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    EXHIBIT
      10.1

    

    

    LOAN
      AND SECURITIES PURCHASE
      AGREEMENT

     

    This
      Loan
      and Securities Purchase Agreement (this “Agreement”) is dated
      as of January 15, 2008 between Industrial Enterprises of America, Inc., a Nevada
      corporation (the “Company”), and each
      purchaser identified on the signature pages hereto (each, including its
      successors and assigns, a “Purchaser” and
      collectively the “Purchasers”).

     

    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 each
      Purchaser, and each Purchaser, severally and not jointly, 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

     

    1.1 Definitions.  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 Notes (as defined herein), and (b) the following terms have the meanings
      set
      forth in this Section 1.1:

     

    “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.  With
      respect to a Purchaser, any investment fund or managed account that is managed
      on a discretionary basis by the same investment manager as such Purchaser will
      be deemed to be an Affiliate of such Purchaser.

     

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

     

    “Business
      Day” means
      any day except any Saturday, any 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(s)”
means
      the
      closing(s) of the purchase and sale of the Securities pursuant to Section 2.1
      and any reference to “Closing” or “Closings” shall be construed to include the
      First Closing and the Second Closing unless only one such closing is expressly
      referred to.

     

    “Closing
      Dates” means,
      collectively, the First Closing Date and the Second Closing Date.

     

     “Commission”
means
      the
      Securities and Exchange Commission.

     

    “Common
      Stock” means
      the common stock of the Company, par value $0.001 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.

     

    “Common
      Stock
      Transaction” means the transactions contemplated by that certain Common
      Stock Purchase Agreement dated on or about the date hereof between Brandywine
      Consults, Inc. and the Purchasers, whereby the Purchasers are purchasing an
      aggregate of 500,000 shares of Common Stock of the Company from Brandywine
      Consultants, Inc..

     

    “Company
      Counsel”
means Holland & Knight LLP, outside counsel to the Company, with offices
      located at 195 Broadway New York, NY 10007.

     

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

     

    “Effective
      Date” means
      the date that the initial Registration Statement filed by the Company pursuant
      to Section 4.16 hereof is first declared effective by the Commission.

     

    “Evaluation
      Date”
shall have the meaning ascribed to such term in Section 3.1(r).

     

    “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 or directors of the Company pursuant to any stock or option plan duly
      adopted for such purpose by a majority of the non-employee members of 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 or
      exchange of or conversion of any Securities issued hereunder and/or other
      securities exercisable or exchangeable for or convertible into shares of Common
      Stock issued and outstanding on the date of this Agreement, provided that such
      securities have not been amended since the date of this Agreement to increase
      the number of such securities or to decrease the exercise, exchange or
      conversion price of such securities, and (c) securities issued pursuant to
      acquisitions 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 in a business synergistic with the business of the Company and in which
      the Company receives benefits in addition to the investment of funds, but shall
      not include a transaction in which the Company is issuing securities primarily
      for the purpose of raising capital or to an entity whose primary business is
      investing in securities.

     

    “First
      Closing” shall
      have the meaning set forth in Section 2.1.

     

    “First
      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 Purchasers’ obligations to pay the Subscription Amount as to the First
      Closing and (ii) the Company’s obligations to deliver the Securities deliverable
      at the First Closing have been satisfied or waived.

     

    “FWS”
means
      Feldman
      Weinstein & Smith LLP with offices located at 420 Lexington Avenue, Suite
      2620, New York, New York 10170-0002.

     

    “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.

     

    “Mortgage”
means
      the
      Open-End Mortgage and Security Agreement made by Pitt Penn Oil Company, LLC
      in
      favor of the Purchasers, in the form of Exhibit E attached
      hereto.

     

    “Notes”
means
      the 10%
      Senior Secured Promissory Notes due, subject to the terms therein, 6 months
      from
      their date of issuance, issued by the Company to the Purchasers hereunder,
      in
      the form of Exhibit
      A attached hereto.

     

     “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.

     

    “Registration
      Statement” means a registration statement meeting the requirements set
      forth in Section 4.16 and covering the resale of the Shares and Warrant Shares
      by each Purchaser as provided herein.

     

    “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 Warrant Shares issuable upon exercise in full of all
      Warrants, ignoring any 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 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).

     

    “Second
      Closing” shall
      have the meaning set forth in Section 2.1.

     

    “Second
      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 Purchasers’ obligations to pay the Subscription Amount as to the Second
      Closing and (ii) the Company’s obligations to deliver the Securities deliverable
      at the Second Closing have been satisfied or waived.

     

     “Securities”
means
      the
      Shares, Notes, the Warrants, and the Warrant Shares.

     

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

     

    “Security
      Documents”
shall mean the Subsidiary Guarantees, the Mortgage, and any other documents
      and
      filing required thereunder in order to grant the Purchasers a first priority
      security interest in the real property as described in the Mortgage.

     

    “Shareholder
      Approval”
means such approval as may be required by the applicable rules and regulations
      of the Nasdaq Stock Market (or any successor entity) from the shareholders
      of
      the Company with respect to the transactions contemplated by the Transaction
      Documents, including the issuance of all of the Shares and Warrant Shares in
      excess of 19.99% of the issued and outstanding Common Stock on the Closing
      Date

     

    “Shares”
means
      the
      shares of Common Stock issued or issuable to each Purchaser pursuant to this
      Agreement.

     

    “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). 

     

     “Subscription
      Amount”
means, as to each Purchaser,
      the
      aggregate amount to be paid
      for Notes, Shares and
      Warrants purchased hereunder as specified below such 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.

     

     “Subsidiary
      Guarantee”
means the Subsidiary Guarantee, dated the date hereof, by each Subsidiary
      in
      favor of the Purchasers, in the form of Exhibit B attached
      hereto.

     

    “Trading
      Day” means a
      day on which the New York Stock Exchange 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 Notes, the Warrants,
      the  Security Documents- (including without limitation  the
      Subsidiary Guarantee and the Mortgage), all exhibits and schedules thereto
      and
      hereto and any other documents or agreements executed in connection with the
      transactions contemplated hereunder.

     

    “Transfer
      Agent” means
      Computershare, the current transfer agent of the Company with a mailing address
      of PO Box
      43010, Providence, RI 02940-3010, and a fax number of 303 261-0604, and
      any successor transfer agent of the Company.

     

    “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 Common Stock is not then listed or quoted on the OTC Bulletin
      Board and if prices for the Common Stock are then reported in the “Pink Sheets”
published by Pink Sheets, LLC (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 (d) 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 Purchasers of a majority in interest of the Securities then
      outstanding and reasonably acceptable to the Company, the fees and expenses
      of
      which shall be paid by the Company.

     

    “Warrants”
means,
      collectively, the Common Stock purchase warrants delivered to the Purchasers
      at
      the Closing in accordance with Section 2.2(a) hereof, which Warrants shall
      be
      exercisable immediately and have a term of exercise equal to five years, in
      the
      form of Exhibit C
      attached hereto.

     

    “Warrant
      Shares” means
      the shares of Common Stock issuable upon exercise of the Warrants.

     

     

    ARTICLE
      II.

