Document:

Unassociated Document

    SECURITIES
PURCHASE AGREEMENT

     

    This
Securities Purchase Agreement (this “Agreement”) is dated
as of December 2, 2009, between RINO International Corporation, 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
an effective registration statement under the Securities Act of 1933, as amended
(the “Securities
Act”), 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, for all purposes of
this Agreement, the following terms have the meanings set forth in this Section
1.1:

     

    “Acquiring Person”
shall have the meaning ascribed to such term in Section 4.4.

     

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

     

    “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as such terms are
used in and construed under Rule 405 under the Securities Act.

     

    “Board of Directors”
means the board of directors of the Company or any committee of such board of
directors duly authorized to act for it hereunder.

     

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

     

    “Closing Date” means
the Trading Day on which 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 and (ii) the
Company’s obligations to deliver the Securities, in each case, have been
satisfied or waived, but in no event later than the third Trading Day following
the date hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    “Common Stock” means
the common stock of the Company, par value $0.0001 per share, and any other
class of securities into which such securities may hereafter be reclassified or
changed.

     

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

     

    “Company Counsel”
means Wilson Sonsini Goodrich & Rosati, Professional Corporation, with
offices located at 38F, Unit 01-04 88 Century Builevard, Pudong, Shanghai, China
200121.

     

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

     

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

    

    “Exempt Issuance”
means the issuance of (a) the Shares, the Warrant Shares and the Warrants, (b)
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, (c) 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 price, exchange price or conversion price of such
securities, (d) 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 (or to the
equityholders of a Person) which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business synergistic with the
business of the Company and shall provide to the Company additional 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, (e)
shares of Common Stock by reason of a stock split, combination or dividend, (f)
securities issued to banks, equipment lessors or other financial institutions in
connection with loans made to the Company, (g) securities issued to suppliers or
third party service providers in connection with the provision of goods and
services (the primary purpose of which is not to raise equity capital) or (h)
securities issued or issuable in connection with sponsored research,
collaboration, technology license, development, OEM, marketing or other similar
agreements or strategic partnerships approved by the board of directors of the
Company.

     

    
      
        
        

      

      
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    “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).

     

     “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).

     

    “Per Share Purchase
Price” equals $30.75.

     

     “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.

     

    “Prospectus” means the
final prospectus filed in connection with the Registration
Statement.

     

    “Prospectus
Supplement” means the supplement to the Prospectus complying with Rule
424(b) of the Securities Act that is filed with the Commission and delivered by
the Company to each Purchaser at the Closing.

     

    “Purchaser Party”
shall have the meaning ascribed to such term in Section 4.7.

     

    “Registration
Statement” means the effective registration statement of the Company with
Commission on Form S-3, file No. 333-162373, including the additional shares
included on the registration statement on Form S-3MEF under Rule 462(b) under the
Securities Act filed in connection therewith, with respect to the Shares,
the Warrants and the Warrant Shares.

     

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

     

    
      
        
        

      

      
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    “Rule 424” means Rule
424 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended or interpreted from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.

    

     

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

     

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

     

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

     

    “Series A Warrants”
means, collectively, the Series A Common Stock Purchase Warrants delivered to
the Purchasers at the Closing in accordance with Section 2.2(a) hereof,
which shall be exercisable commencing on the Closing Date and have a term of
exercise equal to six months from the Closing Date, in the form of Exhibit A attached
hereto.

     

    “Series B Warrants”
means, collectively, the Series B Common Stock Purchase Warrants delivered to
the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which
shall be exercisable commencing on the six month one day anniversary of the
Closing Date and terminate one year and one day from the Closing Date, in the
form of Exhibit
A attached hereto.

     

    “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 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
each “significant subsidiary” of the Company, as such term is defined by Item
1-02(w) of Regulation S-X promulgated under the Securities Act, as set forth on
Schedule 3.1(a)
and shall, where applicable, also include any direct or indirect subsidiary of
the Company that is a “significant subsidiary” formed or acquired after the date
hereof.

     

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

     

    “Trading Market” means
any of the following markets or exchanges on which the Common Stock is listed or
quoted for trading on the date in question: the NYSE AMEX, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange or the OTC Bulletin Board (or any successors to any of the
foregoing).

     

    
      
        
        

      

      
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    “Transaction Disclosure
Time” shall have the meaning ascribed to such term in Section
4.3.

     

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

     

    “Transfer Agent” means
Securities Transfer Corporation, the current transfer agent of the Company, with
a mailing address of 2591 Dallas Pkwy Suite 102, Frisco, TX75034 and a facsimile
number of (469) 633-0088, and any successor transfer agent of the
Company.

     

    “Variable Rate
Transaction” shall have the meaning ascribed to such term in Section
4.10(b).

     

    “Warrants” means the
Series A Warrants and the Series B Warrants.

     

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

     

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

     

    ARTICLE
II.

    PURCHASE
AND SALE

     

    2.1           Closing.  On
the Closing Date, upon the terms and subject to the conditions set forth herein,
substantially concurrent with the execution and delivery of this Agreement by
the parties hereto, the Company agrees to sell, and the Purchasers, severally
and not jointly,  agree to purchase, up to an aggregate of
$100,000,000 of Shares along with Warrants to purchase Common Stock as provided
hereunder.  Each Purchaser shall deliver to the Company via wire
transfer or a certified check of immediately available funds equal to such
Purchaser’s Subscription Amount as set forth on the signature page hereto
executed by such Purchaser, and the Company shall deliver to each Purchaser its
respective 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 Closing.  Upon satisfaction of the
covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall
occur at the offices of WS or such other location as the parties shall mutually
agree.

     

    2.2           Deliveries.

     

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

     

    (i)           this
Agreement duly executed by the Company;

     

    
      
        
        

      

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

     

    (iii)           a
copy of the irrevocable instructions to the Company’s transfer agent instructing
the transfer agent to deliver via the Depository Trust Company Deposit
Withdrawal Agent Commission System (“DWAC”) Shares equal to such Purchaser’s
Subscription Amount divided by the Per Share Purchase Price, registered in the
name of such Purchaser;

     

    (iv)           a
Series A Warrant registered in the name of such Purchaser to purchase up to a
number of shares of Common Stock equal to 35% of the Shares issuable to
the Purchaser on the Closing Date, with an exercise price equal to $34.50;

     

    (v)           a
Series B Warrant registered in the name of such Purchaser to purchase up to a
number of shares of Common Stock equal to 35% of the Shares issuable to
the Purchaser on the Closing Date, with an exercise price equal to $34.50; and

     

    (vi)           the
Prospectus and Prospectus Supplement

     

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

     

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

     

    (ii)           such
Purchaser’s Subscription Amount 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 the Closing are subject
to the following conditions being met:

     

    (i)           the
accuracy in all material respects on the Closing Date of the representations and
warranties of the Purchasers contained herein (unless as of a specific date
therein);

     

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

     

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

     

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

     

    
      
        
        

      

      
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    (i)           the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Company contained herein (unless as of a
specific date therein);

     

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

     

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

     

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

     

    (v)           from
the date hereof to the 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 Closing), and, at any
time prior to the 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 good faith judgment of each Purchaser, makes it impracticable or
inadvisable to purchase the Securities at the Closing.

     

    ARTICLE
III.

    REPRESENTATIONS
AND WARRANTIES

     

    3.1           Representations and
Warranties of the Company. Except as set forth in the SEC Reports,
including the Registration Statement and Prospectus Supplement, or the
Disclosure Schedules, which Disclosure Schedules shall be deemed part hereof and
shall qualify any representation or otherwise made herein, 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.  If the Company has no subsidiaries, all other references
to the Subsidiaries or any of them in the Transaction Documents shall be
disregarded.

     

    
      
        
        

      

      
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    (b)           Organization and
Qualification.  The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation 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, would not
have or reasonably be expected to result in: (i) a material adverse effect on
the results of operations, assets, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (ii) 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 (either
of (i) or(ii), a “Material Adverse
Effect”), provided that none of
the following alone shall be deemed to constitute a Material Adverse Effect: (a)
a change in the market price of the Common Stock or (b) changes in general
economic conditions or changes affecting the industry or region in which the
Company operates.  To the Company’s knowledge, no Proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or
qualification.

     

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

     

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

     

    
      
        
        

      

      
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    (e)           Filings, Consents and
Approvals.  Except as would not have or reasonably be expected
to result in a Material Adverse Effect, the Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.3 of this Agreement, (ii)
the filing with the Commission of the Prospectus Supplement, (iii)
application(s) to each applicable Trading Market for the listing of the
Securities for trading thereon in the time and manner required thereby and (iv)
such filings as are required to be made under applicable state securities laws
(collectively, the “Required
Approvals”).

     

    (f)           Issuance of the Securities;
Registration.  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.  The Warrant Shares, when issued in
accordance with the terms of the Warrants, will be validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the
Company.  The Company has reserved from its duly authorized capital
stock the maximum number of shares of Common Stock issuable pursuant to this
Agreement and the Warrants. The Company has prepared and filed the Registration
Statement in conformity with the requirements of the Securities Act, which
became effective on November 25, 2009 (the “Effective Date”),
including the Prospectus, and such amendments and supplements thereto as may
have been required to the date of this Agreement.  The Registration
Statement is effective under the Securities Act and no stop order preventing or
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued by the Commission and no
proceedings for that purpose have been instituted or, to the knowledge of the
Company, are threatened by the Commission.  The Company, if required
by the rules and regulations of the Commission, proposes to file the Prospectus,
with the Commission pursuant to Rule 424(b).  At the time the
Registration Statement and any amendments thereto became effective, at the date
of this Agreement and at the Closing Date, the Registration Statement and any
amendments thereto conformed and will conform in all material respects to the
requirements of the Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading; and
the Prospectus and any amendments or supplements thereto, at time the Prospectus
or any amendment or supplement thereto was issued and at the Closing Date,
conformed and will conform in all material respects to the requirements of the
Securities Act and did not and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

     

    
      
        
        

      

      
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    (g)           Capitalization.  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 and/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.  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, together with the Prospectus and the
Prospectus Supplement, 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; provided that the
Company’s Current Report on Form 8-K filed with the Commission on November 16,
2009 shall be deemed to cure any defect in the timeliness of the Company’s SEC
Reports.  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; provided that the
Company’s Current Report on Form 8-K filed with the Commission on November 16,
2009 shall be deemed to cure any defect in the accuracy of the Company’s SEC
Reports.  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 (or, if subsequently amended, restated or
supplemented, at the time of the filing of such amendment, restatement or
supplement).  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.

