forth on Schedule 2.1(c) ,
there are no contracts, commitments, understandings, or arrangements by which
the Company is or may become bound to issue additional shares of the capital
stock of the Company or options, securities or rights convertible into shares of
capital stock of the Company.  Except for customary transfer
restrictions contained in agreements entered into by the Company in order to
sell restricted securities or as provided in the Registration Rights Agreement
or except as set forth in the Commission Documents or on Schedule 2.1(c), the
Company is not a party to or bound by any agreement or understanding granting
registration or anti-dilution rights to any person with respect to any of its
equity or debt securities.  Except as set forth in the Commission
Documents and on Schedule 2.1(c), the
Company is not a party to, and it has no Knowledge of, any agreement or
understanding restricting the voting or transfer of any shares of the capital
stock of the Company.  Except as disclosed in the Commission Documents
or on Schedule
2.1(c), (i) there are no outstanding debt securities, or other form of
material debt of the Company or any of its Subsidiaries, (ii) there are no
contracts, commitments, understandings, agreements or arrangements under which
the Company or any of its Subsidiaries is required to register the sale of any
of their securities under the Securities Act, (iii) there are no outstanding
securities of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings, agreements 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, (iv) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities, (v) the Company does not have any stock appreciation rights or
“phantom stock” plans or agreements, or any similar plan or agreement and (vi)
as of the date of this Agreement, to the Company’s and each of its Subsidiaries’
Knowledge, no Person (as defined below) or group of related Persons beneficially
owns (as determined pursuant to Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the “Exchange Act”)) or
has the right to acquire by agreement with or by obligation binding upon the
Company, beneficial ownership of in excess of 10% of the Common
Stock.  Any Person with any right to purchase securities of the
Company that would be triggered as a result of the transactions contemplated
hereby or by any of the other Transaction Documents has waived such rights or
the time for the exercise of such rights has passed, except where failure of the
Company to receive such waiver would not have a Material Adverse
Effect.  Except as set forth in the Commission Documents, on Schedule 2.1(c) or
the rights, preferences and privileges of the Company’s Series A Convertible
Preferred Stock, there are no options, warrants or other outstanding securities
of the Company (including, without limitation, any equity securities issued
pursuant to any Company Plan) the vesting of which will be accelerated by the
transactions contemplated hereby or by any of the other Transaction
Documents.  Except as set forth in Schedule 2.1(c), none
of the transactions contemplated by this Agreement or by any of the other
Transaction Documents shall cause, directly or indirectly, the acceleration of
vesting of any options issued pursuant the Company’s stock option
plans.  For purposes of this Agreement, “Knowledge” means (i)
the actual knowledge of those officers of the Company required to file
statements relating to their ownership of the Company’s securities pursuant to
Section 16 of the Exchange Act, and (ii) with respect to each Subsidiary, the
executive officers of such Subsidiary.

    


    
      
        
           


        

        
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    (d) Issuance of
Securities.  The Preferred Shares and the Series E-1 Shares
and/or Common Shares to be issued at the Closing have been duly authorized by
all necessary corporate action and, when paid for and issued in accordance with
the terms hereof, and subject to and in reliance on the representations,
warranties and covenants of the Purchasers made herein, the Preferred Shares and
the Series E-1 Shares and/or Common Shares will be validly issued, fully paid
and nonassessable and free and clear of all liens, encumbrances and rights of
refusal of any kind and the holders shall be entitled to all rights accorded to
a holder of Series A .

     

    (e) 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 do not and will not (i) violate any
provision of the Company's Articles of Incorporation (the “Articles”) or Bylaws
(the “Bylaws”),
each as amended to date, or any Subsidiary's comparable charter documents, (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,
mortgage, deed of trust, indenture, note, bond, license, lease agreement,
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries' respective properties
or assets are bound, or (iii) result in a violation of any federal, state or
local statute, rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations) 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 all cases, other than violations
pursuant to clauses (i) or (iii) (with respect to federal and state securities
laws) above, for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect.  Neither the Company nor
any of its Subsidiaries is required under federal, state, foreign or local law,
rule or regulation to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under the Transaction
Documents or issue and sell the Securities in accordance with the terms hereof
(other than any filings, consents and approvals which may be required to be made
by the Company under applicable state and federal securities laws, or
rules).

     

    (f) Commission Documents,
Financial Statements.  The Common Stock of the Company is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and, except
as disclosed on Schedule 2.1(f) , the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange Commission
(the “Commission”) pursuant
to the reporting requirements of the Exchange Act, including pursuant to
Sections 13, 14 or 15(d) thereof (all of the foregoing and all exhibits included
therein and financial statement and schedules thereto, including filings
incorporated by reference therein being referred to herein as the “Commission
Documents”).  At the times of their respective filings, the
Form 10-Q for the fiscal quarters ended March 31, June 30 and September 30, 2008
(collectively, the “Form 10-Q”) and the
Form 10-KSB for the fiscal year ended December 31, 2007 (the “Form 10-K”) complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and, to the Knowledge
of the Company, the Form 10-Q and Form 10-K at the time of their respective
filings did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in 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 Commission Documents complied as to
form and substance in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto.  Such financial
statements, together with the related notes and schedules thereto, have been
prepared in accordance with GAAP applied on a consistent basis 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 not include footnotes or may be condensed or
summary statements), and fairly present in all material respects the financial
position of the Company and its Subsidiaries as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit
adjustments).

    


    
      
        
           


        

        
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    (g) Subsidiaries.  The
Commission Documents or Schedule
2.1(g)  sets forth each Subsidiary of the Company, showing the
jurisdiction of its incorporation or organization and showing the percentage of
each person's ownership of the outstanding stock or other interests of such
Subsidiary.  For the purposes of this Agreement, “Subsidiary” shall
mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries.  All of the outstanding shares of
capital stock of each Subsidiary have been duly authorized and validly issued,
and are fully paid and nonassessable.  Except as set forth in the Commission Documents,
there is no
outstanding preemptive, conversion or other rights, options, warrants or
agreements granted or issued by or binding upon any Subsidiary for the purchase
or acquisition of any shares of capital stock of any Subsidiary or any other
securities convertible into, exchangeable for or evidencing the rights to
subscribe for any shares of such capital stock.  Neither the Company
nor any Subsidiary is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of the capital stock of any
Subsidiary or any convertible securities, rights, warrants or options of the
type described in the preceding sentence except as set forth on Schedule
2.1(g)  or in the Commission Documents.  Except as
set forth in the Commission Documents, neither the Company nor any Subsidiary is
party to, nor has any Knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of any
Subsidiary.

     

    (h) No Material Adverse
Change.  Since September 30, 2008, the Company has not
experienced or suffered any Material Adverse Effect, except as disclosed in the
Commission Documents or on Schedule
2.1(h).

     

    (i) No Undisclosed
Liabilities.  Except as disclosed in the Commission Documents
or on Schedule
2.1(i) , since September 30, 2008, neither the Company nor any of its
Subsidiaries has incurred any liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or otherwise) that would be required to
be disclosed on a balance sheet of the Company or any Subsidiary (including the
notes thereto) in conformity with GAAP and are not disclosed in the Commission
Documents, other than those incurred in the ordinary course of the
Company's or its Subsidiaries respective businesses or which, individually or in
the aggregate, are not reasonably likely to have a Material Adverse
Effect.  Since September 30, 2008, except as disclosed in Commission
Documents or on Schedule
2.1(i) , none of the Company or any of its Subsidiaries has
participated in any transaction material to the condition of the Company which
is outside of the ordinary course of its business.

     

    (j) No Undisclosed Events or
Circumstances.  Since September 30, 2008, except as disclosed
in the Commission Documents or on Schedule 2.1(j) , no
event or circumstance has occurred or exists with respect to the Company or its
Subsidiaries or their respective businesses, properties, operations or financial
condition, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed and which, individually or in the aggregate, would have a
Material Adverse Effect.

     

    (k) Indebtedness.  The
Commission Documents or Schedule
2.1(k)  sets forth as of the date hereof all outstanding
secured and unsecured Indebtedness of the Company or any Subsidiary, or for
which the Company or any Subsidiary has commitments.  For the purposes
of this Agreement, “Indebtedness” shall
mean (a) any liabilities for borrowed money or amounts owed in excess of
$100,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in
respect of liabilities for borrowed money of others in excess of $100,000,
whether or not the same are or should be reflected in the Company’s balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; and (c) the present value of any lease payments in excess of
$25,000 due under leases required to be capitalized in accordance with
GAAP.  Neither the Company nor any Subsidiary is in default with
respect to any Indebtedness.