    PURCHASE
      AND SALE

     

    2.1 Closing.  On
      each Closing Date, upon the terms and subject to the conditions set forth
      herein, the Company agrees to sell, and each Purchaser, severally and not
      jointly, agrees to purchase, up to $1,500,000 of the Notes, it being understood
      that, and as more fully described below, each Purchaser shall indicate on its
      signature page the aggregate Subscription Amount to be purchased hereunder
      by
      such Purchaser, and such Purchaser shall purchase Notes equal to 50% of the
      aggregate Subscription Amount on the First Closing Date and purchase
      Notes  equal to the remaining 50% of the Subscription Amount on the
      Second Closing Date, subject to the conditions set forth herein.  Each Purchaser shall
      deliver to the Company, via wire transfer or a certified check, immediately
      available funds equal to its Subscription Amount as to the applicable Closing,
      and the Company shall deliver to each Purchaser its respective Note, Shares,
      and
      a Warrant, as determined pursuant to Section 2.2(a), and the Company and each
      Purchaser shall deliver the other items set forth in Section 2.2 deliverable
      at
      the applicable Closing.  Upon satisfaction of the conditions set forth
      in Sections 2.2 and 2.3, the Closings shall occur at the offices of FWS or
      such
      other location as the parties shall mutually agree.

     

    (a) First
      Closing.  The First Closing shall be for $750,000 of the
      aggregate Subscription Amount by all Purchasers hereunder and shall occur on,
      or
      as soon as reasonably practicable following, the date hereof.

     

    (b) Second
      Closing.  The Second Closing shall be for $750,000 of the
      aggregate Subscription Amount subscribed for by all Purchasers hereunder and
      shall occur within 5 Business Days of the date which is the latest of (i) the
      date the Company files its Annual Report for the year ended June 30, 2007 with
      the Commission, (ii) the date the Company files its Quarterly Report for the
      quarter ended September 30, 2007 with the Commission and (iii) the date the
      Company is otherwise current in its reporting obligations under the Exchange
      Act
      (and indicated compliance with such reporting obligations on the cover page
      of
      its most recent period report filed with the Commission), and in any event
      on or
      before March 15, 2008.

     

    2.2 Deliveries

     

    .

     

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

     

    (i) as
      to the
      First Closing, this Agreement duly executed by the Company;

     

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

     

    (iii) as
      to the
      First Closing, a Note with a principal amount equal to such Purchaser’s
      Subscription Amount for the First Closing as set forth on its signature page
      hereto, registered in the name of such Purchaser;

     

    (iv) as
      to the
      Second Closing, a Note with a principal amount equal to such Purchaser’s
      Subscription Amount for the Second Closing as set forth on its signature page
      hereto, registered in the name of such Purchaser;

     

    (v) as
      to the
      First Closing, a Warrant registered in the name of such Purchaser to purchase
      up
      to such Purchaser’s pro-rata share of 75,000 shares of Common Stock, with an
      exercise price equal to $_____1,
      subject to adjustment therein, it
      being understood that Warrants to purchase a total of 75,000 shares shall be
      issued at the First Closing;

     

    (vi) a
      certificate of the Secretary of the Company, dated as of the Closing Date,
      (w)
      certifying the resolutions adopted unanimously by the Board of Directors of
      the
      Company approving the transactions contemplated by this Agreement and the other
      Transaction Documents and the issuance of the Securities, (x) certifying the
      current versions of the certificate or articles of incorporation, as amended
      and
      by-laws of the Company and its Subsidiaries, (y) certifying as to the signatures
      and authority of persons signing the Transaction Documents and related documents
      on behalf of the Company and its Subsidiaries and (z) confirming that the
      representations and warranties of the Company contained herein are accurate
      in
      all material respects when made and on the applicable Closing Date;

     

    (vii) as
      to the
      First Closing, a certificate, evidencing a number of Shares equal to such
      Purchaser’s pro-rata portion of 2,000,000 shares of Common Stock (based on such
      Purchaser’s Subscription Amount hereunder and the aggregate Subscription Amount
      of all Purchasers hereunder), registered in the name of such Purchaser, it
      being
      understood that all 2,000,000 shares shall be issued at the First
      Closing;

     

    (viii) as
      to the
      Second Closing, the Mortgage, along with all of the other Security Documents,
      duly executed by the parties thereto and acknowledged where applicable;
      and

     

    (ix) as
      to the
      First Closing, the Subsidiary Guarantees, duly executed by the parties thereto
      and acknowledged where applicable.

     

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

     

    (i) as
      to the
      First Closing, this Agreement duly executed by such Purchaser; and

     

    (ii) such
      Purchaser’s Subscription Amount for the applicable Closing by wire transfer to
      the account as specified in writing by the Company.

     

    2.3 Closing
      Conditions.

     

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

     

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

     

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

     

    (iii) the
      respective Subscription Amounts for the First and Second Closing shall be
      $750,000, for an aggregate Subscription Amount of
      $1,500,000;  and

     

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

     

    (b) The
      respective obligations of the Purchasers hereunder in connection with each
      Closing (except as noted) are subject to the following conditions being
      met:

     

    (i) the
      accuracy in all material respects when made and on the applicable 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 applicable Closing Date shall have been performed;

     

    (iii) the
      aggregate Subscription Amounts for the First and Second Closing shall be
      $1,500,000;

     

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

     

    (v) as
      to the
      Second Closing only, evidence of the filing of the Mortgage in the office of
      the
      Recorder of Deeds of Allegheny County, Commonwealth of
      Pennsylvania;

     

    (vi) as
      to the
      First Closing only, the Common Stock Transaction shall have been
      consummated;

     

    (vii) as
      to the
      Second Closing only, the Company shall be current in its reporting obligations
      under the Exchange Act (and indicated compliance with such reporting obligations
      on the cover page of its most recent period report filed with the
      Commission);

     

    (viii) as
      to the
      Second Closing only, such Closing shall occur on or before March 15,
      2008;

     

    (ix) there
      shall have been no Material Adverse Effect with respect to the Company since
      the
      date hereof; and

     

    (x) from
      the
      date hereof to the applicable Closing Date, trading in the Common Stock shall
      not have been suspended by the Commission  or the Company’s principal
      Trading Market (except for any suspension of trading of limited duration agreed
      to by the Company, which suspension shall be terminated prior to the applicable
      Closing), and, at any time prior to the applicable Closing Date, trading in
      securities generally as reported by Bloomberg L.P. shall not have been suspended
      or limited, or minimum prices shall not have been established on securities
      whose trades are reported by such service, or on any Trading Market, nor shall
      a
      banking moratorium have been declared either by the United States or New York
      State authorities nor shall there have occurred any material outbreak or
      escalation of hostilities or other national or international calamity of such
      magnitude in its effect on, or any material adverse change in, any financial
      market which, in each case, in the reasonable judgment of each Purchaser, makes
      it impracticable or inadvisable to purchase the Securities at the applicable
      Closing.

     

     

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Representations
      and Warranties of the Company.