     

    
      
        
        

      

      
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    (i)           Material Changes;
Undisclosed Events, Liabilities or Developments.  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, no event, liability,
fact, circumstance, occurrence or development has occurred or exists, or is
reasonably expected to occur or exist, with respect to the Company or its
Subsidiaries or their respective business, properties, operations, assets 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 1 Trading Day prior to the
date that this representation is made.

     

    
      
        
        

      

      
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    (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)
materially and 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 to the Company’s knowledge, 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.  To
the Company’s knowledge, no executive officer 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 would 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 judgment, decree, or
order of any court, arbitrator or governmental body or (iii) is or has been in
violation of any statute, rule, ordinance or regulation of any governmental
authority, including without limitation all foreign, federal, state and local
laws relating to taxes, environmental protection, occupational health and
safety, product quality and safety and employment and labor matters, except in
each case as would not have or reasonably be expected to result in a Material
Adverse Effect.

     

    
      
        
        

      

      
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    (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 would 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 as described
in the SEC Reports as necessary or material for use in connection with their
respective businesses and which the failure to so have would have a Material
Adverse Effect (collectively, the “Intellectual
Properties”; and the right of use thereof, collectively, the “Intellectual Property
Rights”).  None of, and neither the Company nor any Subsidiary
has received a notice (written or otherwise) that any of, the Intellectual
Property Rights has expired, terminated or been abandoned.  Except as
set forth in Schedule
3.1(o), none of the patents of the Company or the Subsidiaries is
expected to expire or terminate within two (2) years from the date of this
Agreement.  Neither the Company nor any Subsidiary has received, since
the date of the latest audited financial statements included within the SEC
Reports, a written notice of a claim or otherwise has any knowledge that the
Intellectual Property Rights violate or infringe upon the rights of any Person,
except as would not have a Material Adverse Effect.  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 the Intellectual Properties, except where failure to do so would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

     

    
      
        
        

      

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

     

    (q)           Sarbanes-Oxley; Internal
Accounting Controls.  The Company is in compliance with any and
all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective
as of the date hereof, and any and all applicable rules and regulations
promulgated by the Commission thereunder that are effective as of the date
hereof and as of the Closing Date except where such noncompliance would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

     

    (r)           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.

     

    (s)           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 an “investment company” subject to registration under the
Investment Company Act of 1940, as amended.

     

    (t)           Registration
Rights.  No Person has any right to cause the Company to effect
the registration under the Securities Act of any securities of the
Company.

     

    (u)           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.

     

    
      
        
        

      

      
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    (v)           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.

     

    (w)           Disclosure.  Except
with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents as set forth in Section 4.5 hereof,
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,
non-public information which is not otherwise disclosed in the Prospectus
Supplement.   The Company understands and confirms that the
Purchasers will rely on the foregoing representation in effecting transactions
in securities of the Company.  All of the 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 in all material respects 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 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.

     

    (x)           No Integrated
Offering. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, and the confirmation from Rodman &
Renshaw, LLC set forth in Schedule 3.1(x) and the confirmation from Oppenheimer
& Co. Inc. set forth in Schedule 3.1(x)(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
any applicable shareholder approval provisions of any Trading Market on which
any of the securities of the Company are listed or designated.

     

    (y)           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 (i) has made or filed all United States
federal and state income and all foreign income and franchise tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations and (iii) has set aside on its books provision reasonably adequate
for the payment of all material taxes for periods subsequent to the periods to
which such returns, reports or declarations apply.  Except as would
not reasonably be expected to result in a Material Adverse Effect, there are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company or of any Subsidiary know of
no basis for any such claim.

     

    
      
        
        

      

      
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    (z)           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.

     

    (aa)           Acknowledgment Regarding
Purchasers’ Purchase of Securities.  The Company 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.

     

    (bb)           Acknowledgment Regarding
Purchaser’s Trading Activity.  Anything in this Agreement or
elsewhere herein to the contrary notwithstanding (except for Sections 3.2(e) and
4.13 hereof), it is understood and acknowledged by the Company that: (i) none of
the Purchasers have been asked by the Company to agree, 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 (y) 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 Warrant Shares
deliverable with respect to Securities are being determined, and (z) 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.

     

    
      
        
        

      

      
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    (cc)           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, 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.

     

    (dd)           Stock Option Plans.
Each stock option granted by the Company under the Company’s stock option plan
was granted (i) in accordance with the terms of the Company’s stock option plan
and (ii) with an exercise price at least equal to the fair market value of the
Common Stock on the date such stock option would be considered granted under
GAAP and applicable law. No stock option granted under the Company’s stock
option plan has been backdated.  The Company has not knowingly
granted, and there is no and has been no Company policy or practice to knowingly
grant, stock options prior to, or otherwise knowingly coordinate the grant of
stock options with, the release or other public announcement of material
information regarding the Company or its Subsidiaries or their financial results
or prospects.

     

    (ee)           Office of Foreign Assets
Control.  Neither the Company nor, to the Company's knowledge,
any director, officer, agent, employee or affiliate of the Company is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”).

     

    (ff)           Money
Laundering.  The operations of the Company are and have been
conducted at all times in compliance with applicable financial record-keeping
and reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, applicable money laundering statutes and applicable
rules and regulations thereunder (collectively, the “Money Laundering
Laws”), and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
with respect to the Money Laundering Laws is pending or, to the knowledge of the
Company, threatened.

     

    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 (unless as of a specific date
therein):

     

    (a)           Organization;
Authority.  Such Purchaser is either an individual or 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
this Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and performance by such
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate, partnership, limited liability company or
similar action, as applicable, 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.

     

    
      
        
        

      

      
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    (b)           Understandings or
Arrangements.  Such Purchaser 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 in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to
sell the Securities in compliance with applicable federal and state securities
laws).  Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business.

     

    (c)           Purchaser
Status.  Such Purchaser is not registered or 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
its 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)           Certain Transactions and
Confidentiality.  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 or any other derivative transactions that limit the
economic risk of ownership of any of the Securities during the period commencing
as of the time that such Purchaser first received a term sheet (written or oral)
as of the Company or any other Person representing the Company setting forth the
material terms of the transactions contemplated hereunder and ending immediately
prior to the execution hereof.  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) to the
extent that such actions comply with applicable federal and state securities
laws.

     

    
      
        
        

      

      
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    The
Company acknowledges and agrees that the representations contained in Section
3.2 shall not modify, amend or affect such Purchaser’s right to rely on the
Company’s representations and warranties contained in this Agreement or any
other document or instrument executed and/or delivered in connection with this
Agreement or the consummation of the transaction contemplated
hereby.

     

    ARTICLE
IV.

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1           Warrant
Shares.  If all or any portion of a Warrant is exercised at a
time when there is an effective registration statement to cover the issuance or
resale of the Warrant Shares or if the Warrant is exercised via cashless
exercise at a time as permitted therein and the Warrant has been held for at
least six months, the Warrant Shares issued pursuant to any such exercise shall
be issued free of all legends.  If at any time following the date
hereof the Registration Statement (or any subsequent registration statement
registering the sale or resale of the Warrant Shares) is not effective or is not
otherwise available for the sale or resale of the Warrant Shares, the Company
shall immediately notify the holders of the Warrants in writing that such
registration statement is not then effective and thereafter shall promptly
notify such holders when the registration statement is effective again and
available for the sale or resale of the Warrant Shares (it being understood and
agreed that the foregoing shall not limit the ability of the Company to issue,
or any Purchaser to sell, any of the Warrant Shares in compliance with
applicable federal and state securities laws).  The Company shall use
best efforts to keep a registration statement (including the Registration
Statement) registering the issuance or resale of the Warrant Shares effective
during the term of the Warrants.

     

    4.2           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 for
purposes of the rules and regulations of any Trading Market such that it would
require shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of such subsequent
transaction.

     

    4.3           Securities Laws Disclosure;
Publicity.  The Company shall, by 10:00 a.m. (New York City
time) on the Trading Day immediately following the date hereof (the “Transaction Disclosure
Time”), issue a press release disclosing the material terms of the
transactions contemplated hereby and on or before the fourth Trading Day
following the date hereof file a Current Report on Form 8-K with the Commission
containing such press release and including the Transaction Documents as
exhibits thereto.  From and after the Transaction Disclosure Time, the
Company shall have publicly disclosed all material, non-public information
delivered to any of the Purchasers by the Company or any of its Subsidiaries, or
any of their respective officers, directors, employees or agents in connection
with the transactions contemplated by the Transaction Documents as set forth in
Section 4.4 hereof.  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 nor 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: (a) as required by federal securities law in connection with
the filing of final Transaction Documents (including signature pages thereto)
with the Commission and (b) 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 (b);
provided that
in no event will such notice contain material, non-public information as set
forth in Section 4.5 hereof.

     

    
      
        
        

      

      
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    4.4           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.

     

    4.5           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 with the
Company 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.

     

    4.6           Use of
Proceeds.  Except as set forth on Schedule 4.6 attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and shall not use such proceeds for: (a)
the settlement of any outstanding litigation or (b) in violation of the FCPA or
OFAC regulations.

     

    
      
        
        

      

      
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    4.7           Indemnification of
Purchasers.   Subject to the provisions of this Section
4.7, 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 persons (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 (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 in either case 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 such 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 counsel, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party, in
which case the Company shall be responsible for the reasonable fees and expenses
of no more than one such separate counsel.  The Company will not be
liable to any Purchaser Party under this Agreement (y) for any settlement by a
Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (z) to the extent, but only to
the extent that a loss, claim, damage or liability is attributable to any
Purchaser Party’s breach of any of the representations, warranties, covenants or
agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents.  The indemnification required by this Section
4.7 shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or are incurred.
The indemnity agreements contained herein shall be in addition to any cause of
action or similar right of any Purchaser Party against the Company or others,
and (y) any liabilities the Company may be subject to pursuant to
law.

     

    4.8           Reservation of Common
Stock. As of the date hereof, the Company has reserved and the Company
shall continue to reserve and keep available at all times, free of preemptive
rights, a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue Shares pursuant to this Agreement and Warrant
Shares pursuant to any exercise of the Warrants.

