Pladeo Corp. 8-K


Exhibit
10.5


 





SECURITIES
PURCHASE AGREEMENT


 


This
Securities Purchase
Agreement (this “Agreement”)
is dated
as of
March ,
2014, between
Pladeo Corp.
(the “Company”),
and the
purchaser identified
on the signature
pages hereto (each,
including its successors
and assigns,
the “Purchaser”).


 


WHEREAS,
subject to
the terms
and conditions set
forth in this
Agreement and
pursuant to Section
4(2) of the
Securities Act
of 1933, as
amended (the “Securities
Act”), and
Rule 506 promulgated
thereunder, the Company
desires to issue and
sell to the Purchaser,
and the Purchaser desires
to purchase from the Company,
securities of the Company as more fully described
in this Agreement.


 


NOW, THEREFORE,
IN CONSIDERATION
of the mutual
covenants contained
in this Agreement,
and for other good
and valuable consideration, the receipt
and adequacy of which
are hereby acknowledged, the Company
and each Purchaser
agree as follows:


 


ARTICLE
I. DEFINITIONS


 


1.1Definitions.
In addition
to the terms
defined elsewhere
in this Agreement:
(a) capitalized
terms that
are not
otherwise defined
herein have
the meanings
given to
such terms
in the Debentures
(as defined herein),
and (b) the following terms
have the meanings set forth
in this Section 1.1:


“Acquiring
Person” shall have the meaning ascribed
to such term in Section 4.7.



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



“Affiliate” means
any Person
that, directly or
indirectly through
one or
more


intermediaries, controls
or is controlled
by or
is under
common control
with a Person,
as such terms are
used in and construed under Rule
405 under the Securities Act.


 


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


 


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


 


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


 


“Closing
Date” means the
Trading Day
when all of
the Transaction
Documents have
been executed
and delivered
by the
applicable parties
thereto, and
all conditions
precedent to (i)
the Purchaser’s
obligations to
pay the Subscription
Amount and
(ii) the Company’s obligations
to deliver the Securities have been
satisfied or waived.



    	



    	 



    “Closing Statement” means
the Closing Statement
in the form
Annex A
attached


hereto.


 


“Commission” means
the United States Securities and
Exchange Commission.


 


“Common
Stock” means the
common stock
of the Company,
par value
$.01 per
share, and
any other
class of securities
into which
such securities may
hereafter be
reclassified or changed
into.


 


“Common
Stock Equivalents” means
any securities of
the Company or
the Subsidiaries
which would entitle
the holder thereof
to acquire
at any
time Common Stock,
including, without limitation,
any debt, preferred
stock, rights,
options, warrants
or other instrument that
is at any time convertible
into or exercisable
or exchangeable
for, or otherwise entitles the
holder thereof to receive Common Stock.


 


“Company”
 means Pladeo Corp.



“Company Counsel”
means                 .


“Conversion
Price” shall have
the meaning
ascribed to such
term in the
Debentures.


 


“Debentures”
means the 5%
Convertible Debentures
due, subject to
the terms
therein, issued by
the Company to
the Purchaser hereunder,
in the form
of Exhibit A
attached hereto.


  





“Disclosure
Schedules” shall have
the meaning ascribed
to such term
in Section 3.1.


 


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


 


“Exempt
Issuance” means the issuance
of (a) shares
of Common Stock
or options to
employees, officers,
directors or
consultants of
the Company pursuant
to any
stock or option
plan or agreement
duly adopted for such purpose
by the Board
of Directors or
a majority of the members of a
committee of non-employee directors
established for such purpose, (b)
securities upon the exercise,
exchange or conversion of any
Securities issued hereunder
and/or other securities, options,
warrants, convertible securities
or other rights to acquire,
exercisable or exchangeable for
or convertible into, shares
of Common
Stock, in each case that are
issued and outstanding
on the date
of this Agreement, provided that
such securities have
not been amended
since the date
of this Agreement
to increase
the number of such securities or to decrease
the exercise, exchange or conversion
price of such securities, (c)
securities issued pursuant to
acquisitions of companies,
assets or intellectual property (or licensing
of assets or intellectual property) or strategic
transactions approved
by a majority of
the disinterested directors
of the
Company, provided that
any such issuance
shall only be to a
Person which
is, itself or
through its subsidiaries,
an operating company or a university of
other non-financial institution and



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in which
the Company receives
benefits in addition
to the investment
of funds, (d)
securities issued
or issuable in
exchange for
other than cash
in connection
with any other
transaction that is
not for the primary purpose
of financing the Company’s
business, but shall not include a transaction
in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity
whose primary business is investing in securities.“GAAP” shall
have the meaning ascribed to such term
in Section 3.1(h).


 


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


“Intellectual
Property Rights”
shall have the
meaning ascribed
to such term
in Section 3.1(o).  





“Legend
Removal Date”
shall have
the meaning ascribed
to such term
in Section 4.1(c).


 


“Liens”
means a
lien, charge,
security interest, encumbrance,
right of first
refusal, preemptive right
or other restriction.


 


“Material
 Adverse
Effect”  shall 
have  the 
meaning assigned  to 
such  term  in
Section 3.1(b).


 


“Material
 Permits”  shall 
have  the 
meaning  ascribed
 to  such 
term  in 
Section 3.1(m).


 


“Maximum
Rate” shall have
the meaning ascribed to such
term in Section 5.17.


 


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





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


 


“Purchaser
Party” shall have the meaning
ascribed to such term
in Section 4.10.


  





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


 


“Required
Minimum” means, as
of any
date, the maximum
aggregate number
of shares
of Common Stock
then issued
or potentially issuable
in the future
pursuant to the
Transaction Documents,
including any Underlying Shares
issuable upon conversion
in full of all Debentures
(including Underlying Shares issuable
as payment of interest on the
Debentures), ignoring any conversion or exercise
limits set forth therein.


 


“Rule
144” means Rule
144 promulgated
by the
Commission pursuant
to the Securities
Act, as
such Rule may
be amended
from time to
time, or any
similar rule
or



    	3



    	 



    regulation
hereafter adopted by
the Commission having
substantially the same
effect as
such Rule.


 


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



 


“Securities”
means the Debentures and
the Underlying Shares.


 


“Securities
Act” means the Securities
Act of
1933, as
amended, and
the rules and
regulations promulgated thereunder.


 


“Short
Sales” means all
“short sales”
as defined
in Rule 200
of Regulation
SHO under
the Exchange Act
(but shall not
be deemed to
include the location
and/or reservation
of borrowable shares of
Common Stock).


 


“SRFF”
means Sichenzia Ross
Friedman Ference
LLP, 61 Broadway,
New York,
New York 10006.


 


“Subscription
Amount” means the aggregate amount
to be paid
for Debentures purchased hereunder as specified
below the Purchaser’s
name on the signature page of
this Agreement and next to
the heading “Subscription Amount,”
in United States dollars and in
immediately available funds.


 


“Subsidiary”
means any subsidiary
of the Company
as set
forth on Schedule
3.1(a) and
shall, where
applicable, include
any direct
or indirect
subsidiary of the
Company formed or acquired
after the date hereof.


 


“Trading
Day” means a
day on which
the principal Trading
Market is
open for trading.


 


“Trading
Market” means the following
markets or
exchanges on
which the
Common Stock
is listed or quoted
for trading on the
date in
question: the American
Stock Exchange,
the Nasdaq Capital
Market, the Nasdaq
Global Market,
the Nasdaq
Global Select Market,
the New
York Stock Exchange or
the OTC Bulletin Board.


 


“Transaction Documents means this
Agreement, the
Debentures, all
exhibits and
schedules thereto
and hereto
and any
other documents
or agreements executed
in connection with the
transactions contemplated hereunder.


 


“Transfer
Agent” means       the current
transfer agent of
the Company with a mailing
address of         
  and a facsimile
number of               and
any successor transfer agent
of the Company.


“Underlying
Shares” means the shares
of Common
Stock issued
and issuable
upon conversion or
redemption of
the Debentures and
issued and
issuable in lieu
of the
cash payment
of interest
on the Debentures
in accordance
with the terms
of the Debentures.



