Document:

Agreement & Plan of Merger dated as of October 27, 2004

 Exhibit 10.1 
 EXECUTION COPY 
  

  
 AGREEMENT AND PLAN OF MERGER 
  

by and among 
  
 PRIME/MANSUR INVESTMENT PARTNERS, LLC 
  
 CUMBERLAND BLUES MERGER SUB, LLC 
  
 CUMBERLAND BLUES, LLC 
  
 PRIME GROUP REALTY TRUST 
  
 and 

 
 PRIME GROUP REALTY, L.P. 
  
 Dated as of October 27, 2004 
  

 TABLE OF CONTENTS 
  

					
	ARTICLE I	  	THE MERGERS	  	2
	        Section 1.1.	  	The Mergers.	  	2
	        Section 1.2.	  	Closing	  	2
	        Section 1.3.	  	Effective Times of the Mergers.	  	2
	        Section 1.4.	  	Effects of the Mergers	  	3
	        Section 1.5.	  	Surviving Partnership Agreement	  	3
	        Section 1.6.	  	Surviving Charter	  	3
	        Section 1.7.	  	Surviving Bylaws	  	3
	        Section 1.8.	  	Trustees	  	3
	        Section 1.9.	  	Officers	  	4
			
	ARTICLE II	  	EFFECT OF THE MERGERS ON CAPITAL STOCK, COMMON SHARES, WARRANTS, COMPANY OPTIONS AND PARTNERSHIP UNITS	  	4
	        Section 2.1.	  	Effect of REIT Merger on Capital Stock, Common Shares and Warrants	  	4
	        Section 2.2.	  	Surrender of Certificates.	  	5
	        Section 2.3.	  	Company Options.	  	8
	        Section 2.4.	  	Restricted Shares	  	8
	        Section 2.5.	  	Adjustments to REIT Merger Consideration	  	9
	        Section 2.6.	  	Effect of OP Merger on the Partnership Units	  	9
	        Section 2.7.	  	Procedures for Exchange of Eligible LP Units in the OP Merger	  	10
			
	ARTICLE III	  	REPRESENTATIONS AND WARRANTIES	  	10
	        Section 3.1.	  	Representations and Warranties of the Company	  	10
	        Section 3.2.	  	Representations and Warranties of the Purchaser Parties	  	34
			
	ARTICLE IV	  	COVENANTS RELATING TO CONDUCT OF BUSINESS PENDING THE MERGERS	  	38
	        Section 4.1.	  	Conduct of Business.	  	38
			
	ARTICLE V	  	ADDITIONAL COVENANTS	  	42
	        Section 5.1.	  	Access to Information; Confidentiality	  	42
	        Section 5.2.	  	Reasonable Efforts; Notification.	  	43
	        Section 5.3.	  	Tax Treatment.	  	44
	        Section 5.4.	  	No Solicitation of Transactions.	  	45
	        Section 5.5.	  	Public Announcements	  	46
	        Section 5.6.	  	Transfer and Gains Taxes; Shareholder Demand Letters	  	47
	        Section 5.7.	  	Employee Arrangements; Accrued Bonuses; Employee Brokerage Arrangements.	  	47
	        Section 5.8.	  	Indemnification; Trustees’ and Officers’ Insurance.	  	50
	        Section 5.9.	  	Deposit Escrow Agreement	  	52
	        Section 5.10.	  	Series B Share Distribution	  	52
	        Section 5.11.	  	Sale of Properties	  	52
	        Section 5.12.	  	Company Proxy Statement	  	53
	        Section 5.13.	  	Company Shareholders Meeting; Partnership Unitholder Approval.	  	53
	        Section 5.14.	  	Director Resignations	  	53

  

 i 

					
	        Section 5.15.	  	Undertakings of Parent	  	53
	        Section 5.16.	  	Financing.	  	54
	        Section 5.17.	  	Company Board Recommendation.	  	55
	        Section 5.18.	  	Certain Post-Closing Covenants.	  	56
	        Section 5.19.	  	Environmental Matters	  	56
	        Section 5.20.	  	Environmental Indemnity Agreement Payments	  	56
	        Section 5.21.	  	Continental Towers	  	57
			
	ARTICLE VI	  	CONDITIONS TO CLOSING	  	57
	        Section 6.1.	  	Conditions to Each Party’s Obligation to Effect the Mergers	  	57
	        Section 6.2.	  	Conditions to the Obligation of the Purchaser Parties to Effect the Mergers	  	58
	        Section 6.3.	  	Conditions to the Obligation of the Company to Effect the Mergers	  	59
	        Section 6.4.	  	Frustration of Closing Conditions	  	59
			
	ARTICLE VII	  	TERMINATION, AMENDMENT AND WAIVER	  	59
	        Section 7.1.	  	Termination	  	59
	        Section 7.2.	  	Expenses; Break-up Fee; Earnest Money.	  	61
	        Section 7.3.	  	Notice of Termination	  	63
	        Section 7.4.	  	Effect of Termination	  	64
	        Section 7.5.	  	Return of Earnest Money	  	64
	        Section 7.6.	  	Amendment	  	64
	        Section 7.7.	  	Extension; Waiver	  	64
			
	ARTICLE VIII	  	GENERAL PROVISIONS	  	64
	        Section 8.1.	  	Nonsurvival of Representations, Warranties, Covenants and Agreements	  	64
	        Section 8.2.	  	Notices	  	65
	        Section 8.3.	  	Interpretation	  	66
	        Section 8.4.	  	Counterparts	  	67
	        Section 8.5.	  	Entire Agreement; No Third-Party Beneficiaries	  	67
	        Section 8.6.	  	Governing Law	  	67
	        Section 8.7.	  	Assignment	  	67
	        Section 8.8.	  	Enforcement	  	67
	        Section 8.9.	  	Exhibits; Disclosure Letter	  	68
			
	ARTICLE IX	  	CERTAIN DEFINITIONS	  	68
	        Section 9.1.	  	Certain Definitions	  	68

  

			
	EXHIBITS AND SCHEDULES
		
	Exhibit A	  	Deposit Escrow Agreement*
	Exhibit B	  	PGI Release*

  
 Schedule 9.1(a) – Company
Knowledge Persons* 
  
 Schedule 9.1(b) – Parent Knowledge Persons*

	*	Omitted from this filing. The Company will furnish supplementally a copy of any such omitted item to the Commission upon request. 