     

    4.9           Listing of Common
Stock. The Company hereby agrees to use its commercially reasonable
efforts to maintain the listing or quotation of the Common Stock on the Trading
Market on which it is currently listed, and within 5 calendar days following the
Closing, the Company shall apply to list or quote all of the Shares and Warrant
Shares on such Trading Market and promptly secure the listing of all of the
Shares and Warrant Shares on such Trading Market. The Company further agrees, if
the Company applies to have the Common Stock traded on any other Trading Market,
it will then include in such application all of the Shares and Warrant Shares,
and will use commercially reasonable efforts to cause all of the Shares and
Warrant Shares to be listed or quoted on such other Trading Market as promptly
as possible.  The Company will use commercially reasonable efforts to
continue the listing or quotation and trading of its Common Stock on a Trading
Market and will comply in all respects with the Company’s reporting, filing and
other obligations under the bylaws or rules of the Trading Market

     

    
      
        
        

      

      
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    4.10           Subsequent Equity
Sales.

     

    (a)           From
the date hereof until thirty (30) days after the Closing Date, neither the
Company nor any Subsidiary shall issue, enter into any agreement to issue or
announce the issuance or proposed issuance of any shares of Common Stock or
Common Stock Equivalents.

     

    (b)           From
the date hereof until the date that is twelve months following the execution
date of this Agreement, the Company shall be prohibited from effecting or
entering into an agreement to effect any issuance by the Company or any of its
Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration
(or a combination of units thereof) involving a Variable Rate
Transaction.  “Variable Rate
Transaction” means a transaction in which the Company (i) issues or sells
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 price, exercise price 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.  Notwithstanding the
foregoing, the term “Variable Rate Transaction” shall not be deemed to include
any transaction relating to convertible securities of the Company effected
pursuant to a firm commitment by qualified independent underwriters or initial
purchasers to purchase such convertible securities sold by the Company on a
publicly registered basis or in a private placement meeting the requirements of
Rule 144A promulgated under the Securities Act, as the case may be, including
any equity derivative transaction entered into in connection with such purchase
and sale of the Company’s convertible securities.  Any Purchaser shall
be entitled to obtain injunctive relief against the Company to preclude an
issuance involving a Variable Rate Transaction, which remedy shall be in
addition to any right to collect damages.

     

    (c)           Notwithstanding
the foregoing, this Section 4.10shall not apply in respect of an Exempt
Issuance.

     

    
      
        
        

      

      
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    4.11           Equal Treatment of
Purchasers.  No consideration (including any modification of
any Transaction Document) 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.  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.

     

    4.12           Certain Transactions and
Confidentiality. 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 purchases or sales,
including Short Sales, of any of the Company’s securities during the period
commencing with the execution of this Agreement and ending on the Transaction
Disclosure Time.  Each Purchaser, severally and not jointly with the other
Purchasers, covenants that until the Transaction Disclosure Time, such Purchaser
will maintain the confidentiality of the existence and terms of this transaction
and the information included in the Transaction Documents and the Disclosure
Schedules.  Notwithstanding the foregoing, and notwithstanding anything
contained in this Agreement to the contrary, the Company expressly acknowledges
and agrees that (i) no Purchaser makes any representation, warranty or covenant
hereby that it will not engage in effecting transactions in any securities of
the Company after the Transaction Disclosure Time, (ii) no Purchaser shall be
restricted or prohibited from effecting any transactions in any securities of
the Company in accordance with applicable securities laws from and after the
Transaction Disclosure Time and (iii) no Purchaser shall have any duty of
confidentiality to the Company or its Subsidiaries after the Transaction
Disclosure 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 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 to the extent such actions comply with
applicable federal and state securities laws.

     

    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 Closing has not been consummated on or before December 7, 2009;
provided, however, that such
termination will not affect the right of any party to sue for any breach by the
other party (or parties).

     

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

     

    
      
        
        

      

      
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    5.3           Entire
Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, the Prospectus and the Prospectus Supplement,
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 made in accordance with Section 4.5 hereof and 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 (2nd)
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 holding at least 67% in
interest of the Shares then outstanding 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 4.7.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    5.9           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law.  If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then in
addition to the obligations of the Company under Section 4.7, 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 contained herein shall survive the Closing and
the delivery of the Securities.

     

    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.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    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, that in the
case of a rescission of an exercise of a Warrant, the applicable Purchaser shall
be required to return any shares of Common Stock subject to any such rescinded
exercise notice concurrently with the return to such Purchaser of the aggregate
exercise price paid to the Company for such shares and the restoration of such
Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant
(including, issuance of a replacement warrant certificate evidencing such
restored right).

     

    5.14           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 agree 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.

     

    5.15           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.

     

    5.16           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, each Purchaser and its respective counsel have
chosen to communicate with the Company through WS.  WS does not
represent any of the Purchasers and only represents Rodman & Renshaw
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 any of the
Purchasers.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    5.17           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.

     

    5.18           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.

     

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

     

    

     

    (Signature
Pages Follow)

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

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

     

    

    
      
        	
                RINO
      INTERNATIONAL CORPORATION

                 

                 

              	
                Address for Notice:

              
	
                By:__________________________________________

                     Name:

                     Title:

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

              	
                Fax:

              
	 
      	 
      

      

    

    

    

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

     

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    [PURCHASER
SIGNATURE PAGES TO RINO SECURITIES PURCHASE AGREEMENT]

    

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

     

    Name of
Purchaser: ________________________________________________________

     

    Signature of Authorized Signatory of
Purchaser: __________________________________

     

    Name of
Authorized Signatory:
____________________________________________________

     

    Title of
Authorized Signatory:
_____________________________________________________

     

    Email
Address of Authorized Signatory:
______________________________________________

     

    Facsimile
Number of Authorized Signatory:
_____________________________________________

     

    Address
for Notice of Purchaser:

    

    

    

    

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

    

    

    

    

    

    Subscription
Amount: $_________________

    

    Shares:
_________________

    

    Warrant
Shares: __________________

    

    

    

    [SIGNATURE
PAGES CONTINUE]

     

     

     

     

     

     

    29CHINA
FIRE & SECURITY GROUP, INC

    2008
OMNIBUS LONG-TERM INCENTIVE PLAN

     

    China
Fire & Security Group, Inc., a Florida corporation (the “Company”), sets
forth herein the terms of its 2008 Omnibus Long-Term Incentive Plan (the
“Plan”), as follows:

     

    
      
        	
                1.

              	
                PURPOSE

              

      

    

     

    The Plan
is intended to enhance the Company’s and its Affiliates’ (as defined herein)
ability to attract and retain highly qualified officers, directors, key
employees and other persons, and to motivate such officers, directors, key
employees and other persons to serve the Company and its Affiliates and to
expend maximum effort to improve the business results and earnings of the
Company, by providing to such persons an opportunity to acquire or increase a
direct proprietary interest in the operations and future success of the Company.
To this end, the Plan provides for the grant of stock options, stock
appreciation rights, restricted stock, restricted stock units, unrestricted
stock and cash awards. Any of these awards may, but need not, be made as
performance incentives to reward attainment of annual or long-term performance
goals in accordance with the terms hereof. Stock options granted under the Plan
may be non-qualified stock options or incentive stock options, as provided
herein.

     

    
      
        	
                2.

              	
                DEFINITIONS

              

      

    

     

    For
purposes of interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply:

     

    2.1.        “Affiliate” means any company or other trade or
business that “controls,” is “controlled by” or is “under common control” with
the Company within the meaning of Rule 405 of Regulation C under the Securities
Act, including, without limitation, any Subsidiary.

     

    2.2.         “Annual Incentive
Award” means an Award made
subject to attainment of performance goals (as described in Section 13)
over a performance period of a duration as specified by the Designees or
Committee.

     

    2.3.         “Award” means a grant of an Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit, Unrestricted Stock,
or cash award, as determined by the Designees or Committee from time to time
under the Plan.

     

    2.4.         “Award
Agreement” means a written
agreement between the Company and a Grantee, or notice from the Company to a
Grantee, that evidences and sets out the terms and conditions of an
Award.

     

    2.5.         “Board” means the Board of Directors of the
Company.

     

    2.6.         “Cause” means, as determined
by the Designees or Committee and unless otherwise provided in an applicable
agreement with the Company or an Affiliate at or before the Grant Date: (i)
engaging in any act, omission or misconduct that is injurious to the Company or
its Affiliates; (ii) gross negligence or willful misconduct in connection with
the performance of duties; (iii) conviction of a criminal offense (other than
minor traffic offenses); (iv) fraud, embezzlement or misappropriation of funds
or property of the Company or an Affiliate; (v) material breach of any term of
any employment, consulting or other services, confidentiality, intellectual
property or non-competition agreements, if any, between the Service Provider and
the Company or an Affiliate; (vi) the entry of an order duly issued by any
regulatory agency (including federal, state and local regulatory agencies and
self-regulatory bodies) having jurisdiction over the Company or an Affiliate
requiring the removal from any office held by the Service Provider with the
Company or prohibiting a Service Provider from participating in the business or
affairs of the Company or any Affiliate; or (vii) the revocation or threatened
revocation of any of the Company’s or an Affiliate’s government licenses,
permits or approvals, which is primarily due to the Service Provider’s action or
inaction and such revocation or threatened revocation would be alleviated or
mitigated in any material respect by the termination of the Service Provider’s
Services.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    2.7.         “Change in
Control” shall have the
meaning set forth in Section 15.2.

     

    2.8.         “Code” means the Internal Revenue Code of
1986, as now in effect or as hereafter amended.

     

    2.9.         “Committee” means the Compensation Committee of
the Board, or such other committee as determined by the Board. The Compensation
Committee of the Board may, in its discretion, designate a subcommittee of its
members to serve as the Committee (to the extent the Board has not designated
another person, committee or entity as the Committee) or to cause the Committee
to (i) consist solely of persons who are “Nonemployee Directors” as defined in
Rule 16b-3 issued under the Exchange Act, (ii) consist solely of persons who are
Outside Directors, or (iii) satisfy the applicable requirements of any stock
exchange on which the Common Stock may then be listed.

     

    2.10.       “Company” means China Fire & Security Group,
Inc., a Florida corporation, or any successor corporation.