     

    Except
      as
      set forth under the corresponding section of the disclosure schedules delivered
      to the Purchasers concurrently herewith (the “Disclosure Schedules”) which
      Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
      the
      representations and warranties set forth below to each PurchaserExcept 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 Schedule
      3.1(a).  The Company owns, 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.

     

    (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
      (as applicable), 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 or
      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 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.

     

    (d) No
      Conflicts.  The execution, delivery and performance of the
      Transaction Documents by the Company and the consummation by the Company 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, or (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) filings required pursuant to Section 4.6, (ii) the filing with the
      Commission of the Registration Statement, (iii) the notice and/or application(s)
      to each applicable Trading Market for the issuance and sale of the Securities
      and the listing of the Shares and Warrant 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 Shares and Warrant 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
      Shares and Warrant Shares at least equal to the Required Minimum on the date
      hereof.

     

    (g) Capitalization.  The
      capitalization of the Company is as set forth on Schedule 3.1(g),
      which Schedule
      3.1(g) shall also include the number of shares of Common Stock owned
      beneficially, and of record, by Affiliates of the Company as of the date hereof.
      The Company has not issued any capital stock since its most recently filed periodic
      report
      under the Exchange Act, other than pursuant to the exercise of employee
      stock options under the Company’s stock option plans, the issuance of shares of
      Common Stock to employees pursuant to the Company’s employee stock purchase
      plans and pursuant to the conversion or exercise of Common Stock Equivalents
      outstanding as of the date of the most recently filed periodic report under
      the
      Exchange Act.  No Person has any right of first refusal, preemptive
      right, right of participation, or any similar right to participate in the
      transactions contemplated by the Transaction Documents.  Except as a
      result of the purchase and sale of the Securities, there are no outstanding
      options, warrants, scrip rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities, rights or obligations
      convertible into or exercisable or exchangeable for, or giving any Person any
      right to subscribe for or acquire, any shares of Common Stock, or contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to issue additional shares of Common Stock
      or
      Common Stock Equivalents. 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 Purchasers) 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.  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.  Except as set forth on Schedule
      3.1(h), 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.  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 United States generally accepted
      accounting principles applied on a consistent basis during the periods involved
      (“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.  Since the date of the latest audited financial
      statements included within the SEC Reports, except as specifically disclosed
      in
      a subsequent SEC Report filed prior to the date hereof, (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 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 stock option 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 or as set forth on Schedule 3.1(i), 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.  The Company
      and its Subsidiaries are in compliance with all U.S. 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.  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 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 case 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 as described in the SEC Reports, 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 owned by them and good
      and
      marketable title in all personal property owned by them that 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.  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.  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 necessary
      or
      material for use in connection with their respective businesses as described
      in
      the SEC Reports and which the failure to so have could have a Material Adverse
      Effect (collectively, the “Intellectual Property
      Rights”).  Neither the Company nor any Subsidiary has received
      a notice (written or otherwise) that any of the Intellectual Property Rights
      used by the Company or any Subsidiary violates or infringes upon the rights
      of
      any Person. To the knowledge of the Company, all such Intellectual Property
      Rights are enforceable and there is no existing infringement by another Person
      of any of the Intellectual Property Rights.  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 are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged, 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 $60,000 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) Sarbanes-Oxley;
      Internal
      Accounting Controls.  The Company is in material compliance
      with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable
      to it
      as of the each 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.

     

    (s) Certain
      Fees.  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.  The
      Purchasers 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.

     

    (t) Private
      Placement.  Assuming the accuracy of the Purchasers’
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 Purchasers as contemplated hereby. The issuance and sale of
      the
      Securities hereunder does not contravene the rules and regulations of the
      Trading Market.

     

    (u) 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.

     

    (v) Registration
      Rights.  Other than each of the Purchasers, no Person has any
      right to cause the Company to effect the registration under the Securities
      Act
      of any securities of the Company.

     

    (w) 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.

     

    (x) 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 Purchasers
      as a
      result of the Purchasers 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
      Purchasers’ ownership of the Securities.

     

    (y) Disclosure.  Except
      with respect to the material terms and conditions of the transactions
      contemplated by the Transaction Documents, the Company confirms that neither
      it
      nor any other Person acting on its behalf has provided any of the Purchasers
      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 Purchasers will rely on the foregoing
      representation in effecting transactions in securities of the
      Company.  All disclosure furnished by or on behalf of the Company to
      the Purchasers 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
      no Purchaser makes or has made any representations or warranties with respect
      to
      the transactions contemplated hereby other than those specifically set forth
      in
      Section 3.2 hereof.

     

    (z) No
      Integrated
      Offering. Assuming the accuracy of the Purchasers’ 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.

     

    (aa) Solvency.  Based
      on the consolidated financial condition of the Company as of the applicable
      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 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 applicable Closing
      Date.  Schedule 3.1(aa) sets
      forth as of the date hereof all outstanding secured and unsecured Indebtedness
      of the Company or any Subsidiary, or for which the Company or any Subsidiary
      has
      commitments.  For the purposes of this Agreement, “Indebtedness” means
      (a) any liabilities for borrowed money or amounts owed in excess of $50,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations in respect
      of
      indebtedness of others, whether or not the same are or should be reflected
      in
      the Company’s balance sheet (or the notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of
      any lease payments in excess of $50,000 due under leases required to be
      capitalized in accordance with GAAP.  Neither the Company nor any
      Subsidiary is in default with respect to any Indebtedness.

     

    (bb) 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.

     

    (cc) 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 Purchasers and certain other “accredited
      investors” within the meaning of Rule 501 under the Securities Act.

     

    (dd) 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 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.

     

    (ee) Accountants.  The
      Company’s accounting firm is set forth on Schedule 3.1(ee) of
      the Disclosure Schedule.  To the knowledge and belief of the Company,
      such accounting firm (i) is a registered public accounting firm as required
      by
      the Exchange Act and (ii) shall express its opinion with respect to the
      financial statements to be included in the Company’s Annual Report for the year
      ending March 31, 2008.

     

    (ff) Seniority.  Except
      as set forth on Schedule 3.1(ff), as
      of the applicable Closing Date, no Indebtedness or other claim against the
      Company is senior to the Notes in right of payment, whether with respect to
      interest or upon liquidation or dissolution, or otherwise, other than
      indebtedness secured by purchase money security interests (which is senior
      only
      as to underlying assets covered thereby) and capital lease obligations (which
      is
      senior only as to the property covered thereby).

     

    (gg) No
      Disagreements with
      Accountants and Lawyers.  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 current with respect to any fees
      owed
      to its accountants and lawyers which could affect the Company’s ability to
      perform any of its obligations under any of the Transaction
      Documents.