  

 ii 

 AGREEMENT AND PLAN OF MERGER 
  
 AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of October 27, 2004, by and among PRIME/MANSUR
INVESTMENT PARTNERS, LLC, a Delaware limited liability company (“Parent”), CUMBERLAND BLUES MERGER SUB, LLC, a Maryland limited liability company (“Merger Sub”), CUMBERLAND BLUES, LLC, a Delaware limited liability
company (“OP Merger Sub”), PRIME GROUP REALTY TRUST, a Maryland real estate investment trust (the “Company”), and PRIME GROUP REALTY, L.P., a Delaware limited partnership (the “Operating
Partnership”). 
  
 RECITALS 
  
 WHEREAS, the respective Boards of Directors, Trustees and Managers or
members, as applicable, of each of the Purchaser Parties (as defined in Section 9.1) and the Company have each determined that this Agreement and the transactions contemplated hereby, including the REIT Merger (as defined in Section
1.1), are advisable, fair to, and in the best interests of, their respective stockholders, shareholders, members and equity holders, as applicable; 
  
 WHEREAS, the Board of Trustees of the Company (the “Company Board”) has adopted resolutions approving this Agreement, the REIT Merger and
the other transactions contemplated by this Agreement, and has agreed to recommend that the shareholders of the Company approve this Agreement, the REIT Merger and the other transactions contemplated by this Agreement; 
  
 WHEREAS, the Company, as general partner of the Operating Partnership, has
approved and determined that this Agreement and the transactions contemplated hereby, including the OP Merger, are advisable and in the best interests of the Operating Partnership and its partners; 
  
 WHEREAS, capitalized terms used but not otherwise defined herein shall have
the meanings given to such terms in Section 9.1; and 
  
 WHEREAS, the Company, the Operating Partnership and the Purchaser Parties desire to make certain representations, warranties, covenants and agreements in connection with the REIT Merger, the OP Merger and the other transactions contemplated
hereby and also to specify certain conditions to the REIT Merger, the OP Merger and the other transactions contemplated hereby. 

 NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties,
covenants and agreements contained in this Agreement, each of the Company and the Operating Partnership and each of the Purchaser Parties agree as follows: 
  
 ARTICLE I 
  
 THE MERGERS 
  
 Section 1.1. The Mergers. 
  
 (a) OP Merger; Surviving Partnership. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the Delaware Revised Uniform Limited Partnership Act (“DRULPA”), at the OP
Effective Time (as defined in Section 1.3), (i) OP Merger Sub shall be merged with and into the Operating Partnership (the “OP Merger”), (ii) the separate existence of OP Merger Sub shall thereupon cease and (iii) the
Operating Partnership shall continue its existence under Delaware law as the surviving entity in the OP Merger (the “Surviving Partnership”), and the separate limited partnership existence of the Operating Partnership with all its
rights, privileges, immunities, powers and franchises shall continue unaffected by the OP Merger. 
  
 (b) REIT Merger; Surviving Entity. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with Title 8 of the
Corporations and Associations Article of the Annotated Code of Maryland (the “Maryland REIT Law”) and the Maryland General Corporation Law (the “MGCL”), immediately following the OP Merger and at the REIT Effective
Time (as defined in Section 1.3), (i) Merger Sub shall be merged with and into the Company (the “REIT Merger” and, together with the OP Merger, the “Mergers”), (ii) the separate existence of Merger Sub shall
thereupon cease and (iii) the Company shall continue its existence under Maryland law as the surviving entity in the REIT Merger (the “Surviving Entity”), and the separate trust existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the REIT Merger. 
  
 Section 1.2. Closing. Unless this Agreement shall have terminated and the Mergers shall have been abandoned pursuant to Section 7.1, and subject to the satisfaction or waiver (as permitted by applicable
Law) of all of the conditions set forth in Article VI hereof, the closing of the OP Merger and the closing of the REIT Merger (such closings are referred to together as the “Closing”) shall take place (a) at the offices of
Winston & Strawn LLP, 35 W. Wacker Drive, Chicago, Illinois 60601 as expeditiously as possible but no later than two (2) Business Days after the day on which the last of such conditions (other than any conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) is satisfied or waived (as permitted by applicable Law) in accordance with this Agreement or (b) at such other place and time or on such other date as the
Purchaser Parties and the Company may agree in writing. The date on which the Closing occurs is referred to herein as the “Closing Date.” 
  
 Section 1.3. Effective Times of the Mergers. 
  
 (a) On the Closing Date and prior to the REIT Effective Time, OP Merger Sub and the Operating Partnership shall execute and file the OP Merger
Certificate, in accordance with, and shall make all other filings or recordings and take all such other action required with respect to the OP Merger under, DRULPA. The OP Merger shall become effective when the OP Merger Certificate has been
accepted for filing by the office of the Secretary of State of the State of Delaware or at such other subsequent date or time as Parent and the Company may agree in writing and specify in the OP Merger Certificate in accordance with DRULPA. The time
at which the OP Merger becomes effective is referred to as the “OP Effective Time.” 
  

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 (b) On the Closing Date and immediately after the OP Effective Time or as soon thereafter as practicable,
Merger Sub and the Company shall execute and file the Articles of Merger, in accordance with, and shall make all other filings or recordings and take all such other action required with respect to the REIT Merger under, the Maryland REIT Law and the
MGCL. The REIT Merger shall become effective when the Articles of Merger have been accepted for filing by the Maryland Department or at such other subsequent date or time as Parent and the Company may agree in writing and specify in the Articles of
Merger in accordance with the Maryland REIT Law and the MGCL. The time at which the REIT Merger becomes effective is referred to as the “REIT Effective Time” and, together with the OP Effective Time, the “Effective
Time.” 
  
 Section 1.4. Effects of the Mergers.
The OP Merger shall have the effects set forth herein and in the applicable provisions of DRULPA. Without limiting the generality of the foregoing sentence, and subject thereto, at the OP Effective Time, all properties, rights, privileges, powers
and franchises of the Operating Partnership and OP Merger Sub shall vest in the Surviving Partnership, and all debts, liabilities and duties of the Operating Partnership and OP Merger Sub shall become the debts, liabilities and duties of the
Surviving Partnership. The REIT Merger shall have the effects set forth herein and in the applicable provisions of the Maryland REIT Law and the MGCL. Without limiting the generality of the foregoing sentence, and subject thereto, at the REIT
Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Entity, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities
and duties of the Surviving Entity. 
  