    	4



    	 



    “VWAP”
means, for any date,
the price determined
by the
first of
the following clauses
that applies:
(a) if
the Common
Stock is
then listed
or quoted on
a Trading
Market, the daily volume weighted
average price of the Common Stock for such date
(or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed
or quoted as
reported by Bloomberg
L.P. (based
on a Trading
Day from 9:30
a.m. New
York City time to 4:02 p.m. New
York City time); (b) if the OTC
Bulletin Board is
not a Trading Market, the volume weighted average
price of the Common Stock for such date
(or the nearest preceding date) on the OTC Bulletin
Board; (c) if the OTC QB is not
a Trading Market, the volume
weighted average price of the Common
Stock for such date (or the nearest preceding date) on the OTC QB as
then listed or quoted for trading by OTC Markets Group
Inc., (d) if prices for the Common Stock are
then reported in the “Pink
Sheets” published by OTC Markets
Group Inc., (or a similar organization
or agency succeeding to its functions of
reporting prices), the most recent bid
price per share of the Common Stock so reported;
or (e) in all other cases, the fair market
value of a share of Common
Stock as determined by
an independent appraiser
selected in good faith
by the Purchaser and reasonably
acceptable to the Company, the fees and
expenses of which shall
be paid by the
Company.


 


ARTICLE
II. PURCHASE AND SALE


 


	 	2.1	Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchaser agrees to purchase, an aggregate of $45,000 in principal amount of the Debentures. The Purchaser shall deliver to the Company via wire transfer, immediately available funds equal to its Subscription Amount and the Company shall deliver to the Purchaser its Debenture, as determined pursuant to Section
2.2(a), and the Company and the Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the conditions set forth in Sections 2.2 and 2.3, the initial Closing shall occur at the offices of SRFF or such other location as the parties shall mutually agree. Notwithstanding anything to the contrary, the Purchaser may assign its obligations hereunder to an affiliate in its sole discretion.


 


	 	2.2	Deliveries.


 


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


 


	 	(i)	this Agreement duly executed by the Company;


 


	 	(ii)	a legal opinion of Company Counsel, in substantially the form of Exhibit D attached hereto; and


 


	 	(iii)	a  Debenture  with  a  principal  amount  equal  to  the  Purchaser’s Subscription Amount, registered in the name of the Purchaser.



    	5



    	 



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


 


	 	(i)	this Agreement duly executed by the Purchaser; and


 


	 	(ii)	such Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company. (See Annex A)


 


	 	2.3	Closing Conditions.


 


(a)                  
The  obligations 
of  the  Company 
hereunder  in 
connection  with 
the Closing are
subject to the following
conditions being met:


 


(i)       
the  accuracy  in 
all  material
 respects 
on  the  Closing 
Date  of 
the representations
and warranties of the Purchaser
contained herein;


 


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


 


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


 


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


 


(i)                
the accuracy in
all material
respects when made and
on the Closing
Date of the
representations and warranties
of the Company contained herein;


 


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


 


(iii)            
the delivery
by the
Company of the
items set
forth  in Section
2.2(a) of this Agreement;
and


 


(iv)            
there shall
have been
no Material
Adverse Effect
with respect
to the Company since
the date hereof.


 


ARTICLE
III. 


REPRESENTATIONS AND
WARRANTIES


 


3.1  Representations and Warranties the Company. Except as set forth
in the Disclosure
Schedules, which
Disclosure Schedules
shall be deemed
a part hereof
and shall qualify
any representation
or otherwise made herein
to the
extent of the
disclosure contained
in the corresponding section of
the Disclosure Schedules, the Company
hereby makes the following representations and
warranties to each Purchaser:


 


(a)               
Subsidiaries.  All
of the direct
and indirect
subsidiaries of
the Company are
set forth
on the applicable
exhibits filed with
the SEC Reports. 
The Company owns,



    	6



    	 



    directly or
indirectly, all
of the capital
stock or
other equity interests
of each
Subsidiary free
and clear of any
Liens, and all
of the issued and outstanding shares
of capital stock of
each Subsidiary
are validly
issued and are fully
paid, non-assessable and
free of preemptive and
similar rights to subscribe for
or purchase
securities. If the Company
has no subsidiaries, all
other references to the Subsidiaries
or any of
them in the Transaction Documents
shall be disregarded.


 


(b)              
Organization and Qualification.The
Company and each
of the
Subsidiaries is an
entity duly incorporated or
otherwise organized,
validly existing
and in
good standing
under the
laws of
the jurisdiction
of its
incorporation or
organization, with
the requisite
power and
authority to
own and
use its
properties and
assets and to
carry on
its business as
currently conducted. Neither the Company nor any
Subsidiary is in violation nor default
of any of the provisions
of its respective
certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary,
except where the
failure to
be so
qualified or
in good
standing, as the
case may
be, could
not have or reasonably be expected to result in: (i)
a material adverse effect on the legality, validity or
enforceability of any Transaction Document,
(ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material
adverse effect on the Company’s ability to perform in any
material respect on a timely basis its obligations
under any
Transaction Document (any of
(i), (ii)
or (iii), a
“Material Adverse Effect”) and
no Proceeding
has been instituted
in any
such jurisdiction
revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or
qualification.


 


(c)               
Authorization; Enforcement.The Company
has the requisite
corporate power and
authority to enter
into and
to consummate
the transactions
contemplated by
each of
the Transaction Documents
and otherwise to carry out its obligations
hereunder and
thereunder. The execution and
delivery of each of the Transaction
Documents by the Company and
the consummation by it of the transactions
contemplated hereby and thereby have
been duly
authorized by
all necessary action
on the part
of the Company and
no further action is required
by the Company, the Board
of Directors or the Company’s stockholders
in connection therewith other than in
connection with the Required Approvals.
Each Transaction Document to which
it is a party has been (or upon delivery
will have been) duly executed by
the Company and, when delivered in accordance
with the terms hereof and thereof, will constitute
the valid and binding obligation of the
Company enforceable against the Company in accordance
with its terms, except: (i)
as limited by
general equitable principles
and applicable
bankruptcy, insolvency, reorganization,
moratorium and other laws
of general application affecting
enforcement of creditors’ rights generally,
(ii) as limited by
laws relating to the availability
of specific performance, injunctive
relief or other equitable remedies and
(iii) insofar as indemnification
and contribution provisions may be limited
by applicable law.



    	7



    	 



    (d)              
 No Conflicts. The execution,
delivery and
performance by
the Company of
the Transaction
Documents and the
consummation by
it to which
it is a
party of
the other transactions
contemplated hereby and thereby
do not and
will not: (i) conflict
with or violate any
provision of the Company’s or any
Subsidiary’s certificate or articles
of incorporation,
bylaws or
other organizational or
charter documents,
(ii) conflict with, or constitute
a default (or an event that with
notice or lapse of time or both would become
a default) under,
result in the
creation of
any Lien
upon any
of the properties
or assets of the Company or any
Subsidiary, or give
to others
any rights of termination,
amendment, acceleration or
cancellation (with
or without notice,
lapse of time or both)
of, any agreement,
credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt
or otherwise)
or other understanding to which
the Company or
any Subsidiary is
a party or
by which
any property or
asset of
the Company or
any Subsidiary
is bound or affected,
or (iii) subject
to the Required Approvals,
conflict with or result
in a violation of any
law, rule, regulation,
order, judgment,
injunction, decree
or other restriction
of any court
or governmental authority to
which the Company or a Subsidiary is subject
(including federal
and state securities laws
and regulations), or by
which any property or asset
of the Company or a Subsidiary is bound or
affected; except
in the case of each
of clauses (ii) and (iii), such
as could not have or reasonably be expected
to result in a Material Adverse Effect.


 


(e)               
Filings, Consents and Approvals. The
Company is
not required
to obtain
any consent,
waiver, authorization
or order
of, give
any notice
to, or
make any
filing or
registration with,
any court
or other
federal, state, local
or other
governmental authority
or other
Person in connection
with the
execution, delivery and performance
by the Company
of the Transaction Documents, other than: (i) the filings required pursuant to Section
4.6, (ii) such consents, waivers, or authorizations as have been obtained before the Closing,
(iii) if required,
the notice and/or application(s) to each applicable Trading
Market for the
issuance and sale
of the Securities and
the listing
of the
Underlying Shares for trading thereon in the time and manner required thereby and
(iv) the filing of Form D with the
Commission and
such filings
as are required to
be made
under applicable
state securities laws (collectively, the “Required
Approvals”).


 


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


 


(g)              
Capitalization. The
capitalization of
the Company immediately
prior to Closing is,
in all
material respects,
as set
forth in
the SEC Reports.
Except as
provided on Schedule
3.1(g), no Person
has (i)
any right
of first refusal,
preemptive right, right
of participation, or any similar
right to participate in the transactions
contemplated by the



    	8



    	 



    Transaction
Documents except for
such, if any,
as will have
been validly waived
before the Closing and
(ii) except pursuant
to the operation
of agreements filed
as exhibits
to the SEC
Reports before
the date
of this Agreement,
the issuance
and sale
of the Securities will
not obligate
the Company to issue
shares of
Common Stock
or other securities
to any Person (other
than the Purchaser) and will not result in a right
of any
holder of Company securities to
adjust the exercise,
conversion, exchange or reset
price under any of such securities.
All of the outstanding shares
of capital stock of the Company are validly issued,
fully paid and nonassessable, have
been issued in compliance with all federal
and state securities
laws, and
none of such
outstanding shares
was issued
in violation
of any preemptive rights
or similar rights to subscribe for or purchase securities. No further
approval or authorization of any stockholder,
the Board of Directors or others
is required for the issuance
and sale
of the Securities.
Except as
filed as
exhibits to the SEC Reports,
there are no stockholders
agreements, voting agreements
or other similar
agreements with respect
to the Company’s capital stock to which the Company is a party or,
to the knowledge of the Company,
between or among any of
the Company’s stockholders.