     

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

     

    2.12.       “Covered
Employee” means a Grantee
who is a “covered employee” within the meaning of Section 162(m)(3) of the
Code, as qualified by Section 13.4 herein.

     

    2.13. “Disability” means the Grantee is unable to perform
each of the essential duties of such Grantee’s position by reason of a medically
determinable physical or mental impairment which is potentially permanent in
character or which can be expected to last for a continuous period of not less
than 12 months; provided, however, that, with respect to rules regarding
expiration of an Incentive Stock Option following termination of the Grantee’s
Service, Disability has the meaning as set forth in Section 22(e)(3) of the
Code.

     

    2.14.       “Designee” means one or more officers or
directors of the Company who are authorized by the Board to administer the Plan
before the Committee is formed.

     

    2.15.       “Effective
Date” means the date set
forth in Section
16.10
herein.

     

    2.16.       “Exchange
Act” means the Securities
Exchange Act of 1934, as now in effect or as hereafter
amended.

     

    2.17.       “Fair Market
Value” of a share of
Common Stock as of a particular date shall mean (i) the closing sale price
reported for a share of Common Stock on such date on the national securities
exchange or national market system on which such stock is principally traded, or
if such date is not a trading day, the trading day immediately preceding such
date on which a sale was reported, or (ii) if the shares of Common Stock are not
then listed on a national securities exchange or national market system, or the
value of such shares is not otherwise determinable, such value as determined by
the Board in good faith in its sole discretion (but in any event not less than
fair market value within the meaning of Section 409A).

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    2.18.       “Family
Member” means a person who
is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent,
grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including
adoptive relationships, of the applicable individual, any person sharing the
applicable individual’s household (other than a tenant or employee), a trust in
which any one or more of these persons have more than fifty percent of the
beneficial interest, a foundation in which any one or more of these persons (or
the applicable individual) control the management of assets, and any other
entity in which one or more of these persons (or the applicable individual) own
more than fifty percent of the voting interests.

     

    2.19.       “Grant
Date” means, as determined
by the Designees or Committee, the latest to occur of (i) the date as of
which the Designees or Committee approves an Award, (ii) the date on which
the recipient of an Award first becomes eligible to receive an Award under
Section 6 hereof, or (iii) such other date as may be specified by the
Designees or Committee in the Award Agreement.

     

    2.20.       “Grantee” means a person who receives or holds
an Award under the Plan.

     

    2.21.       “Incentive Stock
Option” means an
“incentive stock option” within the meaning of Section 422 of the Code, or
the corresponding provision of any subsequently enacted tax statute, as amended
from time to time.

     

    2.22.       “Non-Qualified Stock
Option” means an Option
that is not an Incentive Stock Option.

     

    2.23.       “Option”
means an option to
purchase one or more shares of Stock pursuant to the Plan.

     

    2.24.       “Option
Price” means the exercise
price for each share of Stock subject to an Option.

     

    2.25.       “Outside
Director” means a member
of the Board who is not an officer or employee of the Company or an Affiliate,
determined in accordance with the requirements of Section 162(m) of the
Code.

     

    2.26.        “Performance
Award” means an Award made
subject to the attainment of performance goals (as described in Section 13)
over a performance period of up to ten (10) years.

     

    2.27.       “Plan” means this China Fire & Security
Group,, Inc. 2008 Omnibus Long-Term Incentive Plan.

     

    2.28.       “PRC” means People’s Republic of China,
excluding Hong Kong, Macau and Taiwan.

     

    2.29.       “Purchase
Price” means the purchase
price for each share of Stock pursuant to a grant of Restricted Stock or
Unrestricted Stock.

     

    2.30.       “Reporting
Person” means a person who
is required to file reports under Section 16(a) of the Exchange
Act.

     

    2.31.       “Restricted
Stock” means shares of
Stock, awarded to a Grantee pursuant to Section 10
hereof.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    2.32.       “Restricted Stock
Unit” means a bookkeeping
entry representing the equivalent of shares of Stock, awarded to a Grantee
pursuant to Section 10 hereof.

     

    2.33.       “SAR Exercise
Price” means the per share
exercise price of a SAR granted to a Grantee under Section 9
hereof.

     

    2.34.       “Section
409A” shall mean
Section 409A of the Code and all formal guidance and regulations
promulgated thereunder.

     

    2.35.       “Securities
Act” means the Securities
Act of 1933, as now in effect or as hereafter amended.

     

    2.36.       “Separation from
Service” means a
termination of Service by a Service Provider, as determined by the Designees or
Committee, which determination shall be final, binding and conclusive; provided
if any Award governed by Section 409A is to be distributed on a Separation
from Service, then the definition of Separation from Service for such purposes
shall comply with the definition provided in
Section 409A.

     

    2.37.       “Service” means service as a Service Provider to
the Company or an Affiliate. Unless otherwise stated in the applicable Award
Agreement, a Grantee’s change in position or duties shall not result in
interrupted or terminated Service, so long as such Grantee continues to be a
Service Provider to the Company or an Affiliate.

     

    2.38.        “Service
Provider” means an
employee, officer or director of the Company or an Affiliate, or a consultant or
adviser currently providing services to the Company or an
Affiliate.

     

    2.39.       “Stock Appreciation
Right” or “SAR” means a
right granted to a Grantee under Section 9 hereof.

     

    2.40.        “Subsidiary” means any “subsidiary corporation” of
the Company within the meaning of Section 424(f) of the
Code.

     

    2.41.       “Termination
Date” means the date upon
which an Option shall terminate or expire, as set forth in Section 8.3
hereof.

     

    2.42.       “Ten Percent
Stockholder” means an
individual who owns more than ten percent (10%) of the total combined
voting power of all classes of outstanding stock of the Company, its parent or
any of its Subsidiaries. In determining stock ownership, the attribution rules
of Section 424(d) of the Code shall be applied.

     

    2.43.       “Unrestricted
Stock” means an Award
pursuant to Section 11 hereof.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      
        	
                3.

              	
                ADMINISTRATION
      OF THE PLAN

              

      

    

     

    3.1.        
General.

     

    The
Designees or Committee shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company’s certificate of
incorporation and bylaws and applicable law. The Designees or Committee shall
have full power and authority to take all actions and to make all determinations
required or provided for under the Plan, any Award or any Award Agreement, and
shall have full power and authority to take all such other actions and make all
such other determinations not inconsistent with the specific terms and
provisions of the Plan that the Designees or Committee deems to be necessary or
appropriate to the administration of the Plan. The interpretation and
construction by the Designees or Committee of any provision of the Plan, any
Award or any Award Agreement shall be final, binding and conclusive. Without
limitation, the Designees or Committee shall have full and final authority,
subject to the other terms and conditions of the Plan, to:

     

    (i)
designate Grantees;

     

    (ii)
determine the type or types of Awards to be made to a Grantee;

     

    (iii)
determine the number of shares of Stock to be subject to an Award;

     

    (iv)
establish the terms and conditions of each Award (including, but not limited to,
the Option Price of any Option, the nature and duration of any restriction or
condition (or provision for lapse thereof) relating to the vesting, exercise,
transfer, or forfeiture of an Award or the shares of Stock subject thereto, and
any terms or conditions that may be necessary to qualify Options as Incentive
Stock Options);

     

    (v)
prescribe the form of each Award Agreement; and

     

    (vi)
amend, modify, or supplement the terms of any outstanding Award including the
authority, in order to effectuate the purposes of the Plan, to modify Awards to
foreign nationals or individuals who are employed outside the United States
to recognize differences in local law, tax policy, or custom.

     

    Notwithstanding
the foregoing, no amendment or modification may be made to an outstanding Option
or SAR that (i)  causes the Option or SAR to become subject to
Section 409A, (ii) reduces the Option Price or SAR Exercise Price,
either by lowering the Option Price or SAR Exercise Price or by canceling the
outstanding Option or SAR and granting a replacement Option or SAR with a lower
Option Price or SAR Exercise Price or (iii) would be treated as a repricing
under the rules of the exchange upon which the Company’s Stock trades, without,
with respect to item (i), the Grantee’s written prior approval, and with respect
to items (ii) and (iii), without the approval of the stockholders of the
Company, provided, that, appropriate adjustments may be made to outstanding
Options and SARs pursuant to Section 15.

     

    The
Company may retain the right in an Award Agreement to cause a forfeiture of the
gain realized by a Grantee on account of actions taken by the Grantee in
violation or breach of or in conflict with any employment agreement,
non-competition agreement, any agreement prohibiting solicitation of employees
or clients of the Company or any Affiliate thereof or any confidentiality
obligation with respect to the Company or any Affiliate thereof or otherwise in
competition with the Company or any Affiliate thereof, to the extent specified
in such Award Agreement applicable to the Grantee. The Company may retain the
right in an Award Agreement to cause a forfeiture of the gain realized by a
Grantee, if the Grantee voluntarily terminates his employment with the Company.
Furthermore, the Company may annul an Award if the Grantee is terminated for
Cause as defined in the applicable Award Agreement or the Plan, as applicable.
The grant of any Award may be contingent upon the Grantee executing the
appropriate Award Agreement.

     

    3.2.        
Deferral
Arrangement.

     

    The
Designees or Committee may permit or require the deferral of any Award payment
into a deferred compensation arrangement, subject to such rules and procedures
as it may establish and in accordance with Section 409A, which may include
provisions for the payment or crediting of interest or dividend equivalents,
including converting such credits into deferred Stock units.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.3.        
No
Liability.

    

    No member
of the Board or of the Designees or Committee shall be liable for any action or
determination made in good faith with respect to the Plan, any Award or Award
Agreement.

     

    3.4.        
Book
Entry.

     

    Notwithstanding
any other provision of this Plan to the contrary, the Company may elect to
satisfy any requirement under this Plan for the delivery of stock certificates
through the use of book-entry.

     

    
      
        	
                4.

              	
                STOCK SUBJECT TO THE
      PLAN

              

      

    

     

    Subject
to adjustment as provided in Section 15 hereof, the
maximum number of shares of Stock available for issuance under the Plan shall be
2,000,000. All such
shares of Stock available for issuance under the Plan shall be available for
issuance pursuant to Incentive Stock Options. Stock issued or to be issued under
the Plan shall be authorized but unissued shares; or, to the extent permitted by
applicable law, issued shares that have been reacquired by the Company. The
maximum number of Common Stock that will be awarded to any one Grantee during
any calendar year shall not exceed 300,000.