 Section 1.5. Surviving
Partnership Agreement. The Partnership Agreement shall be amended and restated as of the OP Effective Time in accordance with the instructions of Parent (and subject to the prior consent of the Operating Partnership, which consent shall not be
unreasonably withheld) and, as so amended and restated, shall be the agreement of limited partnership of the Surviving Partnership until thereafter modified or amended as provided therein or in accordance with applicable Law. 
  
 Section 1.6. Surviving Charter. The articles of amendment and
restatement of declaration of trust of the Company in effect immediately prior to the REIT Effective Time shall be, from and after the REIT Effective Time, the declaration of trust of the Surviving Entity (the “Surviving Charter”),
until duly changed or amended as provided therein or in accordance with applicable Law. 
  
 Section 1.7. Surviving Bylaws. The amended and restated bylaws of the Company in effect immediately prior to the REIT Effective Time shall be, from and after the REIT Effective Time, the bylaws of the Surviving
Entity (the “Surviving Bylaws”) until duly changed or amended as provided therein or in accordance with applicable Law. 
  
 Section 1.8. Trustees. The parties shall take all requisite action so that the managers of Merger Sub immediately prior to the REIT Effective Time
shall be, from and after the REIT Effective Time, the trustees of the Surviving Entity until their successors are duly elected and qualified or until their earlier death, resignation or removal in accordance with the Surviving Charter, the Surviving
Bylaws, the Maryland REIT Law and the MGCL. 
  

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 Section 1.9. Officers. The parties shall take all requisite action so that the officers of Merger
Sub immediately prior to the REIT Effective Time shall be, from and after the REIT Effective Time, the officers of the Surviving Entity until their successors are duly elected and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Charter, the Surviving Bylaws, the Maryland REIT Law and the MGCL. 
  
 ARTICLE II 
  
 EFFECT OF THE MERGERS ON CAPITAL STOCK, COMMON 
 SHARES, WARRANTS, COMPANY OPTIONS AND PARTNERSHIP UNITS

  
 Section 2.1. Effect of REIT Merger on Capital Stock,
Common Shares and Warrants. At the REIT Effective Time, by virtue of the REIT Merger and without any action on the part of any of the Purchaser Parties, the Company or the holder of any equity interests of Merger Sub or common shares of
beneficial interest, par value $0.01 per share, of the Company (the “Common Shares”): 
  
 (a) Conversion of Common Shares. Each Common Share (other than Excluded Shares (as defined in Section 2.1(b)) issued and outstanding
immediately prior to the REIT Effective Time (including all Common Shares issued after the date of this Agreement and prior to the REIT Effective Time in exchange for LP Units in accordance with the terms of such LP Units) (such Common Shares are
each hereinafter referred to as a “Share” and collectively as the “Shares”), shall be converted automatically into the right to receive $6.70 in cash, without interest (the “REIT Merger Consideration”). At
the REIT Effective Time, all Shares shall be cancelled automatically and shall cease to exist, and the holders of certificates which immediately prior to the REIT Effective Time represented Shares (the “Certificates”) shall cease to
have any rights with respect to the Shares, other than the right to receive the REIT Merger Consideration per share (without any interest being payable thereon) upon surrender of the Certificates in accordance with Section 2.2. 
  
 (b) Cancellation of Certain Common Shares and Purchaser Party-Owned Common
Shares. Each Common Share issued and outstanding and owned by the Company, the Operating Partnership, or any of their respective wholly-owned Subsidiaries, or by the Purchaser Parties, or any of their wholly-owned Subsidiaries, immediately prior
to the REIT Effective Time (collectively, the “Excluded Shares”) shall be cancelled automatically and shall cease to exist, without payment of any consideration being made in respect thereof. 
  
 (c) Conversion of Merger Sub Equity Interests. The equity interests of
Merger Sub issued and outstanding immediately prior to the REIT Effective Time shall be converted automatically into and become fully paid and non-assessable common shares of beneficial interest, par value $0.01 per share, of the Surviving Entity
(the “Surviving Entity Shares”). The number of Surviving Entity Shares shall be equal to the equity capitalization of Merger Sub divided by $6.70. 
  
 (d) Series B Shares. The REIT Merger shall have no effect on the Company’s outstanding Series B Shares and, at
and after the REIT Effective Time, the Series B Shares shall be the outstanding Series B Shares of the Surviving Entity. 
  

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 (e) Warrants. The Company shall take such actions as are necessary to assure that, as of the REIT
Effective Time, each Warrant, by virtue of the REIT Merger and without any further action on the part of the Purchaser Parties, the Company or the holder of such Warrant, shall be (i) converted automatically into the right upon exercise to acquire
and receive, in lieu of the Common Shares otherwise acquirable and receivable upon the exercise of such Warrant immediately prior to the REIT Effective Time, an aggregate amount in cash, without interest, equal to the product of (x) the per share
REIT Merger Consideration and (y) the maximum number of Common Shares subject to such Warrant (after giving effect to the adjustment set forth in clause (ii) of this sentence) (with respect to such Warrant, this product is referred to as the
“Warrant REIT Merger Consideration”) and (ii) modified automatically to provide that (x) the Exercise Price (as defined in such Warrant) is adjusted to $6.70 per Common Share (the “Adjusted Exercise Price”) subject to such
Warrant and (y) the maximum number of Common Shares subject to such Warrant is adjusted to 559,701 Common Shares in the case of the Series A-2 Share Purchase Warrant, 373,134 Common Shares in the case of the Series B
Share Purchase Warrant and 466,418 Common Shares in the case of the Series C Share Purchase Warrant. From and after the REIT Effective Time, the Warrants, as so converted and modified in accordance with this Section 2.1(e),
shall be exercisable solely for the per share Warrant REIT Merger Consideration (in exchange for the payment by the holder(s) of the Warrants to the Company of the Adjusted Exercise Price), and shall not be exercisable for the purchase of Common
Shares. 
  
 (f) Series A Shares. If requested by the
Purchaser Parties, the Company shall take such actions as are necessary to convert all issued and outstanding Series A Shares to Common Shares before the REIT Effective Time. Any such converted Common Shares shall be automatically cancelled at the
REIT Effective Time in accordance with Section 2.1(b). 
  