     

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

     

    (ii) Acknowledgment
      Regarding Purchasers’ Trading Activity.  Notwithstanding
      anything in this Agreement
      or elsewhere
      herein to the contrary (except for Sections 3.2(f)
      and 4.14hereof),
      it is understood and
      acknowledgedby the
      Companythat (i) none of
      the Purchasers hasbeen
      asked to agreeby the
      Company, nor has any
      Purchaser agreed, to desist from purchasing or selling, long and/or short,
      securities of the Company, or “derivative” securities based on securities issued
      by the Company or to hold the Securities for any specified term,(ii)
      past or future open market or other
      transactions by any Purchaser, specifically including, without limitation,
      Short
      Sales or “derivative” transactions, before or after the closing of this or
      future private placement transactions, may negatively impact the market price
      of
      the Company’s
      publicly-traded securities,(iii) any
      Purchaser, and counter-parties in “derivative” transactions to
      which any such Purchaser is a party, directly or indirectly, may presently
      have
      a “short” position in the Common Stock, and (iv) each Purchaser shall not be
      deemed to have any affiliation with or control over any arm’s length
      counter-party in any “derivative” transaction.  The Company
      further understands and acknowledges that (a) one or more Purchasers may engage
      in hedging activities at various times during the period that the Securities
      are
      outstanding, including, without limitation, during the periods that the value
      of
      the Shares and Warrant Shares deliverable with respect to Securities are being
      determined and (b) such hedging activities (if any) could reduce the value
      of
      the existing stockholders' equity interests in the Company at and after the
      time
      that the hedging activities are being conducted.  The Company acknowledges
      that such aforementioned hedging activities do not constitute a breach of any
      of
      the Transaction Documents.

     

    (jj) Regulation
      M
      Compliance.  The Company has not, and to its knowledge no one acting
      on its behalf has, (i) taken, directly or indirectly, any action designed to
      cause or to result in the stabilization or manipulation of the price of any
      security of the Company to facilitate the sale or resale of any of the
      Securities, (ii) sold, bid for, purchased, or paid any compensation for
      soliciting purchases of, any of the securities of the Company or (iii) paid
      or
      agreed to pay to any Person any compensation for soliciting another to purchase
      any other securities of the Company, other than, in the case of clauses (ii)
      and
      (iii), compensation paid to the Company’s placement agent in connection with the
      placement of the Securities.

     

    3.2 Representations
      and
      Warranties of the Purchasers.    Each Purchaser, for
      itself and for no other Purchaser hereby, represents and warrants as of the
      date
      hereof and as of the Closing Date to the Company as follows:

     

    (a) Organization;
      Authority.  Such Purchaser is an entity duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      organization with 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
      such
      Purchaser of the transactions contemplated by the Transaction Documents have
      been duly authorized by all necessary corporate or similar action on the part
      of
      such Purchaser.  Each Transaction Document to which it is a party has
      been duly executed by such Purchaser, and when delivered by such Purchaser
      in
      accordance with the terms hereof, will constitute the valid and legally binding
      obligation of such Purchaser, enforceable against it in accordance with its
      terms, except (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.

     

    (b) Own
      Account.  Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
      any applicable state securities law and is acquiring the 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 such Purchaser’s right to sell
      the Securities pursuant to the 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.  Such Purchaser
      is acquiring the Securities hereunder in the ordinary course of its
      business.

     

    (c) Purchaser
      Status.  At the time such Purchaser was offered the Securities,
      it was, and at the date hereof it is, and on each date on which it exercises
      any
      Warrants 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.  Such Purchaser is not required to be registered as a
      broker-dealer under Section 15 of the Exchange Act.

     

    (d) Experience
      of Such
      Purchaser.  Such 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.  Such Purchaser is able to bear the
      economic risk of an investment in the Securities and, at the present time,
      is
      able to afford a complete loss of such investment.

     

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

     

    (f) Short
      Sales
      and Confidentiality
      Prior To The Date Hereof.  Other than consummating
      the
      transactions contemplated hereunder, such Purchaser has not directly or
      indirectly, nor has any Person acting on behalf of or pursuant to any
      understanding with such Purchaser, executed any purchases or sales, including
      Short Sales, of the securities of the Company during the period commencing
      from the time that such Purchaser first received a term sheet (written or
      oral) from the Company or any other Person representing the Company setting
      forth the material terms of the transactions contemplated hereunder until the
      date hereof (“Discussion
      Time”).  Notwithstanding
      the
      foregoing, in the case of a Purchaser that is a multi-managed investment vehicle
      whereby separate portfolio managers manage separate portions of such Purchaser's
      assets and the portfolio managers have no direct knowledge of the investment
      decisions made by the portfolio managers managing other portions of such
      Purchaser's assets, the representation set forth above shall only apply with
      respect to the portion of assets managed by the portfolio manager that made
      the
      investment decision to purchase the Securities covered by this
      Agreement.  Other than to other Persons party to this Agreement, such
      Purchaser has maintained the confidentiality of all disclosures made to it
      in
      connection with this transaction (including the existence and terms of this
      transaction).

     

     

    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 to an Affiliate of a Purchaser 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 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
      Purchasers agree to the imprinting, so long as is required by this Section
      4.1,
      of a legend on any of the Shares, Warrants and Warrant Shares in the following
      form:

     

    [NEITHER]
      THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE]
      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 EXERCISE 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 a 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 to be bound by the provisions of this Agreement
      and, if required under the terms of such arrangement, such Purchaser may
      transfer pledged or secured Securities to the pledgees or secured
      parties.  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 appropriate
      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, including, if the
      Securities are subject to registration pursuant to this Agreement, the
      preparation and filing of any required prospectus supplement under Rule
      424(b)(3) under the Securities Act or other applicable provision of the
      Securities Act to appropriately amend the list of Selling Stockholders
      thereunder.

     

    (c) Certificates
      evidencing the Shares and Warrant Shares shall not contain any legend (including
      the legend set forth in Section 4.1(b) hereof): (i) while a registration
      statement (including the Registration Statement) covering the resale of such
      security is effective under the Securities Act, or (ii) following any sale
      of
      such Shares or Warrant Shares pursuant to Rule 144, or (iii) if such Shares
      or
      Warrant Shares are eligible for sale under Rule 144(k), or (iv) if such legend
      is not required under applicable requirements of the Securities Act (including
      judicial interpretations and pronouncements issued by the staff of the
      Commission). The Company shall cause its counsel to issue a legal opinion to
      the
      Transfer Agent promptly after the Effective Date if required by the Transfer
      Agent to effect the removal of the legend hereunder.  If all or any
      portion of a Warrant is exercised (as applicable) at a time when there is an
      effective registration statement to cover the resale of the Warrant Shares,
      or
      if such Shares or Warrant Shares may be sold under Rule 144(k) or 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) then such Shares or Warrant Shares shall be issued free of
      all
      legends.  The Company agrees that following the Effective Date or at
      such time as such legend is no longer required under this Section 4.1(c), it
      will, no later than three Trading Days following the delivery by a Purchaser
      to
      the Company or the Transfer Agent of a certificate representing the Shares
      or
      Warrant Shares, as applicable, issued with a restrictive legend (such third
      Trading Day, the “Legend Removal
      Date”), deliver or cause to be delivered to such Purchaser a certificate
      representing such shares that is free from all restrictive and other
      legends.  The Company may not make any notation on its records or give
      instructions to the Transfer Agent that enlarge the restrictions on transfer
      set
      forth in this Section.  Certificates for Shares or Warrant Shares
      subject to legend removal hereunder shall be transmitted by the Transfer Agent
      to the Purchaser by crediting the account of the Purchaser’s prime broker with
      the Depository Trust Company System as directed by such Purchaser.