    
      
        
           


        

        
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    (l) Title to
Assets.  Each of the Company and the Subsidiaries has good and
marketable title to all of its real
and personal property reflected in the Commission Documents that is material to the business of the
Company, free and clear of any
mortgages, pledges, charges, liens, security interests or other encumbrances,
except for those indicated in the Commission Documents or on Schedule
2.1(l)  or such that, individually or in the aggregate, do not
cause a Material Adverse Effect, and except for
Permitted Liens.  All such leases of the Company and each of
its Subsidiaries are valid and subsisting and in full force and effect in all material respects.  “Permitted Liens” means (i) statutory liens for taxes, assessments and
other governmental charges which are not yet due and payable or are due but not
delinquent or are being contested in good faith by appropriate proceedings, (ii)
statutory or common law liens to secure landlords, sublandlords, licensors or
sublicensors under leases or rental agreements, (iii) deposits or pledges made
in connection with, or to secure payment of, workers’ compensation, unemployment
insurance, old age pension or other social security programs mandated under
applicable laws, (iv) statutory or common law liens in favor of carriers,
warehousemen, mechanics, workmen, repairmen and materialmen to secure claims for
labor, materials or supplies and other like liens, (v) restrictions on transfer
of securities imposed by applicable state and federal securities laws, (vi) any
other encumbrance affecting any asset which does not materially impede or
otherwise affect the ownership or operation of such asset, (vii) liens resulting
from a filing by a lessor as a precautionary filing for a true lease, (viii)
deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds an other obligations of
a like nature incurred in the ordinary course of business, (ix) vendor’s liens
to secure payment, or (x) rights or claims of customers or tenants under
licenses or leases.

     

    (m) Actions
Pending.  Except as set forth in
the Commission Documents or on Schedule 2.1(m) , there is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding or other
proceeding pending or, to the Knowledge of
the Company, threatened against the Company or any Subsidiary which questions
the validity of this Agreement or any of the other Transaction Documents or any
of the transactions contemplated hereby or thereby or any action taken or to be
taken pursuant hereto or thereto.  Except as set forth in the
Commission Documents or on Schedule 2.1(m),
there is no action, suit, claim, investigation, arbitration, alternate dispute
resolution proceeding or other proceeding pending or, to the Knowledge of the Company, threatened against or
involving the Company, any Subsidiary or any of their respective properties or
assets, which individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.  Except
as set forth in the Commission Documents, there are no outstanding
orders, judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against the Company or any Subsidiary or any
officers or directors of the Company or any Subsidiary in their capacities as
such, which individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.

     

    (n) Compliance with
Law.  The business of the Company and the Subsidiaries has been
and is presently being conducted in accordance with all applicable federal,
state and local governmental laws, rules, regulations and ordinances, except as
set forth in the Commission Documents or on Schedule
2.1(n)  or such that, individually or in the aggregate, the
noncompliance therewith would not reasonably be expected to have a Material
Adverse Effect.  The Company and each of its Subsidiaries have all
franchises, permits, licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of its business as now
being conducted by it unless the failure to possess such franchises, permits,
licenses, consents and other governmental or regulatory authorizations and
approvals, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

    


    
      
        
           


        

        
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    (o) Taxes.  Except
as set forth in the Commission Documents or on Schedule 2.1(o) ,
and except for matters that would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect, the Company and each of the Subsidiaries has
accurately prepared and filed all federal, state and other tax returns required
by law to be filed by it, has paid all taxes shown to be due and all additional
assessments, and adequate provisions have been and are reflected in the
financial statements of the Company and the Subsidiaries for all current taxes
and other charges to which the Company or any Subsidiary is subject and which
are not currently due and payable.  Except as disclosed on Schedule 2.1(o), none
of the federal income tax returns of the Company or any Subsidiary has been
audited by the Internal Revenue Service.  The Company has no Knowledge
of any additional assessments, adjustments or contingent tax liability (whether
federal or state) of any nature whatsoever, whether pending or threatened
against the Company or any Subsidiary for any period, nor of any basis for any
such assessment, adjustment or contingency.

     

    (p) Certain
Fees.  Except as set forth on Schedule 2.1(p), the
Company has not employed any broker or finder or incurred any liability for any
brokerage or investment banking fees, commissions, finders' structuring fees,
financial advisory fees or other similar fees in connection with the Transaction
Documents.

     

    (q) Disclosure.  Neither
this Agreement or the Schedules  nor any other documents, certificates
or instruments furnished to the Purchasers by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements made herein or therein, in the
light of the circumstances under which they were made herein or therein, not
misleading.

     

    (r) Operation of
Business.  The Company and each of the Subsidiaries owns or
possesses the rights to use all patents, trademarks, domain names (whether or
not registered) and any patentable improvements or copyrightable derivative
works thereof, websites and intellectual property rights relating thereto,
service marks, trade names, copyrights, licenses and authorizations which are
necessary for the conduct of its business as now conducted, which the failure to
so have would reasonably be expected to have a Material Adverse
Effect.  Except as set forth in the Commission Documents, neither the
Company nor any Subsidiary has received written notice that the intellectual
property rights used by the Company or any Subsidiary, and necessary for their
respective business, violates or infringes upon the rights of any third
party.

    


    
      
        
           


        

        
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    (s) Environmental
Compliance.  Except as disclosed in the Commission Documents or
on Schedule
2.1(s) , the Company and each of its Subsidiaries have obtained all
material approvals, authorization, certificates, consents, licenses, orders and
permits or other similar authorizations of all governmental authorities, or from
any other person, that are required under any Environmental Laws, except where failure to obtain such material
approvals, authorization, certificates, consents, licenses, orders and permits
or other similar authorizations would not individually or in the aggregate have
a Material Adverse Effect.  “Environmental Laws”
shall mean all applicable laws relating to the protection of the environment
including, without limitation, all requirements pertaining to reporting,
licensing, permitting, controlling, investigating or remediating emissions,
discharges, releases or threatened releases of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in
nature.  Except as set forth in the
Commission Documents or on Schedule 2.1(s), the
Company has all necessary governmental approvals required under all
Environmental Laws and used in its business or in the business of any of its
Subsidiaries, except for such instances as would not individually or in the
aggregate have a Material Adverse Effect.  Except as disclosed in the
Commission Documents, the Company and each of its
Subsidiaries are also in compliance with all other limitations, restrictions,
conditions, standards, requirements, schedules and timetables required or
imposed under all Environmental Laws, except where
failure to be in compliance would not individually
or in the aggregate have a Material Adverse Effect.   Except as
disclosed in the Commission Documents or for such instances as would not
individually or in the aggregate have a Material Adverse Effect, there are no
past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its Subsidiaries
that violate or would be reasonably likely to violate any Environmental Law
after the Closing or that would be reasonably likely to give rise to any
environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including, without limitation,
underground storage tanks), disposal, transport or handling, or the emission,
discharge, release or threatened release of any hazardous
substance.

     

    (t) Books and Records; Internal
Accounting Controls.  The records and documents of the Company
and its Subsidiaries accurately reflect in all material respects the information
relating to the business of the Company and its Subsidiaries, the location and
collection of their assets, and the nature of all transactions giving rise to
the obligations or accounts receivable of the Company or any
Subsidiary.  The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate actions are taken with respect to any
differences and (v) accounts, notes and other receivables and inventory are
recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis.  Except
as set forth on Schedule
2.1(t)  or in the Commission Documents, there are no
significant deficiencies or material weaknesses in the design or operation of
internal controls over financial reporting that would reasonably be expected to
materially and adversely affect the Company’s ability to record, process,
summarize and report financial information, and there is no fraud, whether or
not material, that involves management or, to the Knowledge of the Company,
other employees who have a significant role in the Company’s internal controls
and the Company has provided to the Purchaser copies of any written materials
relating to the foregoing.


    
      
        
           


        

        
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    (u) Material
Agreements.  Except for the Transaction Documents (with respect
to clause (i) of this Section 2.1(u) only) or as set forth in the Commission
Documents or on Schedule 2.1(u) , or
as would not be reasonably likely to have a Material Adverse Effect, (i) the
Company and each of its Subsidiaries have performed all obligations required to
be performed by them to date under any written or oral contract, instument,
agreement, commitment, obligation, plan or arrangement, filed or required to be
filed with the Commission (the “Material
Agreements”), (ii) neither the Company nor any of its Subsidiaries has
received any notice of default under any Material Agreement and, (iii) to the
Company's Knowledge, neither the Company nor any of its Subsidiaries is in
default under any material provision of any Material Agreement.

     

    (v) Transactions with
Affiliates.  Except as set forth in the Commission Documents or
on Schedule
2.1(v) , there are no loans, leases, agreements, contracts, royalty
agreements, management contracts or arrangements or other continuing
transactions exceeding $50,000 in value between (a) the Company, any Subsidiary
or any of their respective customers or suppliers on the one hand, and (b) on
the other hand, any officer, employee, consultant or director of the Company, or
any of its Subsidiaries (except for reimbursements to such persons for
reasonable expenses incurred on behalf of the Company or any Subsidiary, or
arrangements entered into by and between any such person and the Company or any
Subsidiary as part of the normal and customary terms of such person’s employment
or services as a director or consultant with the Company or any of its
Subsidiaries), or any person owning any capital stock of the Company or any
Subsidiary or any member of the immediate family of such officer, employee,
consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant, director or stockholder, or a
member of the immediate family of such officer, employee, consultant, director
or stockholder which, in each case, is required to be disclosed in the
Commission Documents or in the Company’s most recently filed definitive proxy
statement on Schedule 14A, that is not so disclosed in the Commission Documents
or in such proxy statement.