 (g) Dissenters’ Rights. No dissenters’, appraisal or similar rights shall be available with respect to the REIT Merger. 
  
 Section 2.2. Surrender of Certificates. 
  
 (a) Paying Agent. Prior to the OP Effective Time, the Purchaser Parties shall (i) select a bank or trust company to act as the paying agent in the
OP Merger and the REIT Merger (the “Paying Agent”), and (ii) enter into an agreement with the Paying Agent. The identity of the Paying Agent and the terms and conditions of the agreement with the Paying Agent shall be subject to the
prior approval of the Company, which approval shall not be unreasonably withheld. 
  
 (b) Payment Fund. On the Closing Date and prior to the OP Effective Time, the Company shall deposit with the Paying Agent, (i) subject to Section 3.2 (c)(iii), any unrestricted cash of the Company to the extent
required by the Purchaser Parties and (ii) only to the extent the Commercial Properties Sale is completed, the Company’s share of the proceeds from the Commercial Properties Sale, if any, and, on the Closing Date and prior to the OP Effective
Time, the Purchaser Parties shall deposit with the Paying Agent such additional amounts as are necessary for the payment of, in each case for the benefit of the holders of Eligible LP Units and Shares for exchange in accordance with this Article
II and for the benefit of the holders of Company Options for payment in accordance with Section 2.3(a), the aggregate 
  

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 OP Merger Consideration, REIT Merger Consideration and Option Merger Consideration. Such funds provided to the Paying
Agent are referred to herein as the “Payment Fund.” The Paying Agent shall make payments of the OP Merger Consideration, REIT Merger Consideration and Option Merger Consideration in accordance with this Agreement, the OP Merger
Certificate and the Articles of Merger. The Payment Fund shall not be used for any other purpose. Any and all interest earned on the Payment Fund shall be paid to the Surviving Entity. 
  
 (c) Payment Procedures. 
  
 (i) Letter of Transmittal. Promptly after the REIT Effective Time, but in no event more than five (5) Business Days thereafter, the
Surviving Entity shall cause the Paying Agent to mail to each holder of record of a Certificate at the REIT Effective Time (A) a letter of transmittal specifying that delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Paying Agent and which letter shall be in such form and have such other provisions (including provisions for the delivery of certificates of non-foreign status) as the Purchaser Parties
shall reasonably specify and to which the Company shall reasonably approve prior to the Effective Time and (B) instructions for surrendering the Certificates. 
  

(ii) Surrender of Certificates. Upon surrender of a Certificate for cancellation to the Paying Agent or such agent or agents as
the Purchaser Parties may designate, together with a duly executed letter of transmittal and any other documents reasonably required by the Paying Agent and reasonably approved by the Company prior to the Effective Time (including, if applicable,
duly executed certificates of non-foreign status), the holder of such Certificate shall be entitled to receive in exchange therefor the applicable REIT Merger Consideration payable in respect of such Certificate less any required withholding of
Taxes in accordance with Section 2.2(e). Any Certificates so surrendered shall be cancelled immediately. No interest shall accrue or be paid on any amount payable upon surrender of the Certificates. 
  
 (iii) Unregistered Transferees. If any REIT Merger
Consideration is to be paid to a Person other than the Person in whose name the surrendered Certificate is registered, then the REIT Merger Consideration may be paid to such a transferee so long as (A) the surrendered Certificate is accompanied by
all documents reasonably required to evidence and effect such transfer and (B) the Person requesting such payment (1) pays any applicable transfer taxes or (2) establishes to the reasonable satisfaction of the Purchaser Parties and the Paying Agent
that such taxes have already been paid or are not applicable. 
  
 (iv) No Other Rights. Until surrendered in accordance with this Section 2.2(c), each Certificate shall be deemed, except as provided in this Agreement or by applicable Law, from and after the REIT
Effective Time, to represent for all purposes solely the right to receive the applicable REIT Merger Consideration in accordance with the terms hereof. Payment of the REIT Merger Consideration upon the surrender of any Certificate shall be deemed to
have been paid in full satisfaction of all rights pertaining to that Certificate and the Shares formerly represented by it. The Option Merger Consideration paid with respect to Company Options in accordance with this Article II 
  

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 and Section 2.3(a) shall be deemed to have been paid in full satisfaction of all rights pertaining
to the cancelled Company Options and on and after the REIT Effective Time the holder of a Company Option shall have no further rights to exercise any Company Option. 
  
 (d) No Further Transfers. Upon and after the REIT Effective Time, the share transfer books of the Company shall be
closed and there shall be no further registration of transfers of the Common Shares that were outstanding immediately prior to the REIT Effective Time. If, after the REIT Effective Time, Certificates are presented to the Surviving Entity for any
reason, they shall be cancelled and exchanged for cash as provided in this Article II. 
  
 (e) Required Withholding. The Purchaser Parties and the Paying Agent shall be entitled to deduct and withhold from any REIT Merger Consideration or Option Merger Consideration, as the case may be, payable under
this Agreement such amounts as may be required to be deducted or withheld therefrom under (i) the Code or (ii) any applicable state, local or foreign Tax Laws. To the extent that amounts are so deducted and withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. 
  
 (f) No Liability. Neither the Purchaser Parties nor the Paying Agent shall be liable to any holder of Certificates or Company Options for any
amount properly paid from the Payment Fund or delivered to a public official under any applicable abandoned property, escheat or similar Law. 
  
 (g) Investment of Payment Fund. The Paying Agent shall invest the Payment Fund as directed by the Purchaser Parties. Any interest and other income
resulting from such investment shall be deemed property of, and shall be paid promptly to, the Surviving Entity. Any losses resulting from such investment shall not in any way diminish the Purchaser Parties’ obligation to pay the full amount of
the aggregate OP Merger Consideration, REIT Merger Consideration and Option Merger Consideration. 
  