 


(h)              
SEC Reports; Financial Statements. The
Company has filed
all reports, schedules,
forms, statements and
other documents required
to be filed
by the
Company under
the Securities Act
and the Exchange
Act, including pursuant to
Section 13(a)
or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period
as the Company was required
by law or regulation
to file such material) (the foregoing
materials, including the exhibits
thereto and documents
incorporated by
reference therein, being
collectively referred to herein
as the “SEC Reports”)
on a timely basis or has received
a valid
extension of such
time of filing and
has filed any such
SEC Reports
prior to the
expiration of
any such
extension, except
as set
forth on
Schedule 3.1(h). As of their respective
dates, the SEC Reports complied
in all material respects with the requirements
of the Securities Act and the
Exchange Act, as
applicable, and none of the SEC Reports,
when filed, contained any untrue
statement of a material fact or omitted
to state a material fact required
to be stated therein or necessary
in order to make the statements therein,
in the light of the circumstances under
which they were made,
not misleading. The financial
statements of the Company included in the SEC Reports
comply in all material
respects with applicable accounting
requirements and the
rules and regulations
of the Commission with
respect thereto
as in
effect at
the time of filing. Such
financial statements have been
prepared in accordance with generally
accepted accounting principles
(“GAAP”), except as
may be otherwise specified
in such financial statements or
the notes thereto and except
that unaudited financial statements
may not contain all
footnotes required by
GAAP, and fairly present
in all material respects
the financial position
of the Company and
its consolidated Subsidiaries as of
and for the dates
thereof and the results of operations
and cash flows for the periods
then ended, subject, in the case
of unaudited statements, to normal,
immaterial, year-end audit adjustments.


 


(i)                
Material Changes. Except as
provided in
Schedule 3.1(i),
since the date
of the latest
financial statements
included in
the SEC
Reports: (i)
there has
been no event,
occurrence or development
that has
had or
that could
reasonably be expected
to result
in a Material
Adverse Effect, (ii)
the Company has not incurred
any liabilities (contingent
or otherwise) other than (A)
trade payables
and accrued
expenses incurred in
the ordinary


 



    	9



    	 



    course
of business consistent
with past practice
and (B)
liabilities not required
to be reflected
in the Company’s
financial statements
pursuant to GAAP
or disclosed in
filings made
with the Commission,
(iii) the Company
has not
altered its method of
accounting,


(iv)  
the Company has
not declared
or made
any dividend
or distribution of
cash or
other property to
its stockholders
or purchased,
redeemed or
made any
agreements to
purchase or
redeem any
shares of
its capital
stock and
(v) the Company
has not issued
any equity
securities to any
officer, director
or Affiliate, except pursuant
to existing Company equity incentive
plans. The Company does not have
pending before the Commission any
request for confidential treatment of information.
Except for the issuance
of the Securities contemplated
by this Agreement, no event, liability or development
has occurred or exists with respect
to the Company or its Subsidiaries or their respective
business, properties, operations
or financial condition, that would be
required to be disclosed by
the Company under applicable
securities laws at
the time this representation
is made or deemed
made that has not been publicly
disclosed at least one Trading Day
prior to the date that this representation
is made.


 


(j)                
Litigation. There is no action,
suit, inquiry, notice
of violation, proceeding or investigation
pending or,
to the knowledge
of the
Company, threatened
against or affecting
the Company,
any Subsidiary or
any of
their respective
properties before
or by
any court, arbitrator,
governmental or administrative
agency or regulatory authority (federal,
state, county, local or foreign)
(collectively, an “Action”)
which (i) adversely affects or challenges
the legality,
validity or enforceability of
any of the
Transaction Documents or the
Securities or (ii)
could, if there
were an unfavorable decision,
have or reasonably be
expected to
result in a Material
Adverse Effect. Neither the
Company nor any Subsidiary, nor any
director or
officer thereof, is or has
been the subject of
any Action
involving a claim
of violation
of or liability
under federal
or state securities
laws or a claim
of breach
of fiduciary
duty. There has not been,
and to the
knowledge of the Company,
there is not pending or contemplated, any
investigation by the Commission involving
the Company or any
current or former director or
officer of the Company. The Commission
has not issued
any stop order or
other order
suspending the effectiveness
of any registration statement filed by
the Company or any Subsidiary under the Exchange
Act or the Securities Act.


 


(k)              
Labor Relations. No
material labor
dispute exists
or, to
the knowledge
of the
Company, is imminent
with respect
to any
of the
employees of
the Company
which could
reasonably be
expected to result
in a
Material Adverse
Effect. None of the
Company’s or its Subsidiaries’ employees is a member of a union that relates
to such employee’s relationship
with the
Company or such
Subsidiary, and
neither the
Company nor any of
its Subsidiaries
is a party to a collective
bargaining agreement, and the Company
and its Subsidiaries believe that
their relationships with their employees
are good. No executive
officer, to
the knowledge
of the
Company, is, or
is now
expected to be, in violation of any material
term of any employment
contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement
or any restrictive
covenant in favor
of any
third party, and the continued
employment of
each such executive officer does
not subject the Company or any of its
Subsidiaries to any liability with respect to any of
the foregoing matters. To the Company’s knowledge, the Company and its Subsidiaries are in compliance with all U.S.






    	10



    	 



    federal,
state, local and foreign
laws and
regulations relating
to employment
and employment
practices, terms and
conditions of employment
and wages
and hours, except
where the failure
to be in
compliance could
not, individually or
in the aggregate,
reasonably be expected to have
a Material Adverse Effect.


 


(l)                
Compliance. To
the Company’s
knowledge, neither
the Company nor
any Subsidiary:
(i) is in
default under
or in violation
of (and
no event
has occurred
that has
not been
waived that,
with notice
or lapse of time
or both, would
result in a
default by
the Company or
any Subsidiary under), nor has
the Company or any Subsidiary received
notice of a claim that it is in default
under or that it is in violation
of, any indenture,
loan or credit agreement
or any other
material agreement
or instrument to which
it is a party or by
which it or any of
its properties is bound (whether
or not such default or violation has
been waived),
(ii) is in violation of any order
of any court, arbitrator
or governmental body or (iii) is or has
been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all
foreign, federal, state and local
laws applicable to its business
and all such laws that affect
the environment, except in each
of the foregoing cases as could
not have or reasonably be expected
to result in a Material Adverse
Effect.


 


(m)            
Regulatory Permits.The Company and
the Subsidiaries
possess all
certificates, authorizations
and permits
issued by the
appropriate federal, state,
local or
foreign regulatory
authorities necessary
to conduct their
respective businesses, except where the failure to possess such permits could not reasonably be expected to result in
a Material Adverse Effect (“Material Permits”), and neither the
Company nor any
Subsidiary has received any notice of proceedings
relating to the revocation
or modification of any Material
Permit.


 


(n)              
Title to Assets.The Company and
the Subsidiaries
have good
and marketable
title in fee
simple to all
real property and
good and
marketable title in
all personal
property owned by it that,
in each
case, is material
to the business
of the Company and the Subsidiaries,
in each case
free and clear
of all Liens,
except for Liens as do not materially
affect the value of such property and
do not materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries
and Liens for the payment of federal,
state or other taxes, the payment of which
is neither
delinquent nor subject
to penalties in any material
respect. Any real property and
facilities held under
lease by the Company and the Subsidiaries
are held by them
under valid,
subsisting and enforceable
leases with which
the Company and
the Subsidiaries are in compliance.


 


(o)              
Patents and Trademarks. To
the Company’s
knowledge (without
having conducted
any independent
investigation): (i)
the Company and
the Subsidiaries
have, or
have rights
to use, all patents, patent applications,
trademarks, trademark applications, service
marks, trade
names, trade secrets,
inventions, copyrights, licenses
and other intellectual property
rights and similar rights
as described in the SEC Reports
as necessary or material
for use in connection with their
respective businesses
and which the failure
to so have could reasonably be expected to have
a Material Adverse Effect
(collectively, the “Intellectual Property 
Rights”); (ii) neither the Company 
nor any



    	11



    	 



    Subsidiary has
received a
notice (written
or otherwise) that
any of
the Intellectual
Property Rights violates
or infringes
upon the rights
of any
Person; (iii) all
such Intellectual Property Rights
are enforceable and there is no
existing infringement by
another Person
of any of the Intellectual
Property Rights, except
where the failure
to be so enforceable
or for such infringements as would
not, individually or in the aggregate, reasonably
be expected to have
a Material Adverse Effect;
and (iv) the Company and
its Subsidiaries have taken reasonable
security measures to protect the secrecy,
confidentiality and value of
all of their
intellectual properties,
except where failure to do so
could not, individually or
in the aggregate,
reasonably be expected
to have a Material Adverse Effect.