     

    (w) Securities Act of
1933.  Subject to the accuracy and completeness of the
representations and warranties of the Purchasers contained in the Transaction
Documents, the Company has complied and will comply with all applicable federal
and state securities laws in connection with the offer, issuance and sale of the
Securities hereunder.  Neither the Company nor anyone acting on its
behalf, directly or indirectly, has or will sell, offer to sell or solicit
offers to buy any of the Securities or similar securities to, or solicit offers
with respect thereto from, or enter into any negotiations relating thereto with,
any person, or has taken or will take any action so as to bring the issuance and
sale of any of the Securities under the registration provisions of the
Securities Act and applicable state securities laws, and neither the Company nor
any of its affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning
of Regulation D under the Securities Act) in connection with the offer or sale
of any of the Securities.

     

    (x) Governmental
Approvals.  Except as set forth on Schedule
2.1(x)  or disclosed in the Commission Documents, and except
for the filing of any notice prior or subsequent to the Closing that may be
required under applicable state and/or federal securities laws (which if
required, shall be filed on a timely basis), no authorization, consent,
approval, license, exemption of, filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is or will be necessary for, or in connection with, the
execution or delivery of the Securities, or for the performance by the Company
of its obligations under the Transaction Documents except for such
authorizations, consents, approvals, licenses, exemptions, filings or
registrations the Company’s failure of which to obtain would not, individually
or in the aggregate, constitute a Material Adverse Effect.

    


    
      
        
           


        

        
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    (y) Employees.  Neither
the Company nor any Subsidiary has any collective bargaining arrangements or
agreements covering any of its employees, except as set forth on Schedule
2.1(y)  or disclosed in the Commission
Documents.  Except as set forth on Schedule
2.1(y)  or disclosed in the Commission Documents, neither the
Company nor any Subsidiary has any employment contract, agreement regarding
proprietary information, non-competition agreement, non-solicitation agreement,
confidentiality agreement, or any other similar contract or restrictive
covenant, relating to the right of any officer, employee or consultant to be
employed or engaged by the Company or such Subsidiary required to be disclosed
in the Commission Documents that is not so disclosed.  Since September
30, 2008, no officer, consultant or key employee of the Company or any
Subsidiary whose termination, either individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect, has terminated, or
indicated to the Company his or her intent to terminate, his or her employment
or engagement with the Company or any Subsidiary.

     

    (z) Labor Relations.  Except as set forth in the
Commission Documents or as could not reasonably be
expected to have a Material Adverse Effect, (i) neither the Company nor any of
its Subsidiaries is engaged in any unfair labor practice, (ii) there is no
strike, labor dispute, slowdown or stoppage pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, and (iii)
neither the Company nor any of its Subsidiaries is a party to any collective
bargaining agreement or contract.

     

    (aa) Absence of Certain
Developments.  Except as disclosed in the Commission Documents
or on Schedule
2.1(aa), since September 30, 2008, neither the Company nor any Subsidiary
has:

    


    (i) issued
any stock, bonds or other corporate securities or any right, options or warrants
with respect thereto other than under the Company’s stock option plan(s) and
otherwise in the ordinary course of business;

     

    (ii) borrowed
any amount or incurred or become subject to any liabilities (absolute or
contingent) except current liabilities incurred in the ordinary course of
business which are comparable in nature and amount to the current liabilities
incurred in the ordinary course of business during the comparable portion of its
prior fiscal year, as adjusted to reflect the current nature and volume of the
Company’s or such Subsidiary’s business;

     

    (iii) discharged
or satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent), other than Permitted Liens and current liabilities
paid in the ordinary course of business;

     

    (iv) declared
or made any payment or distribution of cash or other property to stockholders
with respect to its stock, or purchased or redeemed, or made any agreements so
to purchase or redeem, any shares of its capital stock other than under any
equity incentive plans of the Company;

     

    (v) sold,
assigned or transferred any other tangible assets, or canceled any debts or
claims, except in the ordinary course of business;

     

    (vi) sold,
assigned or transferred any patent rights, trademarks, trade names, copyrights,
trade secrets or other intangible assets or intellectual property rights
necessary for the conduct of its business as presently conducted;

     

    (vii) suffered
any material losses or waived any rights of material value, whether or not in
the ordinary course of business;

    


    
      
        
           


        

        
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    (viii) made any
changes in employee compensation except in the ordinary course of business and
consistent with past practices;

     

    (ix) made
capital expenditures or commitments therefor that aggregate in excess of
$100,000;

     

    (x) made
charitable contributions or pledges in excess of $10,000;

     

    (xi) experienced
any material problems with labor or management in connection with the terms and
conditions of their employment; or

     

    (xii) entered
into an agreement, written or otherwise, to take any of the foregoing
actions.

     

    (bb) Public Utility Holding
Company Act and Investment Company Act Status.  The Company is
not a “holding company” or a “public utility company” as such terms are defined
in the Public Utility Holding Company Act of 1935, as amended.  The
Company is not, and as a result of and immediately upon the Closing will not be,
an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
amended.

     

    (cc) ERISA.  Except
as set forth in the Commission Documents, no liability to the Pension Benefit
Guaranty Corporation has been incurred with respect to any Plan by the Company
or any of its Subsidiaries which is or would be materially adverse to the
Company and its Subsidiaries.  The execution and delivery of this
Agreement and the issuance and sale of the Securities will not involve any
transaction which is subject to the prohibitions of Section 406 of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) or in
connection with which a tax could be imposed pursuant to Section 4975 of the
Internal Revenue Code of 1986, as amended, provided that, if any of the
Purchasers, or any person or entity that owns a beneficial interest in any of
the Purchasers, is an “employee pension benefit plan” (within the meaning of
Section 3(2) of ERISA) with respect to which the Company is a “party in
interest” (within the meaning of Section 3(14) of ERISA), the requirements of
Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met.  As
used in this Section 2.1(cc), the term “Plan” shall mean an “employee pension
benefit plan” (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or any Subsidiary or by any trade or business, whether or not
incorporated, which, together with the Company or any Subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.

     

    
      
        
           


        

        
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    (dd) Independent Nature of
Purchasers.  The Company acknowledges that the obligations of
each Purchaser under the Transaction Documents are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under the
Transaction Documents and the Company shall not be excused from performance of
its obligations to any Purchaser under the Transaction Documents as a result of
nonperformance or breach by any other Purchaser.  The Company
acknowledges that the decision of each Purchaser to purchase Securities pursuant
to this Agreement has been made by such Purchaser independently of any other
purchaser and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company or of its Subsidiaries which may have made or given by
any other Purchaser or by any agent or employee of any other
Purchaser.  The Company acknowledges that nothing contained herein, or
in any Transaction Document, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Documents.  The Company acknowledges that each Purchaser
shall be entitled to independently protect and enforce its rights, including
without limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such
purpose.  

     

    (ee) Anti-takeover
Device.  Neither the Company nor
any of its Subsidiaries has any outstanding shareholder rights plan or “poison
pill” or any similar arrangement.  There are no provisions of any anti-takeover
or business combination statute applicable
to the Company, the Articles and the Bylaws which would preclude the issuance and sale of the Securities,
and the consummation of the other transactions contemplated by this Agreement or
any of the other Transaction Documents.

     

    (ff) No Integrated
Offering.  Assuming the accuracy of the Purchasers’
representations and warranties herein, neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offering of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the Securities Act which would prevent the Company
from selling the Securities pursuant to Regulation D and Rule 506 thereof under
the Securities Act, or any applicable exchange-related stockholder approval
provisions, nor will the Company or any of its affiliates or Subsidiaries take
any action or steps that would cause the offering of the Securities to be
integrated with other offerings if such other offering, if integrated, would
cause the offer and sale of the Securities not to be exempt from registration
pursuant to Regulation D and Rule 506 thereof under the Securities
Act.  Except as set forth on Schedule 2.1(ff) ,
the Company does not have any registration statement pending before the
Commission or currently under the Commission’s review and since December 1,
2007, the Company has not offered or sold any of its equity securities or debt
securities convertible into shares of Common Stock.

     

    (gg) Sarbanes-Oxley
Act.  The Company is in compliance with the applicable provisions of
the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”),
and the rules and regulations promulgated thereunder, that are effective and for
which compliance by the Company is required as of the date hereof.

     

    (hh) DTC
Status.  The Company’s current transfer agent is a participant
in and the Common Stock is eligible for transfer pursuant to the Depository
Trust Company Automated Securities Transfer Program.  The name,
address, telephone number, fax number, contact person and email address of the
Company’s transfer agent is set forth on Schedule
2.1(hh).


    
      
        
           


        

        
          -14-

          
            

          

        

        
           


        

      

    

     

    (ii) Insurance.  The
Company and its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged (not including directors and officers insurance
coverage).  Such insurance contracts and policies are accurate and
complete in all material respects.  Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.