     

    The
Designees or Committee may adopt reasonable procedures for making adjustments in
accordance with Section 15. If the Option
Price of any Option granted under the Plan, or if pursuant to Section 16.3 the
withholding obligation of any Grantee with respect to an Option or other Award,
is satisfied by tendering shares of Stock to the Company (by either actual
delivery or by attestation) or by withholding shares of Stock, the number of
shares of Stock issued net of the shares of Stock tendered or withheld shall be
deemed delivered for purposes of determining the maximum number of shares of
Stock available for delivery under the Plan. To the extent that an Award under
the Plan is canceled, expired, forfeited, settled in cash, settled by issuance
of fewer shares than the number underlying the Award, or otherwise terminated
without delivery of shares to the Grantee, the shares retained by or returned to
the Company will be available under the Plan; and shares that are withheld from
such an Award or separately surrendered by the Grantee in payment of any
exercise price or taxes relating to such an Award shall be deemed to constitute
shares not delivered to the Grantee and will be available under the Plan. In
addition, in the case of any Award granted in assumption of or in substitution
for an award of a company or business acquired by the Company or a Subsidiary or
Affiliate or with which the Company or a Subsidiary or Affiliate combines,
shares issued or issuable in connection with such substitute Award shall not be
counted against the number of shares reserved under the Plan.

     

    
      
        	
                5.

              	
                EFFECTIVE
      DATE, DURATION AND
      AMENDMENTS

              

      

    

     

    5.1.        
Term.

     

    The Plan
shall be effective as of the Effective Date and shall terminate on the ten
(10) year anniversary of the Effective Date, and may be terminated on any
earlier date as provided in Section 5.2.

     

    5.2.         Amendment and
Termination of the Plan.

     

    The Board
may, at any time and from time to time, amend, suspend, or terminate the Plan as
to any Awards which have not been made. An amendment shall be contingent on
approval of the Company’s stockholders to the extent stated by the Board,
required by applicable laws, regulations and rules, as amended, or required by
applicable stock exchange listing requirements. No Awards shall be made after
termination of the Plan. No amendment, suspension, or termination of the Plan
shall, without the consent of the Grantee, impair rights or obligations under
any Award theretofore awarded.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      
        	
                6.

              	
                AWARD ELIGIBILITY AND
      LIMITATIONS

              

      

    

     

    6.1.        
Service Providers and
Other Persons.

     

    Subject
to this Section 6,
Awards may be made to any Service Provider, including any Service Provider who
is an officer or director of the Company or of any Affiliate, as the Designees
or Committee shall determine and designate from time to time in its
discretion.

     

    6.2.       
Successive
Awards.

     

    An
eligible person may receive more than one Award, subject to such restrictions as
are provided herein.

     

    6.3.        
Stand-Alone,
Additional, Tandem, and Substitute Awards.

     

    Awards
may, in the discretion of the Designees or Committee, be granted either alone or
in addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, any Affiliate, or
any business entity to be acquired by the Company or an Affiliate, or any other
right of a Grantee to receive payment from the Company or any Affiliate. Such
additional, tandem, and substitute or exchange Awards may be granted at any
time. If an Award is granted in substitution or exchange for another Award, the
Designees or Committee shall have the right to require the surrender of such
other Award in consideration for the grant of the new Award. The Board shall
have the right, in its discretion, to make Awards in substitution or exchange
for any other award under another plan of the Company, any Affiliate, or any
business entity to be acquired by the Company or an Affiliate. In addition,
subject to the sole discretion of the Designees or Committee from time to time,
Awards may be granted in lieu of cash compensation, including in lieu of cash
amounts payable under other plans of the Company or any Affiliate, in which the
value of Stock subject to the Award is equivalent in value to the cash
compensation (for example, Restricted Stock Units or Restricted
Stock).

     

    
      
        	
                7.

              	
                AWARD
      AGREEMENT

              

      

    

     

    Each
Award shall be evidenced by an Award Agreement, in such form or forms as the
Designees or Committee shall from time to time determine. Without limiting the
foregoing, an Award Agreement may be provided in the form of a notice which
provides that acceptance of the Award constitutes acceptance of all terms of the
Plan and the notice. Award Agreements granted from time to time or at the same
time need not contain similar provisions but shall be consistent with the terms
of the Plan. Each Award Agreement evidencing an Award of Options shall specify
whether such Options are intended to be Non-Qualified Stock Options or Incentive
Stock Options, and in the absence of such specification such options shall be
deemed Non-Qualified Stock Options.

     

    
      
        	
                8.

              	
                TERMS AND CONDITIONS OF
      OPTIONS

              

      

    

     

    8.1.        
Option
Price.

     

    The
Option Price of each Option shall be fixed by the Designees or Committee and
stated in the related Award Agreement. The Option Price of each Incentive Stock
Option shall be at least the Fair Market Value of a share of Stock on the Grant
Date; provided,
however, that
(i) in the event that a Grantee is a Ten Percent Stockholder as of the
Grant Date, the Option Price of an Option granted to such Grantee that is
intended to be an Incentive Stock Option shall be not less than 110 percent of
the Fair Market Value of a share of Stock on the Grant Date, and (ii) with
respect to Awards made in substitution for or in exchange for awards made by an
entity acquired by the Company or an Affiliate, the Option Price does not need
to be at least the Fair Market Value on the Grant Date. In no case shall the
Option Price of any Option be less than the par value of a share of
Stock.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    8.2.        
Vesting.

    

    Subject
to Section 8.3
hereof, each Option shall become exercisable at such times and under such
conditions (including without limitation performance requirements) as shall be
determined by the Designees or Committee and stated in the Award Agreement. For
purposes of this Section 8.2, fractional
numbers of shares of Stock subject to an Option shall be rounded down to the
next nearest whole number.

     

    8.3.        
Term.

     

    Each
Option shall terminate, and all rights to purchase shares of Stock thereunder
shall cease, upon the expiration of ten years from the Grant Date,
or under such circumstances and on such date prior thereto as is set forth in
the Plan or as may be fixed by the Designees or Committee and stated in the
related Award Agreement (the “Termination Date”).

     

    8.4.        
Separation
from Service.

     

    Except as
otherwise provided in an Award Agreement, if a Grantee’s employment with or
service to the Company or Affiliate terminates for any reason other than Cause,
(i) Options granted to such Grantee, to the extent that they are exercisable at
the time of such termination, shall remain exercisable for a period of not more
than 90 days after such termination (one year in the case of termination by
reason of death or Disability), on which date they shall expire, and (ii)
Options granted to such Grantee, to the extent that they were not exercisable at
the time of such termination, shall expire on the date of such termination. In
the event of the termination of a Grantee’s employment or service for Cause, all
outstanding Options granted to such Grantee shall expire on the date of such
termination. Notwithstanding the foregoing, no Option shall be exercisable after
the expiration of its term.

     

    8.5.         Limitations on
Exercise of Option.

     

    Notwithstanding
any other provision of the Plan, in no event may any Option be exercised, in
whole or in part, (i) prior to the date the Plan is approved by the Board
and stockholders of the Company as provided herein or (ii) after the
occurrence of an event referred to in Section 15 hereof which
results in termination of the Option.

     

    8.6.         Method of
Exercise.

     

    An Option
that is exercisable may be exercised by the Grantee’s delivery to the Company of
written notice of exercise on any business day, at the Company’s principal
office, on the form specified by the Company. Such notice shall specify the
number of shares of Stock with respect to which the Option is being exercised
and which exercise method shall be , determined by the Designees or Committees
solely in its discretion, and the Designees or Committee may approve payment in
whole or in part by an alternative method, including (i) by means of any
cashless exercise procedure approved by the Designees or Committee, (ii) in the
form of unrestricted shares of Stock already owned by the Grantee on the date of
surrender to the extent the shares of Stock having a Fair Market Value on the
date of surrender equal to the aggregate Option Price of the shares as to which
such Option shall be exercised, provided that, in the case of
an Incentive Stock Option, the right to make payment in the form of already
owned shares of Stock may be authorized only at the time of grant, or (iii) any
combination of the foregoing.

     

    8.7.         Rights of Holders of
Options.

     

    Unless
otherwise stated in the related Award Agreement, an individual holding or
exercising an Option shall have none of the rights of a stockholder (for
example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock ) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in Section 15 hereof, no
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date of such issuance.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    8.8.         Delivery of Stock
Certificates.

     

    Promptly
after the exercise of an Option by a Grantee and the payment in full of the
Option Price, such Grantee shall be entitled to the issuance of a stock
certificate or certificates evidencing his or her ownership of the shares of
Stock subject to the Option.

     

    8.9.         Transferability of
Options.

     

    Except as
provided in Section 8.10, during the
lifetime of a Grantee, only the Grantee (or, in the event of legal incapacity or
incompetence, the Grantee’s guardian or legal representative) may exercise an
Option. Except as provided in Section 8.10, no Option
shall be assignable or transferable by the Grantee to whom it is granted, other
than by will or the laws of descent and distribution.

     

    8.10.     
 Family
Transfers.

     

    If
authorized in the applicable Award Agreement, a Grantee may transfer, not for
value, all or part of an Option which is not an Incentive Stock Option to any
Family Member. For the purpose of this Section 8.10, a “not for
value” transfer is a transfer which is (i) a gift, (ii) a transfer
under a domestic relations order in settlement of marital property rights; or
(iii) a transfer to an entity in which more than fifty percent of the
voting interests are owned by Family Members (or the Grantee) in exchange for an
interest in that entity. Following a transfer under this Section 8.10, any such
Option shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer. Subsequent transfers of transferred
Options are prohibited except to Family Members of the original Grantee in
accordance with this Section 8.10 or by will
or the laws of descent and distribution. Notwithstanding the foregoing, the
Designees or Committee may also provide that Options may be transferred to
persons other than Family Members. The events of termination of Service of Section 8.4 hereof shall
continue to be applied with respect to the original Grantee, following which the
Option shall be exercisable by the transferee only to the extent, and for the
periods specified, in Section 8.4.