 (h) Termination of Payment Fund. Any portion of the Payment Fund that remains unclaimed by the holders of Certificates or Company Options nine (9)
months after the REIT Effective Time shall be delivered by the Paying Agent to the Surviving Entity upon demand, which shall hold such amounts for the holders of Certificates or Company Options (to the extent the Option Merger Consideration is
payable in respect of such Company Options). Any holder of Certificates or Company Options who has not complied with this Article II shall look thereafter only to the Surviving Corporation for payment of the applicable REIT Merger
Consideration or Option Merger Consideration, as the case may be, without interest on such REIT Merger Consideration or Option Merger Consideration and only as general creditors thereof. If any Certificates or Company Options shall not have been
surrendered immediately prior to the date on which any REIT Merger Consideration or Option Merger Consideration, as the case may be, would otherwise become subject to any abandoned property, escheat or similar Law, the REIT Merger Consideration or
Option Merger Consideration payable in respect of such Certificates or Company Options shall, to the extent permitted by applicable Law and at the option of the Surviving Entity, on the Business Day immediately prior to such date become the property
of Surviving Entity, free and clear of any claim or interest of any Person previously entitled thereto. 
  

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 (i) Lost, Stolen or Destroyed Certificates. If any Certificate is lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Entity, the posting by such Person of a bond in such reasonable and customary form and amount as the
Surviving Entity may direct as indemnity against any claim that may be made against the Surviving Entity with respect to the alleged loss, theft or destruction of such Certificate, the Paying Agent shall pay the REIT Merger Consideration to such
Person in exchange for such lost, stolen or destroyed Certificate. 
  
 Section 2.3. Company Options. 
  
 (a) The Company
shall take such actions as are necessary to assure that, as of the REIT Effective Time, each option to acquire Common Shares (each, a “Company Option”) issued under the Company Share Incentive Plan and outstanding immediately prior
to the REIT Effective Time, whether or not then exercisable or vested, by virtue of the REIT Merger and without any further action on the part of the Purchaser Parties, the Company or the holder of that Company Option, shall be cancelled and
converted into the right to receive an amount in cash, without interest, equal to the product of (x) the excess of the REIT Merger Consideration per share over the exercise or purchase price per share of such Company Option, and (y) the number of
Common Shares subject thereto (the aggregate of such amounts hereinafter referred to as the “Option Merger Consideration”). The payment of the Option Merger Consideration to the holder of a Company Option shall be reduced by any
income or employment Tax withholding required under (i) the Code or (ii) any applicable state, local or foreign Tax Laws. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes under this Agreement as
having been paid to the holder of that Company Option. At the REIT Effective Time, all Company Options shall be cancelled and the Company Share Incentive Plan shall terminate. The Company shall take such actions as are necessary to ensure that the
Company Share Incentive Plan shall terminate as of the REIT Effective Time. All administrative and other rights and authorities granted under the Company Share Incentive Plan to the Company, the Company Board or any committee or designee thereof,
shall, following the REIT Effective Time, reside with the Surviving Entity. Notwithstanding the foregoing, if the exercise price per share or unit provided for in any Company Option exceeds the REIT Merger Consideration per share, no cash shall be
paid with regard to such Company Option to the holder of such Company Option. Prior to the REIT Effective Time, the Company and the Purchaser Parties shall establish a procedure to effect the surrender of Company Options contemplated by this
Section 2.3(a) and payment of the Option Merger Consideration by the Paying Agent out of the Payment Fund. 
  
 (b) The Company shall take such actions as are necessary to cause dispositions of Company equity securities (including derivative securities) pursuant to
the transactions contemplated by this Agreement by each individual that is an officer or trustee of the Company to be exempt from Section 16(b) of the Exchange Act under Rule 16b-3 under the Exchange Act in accordance with the Rule 16b-3 No-Action
Letter. 
  
 Section 2.4. Restricted Shares. The Company
shall take such actions as are necessary so that as of the REIT Effective Time, each restricted Common Share granted by the Company 
  

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 Board which as of the Closing Date is issued and outstanding but not vested, shall fully vest. At the REIT Effective
Time, each issued and outstanding restricted Common Share shall be converted into the right to receive the REIT Merger Consideration as provided in Section 2.1(a). 
  
 Section 2.5. Adjustments to REIT Merger Consideration. If during the period between the date of this Agreement and
the REIT Effective Time, any change in the outstanding Shares shall occur, including, but not limited to, by reason of any reclassification, recapitalization, share dividend, share split, reverse split or combination, exchange or readjustment of
Shares, or any share dividend thereon with a record date during such period (but not as a result of (x) the exercise of (i) outstanding Company Options or (ii) all or any portion of the Warrants, (y) the exchange of any outstanding LP Units for
Common Shares or (z) the conversion of Series A Shares to Common Shares pursuant to Section 2.1(f)), the amount per share to be paid to holders of Shares in the REIT Merger Consideration and the holders of Company Options in the Option Merger
Consideration shall be appropriately adjusted. 
  
 Section 2.6.
Effect of OP Merger on the Partnership Units. At the OP Effective Time, by virtue of the OP Merger and without any action on the part of any of the Purchaser Parties, the Operating Partnership or the holders of any of the outstanding equity
interests of OP Merger Sub or the Partnership Units: 
  
 (a)
Conversion of LP Units. Each LP Unit (other than Excluded LP Units (as defined in Section 2.6(b)) issued and outstanding immediately prior to the OP Effective Time (such LP Units are each hereinafter referred to as an “Eligible
LP Unit” and collectively, as the “Eligible LP Units”), shall be converted automatically into the right to receive $6.70 in cash, without interest (the “OP Merger Consideration”). At the OP Effective Time,
all Eligible LP Units shall be cancelled automatically and shall cease to exist, and the holders of certificates which immediately prior to the OP Effective Time represented Eligible LP Units (the “LP Unit Certificates”) shall cease
to have any rights with respect to the Eligible LP Units, other than the right to receive the OP Merger Consideration per Eligible LP Unit (without any interest being payable thereon) upon surrender of the LP Unit Certificates in accordance with
Section 2.7. 
  
 (b) Cancellation of Certain LP Units
and Purchaser Party-Owned Partnership Units. Each LP Unit issued and outstanding and owned by the Company, the Operating Partnership, or any of their respective wholly-owned Subsidiaries, or by the Purchaser Parties, or any of their wholly-owned
Subsidiaries, immediately prior to the OP Effective Time (collectively, the “Excluded LP Units”) shall be cancelled automatically and shall cease to exist, without payment of any consideration being made in respect thereof.