 


(p)              
Insurance. The
Company and
the Subsidiaries
are insured
by insurers
of recognized
financial responsibility
against such losses
and risks and
in such amounts
as the Company
believes are
prudent and
customary in the
businesses in
which the
Company and
the Subsidiaries
are engaged in light
of the size
and activities
of the Company and
its Subsidiaries, including,
but not limited to, directors
and officers insurance
coverage at
least equal to the aggregate
Subscription Amount. Neither
the Company nor any Subsidiary has
any reason to believe
that it will not be able
to renew its
existing insurance
coverage as and
when such coverage
expires or to obtain
similar coverage
from similar insurers as may
be necessary to continue its business
without a significant increase in
cost.


 


(q)              
Transactions with Affiliates and Employees. Except as
set forth
in the SEC
Reports, none
of the
officers or
directors of
the Company and,
to the knowledge
of the Company,
none of the
employees of
the Company is
presently a party to any
transaction with the Company or any
Subsidiary (other than for services as employees,
officers and
directors), including any
contract, agreement
or other arrangement
providing for the furnishing of services
to or by,
providing for rental
of real or
personal property to or
from, or
otherwise requiring
payments to
or from
any officer, director
or such employee or,
to the knowledge of the Company,
any entity in which any
officer, director,
or any such employee has
a substantial interest or is an
officer, director, trustee or partner,
in each case in excess
of $120,000 other than for: (i) payment of salary or consulting
fees for services
rendered, (ii) reimbursement
for expenses incurred
on behalf of the Company and
(iii) other employee benefits, including stock option agreements
under any stock option plan of the Company


 


(r)    
Environmental Laws.
The Company and
its subsidiaries
are (i)
in compliance
with any and
all applicable
foreign, federal,
state and
local laws
and regulations
relating to
the protection of human health
and safety, the environment
or hazardous or toxic substances or
wastes, pollutants
or contaminants (“Environmental
Laws”), (ii) have received
all permits,
licenses or
other approvals required
of them under applicable
Environmental Laws to conduct
their respective businesses and
(iii) are in compliance with all
terms and conditions of any
such permit, license or approval,
except in each of the above
cases where noncompliance
could not
be reasonably expected to
have a Material Adverse Effect.



    	12



    	 



    (s)               
 Sarbanes-Oxley; Internal
Accounting Controls. Except
as set
forth in
the SEC Reports,
the Company is
in material
compliance with all
provisions of the
Sarbanes- Oxley Act
of 2002 which are applicable
to it as of the Closing Date.
The Company and the 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, and
(iv) the recorded accountability
for assets is compared
with the existing
assets at
reasonable intervals
and appropriate action
is taken with respect
to any differences. The Company
has established disclosure controls
and procedures (as
defined in Exchange
Act Rules 13a-15(e)
and 15d-15(e))
for the Company and
designed such disclosure controls
and procedures to ensure
that information required to be disclosed by
the Company in the reports it files
or submits under the Exchange Act
is recorded, processed,
summarized and
reported, within the
time periods
specified in the Commission’s
rules and forms.
The Company’s certifying officers have evaluated
the effectiveness of the Company’s
disclosure controls and procedures
as of the end
of the period covered
by the Company’s
most recently filed periodic
report under the
Exchange Act (such
date, the “Evaluation
Date”). The Company presented
in its most recently filed periodic report
under the Exchange Act the conclusions of the certifying
officers about the effectiveness
of the disclosure controls
and procedures
based on their evaluations
as of the Evaluation Date. Since
the Evaluation Date, there have been
no changes in the Company’s
internal control over
financial reporting (as
such term
is defined
in the Exchange Act)
that has materially affected, or is reasonably likely to materially affect,
the Company’s internal control
over financial reporting.


 


(t)                
Certain Fees .Except
as disclosed on
Schedule 3.1(t),
no brokerage
or finder’s
fees or commissions
are or will
be payable
by the
Company to any
broker, financial
advisor or
consultant, finder,
placement agent,
investment banker, bank
or other Person with respect
to the transactions contemplated
by the Transaction Documents,
other than fees payable
to. The Purchaser shall
have no obligation with respect
to any fees or with respect
to any claims made by or on behalf
of other Persons for fees of
a type contemplated in this Section that may
be due in connection with the transactions
contemplated by the Transaction Documents.


 


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


 


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



    	13



    	 



    (w)            
 Registration Rights.
Except as
disclosed in the
SEC Reports,
no Person
has any
right to
cause the
Company to effect
the registration
under the
Securities Act
of any securities of
the Company.


 


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


 


(y)              
Application of Takeover Protections.The Company
and the
Board of
Directors have
taken all
necessary action, if
any, in
order to
render inapplicable
any control
share acquisition,
business combination,
poison pill (including
any distribution under a rights
agreement) or other similar anti-takeover provision
under the Company’s certificate of
incorporation (or similar
charter documents) or the laws
of its state of incorporation that
is or could become applicable to the
Purchaser as a result
of the Purchaser and the
Company fulfilling their obligations
or exercising their
rights under
the Transaction Documents, including without limitation
as a result of the Company’s issuance
of the Securities
and the Purchaser’s ownership
of the Securities.


 


(z)               
Disclosure. Except
with respect
to (i) the
material terms
and conditions
of the transactions
contemplated by
the Transaction
Documents and
(ii) information given
to the Investor, if
any, which the Company hereby confirms
will not constitute material non-public
information six months from the date
hereof, the Company confirms that neither
it nor any other Person acting
on its behalf has provided
the Purchaser or their agents
or counsel with any information that it believes
constitutes or might constitute
material, nonpublic information.
The Company understands
and confirms that the Purchaser will rely on the foregoing representation
in effecting transactions in securities
of the Company. All disclosure furnished in writing by
or on behalf of the Company to the Purchaser
regarding the Company, its business and
the transactions contemplated hereby,
including the Disclosure Schedules to this Agreement,
is true and correct and does
not contain
any untrue statement
of a material fact
or omit to state any
material fact
necessary in order to make the statements
made therein, in light of the
circumstances under
which they
were made,
not misleading.
The press
releases disseminated by
the Company during the twelve months preceding
the date of this Agreement taken
as a whole do 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 and when made, not misleading.
The Company acknowledges and agrees
that the Purchaser has not made any representations
or warranties with respect
to the transactions
contemplated hereby other than those specifically
set forth in Section
3.2 hereof.



    	14



    	 



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


 


(bb)Solvency.
Based on the
consolidated financial
condition of the
Company as
of the Closing
Date after
giving effect
to the receipt
by the
Company of the
proceeds from
the sale
of the Securities
hereunder: (i) the
fair saleable
value of the
Company’s assets
exceeds the amount that will be required
to be paid on or in respect
of the Company’s
existing debts and
other liabilities (including
known contingent liabilities)
as they
mature, (ii)
the Company’s
assets do not constitute
unreasonably small capital to
carry on its business
as now conducted
and as
proposed to be
conducted including its
capital needs taking into account
the particular capital requirements of
the business conducted
by the Company,
and projected
capital requirements
and capital
availability thereof, and (iii)
the current cash flow of the Company,
together with the proceeds the Company would
receive, were
it to liquidate all of its
assets, after
taking into account all
anticipated uses of the cash, would be sufficient to pay all
amounts on or in respect of its liabilities
when such amounts are required
to be paid. The Company does not intend after
the Closing Date to incur debts
beyond its ability to pay such debts
as they mature (taking into account the
timing and amounts
of cash to be payable on or in
respect of its debt). The Company has
no knowledge of any facts or circumstances
which lead it to believe that it will
file for reorganization or liquidation under the
bankruptcy or reorganization laws of
any jurisdiction within one year from the
Closing Date.


 


(cc)Tax Status.Except for matters
that would not,
individually or in
the aggregate,
have or
reasonably be
expected to
result in a
Material Adverse
Effect, the Company
and each
Subsidiary has
filed all necessary federal, state
and foreign
income and franchise tax returns
and has paid or accrued
all taxes shown as due thereon,
and the Company
has no knowledge of a tax deficiency
which has
been asserted or threatened against
the Company or any Subsidiary.