     

    Section
2.2 Representations and
Warranties of the Purchasers.  Each of the Purchasers hereby
represents and warrants to the Company with respect solely to itself and not
with respect to any other Purchaser as follows as of the date hereof, except as
set forth on the Schedule of Exceptions attached hereto with each numbered
schedule corresponding to the section number herein:

     

    (a) Organization and Standing of
the Purchasers.  If the Purchaser is an entity, such Purchaser
is a corporation, limited liability company or partnership duly incorporated or
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.

     

    (b) Authorization and
Power.  Such Purchaser has the requisite power and authority to
enter into and perform its obligations under the Transaction Documents and to
purchase the Securities being sold to it hereunder.  The execution,
delivery and performance of the Transaction Documents by such Purchaser and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate, partnership or other action, and no
further consent or authorization of such Purchaser or its Board of Directors,
stockholders, partners or members, as the case may be, is
required.  When executed and delivered by the Purchasers, the
Transaction Documents shall constitute valid and binding obligations of such
Purchaser enforceable against such Purchaser in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditor's rights and remedies or by other equitable principles of general
application.

     

    (c) No
Conflict.  The execution, delivery and performance of the
Transaction Documents by such Purchaser and the consummation by such Purchaser
of the transactions contemplated thereby and hereby do not and will not (i)
violate any provision of such Purchaser’s charter or organizational documents,
(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, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which such Purchaser is a party or by
which such Purchaser’s respective properties or assets are bound, or (iii)
result in a violation of any federal, state, local or foreign statute, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to such Purchaser or by which any property or
asset of such Purchaser are bound or affected, except, in all cases, other than
violations pursuant to clauses (i) or (iii) (with respect to federal and state
securities laws) above, for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, materially and adversely affect such Purchaser’s ability to perform
its obligations under the Transaction Documents.


    
      
        
           


        

        
          -15-

          
            

          

        

        
           


        

      

    

     

    (d) Acquisition for
Investment.  Such Purchaser is purchasing
the Securities solely for its own
account for the purpose of investment and not with a view to or for sale in
connection with distribution.  Such Purchaser does not have
a present intention to sell any of the Securities, nor a present arrangement (whether or
not legally binding) or intention to effect any distribution of any of the Securities to or through any person
or entity; provided, however, that by
making the representations herein, such Purchaser does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with the terms and provisions of the
Transaction Documents and Federal and state securities laws applicable to
such disposition.  Such Purchaser acknowledges that (i) it has such knowledge and experience in financial
and business matters such that Purchaser is capable of evaluating the merits and
risks of Purchaser's investment in the Company, (ii) it is able to bear the financial risks associated
with an investment in the Securities, (iii) it
has been given full access to such records of the Company and the
Subsidiaries and to the officers of the Company and the Subsidiaries as it has
deemed necessary or appropriate to conduct its due diligence investigation, (iv) it has reviewed or received copies of the
Commission Documents, (v) it and has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Securities, (vi) except for this
Agreement and the transactions contemplated hereby, neither the Company nor its
employees have disclosed to such Purchaser any material non-public information
that, according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to the date hereof but which has not
been so disclosed, and (vii) it (and not the Company) shall be responsible for
its own tax liabilities that may arise as a result of this investment or the
transactions contemplated by this Agreement.  Purchaser has the
financial capability to perform all of its obligations under this Agreement,
including the financial capability to purchase the Securities.

     

    (e) Rule
144.  Such Purchaser understands that the Securities must be
held indefinitely unless such Securities are registered under the Securities Act
or an exemption from registration is available.  Such Purchaser
acknowledges that such person is familiar with Rule 144 of the rules and
regulations of the Commission, as amended, promulgated pursuant to the
Securities Act (“Rule
144”), and that such Purchaser has been advised that Rule 144 permits
resales only under certain circumstances.  Such Purchaser understands
that to the extent that Rule 144 is not available, such Purchaser will be unable
to sell any Securities without either registration under the Securities Act or
the existence of another exemption from such registration
requirement.

     

    (f) General.  Such
Purchaser understands that the Securities are being offered and sold in reliance
on a transactional exemption from the registration requirements of federal and
state securities laws and the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth herein in order to determine the applicability of
such exemptions and the suitability of such Purchaser to acquire the
Securities.  Such Purchaser understands that no United States federal
or state agency or any government or governmental agency has passed upon or made
any recommendation or endorsement of the Securities.

     

    (g) No General
Solicitation.  Such Purchaser acknowledges that the Securities
were not offered to such Purchaser by means of any form of general or public
solicitation or general advertising, or publicly disseminated advertisements or
sales literature, including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media, or
broadcast over television or radio, or (ii) any seminar or meeting to which such
Purchaser was invited by any of the foregoing means of
communications.  Such Purchaser, in making the decision to purchase
the Securities, has relied upon independent investigation made by it and the
representations, warranties, agreements, acknowledgments and understandings set
forth in the Transaction Documents and has not relied on any information or
representations made by third parties.


    
      
        
           


        

        
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    (h) Accredited
Investor.  Such Purchaser is an “accredited investor” (as
defined in Rule 501 of Regulation D), and such Purchaser has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in the Securities.  Such Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act and such Purchaser is not a broker-dealer.  Such Purchaser
acknowledges that an investment in the Securities is speculative and involves a
high degree of risk.

     

    (i) Certain
Fees.  The Purchasers have not employed any broker or finder or
incurred any liability for any brokerage or investment banking fees,
commissions, finders' structuring fees, financial advisory fees or other similar
fees in connection with the Transaction Documents.

     

    (j) Independent
Investment.  Except as may be disclosed in any filings with the
Commission by the Purchasers under Section 13 and/or Section 16 of the Exchange
Act, no Purchaser has agreed to act with any other Purchaser for the purpose of
acquiring, holding, voting or disposing of the Preferred Shares purchased
hereunder for purposes of Section 13(d) under the Exchange Act, and each
Purchaser is acting independently with respect to its investment in the
Securities.

     

    (k) No
Shorting.  No Purchaser has not engaged in any short sales of
any securities of the Company or instructed any third parties to engage in any
short sales of securities of the Company on its behalf prior to the Closing
Date.  Each Purchaser covenants and agrees that it will not be in a
net short position with respect to the shares of Common Stock issued or issuable
to it.

     

    (l) Not an
Affiliate.  Such Purchaser is not an officer, director or
“affiliate” (as defined in Rule 405 of the Securities Act) of the
Company.

     

    ARTICLE
III

     

    COVENANTS

     

    The
Company covenants with each Purchaser as follows, which covenants are for the
benefit of each Purchaser and their respective permitted assignees.

     

    Section
3.1 Securities
Compliance.  The Company shall notify the Commission in
accordance with its rules and regulations, of the transactions contemplated by
any of the Transaction Documents and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Securities to the
Purchasers, or their respective subsequent holders.

     

    Section
3.2 Inspection
Rights.  The Company shall permit, during normal business hours
and upon reasonable request and reasonable notice, each Purchaser or any
employees, agents or representatives thereof, so long as such Purchaser shall be
obligated hereunder to purchase the Preferred Shares or shall beneficially own
any Preferred Shares, for purposes reasonably related to such Purchaser's
interests as a stockholder to examine and make reasonable copies of the records
and books of account of, and visit and inspect the properties, assets,
operations and business of the Company and any Subsidiary, and to discuss the
affairs, finances and accounts of the Company and any Subsidiary with any of its
officers, consultants, directors, and key employees.


    
      
        
           


        

        
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    Section
3.3 Compliance with
Laws.  The Company shall comply, and cause each Subsidiary to
comply, with all applicable laws, rules, regulations and orders, noncompliance
with which would be reasonably likely to have a Material Adverse
Effect.

     

    Section
3.4 Keeping of Records and Books
of Account.  The Company shall keep and cause each Subsidiary
to keep adequate records and books of account, in which complete entries will be
made in accordance with GAAP consistently applied, reflecting all financial
transactions of the Company and its Subsidiaries.

     

    (a) 

     

    Section
3.5 Other
Agreements.  The Company shall not enter into any agreement in
which the terms of such agreement would restrict or impair the right or ability
of the Company or any Subsidiary to perform its material obligations under the
Transaction Documents.

     

    Section
3.6 Use of
Proceeds.  The net proceeds from the sale of the Preferred
Shares will be used by the Company for working capital and general corporate
purposes and not to redeem any Common Stock or securities convertible,
exercisable or exchangeable into Common Stock or to settle any outstanding
litigation.

    


    Section
3.7 Disclosure of Material
Information.  The Company covenants and agrees that neither it
nor any other person acting on its behalf has provided or will provide any
Purchaser or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior thereto such
Purchaser shall have executed a written agreement regarding the confidentiality
and use of such information.  The Company understands and confirms that
each Purchaser shall be relying on the foregoing representations in effecting
transactions in securities of the Company.

     

    Section
3.8 No Integrated
Offerings.  The Company shall not make any offers or
sales of any security (other than the Securities being offered or sold
hereunder) under circumstances that would require registration of the Securities
being offered or sold hereunder under the Securities Act.