    

    (d) In
      addition to such Purchaser’s other available remedies, the Company shall pay to
      a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
      each $1,000 of Shares or Warrant 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 is delivered without a legend.  Nothing herein shall limit
      such 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 such 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) Each
      Purchaser, severally and not jointly with the other Purchasers, agrees that
      such
      Purchaser will sell any Securities pursuant to either the registration
      requirements of the Securities Act, including any applicable prospectus delivery
      requirements, or an exemption therefrom, 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 Shares and Warrant Shares pursuant to the Transaction Documents,
      are
      unconditional and 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 any 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 time that no Purchaser owns Securities,
      the Company covenants 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 even if the
      Company is not then subject to the reporting requirements of the Exchange
      Act.    As long as any Purchaser owns Securities, if the
      Company is not required to file reports pursuant to the Exchange Act, it will
      prepare and furnish to the Purchasers and make publicly available in accordance
      with Rule 144(c) such information as is required for the Purchasers to sell
      the
      Securities under Rule 144.  The Company further covenants that it will
      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
      Purchasers in a manner that would require the registration under the Securities
      Act of the sale of the Securities to the Purchasers or that would be integrated
      with the offer or sale of the Securities for purposes of the rules and
      regulations of any Trading Market.

     

    4.5 Exercise
      Procedures.  The form of Notice of Exercise included in the
      Warrants sets forth the totality of the procedures required of the Purchasers
      in
      order to exercise the Warrants.  No additional legal opinion or other
      information or instructions shall be required of the Purchasers to exercise
      their Warrants.  The Company shall honor exercises of the Warrants and
      shall deliver Warrant 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 following the date hereof, issue a Current Report
      on
      Form 8-K disclosing the material terms of the transactions contemplated hereby
      and attaching the Transaction Documents as exhibits thereto.  The
      Company and each Purchaser shall consult with each other in issuing any other
      press releases with respect to the transactions contemplated hereby, and neither
      the Company nor any Purchaser shall issue any such press release or otherwise
      make any such public statement without the prior consent of the Company, with
      respect to any press release of any Purchaser, or without the prior consent
      of
      each 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, the Company shall not
      publicly disclose the name of any Purchaser, or include the name of any
      Purchaser in any filing with the Commission or any regulatory agency or Trading
      Market, without the prior written consent of such Purchaser, except (i) as
      required by federal securities law in connection with (A) any registration
      statement contemplated hereby and (B) the filing of final Transaction Documents
      (including signature pages thereto) with the Commission and (ii) to the extent
      such disclosure is required by law or Trading Market regulations, in which
      case
      the Company shall provide the Purchasers with prior notice of such disclosure
      permitted under this clause (ii).

     

    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 any Purchaser is an
      “Acquiring Person” under any control share acquisition, business combination,
      poison pill (including any distribution under a rights agreement) or similar
      anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
      or that any Purchaser could be deemed to trigger the provisions of any such
      plan
      or arrangement, by virtue of receiving Securities under the Transaction
      Documents or under any other agreement between the Company and the
      Purchasers.

     

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

     

    4.9 Use
      of
      Proceeds.  Except as set forth on Schedule
      4.9 attached
      hereto, the Company shall use the net proceeds from the sale of the Securities
      hereunder for working capital purposes, including, but not limited to, repayment
      of existing bridge loans, and funding production, 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
      Purchasers.   Subject to the provisions of this Section
      4.10, the Company will indemnify and hold each 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 such 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 (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 such 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 such Purchaser may have with any such stockholder or any
      violations by the Purchaser of state or federal securities laws or any conduct
      by such Purchaser which constitutes fraud, gross negligence, willful misconduct
      or malfeasance).  If any action shall be brought against any 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 (i) for any settlement by a Purchaser Party effected without
      the
      Company’s prior written consent, which shall not be unreasonably withheld or
      delayed; or (ii) 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 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
      day
      after such date. In addition, the Company shall hold a special meeting of
      shareholders (which may also be at the annual meeting of shareholders) at the
      earliest practical date after the date the number of shares of Common Stock
      issuable pursuant to this Agreement on a fully converted or exercised basis
      (ignoring for such purposes any exercise limitations therein) exceeds 15% of
      the
      issued and outstanding shares of Common Stock on the First Closing Date for
      the
      purpose of obtaining Shareholder Approval, with the recommendation of the
      Company’s Board of Directors that such proposal be approved, and the Company
      shall solicit proxies from its shareholders in connection therewith in the
      same
      manner as all other management proposals in such proxy statement and all
      management-appointed proxyholders shall vote their proxies in favor of such
      proposal.  If the Company does not obtain Shareholder Approval at the
      first meeting, the Company shall call a meeting every four months thereafter
      to
      seek Shareholder Approval until the earlier of the date Shareholder Approval
      is
      obtained or the date the Warrants are no longer outstanding.

     

    (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 soon as possible thereafter,
      (iii) provide to the Purchasers 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 Subsequent
      Equity
      Sales.

     

    (a) From
      the
      date hereof until such time as no Purchaser holds any of the Securities, the
      Company shall be prohibited from effecting or entering into an agreement to
      effect any Subsequent Financing involving a Variable Rate Transaction. “Variable Rate
      Transaction” means a transaction in which the Company issues or sells (i)
      any debt or equity securities that are convertible into, exchangeable or
      exercisable for, or include the right to receive additional shares of Common
      Stock either (A) at a conversion, exercise or exchange rate or other price
      that
      is based upon and/or varies with the trading prices of or quotations for the
      shares of Common Stock at any time after the initial issuance of such debt
      or
      equity securities, or (B) with a conversion, exercise or exchange price that
      is
      subject to being reset at some future date after the initial issuance of such
      debt or equity security or upon the occurrence of specified or contingent events
      directly or indirectly related to the business of the Company or the market
      for
      the Common Stock or (ii) enters into any agreement, including, but not limited
      to, an equity line of credit, whereby the Company may sell securities at a
      future determined price.

     

    (b) Unless
      Shareholder Approval has been obtained and deemed effective, neither the Company
      nor any Subsidiary shall make any issuance whatsoever of Common Stock or Common
      Stock Equivalents which would cause any adjustment of the exercise price of
      the
      Warrants to the extent the holders of the Warrants would not be permitted,
      pursuant to Section 2(d)(ii) of the Warrants to exercise their respective
      Warrants in full, ignoring for such purposes the exercise limitations
      therein.  Any Purchaser shall be entitled to obtain injunctive relief
      against the Company to preclude any such issuance, which remedy shall be in
      addition to any right to collect damages

     

    4.13 Equal
      Treatment of
      Purchasers.  No consideration shall be offered or paid to any
      Person to amend or consent to a waiver or modification of any provision of
      any
      of the Transaction Documents unless the same consideration is also offered
      to
      all of the parties to the Transaction Documents. Further, the Company shall
      not
      make any payment of principal or interest on the Notes in amounts which are
      disproportionate to the respective principal amounts outstanding on the Notes
      at
      any applicable time.  For clarification purposes, this provision
      constitutes a separate right granted to each Purchaser by the Company and
      negotiated separately by each Purchaser, and is intended for the Company to
      treat the Purchasers as a class and shall not in any way be construed as the
      Purchasers acting in concert or as a group with respect to the purchase,
      disposition or voting of Securities or otherwise.