 


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


 


(ee)Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has: (i) directly
or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign
or domestic political activity,
(ii) made any unlawful payment to foreign
or domestic government officials or employees
or to any






    	15



    	 



    foreign
or domestic political
parties or campaigns
from corporate funds,
(iii) failed
to disclose fully
any contribution made
by the Company
(or made by
any person
acting on
its behalf
of which
the Company is
aware) which
is in violation
of law or
(iv) violated
in any material respect any provision
of the Foreign Corrupt Practices
Act of 1977, as amended.


 


(ff)No
Disagreements with Accountants and Lawyers; Outstanding SEC Comments. There are no disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the
Company and the accountants and lawyers
formerly or presently employed by
the Company and the Company is or immediately after
the Closing Date will be
current with respect to any fees owed to its accountants
which could affect the Company’s
ability to perform any of
its obligations under
any of the Transaction Documents. There are no unresolved comments or inquiries received by
the Company or its Affiliates
from the Commission which
remain unresolved as of
the date hereof.


 


(gg)Acknowledgment  Regarding
Purchaser’s  Purchase  of  Securities.The
Company acknowledges and agrees that the Purchaser is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated thereby.  The Company further
acknowledges that no Purchaser is acting as
a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by the Purchaser or
any of their respective representatives or agents in connection
with the Transaction Documents and
the transactions contemplated thereby
is merely incidental to the Purchaser’s purchase
of the Securities. The Company further represents
to the Purchaser that the Company’s decision to enter into this Agreement
and the other Transaction Documents has been based solely
on the independent evaluation
of the transactions contemplated
hereby by the Company and its representatives.


 


3.2                                     
Representations and Warrant of the Purchaser.The Purchaser hereby
represents and warrants
as of the date
hereof and as
of the Closing
Date to the
Company as follows:


 


(a)                Organization;
Authority.The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to
consummate the transactions contemplated by the Transaction
Documents and otherwise
to carry out its obligations hereunder and thereunder. The execution
and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated by the Transaction
Documents have been duly authorized by all necessary corporate
or similar action on the part
of the Purchaser. Each Transaction Document to which it is a party has been duly executed by the Purchaser, and
when delivered by the Purchaser
in accordance with the terms hereof, will constitute the valid and
legally binding obligation of the Purchaser, enforceable against
it in accordance with its terms,
except: (i) as limited by general equitable principles
and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws
of general application affecting enforcement
of creditors’ rights generally,
(ii) as limited by laws relating
to the






    	16



    	 



    availability of
specific performance,
injunctive relief or
other equitable
remedies and (iii)
insofar as indemnification and
contribution provisions may be limited
by applicable law.


 


(b)               Own
Account.The Purchaser understands that the Securities
are “restricted securities” and have not
been registered under the Securities
Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view
to or for distributing or reselling such Securities or any part thereof
in violation of the Securities Act or
any applicable state securities law, has no present
intention of distributing any of such Securities in violation of
the Securities Act or any applicable
state securities law and has no direct or indirect arrangement
or understandings with any other
persons to distribute or regarding the distribution of such Securities
(this representation and warranty not limiting the Purchaser’s
right to sell the Securities pursuant to
a registration statement
or otherwise in compliance with applicable federal and
state securities laws) in violation
of the Securities Act or any applicable
state securities law. The Purchaser is
acquiring the Securities hereunder in
the ordinary course of its business.


 


(c)                Purchaser Status. At the time the Purchaser was
offered the Securities, it was, and as of the date hereof it is, and on each date on which it converts any Debentures it
will be either: (i) an
“accredited investor” as defined in
Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified
institutional buyer” as
defined in Rule 144A(a) under the Securities Act. The Purchaser
is not required to be registered as
a broker-dealer under Section 15
of the Exchange Act.


 


(d)               Experience of
Purchaser. The Purchaser, either alone or together with its representatives,
has such knowledge,
sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the prospective investment in
the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment
in the Securities and,
at the present time, is
able to afford a
complete loss of such
investment.


 


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


 


ARTICLE
IV.


OTHER AGREEMENTS
OF THE PARTIES


 


4.1                                     
Transfer Restrictions.


 


(a)               
The Securities
may only
be disposed of
in compliance
with state and
federal securities
laws. In
connection with
any transfer
of Securities
other than pursuant
to an effective registration
statement or Rule 144,
to the Company or
in connection with a pledge as
contemplated in Section 4.1(b),
the Company may
require the
transferor thereof
to provide to the Company an
opinion of counsel selected by
the transferor and






    	17



    	 



    reasonably acceptable
to the Company,
the form
and substance
of which
opinion shall be
reasonably satisfactory to
the Company,
to the effect
that such transfer
does not require
registration of such
transferred Securities
under the Securities
Act. As a condition
of transfer, any such transferee
shall agree in writing to be bound
by the terms of this Agreement and
shall have the rights of a
Purchaser under this Agreement.


 


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


 


[NEITHER]
THIS SECURITY
[NOR THE SECURITIES
INTO WHICH THIS
SECURITY IS
[CONVERTIBLE]] HAS
[NOT] BEEN
REGISTERED WITH
THE SECURITIES
AND EXCHANGE
COMMISSION OR
THE SECURITIES
COMMISSION OF
ANY STATE
IN RELIANCE
UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT,
THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY
[AND THE SECURITIES ISSUABLE UPON [CONVERSION]
OF THIS SECURITY] MAY BE
PLEDGED IN CONNECTION
WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED
BY SUCH SECURITIES.


 


The Company
acknowledges and
agrees that the
Purchaser may
from time to
time pledge pursuant
to a bona
fide margin
agreement with
a registered
broker-dealer or grant
a security interest
in some or
all of
the Securities
to a financial
institution that is
an “accredited investor”
as defined in Rule 501(a) under the Securities
Act and who agrees in writing with the
Company to be bound by the provisions of
this Agreement and, if required
under the terms of such arrangement and subject
to compliance with applicable
federal and
state securities laws,
the Purchaser may
transfer pledged or
secured Securities to the pledgees
or secured parties. Absent special circumstances,
such a pledge or transfer would
not be subject to approval of the Company and
no legal opinion of legal counsel
of the pledgee, secured party or pledgor shall be required
in connection therewith. Further,
no notice shall be required of
such pledge. At the Purchaser’s expense, the Company will execute
and deliver such reasonable documentation
as a pledgee or secured
party of Securities may reasonably
request in connection with a pledge or
transfer of the Securities.


 


(c)   
Certificates evidencing
the Underlying
Shares (or,
if Underlying
Shares are
issued in uncertificated
form, comparable
share notices)
shall not contain
any legend
(including the legend
set forth in Section 4.1(b)
hereof): (i) while a registration statement covering
the resale of such security is
effective under the Securities Act,
or (ii) following any sale
of such Underlying
Shares pursuant to Rule
144, or (iii)
if such Underlying






    	18



    	 



    Shares
are eligible for
sale under Rule
144, without the
requirement for
the Company to
be in compliance
with the current
public information
required under
Rule 144 as
to such Underlying
Shares and
without volume or
manner-of-sale restrictions
or (iv) if
such legend is not otherwise
required under
applicable requirements
of the Securities
Act (including judicial
interpretations and pronouncements issued
by the staff of the Commission), as
reasonably determined
by the Company. Upon the Purchaser’s
request in connection
with a proposed
sale of Underlying
Shares pursuant
to Rule 144 and
if the Company reasonably determines
it is so
required, upon receipt
of customary documentation from
Purchaser’s broker (if the Underlying
Shares are sold in brokers transactions),
the Company shall, at
its own cost and effort, retain
legal counsel to provide an opinion
letter to the Company’s transfer agent
opining that the Underlying Shares
may be resold without registration
under the Securities Act, pursuant
to Rule 144, promulgated thereunder,
so long as the requirements of Rule 144 are
met for any Underlying Shares
to be resold thereunder.
The Company shall arrange for any such opinion letter to be provided
not later than two (2) business
days after the date
of delivery to and receipt by
the Company of a written request by the
Purchaser together with (if required
in order to render
the opinion) any broker’s
representation letter
of other customary documentation reasonably
requested by the
Company evidencing compliance
with Rule 144 (the “Legend
Removal Date”).


 


(d)              
In addition
to the Purchaser’s
other available
remedies, the
Company shall pay
to the Purchaser,
in cash,
as partial
liquidated damages
and not as
a penalty,
for each


$1,000 of
Underlying Shares
(based on
the VWAP of
the Common Stock
on the date
such Securities are
submitted to the
Transfer Agent)
delivered for removal
of the restrictive
legend and
subject to Section
4.1(c), $10 per
Trading Day
(increasing to
$20 per Trading Day
5 Trading Days after such damages
have begun to accrue) for each
Trading Day after
the Legend
Removal Date until
such certificate (or,
if the Underlying
Shares are in uncertificated form,
a comparable notice of share ownership)
is delivered without a legend.
Nothing herein shall limit the Purchaser’s
right to pursue actual damages
for the Company’s
failure to deliver certificates
representing any Securities
as required by the
Transaction Documents, and
the Purchaser
shall have
the right
to pursue all remedies
available to it at
law or in
equity including,
without limitation, a
decree of specific
performance and/or injunctive
relief.