  
 (c) Conversion of Equity Interests of OP Merger Sub.
The equity interests of OP Merger Sub issued and outstanding immediately prior to the OP Effective Time shall be converted into units of limited partner interest in the Surviving Partnership (the “Surviving Partnership LP Units”).
The number of Surviving Partnership LP Units shall be equal to the equity capitalization of OP Merger Sub divided by $6.70. 
  
 (d) Series B Preferred Units. The OP Merger shall have no effect on the Operating Partnership’s outstanding Series B Preferred Units, and at
and after the OP Effective Time, the Series B Preferred Units shall be the outstanding Series B Preferred Units of the Surviving Partnership. 
  

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 (e) Series A Preferred Units. If requested by the Purchaser Parties, the Company shall take such
actions as are necessary to convert all issued and outstanding Series A Preferred Units to LP Units before the OP Effective Time. Any such converted LP Units shall be automatically cancelled at the OP Effective Time in accordance with Section
2.6(b). 
  
 (f) Dissenters’ Rights. No
dissenters’, appraisal or similar rights shall be available with respect to the OP Merger. 
  
 (g) Adjustments to OP Merger Consideration. If during the period between the date of this Agreement and the OP Effective Time, any change in the
outstanding LP Units shall occur, including, but not limited to, by reason of any reclassification, recapitalization, equity distribution, equity split, reverse split or combination, exchange or readjustment of LP Units, or any equity dividend
thereon with a record date during such period (but not as a result of (x) the exchange of any outstanding LP Units for Common Shares or (y) the conversion of Series A Preferred Units to LP Units pursuant to Section 2.6(e)), the amount per LP
Unit to be paid to holders of Eligible LP Units in the OP Merger Consideration shall be appropriately adjusted. 
  
 (h) Required Withholding. The Purchaser Parties, the Operating Partnership and the Paying Agent, as applicable, shall be entitled to deduct and
withhold from any OP Merger Consideration payable under this Agreement such amounts as may be required to be deducted or withheld therefrom under (i) the Code or (ii) any applicable state, local or foreign Tax Laws. To the extent amounts are so
deducted and withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. 
  
 Section 2.7. Procedures for Exchange of Eligible LP Units in the OP Merger. The provisions of Section 2.2,
including the Payment Fund and payment procedures and the right of the Purchaser Parties to request certificates of non-foreign status pursuant to Section 2.2(c), shall apply to the Eligible LP Units with respect to the OP Merger, except
where such provisions are clearly applicable only to the Certificates and except as otherwise provided in Section 2.6. 
  
 ARTICLE III 
  
 REPRESENTATIONS AND WARRANTIES 
  
 Section 3.1. Representations and Warranties of the Company. Unless expressly set forth herein, none of the representations and warranties of the
Company contained herein, other than those contained in Section 3.1(o), are made with respect to any Company Property which is the subject of the Industrial Sale Agreement and all representations and warranties of the Company are made as if
the transactions contemplated thereby were consummated prior to the date of this Agreement, and except as set forth in the disclosure letter delivered by the Company to the Purchaser Parties in connection with the execution of this Agreement (the
“Company Disclosure Letter”), which identifies exceptions by specific Section references, the Company 
  

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 represents and warrants to each of the Purchaser Parties as follows as of the date of this Agreement: 
  
 (a) Organization, Standing and Trust Power of the Company. The
Company is duly organized, validly existing as a real estate investment trust and in good standing under the Laws of the State of Maryland and has the requisite trust power and authority to own, lease and operate its properties and other assets and
to carry on its business as now being conducted. The Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of the business it is conducting, or the ownership, operation or leasing of
its properties and other assets or the management of properties for others makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, would
not constitute a Company Material Adverse Effect. The Company has heretofore made available to Parent complete and correct copies of the Company’s Articles of Amendment and Restatement of Declaration of Trust, including such articles
supplementary thereto (the “Company Charter”) and amended and restated by-laws (the “Company By-laws”). The Company Charter and the Company By-laws are each in full force and effect as of the date hereof. Each
jurisdiction in which the Company is qualified or licensed to do business and each assumed name under which it conducts business in any jurisdiction are identified in Section 3.1(a) of the Company Disclosure Letter. 
  
 (b) Company Subsidiaries; Interests in Other Persons. 
  
 (i) Each Company Subsidiary that is a corporation is duly
incorporated, validly existing and in good standing under the Laws of its jurisdiction of incorporation and has the requisite corporate power and authority to own, lease and operate its properties and other assets and to carry on its business as now
being conducted. Each Company Subsidiary that is a partnership, limited liability company or trust is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has the requisite power and authority
to own, lease and operate its properties and to carry on its business as now being conducted. Each Company Subsidiary is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or
the ownership, operation or leasing of its properties and other assets or the management of properties for others makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not constitute a Company Material Adverse Effect. All outstanding shares of stock of each Company Subsidiary that is a corporation have been duly authorized, are validly issued, fully paid and nonassessable,
and are not subject to any preemptive rights and are owned by the Company and/or another Company Subsidiary, except as disclosed in Section 3.1(b)(i) of the Company Disclosure Letter, and are so owned free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever (collectively, “Liens”) and are not subject to any option or right to purchase any such shares of stock except as disclosed in Section 3.1(b)(i) of the
Company Disclosure Letter and Liens securing mezzanine debt as disclosed in Section 3.1(b)(i) of the Company Disclosure Letter. All equity interests in each Company Subsidiary that is a partnership, limited liability company, trust or other entity
have been duly authorized and are validly issued and are owned by the Company and/or another Company 
  

 -11- 

 Subsidiary, except as disclosed in Section 3.1(b)(i) of the Company Disclosure Letter, and are so owned
free and clear of all Liens and are not subject to any option or right to purchase any such equity interest except as disclosed in Section 3.1(b)(i) of the Company Disclosure Letter and Liens securing mezzanine debt as disclosed in Section 3.1(b)(i)
of the Company Disclosure Letter. The Company has heretofore made available to each of the Purchaser Parties complete and correct copies of the charter, by-laws or other organizational documents of each of the Company Subsidiaries, each as amended
to date and each as in full force and effect as of the date hereof. Section 3.1(b)(i) of the Company Disclosure Letter sets forth (A) all Company Subsidiaries and their respective jurisdictions of incorporation or organization, (B) each owner and
the respective amount of such owner’s equity interests in each Company Subsidiary and (C) a list of each jurisdiction in which each Company Subsidiary is qualified or licensed to do business and each assumed name under which each such Company
Subsidiary conducts business in any jurisdiction. 
  