     

    4.14 Short
      Sales and
      Confidentiality After The Date Hereof. Each Purchaser, severally and not
      jointly with the other Purchasers, covenants that neither it nor any Affiliate
      acting on its behalf or pursuant to any understanding with it will execute
      any
      Short Sales during the period commencing at the Discussion Time and ending
      at
      the time that the transactions contemplated by this Agreement are first publicly
      announced as described in Section 4.6.  Each Purchaser, severally and not
      jointly with the other Purchasers, covenants that until such time as the
      transactions contemplated by this Agreement are publicly disclosed by the
      Company as described in Section 4.6, such Purchaser will maintain the
      confidentiality of the existence and terms of this transaction and the
      information included in the Disclosure Schedules.  Each Purchaser severally
      and not jointly with any other Purchaser understands and acknowledges, and
      agrees, to act in a manner that will not violate the positions of the Commission
      as set forth in Item 65, Section A, of the Manual of Publicly Available
      Telephone Interpretations, dated July 1997, compiled by the Office of Chief
      Counsel, Division of Corporation Finance. Notwithstanding the foregoing, no
      Purchaser makes any representation, warranty or covenant hereby that it will
      not
      engage in Short Sales in the securities of the Company after the time that
      the
      transactions contemplated by this Agreement are first publicly announced as
      described in Section 4.6.  Notwithstanding the foregoing, in the case of a
      Purchaser that is a multi-managed investment vehicle whereby separate portfolio
      managers manage separate portions of such Purchaser’s assets and the portfolio
      managers have no direct knowledge of the investment decisions made by the
      portfolio managers managing other portions of such Purchaser’s assets, the
      covenant set forth above shall only apply with respect to the portion of assets
      managed by the portfolio manager that made the investment decision to purchase
      the Securities covered by this Agreement.

     

    4.15 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 any 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 Purchasers
      at
      the Closings 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 any Purchaser.

     

    4.16 Registration
      Rights.

     

    
      	
              (a)

            	
              Piggy-Back
                Registration Rights. If, at any time, the Company shall determine
                to proceed with the preparation and filing of a Registration Statement,
                in
                connection with the proposed offer and sale of any of its securities
                by it
                or any of its security holders (other than a registration statement
                on
                Form S-4, S-8 or other similar limited purpose form), the Company
                will give written notice of its determination to the
                Purchasers.  Upon receipt of a written request from the
                Purchasers within thirty calendar days after receipt of any such
                notice
                from the Company, the Company will, except as herein provided, cause
                all
                the Shares and Warrant Shares issued or issuable to the Purchasers,
                to the
                extent requested by the Purchasers, to be included in such Registration
                Statement, all to the extent required to permit the sale or other
                disposition by the Purchasers of such shares of Common
                Stock.  The obligation of the Company under this
                Section 4.19(a) shall be unlimited as to the number of Registration
                Statements to which it applies. 

            

    

     

    (b)           
      Registration
      Procedures.  In the case of each registration effected by the
      Company pursuant to Section 4.16 hereof, the Company will keep the Purchaser
      advised, in writing, as to the initiation of each registration and as to the
      completion thereof. At its expense, the Company will:

     

    
      	
              i.  

            	
              Keep
                such registration effective until the earlier of (i) 24 months and
                (ii)
                all Registrable Securities covered by such Registration Statement
                have
                been sold or may be sold without volume restrictions pursuant to
                Rule
                144(k) as determined by the counsel to the Company pursuant to a
                written
                opinion letter to such effect, addressed and acceptable to the Company’s
                transfer agent and the affected Holders (the “Effectiveness
                Period”);  provided,
however,
                that
                (i) such Effectiveness Period shall be extended for a period of time
                equal
                to the period Purchaser refrains from selling any shares of Common
                Stock
                included in such registration at the request of an underwriter of
                securities of the Company or at the request of the Company or a Trading
                Market, and (ii) in the case of any registration of securities on
                Form S-3
                or comparable successor form which are intended to be offered on
                a
                continuous or delayed basis, such Effectiveness Period shall be extended,
                if necessary, to keep the Registration Statement effective until
                all
                securities are sold, provided that applicable rules and regulations
                under
                the Securities Act governing the obligation to file a post-effective
                amendment permit, in lieu of filing a post-effective amendment which
                (x)
                includes any prospectus required by Section 10(a)(3) of the Securities
                Act
                or (y) reflects facts or events representing a material or fundamental
                change in the information set forth in the Registration Statement,
                the
                incorporation by reference of information required to be included
                in (x)
                and (y) hereof to be contained in periodic reports filed pursuant
                to
                Section 13 or 15(d) of the Exchange Act in the Registration
                Statement;

            

    

     

    
      	
              ii.  

            	
              Prepare
                and file with the Commission such amendments and supplements to such
                Registration Statement and the prospectus used in connection with
                such
                Registration Statement as may be necessary to comply with the provisions
                of the Securities Act with respect to a disposition of all securities
                covered by such Registration
                Statement;

            

    

     

    
      	
              iii.  

            	
              Furnish
                to each Purchaser and its legal counsel (i) promptly after the same
                is
                prepared and publicly distributed, filed with the Commission or received
                by the Company, one copy of the Registration Statement and any amendment
                thereto, each preliminary prospectus and prospectus and each amendment
                or
                supplement thereto in both electronic and print format, and (ii)
                such
                number of copies of a prospectus, including a preliminary prospectus,
                and
                all amendments and supplements thereto, and such other documents
                as each
                Purchaser may reasonably request in order to facilitate the disposition
                of
                the shares of Common Stock owned by such
                Purchaser;

            

    

     

    
      	
              iv.  

            	
              Notify
                each Purchaser at any time when a prospectus relating thereto is
                required
                to be delivered under the Securities Act, of the happening of any
                event as
                a result of which the prospectus included in such Registration Statement,
                as then in effect, includes an untrue statement of a material fact
                or
                omits to state a material fact required to be stated therein or necessary
                to make the statements therein not misleading or incomplete in light
                of
                the circumstances then existing, and at the request of such Purchaser,
                prepare and furnish to it a reasonable number of copies of a supplement
                to
                or an amendment of such prospectus as may be necessary so that, as
                thereafter delivered to such Purchaser, such prospectus shall not
                include
                an untrue statement of a material fact or omit to state a material
                fact
                required to be stated therein or necessary to make the statements
                therein
                not misleading or incomplete in light of the circumstances then
                existing;

            

    

     

    
      	
              v.  

            	
              Use
                its best efforts to prevent the issuance of any stop order or other
                suspension of effectiveness of a Registration Statement, and, if
                such an
                order is issued, to obtain the withdrawal of such order at the earliest
                possible moment and to notify each Purchaser (or, in the event of
                an
                underwritten offering, the managing underwriters) of the issuance
                of such
                order and the resolution thereof;

            

    

     

    
      	
              vi.  