 


(e)               
The Purchaser
agrees that
the Purchaser
will sell
any Securities
only pursuant
to either
an exemption
from registration
or a registration
statement under
the Securities Act,
including any applicable prospectus
delivery requirements, and that if
Securities are sold pursuant to a registration statement, they
will be sold in compliance with the plan of distribution
set forth therein, and
acknowledges that the removal of the restrictive legend from certificates
representing Securities as set
forth in this Section 4.1 is predicated
upon the Company’s reliance
upon this understanding.


 


4.2                                     
Acknowledgment of
Dilution. The Company
acknowledges that the
issuance of
the Securities
may result
in dilution
of the outstanding
shares of Common
Stock, which
dilution may be substantial
under certain market
conditions. The Company further acknowledges
that its obligations
under the Transaction Documents,
including, without limitation, its
obligation to issue the Underlying Shares
pursuant to the Transaction Documents, are
unconditional and






    	19



    	 



    absolute
and not subject to any right
of set off, counterclaim, delay
or reduction, regardless of
the effect of
any such
dilution or any
claim the
Company may have
against the Purchaser
and regardless
of the dilutive
effect that
such issuance may
have on the
ownership of
the other stockholders
of the Company.


 


4.3                                      Furnishing
of Information. Until the earliest of the time that the Purchaser owns no Securities, the Company covenants maintain the registration of the Common Stock under
Section 12(b) or 12(g) of the Exchange Act
and to use all commercially reasonable efforts
to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to
be filed by the Company after the date hereof pursuant
to the Exchange Act. As long as the
Purchaser owns Securities, if the Company is not required to
file reports pursuant to the Exchange Act, it
will prepare and furnish to
the Purchaser and make
publicly available in accordance with
Rule 144(c) such information as
is required for the Purchaser to sell
the Securities under Rule 144. The
Company further covenants that
it will use all commercially reasonable efforts to
take such further action as any
holder of Securities may reasonably request, to the extent
required from time to time to enable
such Person to sell such Securities
without registration under the Securities Act
within the requirements
of the exemption provided by
Rule 144.


 


4.4                                     
Integration. The
Company shall not
sell, offer
for sale
or solicit
offers to buy
or otherwise
negotiate in
respect of any
security (as
defined in
Section 2 of
the Securities
Act) that would
be integrated
with the offer
or sale
of the Securities
to the Purchaser
in a manner
that would require the registration
under the Securities Act
of the sale of the Securities to the
Purchaser.


 


4.5                                      Conversion
and Exercise Procedures. The form of Notice of Conversion included in the Debentures
sets forth the totality of the procedures required of the Purchaser in order to convert the Debentures. No additional legal opinion, other information or instructions shall be required of
the Purchaser to convert their Debentures. The Company shall honor
conversions of the Debentures and
shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in
the Transaction Documents.


 


4.6                                      Securities Laws Disclosure; Publicity. The
Company shall, by 8:30 a.m. (New
York City time) on the Trading Day immediately following
the date hereof, issue a Current Report on Form 6-K
disclosing the material terms of the transactions
contemplated hereby and including the Transaction Documents as exhibits thereto.
The Company and the Purchaser shall consult
with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither the Company
nor the Purchaser shall
issue any such press release nor otherwise make any
such public statement (other than
in the Company’s SEC Reports after
the Closing Date or exhibits filed
therewith) without the prior
consent of the Company, with respect
to any press release of the Purchaser, or
without the prior consent of the Purchaser,
with respect to any press release of
the Company, which consent shall
not unreasonably be withheld or delayed,
except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication. Notwithstanding the foregoing,
other than in connection with the Company’s SEC Reports or disclosures
to any regulatory agency or
Trading Market that the Company determines are
necessary or appropriate, the Company shall not publicly disclose the name of
the Purchaser, or






    	20



    	 



    include the
name of
the Purchaser, in
any press
release or similar
public statement, without
the prior written
consent of the Purchaser.


 


4.7                                     
Shareholder Rights
Plan. No claim
will be made
or enforced
by the Company
or, with the
consent of
the Company,
any other
Person, that the
Purchaser is
an “Acquiring
Person” under
any control share
acquisition, business
combination, poison
pill (including
any distribution
under a rights agreement) or similar
anti-takeover plan or arrangement in
effect, or that the Purchaser could
be deemed to trigger
the provisions of any
such plan or arrangement, by
virtue of receiving Securities under
the Transaction Documents or any other
agreement between the Company and
the Purchaser.


 


4.8                                     
Non-Public Information.
Except with respect
to the material
terms and
conditions of the
transactions contemplated
by the
Transaction Documents,
the Company
covenants and
agrees that after
the Closing Date
neither it, nor
any other
Person acting
on its behalf, will provide the Purchaser
or its agents or counsel with
any information that the Company believes
constitutes material non-public
information, unless prior thereto
the Purchaser shall have executed
a written agreement regarding
the confidentiality and use of such information.
The Company understands and confirms
that the
Purchaser shall be relying on the foregoing
covenant in effecting transactions in securities
of the Company. Purchaser acknowledges
that it is aware that the United States
securities laws prohibit any person who has material
non-public information about a
company from purchasing or selling securities
of such company,
or from communicating such information
to any other person under
circumstances in which it is reasonably foreseeable
that such person is likely to purchase or
sell such securities, and
Purchaser agrees
not to engage in any
unlawful trading in securities
of the Company or
unlawful misuse or misappropriation of
any such information. Purchaser
agrees to maintain the confidentiality of
and not disclose or use
(except for purposes
relating to the transactions contemplated
by this Agreement) any
confidential, proprietary or non-public information
disclosed by the Company to Purchaser.


 


4.9                                     
Use of Proceeds.
The Company
shall use the
net proceeds
from the sale
of the Securities
hereunder for working
capital purposes and
shall not use
such proceeds
for: (a) the satisfaction
of any portion of the Company’s debt (other
than payment of
trade payables
in the ordinary course of the Company’s
business and prior practices),
(b) the redemption of any Common Stock or Common
Stock Equivalents or (c) the settlement
of any outstanding litigation.


 


4.10                                 
Indemnification of Purchaser. Subject
to the provisions
of this Section
4.10, the Company
will indemnify and
hold the Purchaser
and its directors,
officers, shareholders, members, partners,
employees and agents
(and any
other Persons
with a functionally
equivalent role of
a Person holding
such titles notwithstanding
a lack of
such title or
any other title),
each Person who controls
the Purchaser (within
the meaning of Section
15 of the
Securities Act
and Section 20 of the Exchange Act),
and the directors, officers, shareholders,
agents, members, partners or employees
(and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a
lack of such title
or any other title)
of such controlling person
(each, a “Purchaser Party”)
harmless from any and all losses,
liabilities, obligations, claims,
contingencies, damages, costs
and expenses, including all judgments,
amounts paid in settlements,
court costs and
reasonable attorneys’ fees and
costs of investigation that any such Purchaser
Party may suffer or incur as
a result of or relating to 
any action, suit, claim or


 



    	21



    	 



    proceeding
brought by a
third party against
such Purchaser
Party arising out
of or relating
to (a)
any breach of
any of
the representations, warranties,
covenants or agreements
made by
the Company in this Agreement or in the other
Transaction Documents or (b) any
action instituted against a
Purchaser in any capacity, or any
of them or their respective
Affiliates, by any
stockholder of the Company who is not
an Affiliate of the Purchaser,
with respect to any
of the transactions contemplated by
the Transaction Documents (unless such
action is based upon a breach
of such Purchaser’s
representations, warranties or covenants
under the Transaction Documents
or any agreements or understandings
the Purchaser may have
with any such stockholder or any
violations by the Purchaser
of state or federal securities laws or
any conduct by
the Purchaser which constitutes
fraud, gross negligence, willful
misconduct or malfeasance). If any
action shall be
brought against the
Purchaser Party
in respect
of which indemnity
may be sought
pursuant to this Agreement, such Purchaser Party shall promptly notify the
Company in writing, and the Company shall
have the right to assume the defense
thereof with counsel of its own choosing
reasonably acceptable to
the Purchaser Party. Any Purchaser
Party shall have the right
to employ separate counsel in
any such action
and participate
in the defense
thereof, but the fees
and expenses of such counsel shall be at
the expense of such Purchaser Party except
to the extent that (i)
the employment
thereof has
been specifically authorized
by the
Company in writing,
(ii) the Company
has failed after
a reasonable period
of time to assume
such defense
and to employ counsel or (iii)
in such action there is, in the reasonable opinion
of such separate counsel, a material conflict
on any material
issue between the position of the Company and
the position of such Purchaser Party, in which case the Company shall be
responsible for the reasonable
fees and expenses of no more than one
such separate counsel. The Company
will not be liable to any Purchaser
Party under this Agreement (y) for
any settlement by a
Purchaser Party effected without the
Company’s prior
written consent, which
shall not be unreasonably withheld or
delayed; or (z) to the extent, but only to the extent that a loss, claim,
damage or liability is attributable to any
Purchaser Party’s breach
of any of the representations, warranties,
covenants or agreements made by
such Purchaser
Party in
this Agreement or
in the other Transaction
Documents.