     

    Section
3.9 Pledge of
Securities.  The Company acknowledges and agrees that the
Securities may be pledged by a Purchaser in connection with a bona fide margin agreement
or other loan or financing arrangement that is secured by the Common
Stock.  The pledge of Common Stock shall not be deemed to be a
transfer, sale or assignment of the Common Stock hereunder, and no Purchaser
effecting a pledge of Common Stock 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; provided that a Purchaser and
its pledgee shall be required to comply with the provisions of Article V hereof
in order to effect a sale, transfer or assignment of Common Stock to such
pledgee. At the Purchasers' expense, the Company hereby agrees to execute and
deliver such documentation as a pledgee of the Common Stock may reasonably
request in connection with a pledge of the Common Stock to such pledgee by a
Purchaser.

    


    
      
        
           


        

        
          -18-

          
            

          

        

        
           


        

      

    

     

    Section
3.10 Sarbanes-Oxley
Act.  The Company shall comply with the applicable provisions of the
Sarbanes-Oxley Act, and the rules and regulations promulgated thereunder, upon
the effectiveness of such provisions or the date by which compliance therewith
by the Company is required.

     

    ARTICLE
IV

     

    CONDITIONS

     

    Section
4.1 Conditions Precedent to the
Obligation of the Company to Close and to Sell the
Securities.  The obligation hereunder of the Company to close
and issue and sell the Securities to the Purchasers at each Closing Date is
subject to the satisfaction or waiver, at or before such Closing, of the
conditions set forth below.  These conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole
discretion.

     

    (a) Accuracy of the Purchasers’
Representations and Warranties.  The representations and
warranties of each Purchaser shall be true and correct in all material respects
(except for those representations and warranties that are qualified by
materiality or Material Adverse Effect, which shall be true and correct in all
respects) as of the date when made and as of the Closing Date, as though made at
that time, except for representations and warranties that are expressly made as
of a particular date, which shall be true and correct in all material respects
(except for those representations and warranties that are qualified by
materiality or Material Adverse Effect, which shall be true and correct in all
respects) as of such date.

     

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

     

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

     

    (d) Delivery of Purchase
Price.  The Purchasers shall have delivered to the Company the
applicable purchase price for the Preferred Shares to be purchased by each
Purchaser.

     

    (e) Delivery of Transaction
Documents.  The Transaction Documents shall have been duly
executed and delivered by the Purchasers and, with respect to the Escrow
Agreement, the escrow agent, to the Company.

     

    Section
4.2 Conditions Precedent to the
Obligation of the Purchasers to Close and to Purchase the
Securities.  The obligation hereunder of each Purchaser to
purchase the Securities and consummate the transactions contemplated by this
Agreement is subject to the satisfaction or waiver, at or before each Closing
Date, of each of the conditions set forth below.  These conditions are
for the Purchaser’s sole benefit and may be waived by the Purchaser at any time
in its sole discretion.

    


    
      
        
           


        

        
          -19-

          
            

          

        

        
           


        

      

    

     

    (a) Accuracy of the Company's
Representations and Warranties.  Each of the representations
and warranties of the Company in this Agreement and the other Transaction
Documents shall be true and correct in all material respects (except for those
representations and warranties that are qualified by materiality or Material
Adverse Effect, which shall be true and correct in all respects) as of the date
when made and as of the Closing Date as though made at that time, except for
representations and warranties that are expressly made as of a particular date,
which shall be true and correct in all material respects (except for those
representations and warranties that are qualified by materiality or Material
Adverse Effect, which shall be true and correct in all respects) as of such
date.

     

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

     

    (c) No Suspension,
Etc.  Trading in the Common Stock shall not have been suspended
by the Commission or the OTC Bulletin Board (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to the Closing), and, at any time prior to the Closing Date,
trading in securities generally as reported by Bloomberg Financial Markets
(“Bloomberg”)
shall not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by Bloomberg, or on the New
York Stock Exchange, nor shall a banking moratorium have been declared either by
the United States or New York State authorities.

     

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

     

    (e) No Proceedings or
Litigation.  No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any Subsidiary, or any of the officers, directors or affiliates
of the Company or any Subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.

     

    (f) Preferred Shares and Series
E-1 Shares.  At or prior to the Closing, the Company shall have
delivered to the Purchasers certificates representing the Preferred Shares (in
such denominations as each Purchaser may request) and the Series E-1 Shares
and/or Common Shares (in such denominations as each Purchaser may request) duly
executed by the Company, in each case, being acquired by the Purchasers at such
Closing.

     

    (g) Material Adverse
Effect.  No Material Adverse Effect shall have occurred at or
before the Closing Date.

     

    ARTICLE
V

     

    CERTIFICATE
LEGEND

     

    Section
5.1 Legend.  Each
certificate representing the Securities shall be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to any legend
required by applicable state securities or “blue sky” laws):

     

    
      
        
           


        

        
          -20-

          
            

          

        

        
           


        

      

    

    


    


    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR WORLD RACING GROUP, INC. SHALL HAVE RECEIVED AN OPINION
OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND
UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

     

    The
Company agrees to reissue certificates representing any of the Preferred Shares
and the Series E-1 Shares and/or Common Shares, without the legend set forth
above if at such time, prior to making any transfer of any such Preferred Shares
or Series E-1 Shares and/or Common Shares, such holder thereof shall give
written notice to the Company describing the manner and terms of such transfer
and removal as the Company may reasonably request.  Such proposed
transfer and removal will not be effected until: (a) either (i) the Company has
received an opinion of counsel reasonably satisfactory to the Company, to the
effect that the registration of the Preferred Shares or Series E-1 Shares and/or
Common Shares under the Securities Act is not required in connection with such
proposed transfer, (ii) a registration statement under the Securities Act
covering such proposed disposition has been filed by the Company with the
Commission and has become and remains effective under the Securities Act, (iii)
the Company has received other evidence reasonably satisfactory to the Company
that such registration and qualification under the Securities Act and state
securities laws are not required, or (iv) the holder provides the Company with
reasonable assurances that such security can be sold pursuant to Rule 144 under
the Securities Act; and (b) either (i) the Company has received an opinion of
counsel reasonably satisfactory to the Company, to the effect that registration
or qualification under the securities or “blue sky” laws of any state is not
required in connection with such proposed disposition, or (ii) compliance with
applicable state securities or “blue sky” laws has been effected or a valid
exemption exists with respect thereto.  The Company will respond to
any such notice from a holder within five (5) business days.  In the
case of any proposed transfer under this Section 5.1, the Company will use
reasonable efforts to comply with any such applicable state securities or “blue
sky” laws, but shall in no event be required, (x) to qualify to do business in
any state where it is not then qualified, or (y) to take any action that would
subject it to tax or to the general service of process in any state where it is
not then subject.  The restrictions on transfer contained in this
Section 5.1 shall be in addition to, and not by way of limitation of, any other
restrictions on transfer contained in any other section of this
Agreement.  Whenever a certificate representing the Preferred Shares
or Series E-1 Shares and/or Common Shares is required to be issued to a
Purchaser without a legend, in lieu of delivering physical certificates
representing the Preferred Shares or Series E-1 Shares and/or Common Shares,
provided the Company's transfer agent is participating in the Depository Trust
Company (“DTC”)
Fast Automated Securities Transfer program, the Company shall use its
commercially reasonable efforts to cause its transfer agent to electronically
transmit the Preferred Shares or Series E-1 Shares and/or Common Shares to a
Purchaser by crediting the account of such Purchaser's Prime Broker with DTC
through its Deposit Withdrawal Agent Commission (“DWAC”) system (to the
extent not inconsistent with any provisions of this Agreement).

     

    
      
        
           


        

        
          -21-

          
            

          

        

        
           


        

      

    

     

    ARTICLE
VI

     

    INDEMNIFICATION

     

    Section
6.1 Company
Indemnity.  The Company agrees to indemnify and hold harmless
the Purchasers (and their respective directors, officers, affiliates, agents,
successors and assigns) (each, a “Purchaser Indemnified
Party” and collectively, the “Purchaser Indemnified
Parties”) from and against any and
all losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys’ fees, charges and disbursements) (“Damages”) incurred by the Purchaser Indemnified Parties as a result of any
inaccuracy in or breach of the representations, warranties or covenants made by
the Company herein; provided, however, that the Company shall not be liable under this
Section 6.1 to a Purchaser Indemnified Party to the extent that such Damages
resulted or arose from the breach by a Purchaser Indemnified Party of any
representation, warranty, covenant or agreement of a Purchaser Indemnified Party
contained in the Transaction Documents or the gross negligence, recklessness,
willful misconduct or bad faith of a Purchaser Indemnified
Party.