            	
              Cause
                all such shares of Common Stock to be listed or included for quotation
                on
                a Trading Market on which the Common Stock is then listed, traded
                or
                included for quotation;

            

    

     

    
      	
              vii.  

            	
              Provide
                a transfer agent and registrar for all such shares of Common Stock
                and
                CUSIP number for all such shares of Common Stock, in each case not
                later
                than the effective date of such
                registration;

            

    

     

    
      	
              viii.  

            	
              Make
                available for inspection by the Purchasers, any underwriter participating
                in any disposition pursuant to such Registration Statement and any
                attorney or accountant retained by the Purchasers or underwriter,
                all
                financial and other records, pertinent corporate documents and properties
                of the Company and cause the Company's officers and directors to
                supply
                all information reasonably requested by Purchaser, any underwriter,
                attorney or accountant in connection with such Registration
                Statement;

            

    

     

    
      	
              ix.  

            	
              Furnish
                to each Purchaser or its counsel a copy of all documents filed with
                and
                all correspondence from or to the Commission in connection with any
                such
                registration;

            

    

     

    
      	
              x.  

            	
              Otherwise
                use its best efforts to comply with all applicable rules and regulations
                of the Commission;

            

    

     

    
      	
              xi.  

            	
              In
                connection with any underwritten offering pursuant to a Registration
                Statement, enter into any underwriting agreement reasonably necessary
                to
                effect the offer and sale of securities, provided such underwriting
                agreement contains customary underwriting provisions and provided,
                further, that if the managing underwriter so requests, the underwriting
                agreement will contain customary indemnification and contribution
                provisions;

            

    

     

    
      	
              xii.  

            	
              Hold
                in confidence and not make any disclosure of information concerning
                each
                Purchaser provided to the Company unless (i) disclosure of such
                information is necessary to comply with federal or state securities
                laws,
                (ii) the disclosure of such information is necessary to avoid or
                correct a
                misstatement or omission in any Registration Statement, (iii) the
                release
                of such information is ordered pursuant to a subpoena or other order
                from
                a court or governmental body of competent jurisdiction or (iv) such
                information has been made generally available to the public other
                than by
                disclosure in violation of this or any other agreement; and, upon
                learning
                that disclosure of such information concerning the Purchaser is sought
                in
                or by a court or governmental body of competent jurisdiction or through
                other means, give prompt notice to Purchaser and, at its expense,
                undertake appropriate action to prevent disclosure of, or to obtain
                a
                protective order for, such information;
                and

            

    

     

    
      	
              xiii.  

            	
              Take
                all other reasonable actions
                necessary to expedite and facilitate disposition by each Purchaser
                of the
                shares of Common Stock pursuant to the Registration
                Statement.

            

    

     

    

        4.17           
          Additional
          Shares.  In the event that the Company is not current in its
          reporting obligations under the Exchange Act for any reason on or before
          March
          15, 2008 (and indicated compliance with such reporting obligations on the
          cover
          page of its most recent period report filed with the Commission), the Company
          shall issue each Purchaser, on March 16, 2008, a certificate, evidencing
          a
          number of Shares equal to such Purchaser’s pro-rata portion of 1,500,000 shares
          of Common Stock (based on such Purchaser’s Subscription Amount hereunder and the
          aggregate Subscription Amount of all Purchasers hereunder).

      

     

    ARTICLE
      V.

    MISCELLANEOUS

     

    5.1 Termination. 
      This Agreement may be terminated by any Purchaser, as to such Purchaser’s
      obligations hereunder only and without any effect whatsoever on the obligations
      between the Company and the other Purchasers, by written notice to the other
      parties, if the First Closing has not been consummated on or before January
      ___,
      2008; 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.  At the First Closing, the Company has agreed to
      reimburse Black Nickel Vision Fund, LLC the non-accountable sum of $20,000,
      for
      its legal fees and to reimburse it for all other disbursements and expenses
      in
      connection with the transactions contemplated hereby, $5,000 of which has been
      paid prior to First Closing.  The Company shall deliver to each
      Purchaser, prior to each Closing, a completed and executed copy of the Closing
      Statement attached hereto as Annex
      A.  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 shall pay all transfer
      agent fees, stamp taxes and other taxes and duties levied in connection with
      the
      delivery of any Securities to the Purchasers.

     

    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) 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, (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 Purchasers of at least 67% in
      interest of the Securities still held by Purchasers 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 each Purchaser (other
      than by merger).  Any Purchaser may assign any or all of its rights
      under this Agreement to any Person to whom such Purchaser assigns or transfers
      any Securities, provided that such transferee agrees in writing to be bound,
      with respect to the transferred Securities, by the provisions of the Transaction
      Documents that apply to the “Purchasers.”

     

    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.

     

    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, unless
      otherwise expressly set forth in any such Transaction Document.  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 Closings and the delivery
      of
      the Securities for the applicable statute of limitations.

     

    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 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 any Purchaser exercises a right, election, demand or option
      under a Transaction Document and the Company does not timely perform its related
      obligations within the periods therein provided, then such Purchaser may rescind
      or withdraw, in its sole discretion from time to time upon written notice to
      the
      Company, any relevant notice, demand or election in whole or in part without
      prejudice to its future actions and rights; provided, however,
      in the case
      of a rescission of an exercise of a Warrant, the Purchaser shall be required
      to
      return any shares of Common Stock delivered in connection with any such
      rescinded 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 Purchasers and the Company
      will
      be entitled to specific performance under the Transaction
      Documents.  The parties agree that monetary damages may not be
      adequate compensation for any loss incurred by reason of any breach of
      obligations 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 any Purchaser
      pursuant to any Transaction Document or a Purchaser enforces or exercises its
      rights thereunder, and such payment or payments or the proceeds of such
      enforcement or exercise or any part thereof are subsequently invalidated,
      declared to be fraudulent or preferential, set aside, recovered from, disgorged
      by or are required to be refunded, repaid or otherwise restored to the Company,
      a trustee, receiver or any other person under any law (including, without
      limitation, any bankruptcy law, state or federal law, common law or equitable
      cause of action), then to the extent of any such restoration the obligation
      or
      part thereof originally intended to be satisfied shall be revived and continued
      in full force and effect as if such payment had not been made or such
      enforcement or setoff had not occurred.

     

    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 any Purchaser in order to enforce
      any right or remedy under any Transaction Document.  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
      any
      Purchaser with respect to indebtedness evidenced by the Transaction Documents,
      such excess shall be applied by such 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 such Purchaser’s election.