     

    8.11.      Limitations on
Incentive Stock Options.

     

    An Option
shall constitute an Incentive Stock Option only (i) if the Grantee of such
Option is an employee of the Company or any Subsidiary of the Company;
(ii) to the extent specifically provided in the related Award Agreement;
and (iii) to the extent that the aggregate Fair Market Value (determined at
the time the Option is granted) of the shares of Stock with respect to which all
Incentive Stock Options held by such Grantee become exercisable for the first
time during any calendar year (under the Plan and all other plans of the
Grantee’s employer and its Affiliates) does not exceed $100,000. This limitation
shall be applied by taking Options into account in the order in which they were
granted.

     

    
      	
              9.

            	
              TERMS
      AND CONDITIONS OF STOCK APPRECIATION
RIGHTS

            

    

     

    9.1.        
Right to
Payment.

     

    A SAR
shall confer on the Grantee a right to receive, upon exercise thereof, the
excess of (i) the Fair Market Value of one share of Stock on the date of
exercise over (ii) the SAR Exercise Price, as determined by the Designees
or Committee. The Award Agreement for an SAR shall specify the SAR Exercise
Price, which shall be fixed on the Grant Date. SARs may be granted alone or in
conjunction with all or part of an Option or at any subsequent time during the
term of such Option or in conjunction with all or part of any other Award. A SAR
granted in tandem with an outstanding Option following the Grant Date of such
Option may have a grant price that is equal to the Option Price.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    9.2.        
Other
Terms.

     

    The
Designees or Committee shall determine at the Grant Date or thereafter, the time
or times at which and the circumstances under which a SAR may be exercised in
whole or in part (including based on achievement of performance goals and/or
future service requirements), the time or times at which SARs shall cease to be
or become exercisable following termination of Service or upon other conditions,
the method of exercise, whether or not a SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any
SAR.

     

    9.3.        
Term of
SARs. The term of a SAR
granted under the Plan shall be determined by the Designees or Committee, in its
sole discretion; provided, however, that such term shall not exceed ten years.

     

    9.4.         Payment of SAR
Amount. Upon exercise of a
SAR, a Grantee shall be entitled to receive payment from the Company in an
amount determined by multiplying:

     

    (i) the
difference between the Fair Market Value of a Share on the date of exercise over
the SAR Exercise Price; by

    

    (ii) the
number of Shares with respect to which the SAR is exercised.

    

    SARs
shall be settled in cash or Stock of equivalent
value, as determined by the Designees or Committee and set forth in the Award
Agreement.

     

    
      	
              10.

            	
              TERMS
      AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK
    UNITS

            

    

     

    10.1.       Restrictions.

     

    At the
time of grant, the Designees or Committee may, in its sole discretion, establish
a period of time (a “restricted period”) and any additional restrictions
including the satisfaction of corporate or individual performance objectives
applicable to an Award of Restricted Stock or Restricted Stock Units in
accordance with Section 13.1 and 13.2. Each Award of Restricted
Stock or Restricted Stock Units may be subject to a different restricted period
and additional restrictions. Neither Restricted Stock nor Restricted Stock Units
may be sold, transferred, assigned, pledged or otherwise encumbered or disposed
of during the restricted period or prior to the satisfaction of any other
applicable restrictions.

     

    10.2.       Restricted Stock
Certificates.

     

    The
Company shall issue stock, in the name of each Grantee to whom Restricted Stock
has been granted, stock certificates or other evidence of ownership representing
the total number of shares of Restricted Stock granted to the Grantee, as soon
as reasonably practicable after the Grant Date. The Designees or Committee may
provide in an Award Agreement that either (i) the Secretary of the Company
shall hold such certificates for the Grantee’s benefit until such time as the
Restricted Stock is forfeited to the Company or the restrictions lapse, or
(ii) such certificates shall be delivered to the Grantee, provided, however, that such
certificates shall bear a legend or legends that comply with the applicable
securities laws and regulations and makes appropriate reference to the
restrictions imposed under the Plan and the Award Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10.3.       Rights of Holders of
Restricted Stock.

    

    Unless
the Designees or Committee otherwise provides in an Award Agreement, holders of
Restricted Stock shall have the right to vote such Stock and the right to
receive any dividends declared or paid with respect to such Stock. The Designees
or Committee may provide that any dividends paid on Restricted Stock must be
reinvested in shares of Stock, which may or may not be subject to the same
restrictions applicable to such Restricted Stock. All distributions, if any,
received by a Grantee with respect to Restricted Stock as a result of any stock
split, stock dividend, combination of shares, or other similar transaction shall
be subject to the restrictions applicable to the original Award.

     

    10.4.       Rights of Holders of
Restricted Stock Units.

     

    
      	 
      	
              10.4.1.

            	
              Settlement
      of Restricted Stock Units.

            

    

     

    Restricted
Stock Units may be settled in cash or Stock, as determined by the Designees or
Committee and set forth in the Award Agreement. The Award Agreement shall also
set forth whether the Restricted Stock Units shall be settled (i) within
the time period specified in Section 16.9.1 for short
term deferrals or (ii) otherwise within the requirements of
Section 409A, in which case the Award Agreement shall specify upon which
events such Restricted Stock Units shall be settled.

     

    
      	 
      	
              10.4.2.

            	
              Voting
      and Dividend Rights.

            

    

     

    Holders
of Restricted Stock Units shall have no rights as stockholders of the Company.
The Designees or Committee may provide in an Award Agreement that the holder of
such Restricted Stock Units shall be entitled to receive, upon the Company’s
payment of a cash dividend on its outstanding Stock, a cash payment for each
Restricted Stock Unit held equal to the per-share dividend paid on the Stock,
which may be deemed reinvested in additional Restricted Stock Units at a price
per unit equal to the Fair Market Value of a share of Stock on the date that
such dividend is paid to shareholders.

     

    
      	 
      	
              10.4.3.

            	
              Creditor’s
      Rights.

            

    

     

    A holder
of Restricted Stock Units shall have no rights other than those of a general
creditor of the Company. Restricted Stock Units represent an unfunded and
unsecured obligation of the Company, subject to the terms and conditions of the
applicable Award Agreement.

     

    10.5.       Termination of
Service.

     

    Unless
the Designees or Committee otherwise provides in an Award Agreement or in
writing after the Award Agreement is issued, upon the termination of a Grantee’s
Service, any Restricted Stock or Restricted Stock Units held by such Grantee
that have not vested, or with respect to which all applicable restrictions and
conditions have not lapsed, shall immediately be deemed forfeited, and the
Grantee shall have no further rights with respect to such Award.

     

    10.6.       Purchase of
Restricted Stock.

     

    The
Grantee shall be required, to the extent required by applicable law, to purchase
the Restricted Stock from the Company at a Purchase Price equal to the greater
of (i) the aggregate par value of the shares of Stock represented by such
Restricted Stock or (ii) the Purchase Price, if any, specified in the
related Award Agreement. If specified in the Award Agreement, the Purchase Price
may be deemed paid by Services already rendered. The Purchase Price shall be
payable in a form described in Section 12 or, in the
discretion of the Designees or Committee, in consideration for past Services
rendered.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10.7.       Delivery of
Stock.

    

    Upon the
expiration or termination of any restricted period and the satisfaction of any
other conditions prescribed by the Designees or Committee, the restrictions
applicable to shares of Restricted Stock or Restricted Stock Units settled in
Stock shall lapse, and, unless otherwise provided in the Award Agreement, a
stock certificate for such shares shall be delivered, free of all such
restrictions, to the Grantee or the Grantee’s beneficiary or estate, as the case
may be.

     

    
      
        	
                11.

              	
                TERMS AND CONDITIONS OF
      UNRESTRICTED STOCK
AWARDS

              

      

    

     

    The
Designees or Committee may, in its sole discretion, grant (or sell at par value
or such other higher purchase price determined by the Designees or Committee) an
Award of Unrestricted Stock to any Grantee pursuant to which such Grantee may
receive shares of Stock free of any restrictions (“Unrestricted Stock”) under
the Plan. Awards of Unrestricted Stock may be granted or sold as described in
the preceding sentence in respect of past Services rendered and other valid
consideration, or in lieu of, or in addition to, any cash compensation due to
such Grantee. Unless otherwise provided by the Designees or Committee, Awards of
Unrestricted Stock shall be paid within the time period specified in Section 16.9.1 for
short-term deferrals.

     

    
      
        	
                12.

              	
                FORM OF PAYMENT FOR OPTIONS,
      RESTRICTED STOCK AND STOCK APPRECIATION
  RIGHTS

              

      

    

     

    12.1.      General
Rule.

     

    Payment
of the Option Price for the shares purchased pursuant to the exercise of an
Option or the Purchase Price for Restricted Stock shall be made in cash or in
cash equivalents acceptable to the Company, except as provided in this Section 12.

     

    12.2.      Surrender of
Stock.

     

    To the
extent the Award Agreement so provides, payment of the Option Price for shares
purchased pursuant to the exercise of an Option or the Purchase Price for
Restricted Stock may be made all or in part through the tender to the Company of
shares of Stock, which shares shall be valued, for purposes of determining the
extent to which the Option Price or Purchase Price has been paid thereby, at
their Fair Market Value on the date of exercise or surrender.

     

    12.3.      Cashless
Exercise.

     

    With
respect to an Option only (and not with respect to Restricted Stock), to the
extent permitted by law and to the extent the Award Agreement so provides,
payment of the Option Price may be made all or in part by delivery (on a form
acceptable to the Designees or Committee) of an irrevocable direction to a
licensed securities broker acceptable to the Company to sell shares of Stock and
to deliver all or part of the sales proceeds to the Company in payment of the
Option Price and any withholding taxes described in Section 16.3.

     

    12.4.      Payment of
Exercising SAR Rights.

     

    In the
event that the SAR rights are granted to a Grantee, to the extent permitted by
law and to the extent the Award Agreement so provides, the payment of the SAR
amount may be made all or in part by cash or delivery of Stock of equivalent
value, at the sole discretion of the Designees or Committee, in payment of any
withholding taxes described in Section 16.3.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    12.5.      Other Forms of
Payment.

    

    To the
extent the Award Agreement so provides, as determined by the Designees or
Committee in its sole discretion, payment of the Option Price or the Purchase
Price may be made in any other form that is consistent with applicable laws,
regulations and rules.

     

    
      
        	
                13.