 (ii) Except as disclosed in Section 3.1(b)(ii) of the Company Disclosure Letter (the “Company Other Interests”), neither the Company nor any of the Company Subsidiaries owns any stock or other ownership interest in any
Person. 
  
 (c) Capital Structure. 
  
 (i) Shares of Beneficial Interest. 
  
 (A) As of the date of this Agreement, the authorized shares
of beneficial interest of the Company consist of (1) 100,000,000 Common Shares, (2) 65,000,000 excess shares, par value $0.01 per share, and (3) 30,000,000 preferred shares, par value $0.01 per share. The Company’s preferred shares have been
designated as set forth in Section 3.1(c)(i)(A) of the Company Disclosure Letter. 
  
 (B) As of the date of this Agreement, (1) 23,681,371 Common Shares are issued and outstanding, (2) 2,000,000 Series A Shares are issued
and outstanding and (3) 4,000,000 Series B Shares are issued and outstanding. As of the date of this Agreement, one hundred percent (100%) of the issued and outstanding Series A Shares are owned by the Operating Partnership. 
  
 (C) As of the date of this Agreement, (1) 939,983 Common
Shares are reserved for issuance upon exercise of outstanding Company Options and 1,771,027 additional Common Shares are reserved for issuance under the Prime Group Realty Trust Share Incentive Plan (the “Company Share Incentive
Plan”), (2) 3,076,586 Common Shares are reserved for issuance upon exchange of LP Units for Common Shares pursuant to the Partnership Agreement and (3) 1,000,000 Common Shares are reserved for issuance upon exercise of the Warrants.

  
 (D) Except as set forth in this Section
3.1(c) or in Section 3.1(c)(i)(D) of the Company Disclosure Letter, there are issued and outstanding or reserved for issuance: (1) no shares of beneficial interest or other voting securities 
  

 -12- 

 of the Company; (2) no restricted Company Shares, performance share awards or dividend equivalent rights
relating to the equity interests of the Company or the Operating Partnership; (3) no securities of the Company or any Company Subsidiary or securities or assets of any other entity convertible into or exchangeable for shares of beneficial interest
or other voting securities of the Company or any Company Subsidiary; and (4) no subscriptions, options, warrants, conversion rights, stock appreciation rights, calls, claims, rights of first refusal, rights (including preemptive rights),
commitments, arrangements or agreements to which the Company or any Company Subsidiary is a party or by which it is bound in any case obligating the Company or any Company Subsidiary to issue, deliver, sell, purchase, redeem or acquire, or cause to
be issued, delivered, sold, purchased, redeemed or acquired, additional shares of beneficial interest or other voting securities of the Company or of any Company Subsidiary, or obligating the Company or any Company Subsidiary to grant, extend or
enter into any such subscription, option, warrant, conversion right, stock appreciation right, call, right, commitment, arrangement or agreement. All outstanding Company Shares are, and all Company Shares reserved for issuance will be, upon
issuance, in accordance with the terms specified in the instruments or agreements pursuant to which they are issuable, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of, any preemptive right,
purchase option, call option, right of first refusal, subscription or any other similar right. 
  
 (E) Except as set forth in Section 3.1(c)(i)(E) of the Company Disclosure Letter, all dividends or distributions on securities of the
Company or any Company Subsidiary that have been declared or authorized prior to the date of this Agreement have been paid in full. 
  
 (F) As of the date of this Agreement, the aggregate unpaid quarterly distributions on the Series B Shares for quarters ended prior to the
date of this Agreement are $13,500,000. 
  
 (ii)
Partnership Units. 
  
 (A) As of the date
of this Agreement, 23,681,371 units of general partner interest in the Operating Partnership (the “GP Units”), 3,076,586 LP Units, 2,000,000 Series A preferred units in the Operating Partnership (the “Series A Preferred
Units”), and 4,000,000 Series B preferred units in the Operating Partnership (the “Series B Preferred Units”), are validly issued and outstanding, are not subject to preemptive rights and any capital contribution required
to be made by the holders thereof has been made. 
  
 (B) The Company is the sole general partner of the Operating Partnership as of the date of this Agreement and holds (1) 23,681,371 GP Units, representing 100% of the outstanding GP Units in the Operating Partnership, (2) 2,000,000 Series A
Preferred Units, representing 100% of the outstanding Series A Preferred Units, and (3) 4,000,000 Series B Preferred Units, representing 100% of 
  

 -13- 

 the outstanding Series B Preferred Units. Section 3.1(c)(ii)(B) of the Company Disclosure Letter sets
forth the name, number and class of LP Units held by each partner in the Operating Partnership. 
  
 (C) Each LP Unit may, under certain circumstances and subject to certain conditions set forth in the Partnership Agreement, be converted
to Common Shares on a one-for-one basis. As of the date of this Agreement, no notice has been received by the Company or the Operating Partnership of the exercise of any of the rights described in this paragraph (C), which are not reflected in this
Section 3.1(c). 
  
 (iii)
Miscellaneous. Except as set forth in Section 3.1(c)(iii) of the Company Disclosure Letter, no holder of securities in the Company or any Company Subsidiary has any right to have such securities registered by the Company or any Company
Subsidiary, as the case may be. 
  
 (d) Authority; No
Violations; Consents and Approval; LP Units. 
  
 (i) The Company has all requisite power and authority to enter into the Transaction Documents and to consummate the Transactions, subject, solely with respect to the consummation of the Mergers, to receipt of the Company Shareholder
Approval and the Partnership Unitholder Approval and the acceptance for recording of the Articles of Merger by the Maryland Department and the OP Merger Certificate by the Secretary of State of Delaware. Each Company Subsidiary that is a party to
any Transaction Document has all requisite power and authority to enter into such Transaction Document and to consummate the Transactions. The execution and delivery of the Transaction Documents and the consummation of the Transactions have been
duly authorized by all necessary action on the part of the Company and each applicable Company Subsidiary, subject, solely with respect to the consummation of the Mergers, to receipt of the Company Shareholder Approval and the Partnership Unitholder
Approval. The Transaction Documents have been duly executed and delivered by the Company and each applicable Company Subsidiary and, subject, solely with respect to the consummation of the Mergers, to receipt of the Company Shareholder Approval and
the Partnership Unitholder Approval, constitute valid and binding obligations of the Company and each applicable Company Subsidiary, enforceable against the Company and each applicable Company Subsidiary in accordance with their terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws of general applicability relating to or affecting creditors’ rights and by the exercise of judicial discretion in
accordance with general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law). 
  