     

    5.18 Independent
      Nature of
      Purchasers’ Obligations and Rights.  The obligations of each
      Purchaser under any Transaction Document are several and not joint with the
      obligations of any other Purchaser, and no Purchaser shall be responsible in
      any
      way for the performance or non-performance of the obligations of any other
      Purchaser under any Transaction Document.  Nothing contained herein or
      in any other Transaction Document, and no action taken by any Purchaser pursuant
      thereto, shall be deemed to constitute the Purchasers as a partnership, an
      association, a joint venture or any other kind of entity, or create a
      presumption that the Purchasers are in any way acting in concert or as a group
      with respect to such obligations or the transactions contemplated by the
      Transaction Documents.  Each Purchaser shall be entitled to
      independently protect and enforce its rights, including without limitation
      the
      rights arising out of this Agreement or out of the other Transaction Documents,
      and it shall not be necessary for any other Purchaser to be joined as an
      additional party in any proceeding for such purpose.  Each Purchaser
      has been represented by its own separate legal counsel in their review and
      negotiation of the Transaction Documents.  For reasons of
      administrative convenience only, Purchasers and their respective counsel have
      chosen to communicate with the Company through FWS.  FWS does not
      represent all of the Purchasers but only Black Nickel Vision Fund, LLC. The
      Company has elected to provide all Purchasers with the same terms and
      Transaction Documents for the convenience of the Company and not because it
      was
      required or requested to do so by the Purchasers.

     

    5.19 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.

     

    5.20 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.

     

    5.21 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.

     

    5.22 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)

     

    

      

    

     

      1
        110% of
        the closing price of the Common Stock on the Trading Day immediately prior
        to
        the date hereof.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    
      	
              INDUSTRIAL
                ENTERPRISES OF AMERICA, INC.

              
              

              
              

            	
              Address
                for Notice:

              
              

              711
                Third Avenue, Suite 1505

              New
                York, New York 10017 

            
	
              By:__________________________________________

                   Name:
                John D. Mazzuto

                   Title:

              
              

            	
              Fax:

            
	
              With
                a copy to (which shall not constitute notice):

              
              

              
              

              
              

            	 

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASER FOLLOWS]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    [PURCHASER
      SIGNATURE PAGES TO IEAM 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 Purchaser: ________________________________________________

    Facsimile
      Number of Purchaser: ________________________________________________

    

    Address
      for Notice of Purchaser:

    

    

    

    

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

    

    

    

    

    

    First
      Closing Subscription Amount: _____________

    

    Second
      Closing Subscription Amount: _____________

    

    Shares:
      _________________________

    

    Warrant
      Shares: _________________

    

    

    EIN
      Number:  [PROVIDE
      THIS UNDER SEPARATE COVER]

    

    [SIGNATURE
      PAGES CONTINUE]

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Annex
      A

    

    CLOSING
      STATEMENT

    

    Pursuant
      to the attached Securities Purchase Agreement, dated as of the date hereto,
      the
      purchasers shall purchase up to $1,500,000 of Notes, Shares and Warrants from
      Industrial Enterprises of America, Inc. (the “Company”).  All
      funds will be disbursed in accordance with this Closing Statement.

    

    
      	
              Disbursement
                Date:

            	
              January
                ___, 2008 First Closing 

            

    

    

    

    
      	
              I.   PURCHASE
                PRICE

              
              

            	 
	 	
              Gross
                Proceeds to be Received

            	
              $750,000

            
	 	 
	
              II.                                                                                     
                DISBURSEMENTS

              
              

            	 
	 	
              Feldman
                Weinstein & Smith
                LLP

            	
              $
                $15,000

            
	 	 	
              $

            
	 	 	
              $

            
	 	 	
              $

            
	 	 	
              $

            
	 	 
	
              Total
                Amount Disbursed:

            	
              $
                15,000

            
	 	 
	 	 
	 	 
	
              WIRE
                INSTRUCTIONS:

              
              

              
              

            	 
	
              To:  Bank

              ############ 

              Account
                name

              ############exhibit10-1_5.htm

     

    
 

    AMENDMENT
      NO. 1 TO THE ESCROW AGREEMENT

     

    This
      Amendment No. 1 to the Escrow Agreement made effective as of the 31st
      day of
      January 2008 by and between Kinglake Resources, Inc., a Nevada corporation
      (the
      "KGLK" or "Party A"); Orient Come Holdings Limited, a British Virgin Islands
      company ("Party A Subsidiary" or "Orient"); Beijing K's Media Advertising Ltd.
      Co., a limited liability company organized under the laws of the PRC ("Chinese
      Advertisement Company" or "Party B"); the persons listed on Schedule A hereto
      ("Party B Shareholders"); and Arnstein & Lehr LLP, a law firm ("Escrow
      Agent") (each of the parties hereto is a "Party" and, collectively, they are
      the
      "Parties").

     

     

    WITNESSETH

     

    WHEREAS,
      the Parties entered into that certain Escrow Agreement dated as of December
      23,
      2007 and the Parties wish to amend the Escrow Agreement upon the terms set
      forth
      herein.

     

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

     

    1. All
      defined terms not otherwise defined herein shall have the meanings ascribed
      to
      them in the Escrow Agreement.

     

    2. The
      Appendix of the Escrow Agreement is hereby amended by incorporating the
      following terms and conditions:

     

    "In
      the
      event of a merger or consolidation of KGLK on or prior to April 30, 2011, with
      or into another corporation or any other entity or the exchange of substantially
      all of the outstanding stock of KGLK for shares of another entity or other
      property in which, after any such transaction the prior shareholders of KGLK
      own
      less than fifty percent (50%) of the voting shares of the continuing or
      surviving entity, or in the event of the sale of all or substantially all of
      the
      assets of KGLK, then all of the Escrowed Shares shall be released and
      distributed to the Party B Shareholders."

     

    3. In
      the
      event of any inconsistency between any of the terms and conditions of this
      Amendment No. 1 to the Escrow Agreement and the Escrow Agreement, the terms
      and
      conditions of this Amendment No. 1 to the Escrow Agreement shall prevail and
      control.  Except as amended by this Amendment No. 1 to the Escrow
      Agreement, the Escrow Agreement and all its terms and conditions are in full
      force and effect.

    

 

    IN
      WITNESS WHEREOF, the parties have caused this Amendment No.1 to the Escrow
      Agreement to be duly executed by their respective officers or principals
      thereunto duly authorized as of the day and year first above
      written.

     

    Kinglake
      Resources, Inc.

    

    By:  /s/ Ke
      Wang         

    Name:  Ke
      Wang                                                              

    Its:    Chairman       
      

    

    

    Orient
      Come Holdings Limited

     

    By:  /s/ Ke
      Wang         

    Name: Ke
      Wang                                                              

    Its:   Director     
      

            
      

    

    

    Beijing
      K's Media Advertising Ltd. Co.

    

    By: /s/ James
      Wei    

    Name:  James
      Wei                                                                         

    Its: Director

    

    

    Party
      B's Shareholders

    

    

    By:
      /s/
Yan Zhuang

    Name: Yan
      Zhuang

     

    

    By:
      /s/
Yong Lu

    Name: Yong
      Lu

     

    

    By:
      /s/
Lin Chang

    Name:
      Lin Chang

    
       

       

    

     

    

    By:
      /s/
LiHong Wu

    Name: LiHong
      Wu                                                  

     

    
      

    

    By:
      /s/
QingYa Wang

    Name: QingYa
      Wang

    
       

       

    

    

    Arnstein
      & Lehr LLP

    
       

    

     

    By:
      /s/
Joel
      D. Mayersohn      

    Name:
Joel
      D. Mayersohn

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