              	
                TERMS AND CONDITIONS OF
      PERFORMANCE AND ANNUAL INCENTIVE
AWARDS

              

      

    

     

    13.1.      Performance
Conditions.

     

    The right
of a Grantee to exercise or receive a grant or settlement of any Award, and the
timing thereof, may be subject to such performance conditions as may be
specified by the Designees or Committee. The Designees or Committee may use such
business criteria and other measures of performance as it may deem appropriate
in establishing any performance conditions, and may exercise its discretion to
reduce the amounts payable under any Award subject to performance conditions,
except as limited under Sections 13.2 hereof in the
case of a Performance Award or Annual Incentive Award intended to qualify under
Code Section 162(m).

     

    
      	 
      	
              13.2.

            	
              Performance
      or Annual Incentive Awards Granted to Designated Covered
      Employees.

            

    

     

    If and to
the extent that the Designees or Committee determines that a Performance or
Annual Incentive Award to be granted to a Grantee who is designated by the
Designees or Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of Code Section 162(m), the
grant, exercise and/or settlement of such Performance or Annual Incentive Award
shall be contingent upon achievement of pre-established performance goals and
other terms set forth in this Section 13.2.

     

    
      	 
      	
              13.2.1.

            	
              Performance
      Goals Generally.

            

    

     

    The
performance goals for such Performance or Annual Incentive Awards shall consist
of one or more business criteria and a targeted level or levels of performance
with respect to each of such criteria, as specified by the Designees or
Committee consistent with this Section 13.2. Performance
goals shall be objective and shall otherwise meet the requirements of Code
Section 162(m) and regulations thereunder including the requirement that
the level or levels of performance targeted by the Designees or Committee result
in the achievement of performance goals being “substantially uncertain.” The
Designees or Committee may determine that such Performance or Annual Incentive
Awards shall be granted, exercised and/or settled upon achievement of any one
performance goal or that two or more of the performance goals must be achieved
as a condition to grant, exercise and/or settlement of such Performance or
Annual Incentive Awards. Performance goals may differ for Performance or Annual
Incentive Awards granted to any one Grantee or to different
Grantees.

     

    
      	 
      	
              13.2.2.

            	
              Business
      Criteria.

            

    

     

    One or
more of the following business criteria for the Company, on a consolidated
basis, and/or specified subsidiaries or business units of the Company (except
with respect to the total stockholder return and earnings per share criteria),
shall be used exclusively by the Designees or Committee in establishing
performance goals for such Performance or Annual Incentive Awards:
(i) total stockholder return; (ii) such total stockholder return as
compared to total return (on a comparable basis) of a publicly available index
such as, but not limited to, the Standard & Poor’s 500 Stock Index;
(iii) net income; (iv) pretax earnings; (v) earnings before
interest expense, taxes, depreciation and amortization; (vi) pretax
operating earnings after interest expense and before bonuses, service fees, and
extraordinary or special items; (vii) operating margin;
(viii) earnings per share; (ix) return on equity; (x) return on
capital; (xi) return on investment; (xii) operating earnings;
(xiii) working capital; (xiv) ratio of debt to stockholders’ equity
and (xv) revenue.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      	 
      	
              13.2.3.

            	
              Timing
      for Establishing Performance Goals.

            

    

     

    Performance
goals shall be established not later than 90 days after the beginning of any
performance period applicable to such Performance or Annual Incentive Awards, or
at such other date as may be required or permitted for “performance-based
compensation” under Code Section 162(m).

     

    
      	 
      	
              13.2.4.

            	
              Settlement
      of Performance or Annual Incentive Awards; Other
  Terms.

            

    

     

    Settlement
of such Performance or Annual Incentive Awards shall be in cash, , SAR,
Restricted Stock, Restricted Stock Units, other Awards or other property, in the
discretion of the Designees or Committee. The Designees or Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in connection
with such Performance or Annual Incentive Awards. The Designees or Committee
shall specify the circumstances in which such Performance or Annual Incentive
Awards shall be paid or forfeited in the event of termination of Service by the
Grantee prior to the end of a performance period or settlement of Performance
Awards.

     

    13.3.      Written
Determinations.

     

    All
determinations by the Designees or Committee as to the establishment of
performance goals, the amount of any Performance Award pool or potential
individual Performance Awards and as to the achievement of performance goals
relating to Performance Awards, and the amount of any Annual Incentive Award
pool or potential individual Annual Incentive Awards and the amount of final
Annual Incentive Awards, shall be made in writing in the case of any Award
intended to qualify under Code Section 162(m). To the extent permitted by
Code Section 162(m), the Designees or Committee may delegate any
responsibility relating to such Performance Awards or Annual Incentive
Awards.

     

    13.4.     
Status of
Section 13.2 Awards Under Code Section 162(m).

     

    It is the
intent of the Company that Performance Awards and Annual Incentive Awards under
Section 13.2 hereof
granted to persons who are designated by the Designees or Committee as likely to
be Covered Employees within the meaning of Code Section 162(m) and
regulations thereunder shall, if so designated by the Designees or Committee,
constitute “qualified performance-based compensation” within the meaning of Code
Section 162(m) and regulations thereunder. Accordingly, the terms of Section 13.2, including
the definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Designees or Committee
cannot determine with certainty whether a given Grantee will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term
Covered Employee as used herein shall mean only a person designated by the
Designees or Committee, at the time of grant of Performance Awards or an Annual
Incentive Award, as likely to be a Covered Employee with respect to that fiscal
year. If any provision of the Plan or any agreement relating to such Performance
Awards or Annual Incentive Awards does not comply or is inconsistent with the
requirements of Code Section 162(m) or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                14.

              	
                REQUIREMENTS OF
      LAW

              

      

    

     

    14.1.      General.

    The
Company shall not be required to sell or issue any shares of Stock under any
Award if the sale or issuance of such shares would constitute a violation by the
Grantee, any other individual exercising an Option, or the Company of any
provision of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations and the
laws and regulations of PRC. If at any time the Company shall determine, in its
discretion, that the listing, registration or qualification of any shares
subject to an Award upon any securities exchange or under any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the issuance or purchase of shares hereunder, no shares of Stock may be
issued or sold to the Grantee or any other individual exercising an Option
pursuant to such Award unless such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Company, and any delay caused thereby shall in no way affect
the date of termination of the Award. Specifically, in connection with the
Securities Act, upon the exercise of any Option or the delivery of any shares of
Stock underlying an Award, unless a registration statement under such Act is in
effect with respect to the shares of Stock covered by such Award, the Company
shall not be required to sell or issue such shares unless the Designees or
Committee has received evidence satisfactory to it that the Grantee or any other
individual exercising an Option may acquire such shares pursuant to an exemption
from registration under the Securities Act. Any determination in this connection
by the Designees or Committee shall be final, binding, and conclusive. The
Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act. The Company shall not be
obligated to take any affirmative action in order to cause the exercise of an
Option or the issuance of shares of Stock pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that an Option shall not be exercisable until
the shares of Stock covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.

     

    14.2.      Rule
16b-3.

     

    During
any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act, it is the intent of the Company that Awards
and the exercise of Options granted hereunder will qualify for the exemption
provided by Rule 16b-3 under the Exchange Act. To the extent that any provision
of the Plan or action by the Board or Designees or Committee does not comply
with the requirements of Rule 16b-3, it shall be deemed inoperative to the
extent permitted by law and deemed advisable by the Board, and shall not affect
the validity of the Plan. In the event that Rule 16b-3 is revised or replaced,
the Board may exercise its discretion to modify this Plan in any respect
necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement.

     

    
      
        	
                15.

              	
                EFFECT OF CHANGES IN
      CAPITALIZATION

              

      

    

     

    15.1.      Changes in
Stock.

     

    If the
number of outstanding shares of Stock is increased or decreased or the shares of
Stock are changed into or exchanged for a different number or kind of shares or
other securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
the Company occurring after the Effective Date, the number and kinds of shares
for which grants of Options and other Awards may be made under the Plan shall be
adjusted proportionately and accordingly by the Company; provided that any such
adjustment shall comply with Section 409A. In addition, the number and kind
of shares for which Awards are outstanding shall be adjusted proportionately and
accordingly so that the proportionate interest of the Grantee immediately
following such event shall, to the extent practicable, be the same as
immediately before such event. Any such adjustment in outstanding Options or
SARs shall not change the aggregate Option Price or SAR Exercise Price payable
with respect to shares that are subject to the unexercised portion of an
outstanding Option or SAR, as applicable, but shall include a corresponding
proportionate adjustment in the Option Price or SAR Exercise Price per share.
The conversion of any convertible securities of the Company shall not be treated
as an increase in shares effected without receipt of consideration.
Notwithstanding the foregoing, in the event of any distribution to the Company’s
stockholders of securities of any other entity or other assets (including an
extraordinary cash dividend but excluding a non-extraordinary dividend payable
in cash or in stock of the Company) without receipt of consideration by the
Company, the Company shall in such manner as the Company deems appropriate,
adjust (i) the number and kind of shares subject to outstanding Awards
and/or (ii) the exercise price of outstanding Options and Stock
Appreciation Rights to reflect such distribution.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    15.2.      Definition of Change
in Control.

     

    Unless an
Award Agreement provides for a different meaning, a “Change in Control” shall
mean the occurrence of any of the following:

     

    
      
        
          	
                	
                  (i)

                	
                  Any ‘person’ (as such term is
      used in Sections 13(d) and 14(d) of the Exchange Act) becomes the
      ‘beneficial owner’ (as defined in Rule 13d-3 under the Exchange Act),
      directly or indirectly, of securities of the Company representing more
      than fifty percent (50%)  of the total voting power represented by
      the Company’s then-outstanding voting securities, provided, however, that
      a Change in Control shall not be deemed to occur if an employee benefit
      plan (or a trust forming a part thereof) maintained by the Company,
      directly or indirectly, becomes the beneficial owner of more than fifty
      percent (50%) of the then-outstanding voting securities of the
      Company after such
acquisition; 

                

        

      

      
         

        
          	
                	
                  (ii)

                	
                  A majority of the members of the
      Board is replaced during any 12-month period commencing on the Effective
      Date, by directors whose appointment or election is not endorsed by a
      majority of the members of the Board prior to the date of the
      appointment; 

                

        

      

      
         

        
          	
                	
                  (iii)

                	
                  The consummation of a merger or
      consolidation of the Company with any other corporation, other than a
      merger or consolidation which would result in (a) the voting
      securities of the Company outstanding immediately prior thereto continuing
      to represent (either by remaining outstanding or being converted into
      voting securities of the surviving entity) at least fifty percent
      (50%) of the total voting power represented by the voting securities
      of the Company or such surviving entity outstanding immediately after such
      merger or consolidation; or (b) the directors of the Company
      immediately prior thereto continuing to represent at least fifty percent
      (50%) of the directors of the Company or such surviving entity
      immediately after such merger or consolidation;
      or 

                

        

      

      
         

        
          	
                	
                  (iv)

                	
                  The consummation of the sale or
      disposition by the Company of all or substantially all of the Company’s
      assets.