     

    Section
6.2 Indemnification
Procedure.  Any party entitled to indemnification under this
Article VI (an “indemnified party”)
will give written notice to the indemnifying party of any matters giving rise to
a claim for indemnification; provided, that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under this Article VI except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice.  In case
any such action, proceeding or claim is brought against an indemnified party in
respect of which indemnification is sought hereunder, the indemnifying party
shall be entitled to participate in and, unless in the reasonable judgment of
the indemnifying party a conflict of interest between it and the indemnified
party exists with respect to such action, proceeding or claim (in which case the
indemnifying party shall be responsible for the reasonable fees and expenses of
one separate counsel for the indemnified parties), to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party.  In the
event that the indemnifying party advises an indemnified party that it will not
contest such a claim for indemnification hereunder, or fails, within thirty (30)
days of receipt of any indemnification notice to notify, in writing, such person
of its election to defend, settle or compromise, at its sole cost and expense,
any action, proceeding or claim (or discontinues its defense at any time after
it commences such defense), then the indemnified party may, at its option,
defend, settle or otherwise compromise or pay such action or
claim.  In any event, unless and until the indemnifying party elects
in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder.  The indemnified
party shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim.  The
indemnifying party shall keep the indemnified party fully apprised at all times
as to the status of the defense or any settlement negotiations with respect
thereto.  If the indemnifying party elects to defend any such action
or claim, then the indemnified party shall be entitled to participate in such
defense with counsel of its choice at its sole cost and expense.  The
indemnifying party shall not be liable for any settlement of any action, claim
or proceeding effected without its prior written consent which shall not be
unreasonably withheld.  Notwithstanding anything in this Article VI to
the contrary, the indemnifying party shall not, without the indemnified party's
prior written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof which imposes any future obligation on the
indemnified party or which does not include, as an unconditional term thereof,
the giving by the claimant or the plaintiff to the indemnified party of a
release from all liability in respect of such claim.  The
indemnification required by this Article VI shall be made by periodic payments
of the amount thereof during the course of investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred, so long as
the indemnified party irrevocably agrees to refund such moneys if it is
ultimately determined by a court of competent jurisdiction that such party was
not entitled to indemnification.  The indemnity agreements contained
herein shall be in addition to (a) any cause of action or similar rights of the
indemnified party against the indemnifying party or others, and (b) any
liabilities the indemnifying party may be subject to pursuant to the
law.

    


    
      
        
           


        

        
          -22-

          
            

          

        

        
           


        

      

    

     

    ARTICLE
VII

     

    MISCELLANEOUS

     

    Section
7.1 Fees and
Expenses.  Each party shall pay the fees and expenses of its
advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement, provided that the
Company shall pay all actual attorneys' fees and expenses (including
disbursements and out-of-pocket expenses) incurred by the Purchasers in
connection with (i) the preparation, negotiation, execution and delivery of this
Agreement, and the transactions contemplated thereunder, which payment shall be
made at the Initial Closing and shall not exceed [$__,000], and (ii) any
amendments, modifications or waivers of this Agreement or any of the other
Transaction Documents.  The Company and the Purchasers hereby agree
that the prevailing party in any suit, action or proceeding arising out of or
relating to the Securities, or this Agreement shall be entitled to reimbursement
for reasonable legal fees from the non-prevailing
party.  

     

    Section
7.2 Specific Performance;
Consent to Jurisdiction; Venue.

     

    (a) The
Company and the Purchasers acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the other
Transaction Documents are not performed in accordance with their specific terms
or are otherwise breached.  It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of this Agreement or the other Transaction Documents and to
enforce specifically the terms and provisions hereof or thereof, this being in
addition to any other remedy to which any of them may be entitled by law or
equity.

     

    (b) The
parties agree that venue for any dispute arising under this Agreement will lie
exclusively in the state or federal courts located in New York County, New York,
and the parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue.  The parties
irrevocably consent to personal jurisdiction in the state and federal courts of
the state of New York.  The Company and each Purchaser consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing in this Section 7.2
shall affect or limit any right to serve process in any other manner permitted
by law.  The Company and the Purchasers hereby agree that the
prevailing party in any suit, action or proceeding arising out of or relating to
the Securities, or this Agreement shall be entitled to reimbursement for
reasonable legal fees from the non-prevailing party.

     

    Section
7.3 Entire Agreement;
Amendment.  This Agreement and the Transaction Documents
contain the entire understanding and agreement of the parties with respect to
the matters covered hereby and, except as specifically set forth herein or in
the other Transaction Documents, neither the Company nor any Purchaser make any
representation, warranty, covenant or undertaking with respect to such matters,
and they supersede all prior understandings and agreements with respect to said
subject matter, all of which are merged herein.  Following the
Closing, no provision of this Agreement may be waived or amended other than by a
written instrument signed by the Company and the Purchasers holding at least a
majority of all Preferred Shares then held by the Purchasers.  Any
amendment or waiver effected in accordance with this Section 7.3 shall be
binding upon each Purchaser (and their permitted assigns) and the
Company.

    


    
      
        
           


        

        
          -23-

          
            

          

        

        
           


        

      

    

     

    Section
7.4 Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, by telecopy or facsimile (or other electronic transmission) at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur.  The addresses for such communications
shall be:

     

    If to the
Company:                                                      

     

    World
Racing Group, Inc.

    7575-D
West Winds Boulevard

    Concord,
North Carolina28027

    Attention:
Chief Executive Officer

    Tel. No.:
(704) 795-7223

    Fax No.:
(704) 795-7229

     

    with
copies (which copies shall not
constitute notice to the
Company)
to:                                                      

     

    Daniel W.
Rumsey

    6080
Center Drive, Suite 600

    Los
Angeles, California 90045

    Tel. No.:
(310) 242-5699

    Fax No.:
(310) 317-7484

     

    If to any
Purchaser:                                           At
the address of such Purchaser set forth on Exhibit A to this
Agreement.

    


    Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other parties hereto.

     

    Section
7.5 Waivers.  No
waiver by any party of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to it
thereafter.

     

    Section
7.6 Headings.  The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose and
shall not be deemed to limit or affect any of the provisions
hereof.

    


    
      
        
           


        

        
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    Section
7.7 Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns.  After the
Closing, the assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this
Agreement.  Subject to Section 5.1 hereof, the Purchasers may assign
the Securities and its rights under this Agreement and the other Transaction
Documents and any other rights hereto and thereto without the consent of the
Company; provided, however, that such
Purchaser shall not assign such Securities and such rights under this Agreement
and the other Transaction Documents to any known competitor of the
Company.  Notwithstanding the foregoing to the contrary, a Purchaser
may assign its rights as provided herein so long as (i) such Purchaser agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the rights and/or securities with respect to
which such rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws, (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section 7.7, the transferee
or assignee agrees in writing with the Company to be bound by all of the
provisions of this Agreement and the other Transaction Documents, and (v) such
transfer shall have been made in accordance with the applicable requirements of
this Agreement.

     

    Section
7.8 No Third Party
Beneficiaries.  Subject to the provisions of Article VI hereof,
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.

     

    Section
7.9 Governing
Law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction.  This
Agreement shall not be interpreted or construed with any presumption against the
party causing this Agreement to be drafted.

     

    Section
7.10 Survival.  The
representations and warranties of the Company and the Purchasers shall survive
the execution and delivery hereof and the Closing until the third anniversary of
the Closing Date.

     

    Section
7.11 Counterparts.  This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and shall become effective
when counterparts have been signed by each party and delivered to the other
parties hereto, it being understood that all parties need not sign the same
counterpart.

     

    Section
7.12 Publicity.  The
Company agrees that it will not disclose, and will not include in any public
announcement, the names of the Purchasers without the consent of the Purchasers,
which consent shall not be unreasonably withheld or delayed, or unless and until
such disclosure is required by law, rule or applicable regulation, and then only
to the extent of such requirement.


    
      
        
           


        

        
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    Section
7.13 Severability.  The
provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.

     

    Section
7.14 Further
Assurances.  From and after the date of this Agreement, upon
the request of the Purchasers or the Company, the Company and each Purchaser
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    


    
      
        
           


        

        
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    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.

     

    


    WORLD
RACING GROUP, INC.

    


    By:_/s/ Brian M.
Carter_____________________

    Name:  Brian
M. Carter

    Title:  Chief
Executive Officer

    


    


    VICIS
CAPITAL MASTER FUND

    


    


    By:_/s/ Keith W.
Hughes____________________

    Name:  Keith
W. Hughes

    Title:  Chief
Financial Officer

     

    


    
      
        
           


        

        
          -27-

          
            

          

        

        
           


        

      

    

    


    EXHIBIT
A

    LIST
OF PURCHASERS

    


    
      	
               
      

            	 


    

    
      
        
          	
                  Names
      and Addresses of
      Purchasers

                	
                  Number of Preferred Shares
      & Series E-1 Shares and/or
      Common Shares Purchased

                	 	
                  Dollar
      Amount Investment

                	 
	
                   

                  INITIAL CLOSING:

                   

                	 
      	 	 	 
	
                  Vicis
      Capital Master Fund

                  445
      Park Avenue, 16th Floor

                  New
      York, NY 10022

                  Attn:
      Keith Hughes

                  Phone:
      (212) 909-4600

                  Fax:
      (212) 909-4601

                   

                	
                  Preferred
      Shares:  350.00

                  Series
      E-1 Shares:  0

                  Common
      Shares: 9,975,000

                	 	$	3,500,000	 


        

      

    

    
 

    
      
        
           


        

        
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    EXHIBIT
B

    CERTIFICATE
OF DESIGNATION

    


    
      
        
           


        

        
          -29-

          
            

          

        

        
           


        

      

    

     

    
      CERTIFICATE
OF DESIGNATION OF THE RELATIVE RIGHTS AND PREFERENCES

      OF
THE

      10% CUMULATIVE PERPETUAL SERIES A
PREFERRED STOCK

      OF

      WORLD
RACING GROUP, INC.