 


	 	4.11	Reservation and Listing of Securities.


 


(a)               
The Company shall
maintain a reserve
from its duly
authorized shares
of Common Stock
for issuance
pursuant to
the Transaction
Documents in
such amount
as may
then be
required to fulfill its obligations in full
under the Transaction Documents.


 


(b)              
If, on
any date,
the number of
authorized but
unissued (and
otherwise unreserved)
shares of
Common Stock is
less than
the Required
Minimum on such
date, then
the Board
of Directors shall
use commercially reasonable
efforts to amend
the Company’s certificate
or articles of incorporation to
increase the number of authorized but
unissued shares of Common Stock to at
least the Required Minimum at such time,
as soon as possible
and in any event not later than
the 75th calendar day
after such
date.


 


(c)               
The Company shall,
if applicable:
(i) in the
time and
manner required
by the
principal Trading
Market, prepare
and file with
such Trading
Market an
additional shares
listing application covering a
number of shares of Common Stock at
least equal
to the Required
Minimum on the
date of
such application, (ii)
take all
steps necessary to cause such shares
of Common Stock to be
approved for listing on such Trading Market
as






    	22



    	 



    soon as
possible thereafter,
(iii) provide to
the Purchaser evidence
of such listing
and (iv)
maintain the listing
of such Common
Stock on any
date at
least equal
to the
Required Minimum on such
date on such Trading Market or
another Trading Market.


 


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


 


4.13                                  Corporate
Existence. So long as any of the Debentures remain outstanding, the Company shall not directly or indirectly consummate any merger, reorganization, restructuring, consolidation, sale of all or substantially all
of the Company’s assets or
any similar transaction or related transactions (each such transaction, an “Organizational
Change”) unless, prior to the consummation an
Organizational Change, the Company obtains the written consent of
the Purchaser, which consent shall not be
unreasonably withheld. In any such case, the Company
will make appropriate provision with respect to such holders’ rights and
interests to insure that the provisions of
this Section 4.13 will thereafter be
applicable to the Debentures.


 


4.14                                  Transfer
Agent. The Company
covenants and agrees that it will at all
times while the Debentures
remain outstanding maintain a duly qualified independent transfer agent.


 


	 	4.15	Intentionally omitted


 


4.16                                  No
Short Selling. The Purchaser has
and shall not, directly or indirectly, his, her or itself, through related
parties, affiliates or otherwise, (i) sell “short” or “short against the box” (as those terms are generally understood) any equity security
of the Company or (ii) otherwise engage
in any transaction that involves hedging of
the Purchaser’s position in any equity security of the Company, until
the later of (i) the date the Debenture owned by
the Purchaser is no longer owned by
the Purchaser, or (ii) the Maturity
Date (as such term is defined in the Debenture) and
the Conversion Date.


 


ARTICLE
V. MISCELLANEOUS


 


5.1                                     
Termination. This
Agreement may
be terminated by
the Purchaser,
as to
the Purchaser’s
obligations hereunder
only and
without any effect
whatsoever on the
obligations between
the Company and
the Purchaser,
by written
notice to the
other parties,
if the Closing
has not been consummated on or
before April 30, 2014; provided,
however, that such termination will not affect
the right of any party to sue for
any breach
by the other party
(or parties).


 


5.2                                      Fees
and Expenses. Except as expressly set forth in the Transaction Documents to the contrary,
each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of
this Agreement. The Company


 






    	23



    	 



    shall pay
all transfer agent
fees, stamp taxes
and other taxes
and duties levied
in connection
with the delivery
of any Securities
to the Purchaser.


 


5.3                                      Entire
Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede
all prior agreements
and understandings, oral or written, with respect to
such matters, which the parties acknowledge have
been merged into such documents, exhibits and schedules.


 


5.4                                     
Notices. Any
and all
notices or other
communications or
deliveries required
or permitted
to be provided
hereunder shall
be in writing
and shall
be deemed
given and
effective on the earliest of: (a)
one Trading Day after
the date of transmission, if such
notice or communication
is delivered via facsimile
at the facsimile number set
forth on the signature pages
attached hereto prior
to 5:30 p.m. (New York
City time) on a Trading Day, with
written confirmation of successful transmission,
(b) the next Trading Day after
the date of transmission,
if such notice or communication
is delivered via facsimile
at the facsimile
number set forth
on the signature
pages attached
hereto on
a day
that is not
a Trading Day
or later than
5:30 p.m. (New
York City
time) on
any Trading Day,
(c) the second Trading
Day following
the date of mailing, if sent
by U.S. nationally recognized
overnight courier service
or (d) upon actual
receipt by the party to whom such notice
is required to be given. The address
for such notices and communications shall
be as set forth on the signature
pages attached hereto.


 


5.5                                     
Amendments;  Waivers.No
provision of this
Agreement may
be waived,
modified, supplemented
or amended
except in
a written
instrument signed,
in the case
of an
amendment, by
the Company and
the Purchaser
or, in
the case
of a waiver,
by the
party against whom enforcement
of any such waived provision
is sought. No
waiver of any default
with respect to
any provision, condition
or requirement
of this Agreement
shall be deemed
to be a continuing
waiver in the future or a waiver
of any subsequent default or a waiver
of any other provision,
condition or requirement hereof, nor shall any
delay or omission of any party to
exercise any right hereunder in any manner
impair the exercise
of any such right.


 


5.6                                     
Headings. The
headings herein
are for convenience
only, do not
constitute a
part of this Agreement
and shall not be deemed to limit or affect
any of the
provisions hereof.


 


5.7                                      Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written
consent of the Purchaser (other
than by merger). The Purchaser may assign any
or all of its rights under this Agreement to any Person to whom
the Purchaser assigns or transfers any
Securities, provided that such transfer
complies with all applicable federal and
state securities laws and that such transferee agrees
in writing with the Company to be bound, with respect to the transferred
Securities, by the provisions of
the Transaction Documents that
apply to the “Purchaser.”


 


5.8                                      No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any
other Person, except
as otherwise set forth in Section 4.10.






    	24



    	 



    5.9                                      
                         Governing Law. All questions
                         concerning the construction, validity, enforcement
                         and interpretation of the Transaction Documents shall be governed by and construed and
                         enforced in accordance with the internal laws of the State
                         of New York, without regard to the principles of conflicts
                         of law thereof. Each party
                         agrees that all legal
                         proceedings concerning the interpretations,
                         enforcement and defense of
                         the transactions contemplated by this Agreement and any
                         other Transaction Documents (whether
                         brought against a party hereto or its respective affiliates, directors, officers,
                         shareholders, employees or agents) shall
                         be commenced exclusively in the state and federal
                         courts sitting in the City
                         of New York. Each party
                         hereby irrevocably submits to the exclusive jurisdiction of
                         the state and federal courts sitting
                         in the City of New York, borough
                         of Manhattan for the adjudication of any
                         dispute hereunder or in connection herewith or with
                         any transaction contemplated hereby
                         or discussed herein (including with respect
                         to the enforcement of any of the Transaction Documents), and hereby
                         irrevocably waives, and
                         agrees not to assert in any suit, action or proceeding, any claim
                         that it is not
                         personally subject to the jurisdiction of
                         any such court, that such suit, action
                         or proceeding is improper or is an inconvenient
                         venue for such proceeding. Each party hereby
                         irrevocably waives personal service of process and
                         consents to process being served in any
                         such suit, action or proceeding by
                         mailing a copy thereof via registered
                         or certified mail or overnight delivery (with evidence of delivery) to
                         such party at the address in effect
                         for notices to it under this Agreement and agrees that
                         such service shall constitute good and sufficient service
                         of process and notice thereof.
                         Nothing contained herein shall be deemed
                         to limit in any way any right to
                         serve process in any other manner permitted by
                         law. If either party
                         shall commence an
                         action or proceeding to enforce any provisions
                         of the Transaction Documents, then the prevailing party
                         in such action or proceeding shall
                         be reimbursed by the other party for
                         its reasonable attorneys’
                         fees and other costs and
                         expenses incurred with the investigation, preparation
                         and prosecution of such action or proceeding.