                

        

      

    

     

    Notwithstanding
the foregoing, if it is determined that an Award hereunder is subject to the
requirements of Section 409A, the Company will not be deemed to have undergone a
Change in Control unless the Company is deemed to have undergone a change in
control pursuant to the definition in Section 409A.

     

    15.3.      
Effect of
Change in Control; Corporate Transactions

     

    The
Designees or Committee shall determine the effect of a Change in Control upon
Awards, and such effect may be set forth in the appropriate Award Agreement.
 Unless an Award
Agreement explicitly provides otherwise, if the Company is to be consolidated
with or acquired by another entity in a merger, sale of all or substantially all
of the Company’s assets other than a transaction to merely change the state of
incorporation (a “Corporate Transaction”), the Designees or Committee or the
board of directors of any entity assuming the obligations of the Company
hereunder (the “Successor Board”), shall, as to outstanding Options and/or SARs,
either (i) make appropriate provision for the continuation of such Options
and/or SARs by substituting on an equitable basis for the Shares then subject to
such Options and/or SARs either the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Corporate Transaction
or securities of any successor or acquiring entity; or (ii) upon written
notice to the Grantees, provide that all Options and/or SARs must be exercised
(either to the extent then exercisable or, at the discretion of the Designees or
Committee or, upon a change of control of the Company, all Options and/or SARs
being made fully exercisable for purposes of this Section 15.3), within a
specified number of days of the date of such notice, at the end of which period
the Options and/or SARs shall terminate; or (iii) terminate all Options
and/or SARs in exchange for a cash payment equal to the excess of the Fair
Market Value of the Shares subject to such Options and/or SARs (either to the
extent then exercisable or, at the discretion of the Designees or Committee, all
Options and/or SARs being made fully exercisable for purposes of this Section
15.3) over the exercise price thereof.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    Unless an
Award Agreement explicitly provides otherwise, with respect to outstanding
grants of Restricted Stock, Restricted Stock Units and/or Unrestricted Stock,
the Designees or Committee or the Successor Board, shall either (i) make
appropriate provisions for the continuation of such grants of Restricted Stock,
Restricted Stock Units and/or Unrestricted Stock by substituting on an equitable
basis for the Shares then subject to such Restricted Stock, Restricted Stock
Units and/or Unrestricted Stock either the consideration payable with respect to
the outstanding Shares of Common Stock in connection with the Corporate
Transaction or securities of any successor or acquiring entity; or (ii) upon
written notice to the Grantees, provide that all grants of Restricted Stock,
Restricted Stock Units and/or Unrestricted Stock must be accepted (to the extent
then subject to acceptance) within a specified number of days of the date of
such notice, at the end of which period the offer of the Restricted Stock,
Restricted Stock Units and/or Unrestricted Stock shall terminate; or (iii)
terminate all grants of Restricted Stock, Restricted Stock Units and/or
Unrestricted Stock in exchange for a cash payment equal to the excess of the
Fair Market Value of the Shares subject to such Restricted Stock, Restricted
Stock Units and/or Unrestricted Stock over the purchase price thereof, if any.
In addition, in the event of a Corporate Transaction, the Administrator may
waive any or all Company repurchase rights with respect to outstanding
Restricted Stock and/or Restricted Stock Units.

     

    15.4.      
Reorganization
Which Does Not Constitute a Change in Control.

     

    If the
Company undergoes any reorganization, merger, or consolidation of the Company
with one or more other entities which does not constitute a Change in Control,
any Option or SAR theretofore granted pursuant to the Plan shall pertain to and
apply to the securities to which a holder of the number of shares of Stock
subject to such Option or SAR would have been entitled immediately following
such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price or SAR Exercise Price per share so
that the aggregate Option Price or SAR Exercise Price thereafter shall be the
same as the aggregate Option Price or SAR Exercise Price of the shares remaining
subject to the Option or SAR immediately prior to such reorganization, merger,
or consolidation. Subject to any contrary language in an Award Agreement, any
restrictions applicable to such Award shall apply as well to any replacement
shares received by the Grantee as a result of the reorganization, merger or
consolidation.

     

    15.5.      
Adjustments.

     

    Adjustments
under this Section 15 related to
shares of Stock or securities of the Company shall be made by the Designees or
Committee, whose determination in that respect shall be final, binding and
conclusive. No fractional shares or other securities shall be issued pursuant to
any such adjustment, and any fractions resulting from any such adjustment shall
be eliminated in each case by rounding downward to the nearest whole
share.

     

    15.6.      
No Limitations
on Company.

     

    The
making of Awards pursuant to the Plan shall not affect or limit in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part of
its business or assets.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                16.

              	
                GENERAL
      PROVISIONS

              

      

    

    

    16.1.      
Disclaimer of
Rights.

     

    No
provision in the Plan or in any Award Agreement shall be construed to confer
upon any individual the right to remain in the employ or service of the Company
or any Affiliate, or to interfere in any way with any contractual or other right
or authority of the Company either to increase or decrease the compensation or
other payments to any individual at any time, or to terminate any employment or
other relationship between any individual and the Company. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement, no Award granted under the Plan shall
be affected by any change of duties or position of the Grantee, so long as such
Grantee continues to be a Service Provider, if applicable. The obligation of the
Company to pay any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
Grantee or beneficiary under the terms of the Plan.

     

    16.2.      
Nonexclusivity
of the Plan.

     

    Neither
the adoption of the Plan nor the submission of the Plan to the stockholders of
the Company for approval shall be construed as creating any limitations upon the
right and authority of the Board to adopt such other incentive compensation
arrangements (which arrangements may be applicable either generally to a class
or classes of individuals or specifically to a particular individual or
particular individuals), including, without limitation, the granting of stock
options as the Board in its discretion determines desirable.

     

    16.3.      
Withholding
Taxes.

     

    The
Company or an Affiliate, as the case may be, shall have the right to deduct from
payments of any kind otherwise due to a Grantee any federal, state, or local
taxes of any kind required by applicable laws, regulations or rules to be
withheld (i) with respect to the vesting of or other lapse of restrictions
applicable to an Award, (ii) upon the issuance of any shares of Stock upon
the exercise of an Option, or (iii) pursuant to an Award. At the time of
such vesting, lapse, or exercise, the Grantee shall pay to the Company or the
Affiliate, as the case may be, any amount that the Company or the Affiliate may
reasonably determine to be necessary to satisfy such withholding obligation.
Subject to the prior approval of the Company or the Affiliate, which may be
withheld by the Company or the Affiliate, as the case may be, in its sole
discretion, the Grantee may elect to satisfy such obligations, in whole or in
part, (i) by causing the Company or the Affiliate to withhold shares of
Stock otherwise issuable to the Grantee or (ii) by delivering to the
Company or the Affiliate shares of Stock already owned by the Grantee. The
shares of Stock so delivered or withheld shall have an aggregate Fair Market
Value equal to such withholding obligations. The Fair Market Value of the shares
of Stock used to satisfy such withholding obligation shall be determined by the
Company or the Affiliate as of the date that the amount of tax to be withheld is
to be determined. A Grantee who has made an election pursuant to this Section 16.3 may satisfy
his or her withholding obligation only with shares of Stock that are not subject
to any repurchase, forfeiture, unfulfilled vesting, or other similar
requirements.

     

    16.4.      
Captions.

     

    The use
of captions in this Plan or any Award Agreement is for the convenience of
reference only and shall not affect the meaning of any provision of the Plan or
any Award Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    16.5.      
Other
Provisions.

    

    Each
Award Agreement may contain such other terms and conditions not inconsistent
with the Plan as may be determined by the Designees or Committee, in its sole
discretion.

     

    16.6.      
Number and
Gender.

     

    With
respect to words used in this Plan, the singular form shall include the plural
form, the masculine gender shall include the feminine gender, etc., as the
context requires.

     

    16.7.      
Severability.

     

    If any
provision of the Plan or any Award Agreement shall be determined to be illegal
or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.

     

    16.8.      
Governing
Law.

     

    The
validity and construction of this Plan and the instruments evidencing the Awards
hereunder shall be governed by the laws of the State of Florida, USA, without
regard to any choice of law principles thereof or of any other
jurisdiction.

     

    16.9.      
Section 409A.

     

    
      
        	
                 
      

              	
                16.9.1.

              	
                Short-Term
      Deferrals.

              

      

    

     

    For each
Award intended to comply with the short-term deferral exception provided for
under Section 409A, the related Award Agreement shall provide that such
Award shall be paid out by the later of (i) the 15th day of
the third month following the Grantee’s first taxable year in which the Award is
no longer subject to a substantial risk of forfeiture or (ii) the 15th day of
the third month following the end of the Company’s first taxable year in which
the Award is no longer subject to a substantial risk of forfeiture.

     

    
      
        	
                 
      

              	
                16.9.2.

              	
                Adjustments.

              

      

    

     

    To the
extent that the Board determines that a Grantee would be subject to the
additional 20% tax imposed on certain deferred compensation arrangements
pursuant to Section 409A as a result of any provision of any Award, to the
extent permitted by Section 409A, such provision shall be deemed amended to
the minimum extent necessary to avoid application of such additional tax. The
Board shall determine the nature and scope of such amendment.

     

    16.10.    Stockholder
Approval; Effective Date of Plan.

     

    The Plan
shall be effective upon the its approval by the Board and stockholders. . No
award that is intended to qualify as performance-based compensation within the
meaning of section 162(m) of the Code shall be effective unless and until the
Plan is approved by the stockholders of the Company.

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