      


      The
undersigned, the Chief Executive Officer of World Racing Group, Inc., a Delaware
corporation (the “Corporation”), in accordance with the provisions of the
Delaware General Corporation Law, does hereby certify that, pursuant to the
authority conferred upon the Board of Directors by the Certificate of
Incorporation of the Corporation, the following resolution creating a series of
10% Cumulative Perpetual Series A Preferred Stock, was duly adopted on December
22, 2008:

      


      RESOLVED,
that pursuant to the authority expressly granted to and vested in the Board of
Directors of the Corporation by provisions of the Certificate of Incorporation
of the Corporation (the “Certificate of Incorporation”), there hereby is created
out of the shares of Preferred Stock, par value $.01 per share, of the
Corporation authorized in Article IV of the Certificate of Incorporation (the
“Preferred Stock”), a series of Preferred Stock of the Corporation, to be named
“10% Cumulative Perpetual Series A Preferred Stock,,” consisting of One
Thousand, Five Hundred (1,500) shares, which series shall have the following
designations, powers, preferences and relative and other special rights and the
following qualifications, limitations and restrictions:

      


      1. ­Designation and
Rank.  The designation of such series of the Preferred Stock
shall be the 10% Cumulative Perpetual Series A Preferred Stock, par value $.01
per share (the “Series A Preferred Stock”).  The maximum number of
shares of Series A Preferred Stock shall be One Thousand, Five Hundred (1,500)
shares.  The Series A Preferred Stock shall rank senior to the common
stock, par value $.01 per share (the “Common Stock”), the Series E Convertible
Preferred Stock, and the Series E-1 Convertible Preferred Stock (together,
“Series E Preferred Stock”), for purposes of liquidation preference, and to all
other classes and series of equity securities of the Corporation that by their
terms do not rank senior to the Series A Preferred Stock (together with the
Series E Preferred Stock, hereinafter referred to as “Junior
Stock”).  The Corporation shall not create any series of equity
securities that by their terms rank senior or pari passu to the Series A
Preferred Stock, without the affirmative vote or consent of the holders of at
least three-fourths (3/4) of the shares of the issued and outstanding Series A
Preferred Stock.

      


      2. ­Dividends.


      
        
           


        

        
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                                 (a)            Rate. Holders of
Series A Preferred Stock shall be entitled to receive, on each share of Series A
Preferred Stock, out of funds legally available for the payment of dividends
under Delaware law, cumulative cash dividends with respect to each Dividend
Period (as defined below) at a per annum rate of 10% on (i) the amount of
$10,000 per share of Series A Preferred Stock and (ii) the amount of
accrued and unpaid dividends on such share of Series A Preferred Stock, if any
(giving effect to (A) any dividends paid through the Dividend Payment Date
(as defined below) that begins such Dividend Period (other than the initial
Dividend Period) and (B) any dividends (including dividends thereon at a
per annum rate of 10% to the date of payment) paid during such Dividend Period).
Such dividends shall begin to accrue and be cumulative from the date such share
of Series A Preferred Stock is issued (“Original Issue Date”), shall compound on
each Dividend Payment Date (i.e., no dividends shall accrue on other dividends
unless and until the first Dividend Payment Date for such other dividends has
passed without such other dividends having been paid on such date) and shall
accrue and be payable in arrears (as provided below in this Section 2(a)),
but only when, as and if declared by the Board of Directors on or before the
tenth business day after the end of each March 31, June 30,
September 31, and December 31, quarterly period (each, a “Dividend Payment
Date”), commencing on the date of each issuance of Series A Preferred Stock;
provided that if any
such Dividend Payment Date would otherwise occur on a day that is not a Business
Day, such Dividend Payment Date shall instead be (and any dividend payable on
Series A Preferred Stock  on such Dividend Payment Date shall instead
be payable on) the immediately succeeding business day. Dividends payable on the
Series A Preferred Stock in respect of any Dividend Period shall be computed on
the basis of a 360-day year consisting of twelve 30-day months. The amount of
dividends payable on the Series A Preferred Stock on any date prior to the end
of a Dividend Period, and for the initial Dividend Period, shall be computed on
the basis of a 360-day year consisting of twelve 30-day months, and actual days
elapsed over a 30-day month.

      


           Dividends
that are payable on Series A Preferred Stock on any Dividend Payment Date will
be payable to holders of record of Series A Preferred Stock as they appear on
the stock register of the Corporation on the applicable record date, which shall
be the 15th calendar day before such Dividend Payment Date (as originally
scheduled) or such other record date fixed by the Board of Directors that is not
more than 60 nor less than 10 days prior to such Dividend Payment Date
(each, a “Dividend Record Date”). Any such day that is a Dividend Record Date
shall be a Dividend Record Date whether or not such day is a Business
Day.

      


           Each
dividend period (a “Dividend Period”) shall commence on and include a Dividend
Payment Date (other than the initial Dividend Period, which shall commence on
and include the Original Issue Date of the Series A Preferred Stock) and shall
end on and include the calendar day next preceding the next Dividend Payment
Date. Dividends payable in respect of a Dividend Period shall be payable in
arrears on the first Dividend Payment Date after such Dividend
Period.

      


           Holders
of Series A Preferred Stock shall not be entitled to any dividends, whether
payable in cash, securities or other property, other than dividends (if any)
declared and payable on the Series A Preferred Stock as specified in this
Section 2 (subject to the other provisions of this Certificate of
Designations), out of funds legally available for the payment of dividends under
Delaware law.  In the event funds are not legally available for the
payment of dividends under Delaware law shall continue to accrue until such time
as such funds are available.


      
        
           


        

        
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                                 (b)            Priority of
Dividends. So long as any share of Series A Preferred Stock remains
outstanding, no dividend shall be declared or paid on the Common Stock or any
other shares of Junior Stock (other than a dividend payable solely in Junior
Stock), and no Common Stock or Junior Stock shall be purchased, redeemed or
otherwise acquired for consideration by the Corporation, directly or indirectly
(other than as a result of a reclassification of Junior Stock for or into other
Junior Stock, or the exchange or conversion of one share of Junior Stock for or
into another share of Junior Stock during a Dividend Period, unless all accrued
and unpaid dividends for all past Dividend Periods, including the latest
completed Dividend Period (including, if applicable as provided in Section 2(a)
above, dividends on such amount), on all outstanding shares of Series A
Preferred Stock have been declared and paid in full (or declared and a sum
sufficient for the payment thereof has been set aside for the benefit of the
holders of shares of Series A Preferred Stock on the applicable record
date).

      


           When
dividends are not paid (or declared and a sum sufficient for payment thereof set
aside for the benefit of the holders thereof on the applicable record date) on
any Dividend Payment Date in full upon the Series A Preferred Stock, all
dividends declared on the Series A Preferred Stock shall be declared pro rata so
that the respective amounts of such dividends declared shall bear the same ratio
to each other as all accrued and unpaid dividends per share on the Series A
Preferred Stock (including, if applicable as provided in Section 2(a) above,
dividends on such amount) bear to each other.

      


      3. ­Voting
Rights.

      


      (a) ­Class Voting
Rights.  The Series A Preferred Stock shall have the following
class voting rights.  So long as any shares of the Series A Preferred
Stock remain outstanding, the Corporation shall not, without the affirmative
vote or consent of the holders of at least three-fourths (3/4) of the shares of
the Series A Preferred Stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting, in which the holders of the Series A
Preferred Stock vote separately as a class: (i) amend, alter or repeal the
provisions of the Series A Preferred Stock so as to adversely affect any right,
preference, privilege or voting power of the Series A Preferred Stock; (ii)
effect any distribution with respect to Junior Stock; or (iii) authorize or
create, or increase the authorized amount of, any shares of any class or series
of capital stock of the Corporation ranking senior or pari-passu to the Series A
Preferred Stock with respect to either or both the payment of dividends and/or
the distribution of assets on any liquidation, dissolution or winding up of the
Corporation.

      


      (b) ­General Voting
Rights.  Except with respect to transactions upon which the
Series A Preferred Stock shall be entitled to vote separately as a class
pursuant to Section 3(a) above, the Series A Preferred Stock shall have no
voting rights.

      


      4. ­Liquidation
Preference.