 


5.10                                 
Survival. The
representations and
warranties shall
survive the Closing
and the
delivery of the
Debentures until,
with respect
to the Purchaser,
the Debenture
held by
the Purchaser has been paid in
full or converted into Underlying Shares,
at which time they shall expire
such respect to Purchaser and
shall no longer be of any force or
effect.


 


5.11                                 
Execution. This
Agreement may
be executed
in two
or more counterparts,
all of
which when
taken together
shall be considered
one and
the same
agreement and
shall become
effective when
counterparts have
been signed
by each
party and delivered
to the other
party, it being understood
that both parties need not sign the same counterpart.
In the event that any signature
is delivered
by facsimile transmission
or by e-mail delivery of a
“.pdf” format data
file, such signature shall create
a valid and
binding obligation
of the party executing
(or on whose behalf
such signature
is executed) with
the same
force and
effect as
if such facsimile
or “.pdf” signature
page were an original
thereof.


 


5.12                                 
Severability. If
any term,
provision, covenant
or restriction
of this Agreement
is held by
a court
of competent jurisdiction
to be invalid, illegal,
void or unenforceable,
the remainder of the terms,
provisions, covenants and restrictions
set forth herein shall remain
in full force and
effect and shall in no
way be affected, impaired
or invalidated, and
the parties
hereto shall use their
commercially reasonable efforts
to find and
employ an alternative
means to achieve the same
or substantially the same result
as that contemplated by
such term, provision, covenant or
restriction. It is hereby stipulated and
declared to be the intention of the
parties that



    	25



    	 



    they would
have executed the
remaining terms, provisions,
covenants and restrictions
without including any
of such that may be hereafter
declared invalid, illegal, void or
unenforceable.


 


5.13                                  Rescission
and Withdrawal  Right.Notwithstanding anything to the contrary contained in (and without
limiting any similar
provisions of) any of the other Transaction
Documents, whenever the Purchaser
exercises a right,
election, demand or option under a Transaction Document and
the Company does not timely perform its related obligations
within the periods therein
provided, then the Purchaser may rescind
or withdraw, in its sole discretion from
time to time upon written notice
to the Company, any relevant notice, demand
or election in whole or in part without prejudice to
its future actions and rights; provided, however,
that in the case of a rescission
of a conversion of a Debenture or exercise
of a Warrant, the Purchaser shall be required to return any shares of
Common Stock subject to any such rescinded
conversion or exercise notice.


 


5.14                                  Replacement
of Securities.If any certificate or instrument evidencing any Securities is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof
(in the case of
mutilation), or in lieu of and
substitution therefor, a new
certificate or instrument, but only upon receipt
of evidence reasonably satisfactory to the Company of
such loss, theft or destruction.
The applicant for a new certificate or instrument under
such circumstances shall also pay
any reasonable third-party costs
(including customary indemnity) associated with the issuance of
such replacement Securities.


 


5.15                                 
Remedies. In
addition to
being entitled
to exercise all
rights provided herein
or granted
by law,
including recovery of
damages, each
of the Purchaser
and the Company
will be entitled
to specific performance
under the Transaction Documents.
The parties agree
that monetary damages may not be
adequate compensation for any loss incurred
by reason of any
breach of obligations contained in the
Transaction Documents and hereby
agrees to waive and not to assert
in any action for specific performance
of any such obligation the defense that
a remedy at law would be
adequate.


 


5.16                                 
Payment  Set
 Aside.To the
extent that the
Company makes
a payment or
payments to
the Purchaser pursuant
to any
Transaction Document
or the Purchaser
enforces or exercises
its rights thereunder, and
such payment or payments
or the proceeds
of such enforcement
or exercise or
any part thereof
are subsequently invalidated, declared
to be fraudulent or preferential,
set aside, recovered
from, disgorged by or are required
to be refunded, repaid
or otherwise
restored to the
Company, a
trustee, receiver
or any other
person under
any law (including, without limitation,
any bankruptcy law, state or federal law,
common law or equitable
cause of action), then
to the extent of any such restoration
the obligation or part
thereof originally intended to be satisfied
shall be revived and continued
in full force and effect
as if such payment had not been
made or such enforcement or setoff had
not occurred.


 


5.17                                 
Usury. To
the extent it
may lawfully do
so, the Company
hereby agrees
not to insist
upon or plead
or in any
manner whatsoever claim,
and will resist
any and
all efforts
to be
compelled to
take the benefit or
advantage of,
usury laws wherever
enacted, now or
at any
time hereafter in force, in connection
with any claim, action or proceeding
that may be brought by
the Purchaser in order to enforce 
any right or remedy under any
Transaction Document.



    	26



    	 



    Notwithstanding any
provision to the
contrary contained
in any
Transaction Document,
it is expressly
agreed and provided
that the total
liability of the
Company under
the Transaction
Documents for
payments in the
nature of
interest shall
not exceed
the maximum lawful
rate authorized under
applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event
shall any rate of
interest or default interest,
or both of them, when aggregated with any
other sums in the nature of interest that the Company may
be obligated to pay under the Transaction
Documents exceed such Maximum Rate.
It is agreed that if the maximum
contract rate
of interest allowed
by law
and applicable
to the Transaction
Documents is increased or
decreased by statute or any official
governmental action subsequent to the date
hereof, the new maximum contract rate
of interest allowed by law will
be the Maximum Rate applicable to the
Transaction Documents from the effective
date forward, unless such application
is precluded by applicable law.
If under any circumstances whatsoever,
interest in excess of the Maximum Rate
is paid by the Company to the Purchaser
with respect to indebtedness evidenced
by the Transaction Documents,
such excess shall be applied by
the Purchaser to the unpaid principal
balance of any such indebtedness
or be refunded to the Company, the manner
of handling such excess to be at the
Purchaser’s election.


 


5.18                                  Liquidated
Damages. The Company’s
obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and
shall not terminate until all
unpaid partial liquidated damages and
other amounts have been paid
notwithstanding the fact that the instrument or security pursuant to which such
partial liquidated damages or other amounts
are due and payable shall have been canceled.


 


5.19                                  Saturdays,
Sundays, Holidays, etc.If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business
Day, then such action may be taken or such right may
be exercised on the next
succeeding Business Day.


 


5.20                                 
Construction. The
parties agree
that each
of them
and/or their
respective counsel
has reviewed
and had
an opportunity to
revise the Transaction
Documents and,
therefore, the
normal rule
of construction
to the effect
that any ambiguities
are to be resolved
against the drafting party shall not be employed
in the interpretation of the Transaction Documents
or any amendments hereto.


 


5.21                                 
WAIVER OF
JURY TRIAL. IN ANY
ACTION, SUIT, OR
PROCEEDING IN ANY
JURISDICTION BROUGHT
BY ANY
PARTY AGAINST
ANY OTHER
PARTY, THE PARTIES
EACH KNOWINGLY
AND INTENTIONALLY,
TO THE
GREATEST EXTENT
PERMITTED BY APPLICABLE
LAW, HEREBY
ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.


  


 


(Signature
Pages Follow)



    	27



    	 



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


 


	PLADEO CORP.	Address for Notice:






 


	By:	 	Fax:
	 	Name:	 
	 	Title:	 
	With
                                         a copy
                                         to (which shall not constitute
                                         notice):

	 
	 	 	 






 


 


 





 


 


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OF PAGE
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SIGNATURE PAGE FOR PURCHASER FOLLOWS]



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    [PURCHASER
SIGNATURE PAGES TO PLADEO
SECURITIES PURCHASE AGREEMENT]


 


IN
WITNESS WHEREOF,
the undersigned have
caused this
Securities Purchase Agreement
to be duly
executed by their
respective authorized signatories
as of
the date first
indicated above.


 


 






	Name
    of Purchaser:	 



 


	 	 
	Signature
    of Authorized Signatory of
    Purchaser:	 



 


	 	 
	Name
    of Authorized
    Signatory:  	 
	 	 
	Title
    of Authorized Signatory:
     	 
	 	 
	Email
    Address of Authorized Signatory:
     	 
	 	 
	Facsimile
    Number of Authorized
    Signatory:  	 
	 	 
	 	 
	Address
    for Notice
    of Purchaser:	 










 


 


 


Address for
Delivery of Securities
for Purchaser (if not same as address
for notice):


 


 


 


 


 


 


Subscription Amount:
 


 


 


 


 


 


 


EIN Number:
[PROVIDE THIS UNDER SEPARATE COVER]


 


[SIGNATURE PAGES
CONTINUE]


 








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