      


      (a) In the
event of any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, holders of Series A
Preferred Stock shall be entitled to receive for each share of Series A
Preferred Stock, out of the assets of the Corporation or proceeds thereof
(whether capital or surplus) available for distribution to stockholders of the
Corporation, and after satisfaction of all liabilities and obligations to
creditors of the Corporation, before any distribution of such assets or proceeds
is made to or set aside for the holders of Common Stock and any other stock of
the Corporation ranking junior to the Series A Preferred Stock as to such
distribution, payment in full in an amount equal to the sum of (i) $10,000 per
share and (ii) the accrued and unpaid dividends thereon (including, if
applicable as provided in Section 3(a) above, dividends on such amount), whether
or not declared, to the date of payment.


      
        
           


        

        
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      (b) If in any
distribution described in Section 4(a) above the assets of the Corporation or
proceeds thereof are not sufficient to pay the Liquidation Preferences (as
defined below) in full to all holders of Series A Preferred Stock and all
holders of any stock of the Corporation ranking equally with the Series A
Preferred Stock as to such distribution, the amounts paid to the holders of
Series A Preferred Stock and to the holders of all such other stock shall
be paid pro rata in
accordance with the respective aggregate Liquidation Preferences of the holders
of Series A Preferred Stock and the holders of all such other stock. In any
such distribution, the “Liquidation Preference” of any holder of stock of the
Corporation shall mean the amount otherwise payable to such holder in such
distribution (assuming no limitation on the assets of the Corporation available
for such distribution), including an amount equal to any declared but unpaid
dividends (and, in the case of any holder of stock, including the Series A
Preferred Stock, on which dividends accrue on a cumulative basis, an amount
equal to any accrued and unpaid dividends (including, if applicable, dividends
on such amount), whether or not declared, as applicable), provided that the Liquidation
Preference for any share of Series A Preferred Stock shall be determined in
accordance with Section 4(a) above.

      


      (c) If the
Liquidation Preference has been paid in full to all holders of Series A
Preferred Stock, the holders of other stock of the Corporation shall be entitled
to receive all remaining assets of the Corporation (or proceeds thereof)
according to their respective rights and preferences.

      


      (d) For
purposes of this Section 4, the merger or consolidation of the Corporation
with any other corporation or other entity, including a merger or consolidation
in which the holders of Series A Preferred Stock receive cash, securities
or other property for their shares, or the sale, lease or exchange (for cash,
securities or other property) of all or substantially all of the assets of the
Corporation, shall not constitute a liquidation, dissolution or winding up of
the Corporation.

      


      5. ­Conversion.  The
holder of Series A Preferred Stock shall have no right to exchange or convert
such shares into any other securities without the written approval or consent of
the Corporation, and the affirmative vote or consent of the holders of at least
three-fourths (3/4) of the shares of the issued and outstanding Series A
Preferred Stock.

      


      6. ­Redemption
Rights.

      


      (a) Optional
Redemption. The Corporation, at its option, may redeem, in whole at any time or
in part from time to time, the shares of Series A Preferred Stock at the
time outstanding, upon notice given as provided in Section 6(c) below, at a
redemption price equal to the sum of (i) $10,000 per share and (ii) the
accrued and unpaid dividends thereon (including, if applicable as provided in
Section 3(a) above, dividends on such amount), whether or not declared, to the
redemption date, provided
that the minimum number of shares of Series A Preferred Stock redeemable
at any time is the lesser of (i) 1,000 shares of Series A Preferred Stock
and (ii) the number of shares of Series A Preferred Stock outstanding. The
redemption price for any shares of Series A Preferred Stock shall be payable on
the redemption date to the holder of such shares against surrender of the
certificate(s) evidencing such shares to the Corporation or its agent. Any
declared but unpaid dividends payable on a redemption date that occurs
subsequent to the Dividend Record Date for a Dividend Period shall not be paid
to the holder entitled to receive the redemption price on the redemption date,
but rather shall be paid to the holder of record of the redeemed shares on such
Dividend Record Date relating to the Dividend Payment Date as provided in
Section 3 above.


      
        
           


        

        
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      (b) No
Sinking Fund. The Series A Preferred Stock will not be subject to any mandatory
redemption, sinking fund or other similar provisions. Holders of Series A
Preferred Stock will have no right to require redemption of any shares of Series
A Preferred Stock; provided,
however, in the event of the sale of all or substantially all the assets
of the Corporation, or a material default of the Corporation’s obligations under
the senior secured promissory notes of the Corporation, due March 15, 2011, in
the aggregate principal amount of $15.0 million, which default has not otherwise
been waived by the holders thereof, the Corporation shall be obligated to redeem
the Series A Preferred Stock within thirty (30) days following the date of such
sale or default, as the case may be; provided, further, the
Corporation’s obligation to redeem the Series A Preferred Stock as set forth in
this Section 6(b) may be waived by the affirmative vote or consent of the
holders of at least three-fourths (3/4) of the shares of the issued and
outstanding Series A Preferred Stock.

      


      (c) Notice of
Redemption. Notice of every redemption of shares of Series A Preferred Stock
shall be given by first class mail, postage prepaid, addressed to the holders of
record of the shares to be redeemed at their respective last addresses appearing
on the books of the Corporation. Such mailing shall be at least 30 days and
not more than 60 days before the date fixed for redemption. Any notice
mailed as provided in this Subsection 6(c) shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice, but
failure duly to give such notice by mail, or any defect in such notice or in the
mailing thereof, to any holder of shares of Series A Preferred Stock designated
for redemption shall not affect the validity of the proceedings for the
redemption of any other shares of Series A Preferred Stock. Each notice of
redemption given to a holder shall state: (1) the redemption date;
(2) the number of shares of Series A Preferred Stock to be redeemed and, if
less than all the shares held by such holder are to be redeemed, the number of
such shares to be redeemed from such holder; (3) the redemption price; and
(4) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price.

      


      (d) Partial
Redemption. In case of any redemption of part of the shares of Series A
Preferred Stock at the time outstanding, the shares to be redeemed shall be
selected either pro rata
or in such other manner as the Corporation may determine to be fair and
equitable. Subject to the provisions hereof, the Corporation shall have full
power and authority to prescribe the terms and conditions upon which shares of
Series A Preferred Stock shall be redeemed from time to time. If fewer than all
the shares represented by any certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares without charge to the holder
thereof.

      


      (e) Effectiveness
of Redemption. If notice of redemption has been duly given and if on or before
the redemption date specified in the notice all funds necessary for the
redemption have been paid by the Corporation, then, notwithstanding that any
certificate for any share so called for redemption has not been surrendered for
cancellation, on and after the redemption date, dividends shall cease to accrue
on all shares so called for redemption, all shares so called for redemption
shall no longer be deemed outstanding and all rights with respect to such shares
shall forthwith on such redemption date cease and terminate, except only the
right of the holders thereof to receive the amount payable on such redemption
without interest.

      


      7. ­Vote to Change the Terms of
or Issue Preferred Stock or Incur Indebtedness.  The
affirmative vote at a meeting duly called for such purpose, or the written
consent without a meeting, of the holders of not less than three-fourths (3/4)
of the issued and outstanding shares of Series A Preferred Stock, shall be
required for (i) any change to this Certificate of Designation or the
Corporation’s Certificate of Incorporation which would amend, alter, change or
repeal any of the powers, designations, preferences and rights of the Series A
Preferred Stock; or (ii) the incurrence by the Corporation of any indebtedness
in excess of $100,000; provided, however, the
Corporation may incur indebtedness in excess of $100,000, up to $1,000,000,
under an unsecured working capital line of credit, or under a credit facility
secured by equipment or assets purchased using the proceeds from such credit
facility.


      
        
           


        

        
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      8. ­Lost or Stolen
Certificates.  Upon receipt by the Corporation of evidence
satisfactory to the Corporation of the loss, theft, destruction or mutilation of
any Preferred Stock Certificates representing the shares of Series A Preferred
Stock, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the holder to the Corporation and, in the case of mutilation,
upon surrender and cancellation of the Preferred Stock Certificate(s), the
Corporation shall execute and deliver new preferred stock certificate(s) of like
tenor and date.

      


      9. ­Remedies, Characterizations,
Other Obligations, Breaches and Injunctive Relief.  The
remedies provided in this Certificate of Designation shall be cumulative and in
addition to all other remedies available under this Certificate of Designation,
at law or in equity (including a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit a holder’s right to pursue actual damages for any failure by the
Corporation to comply with the terms of this Certificate of
Designation.  The Corporation acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the holders of the Series A
Preferred Stock and that the remedy at law for any such breach may be
inadequate.  The Corporation therefore agrees that, in the event of
any such breach or threatened breach, the holders of the Series A Preferred
Stock shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.

      


      10. ­Specific Shall Not Limit
General; Construction.  No specific provision contained in this
Certificate of Designation shall limit or modify any more general provision
contained herein.

      


      11. ­Failure or Indulgence Not
Waiver.  No failure or delay on the part of a holder of Series
A Preferred Stock in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege.

      


      IN
WITNESS WHEREOF, the undersigned has executed and subscribed this Amended
Certificate and does affirm the foregoing as true this 22nd day of December,
2008.

      


      


      WORLD
RACING GROUP, INC.

      


      By: /s/ Brian M.
Carter

      Name: Brian
M. Carter

      Title:  Chief
Executive Officer