 (ii) Except as set forth in Section 3.1(d)(ii) of the Company Disclosure Letter and except, solely with respect to the consummation of the
Mergers, for the Company Shareholder Approval and the Partnership Unitholder Approval, the execution and delivery of the Transaction Documents by the Company and each applicable Company Subsidiary do not, and the consummation of the Transactions,
and compliance 
  

 -14- 

 with the provisions hereof or thereof, will not conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation, or the loss of a benefit under, or give rise to a right of purchase under, result in the creation of
any Lien upon any of the properties or assets of the Company or any of the Company Subsidiaries under, or require the consent or approval of any third party or otherwise result in a detriment or default to the Company or any of the Company
Subsidiaries pursuant to any provision of (A) the Company Charter or the Company By-laws or any provision of the comparable charter or organizational documents of any of the Company Subsidiaries, (B) except for Triggered Agreements (as defined
below), any lease or other agreement, instrument, permit, concession, franchise or license applicable to the Company or any of the Company Subsidiaries, or their respective properties or assets or any guarantee by the Company or any of the Company
Subsidiaries of any of the foregoing, other than any loan or credit agreement, note, bond, mortgage, indenture or other loan document, (it being understood that no representation is being given as to whether the Surviving Entity and the Company
Subsidiaries will be in compliance with any covenants contained therein following the REIT Merger or the OP Merger), (C) any joint venture or other ownership arrangement, except for Triggered Agreements, or (D) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in Section 3.1(d)(iii) are duly and timely obtained or made and the Company Shareholder Approval is obtained, any judgment, order, decree, statute, Law, ordinance, rule or
regulation applicable to the Company or any of the Company Subsidiaries, or any of their respective properties or assets, other than, in the case of clauses (B) (except with respect to the Triggered Agreements), (C) (except with respect to the
Triggered Agreements) and (D), any such conflicts, violations, defaults, rights, Liens, detriments, or failure to obtain any such consents that, individually or in the aggregate, would not constitute a Company Material Adverse Effect. For the
purposes of this Agreement, the term “Triggered Agreements” means the agreements identified as “Triggered Agreements” in Section 3.1(d)(ii) of the Company Disclosure Letter. Notwithstanding the foregoing and anything else
in this Agreement to the contrary, (x) the Company is making no representation or warranty regarding the necessity to obtain the consent, waiver or approval of any lender pursuant to any loan or credit agreement, note, bond, mortgage, indenture or
other loan document in connection with the transactions contemplated by this Agreement, (y) the Company shall not be responsible for obtaining any such consent, waiver or approval, if required, and (z) in no event shall the receipt by any party of
any consent, waiver or approval, compliance with any notice provision pursuant to, or amendment or modification of, any loan or credit agreement, note, bond, mortgage, indenture, other loan document or the Triggered Agreements be in any manner
whatsoever a condition to the parties’ obligations to close the transaction contemplated by this Agreement. 
  
 (iii) Except as set forth in Section 3.1(d)(iii) of the Company Disclosure Letter, no consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from, any Governmental Entity, is required by or on behalf of the Company or any of the Company Subsidiaries in connection with the execution and delivery of the Transaction Documents by the
Company and each of the 
  

 -15- 

 applicable Company Subsidiaries or the consummation by the Company or the applicable Company Subsidiaries
of the Transactions, except for: (A) the filing of the Articles of Merger with the Maryland Department and the OP Merger Certificate with the Secretary of State of Delaware; (B) the filing with the SEC of (1) a proxy statement (together with any
amendment thereof or supplement thereto, the “Company Proxy Statement”) relating to the special meeting of the shareholders of the Company to be held to consider the approval of this Agreement and the REIT Merger (the
“Company Shareholders Meeting”); (2) any other documents otherwise required to be filed in connection with this Agreement and the transactions contemplated hereby; and (3) such reports under Section 13(a) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and such other compliance with the Exchange Act and the rules and regulations thereunder, as may be required in connection with the Transaction Documents and the transactions
contemplated hereby or thereby; (C) such filings and approvals as may be required by any applicable state securities or “blue sky” Laws, Takeover Statute or Environmental Law (as defined in Section 3.1(o)) as more specifically
described in Section 3.1(d)(iii) of the Company Disclosure Letter; (D) the filing, if applicable, of a pre-merger notification and report by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
Act”), and the expiration or termination of the applicable waiting period thereunder; and (E) any such consent, approval, order, authorization, registration, declaration, filing or permit that the failure to obtain or make individually or
in the aggregate, would not constitute a Company Material Adverse Effect. 
  
 (iv) The holders of the Series B Shares will not have any right to (A) cause the redemption of the Series B Shares, (B) exchange the Series B Shares for any other securities or (C) convert, redeem or receive a
distribution with respect to the Series B Shares (other than (1) a distribution in an amount necessary to pay the full cumulative distributions for all past distribution periods to the extent then not previously paid and (2) a distribution
representing the full quarterly distribution for the calendar quarter in which the Closing occurs) as a result of the Mergers or the other transactions contemplated by the Transaction Documents. 
  
 (e) SEC Documents. 
  
 (i) The Company has made available (including via filings
with EDGAR) to each of the Purchaser Parties a true and complete copy of each report, schedule, registration statement and definitive proxy statement filed by the Company with the SEC since January 1, 2002 and prior to or on the date hereof (the
“Company SEC Documents”). As of their respective filing dates, (A) the Company SEC Documents complied in all material respects with the requirements of the Securities Act of 1933, as amended (the “Securities Act”),
or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Company SEC Documents and (B) none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent such statements have been modified or superseded by later Company
SEC Documents filed and publicly available prior to the date of this Agreement. The Company has no outstanding and unresolved comments from the SEC 
  

 -16- 

 with respect to any of the Company SEC Documents; provided, however, that no representation
or warranty is made as to outstanding and unresolved comments from the SEC regarding any post-effective amendment to the Company’s effective registration statement on Form S-11 (Registration No. 333-115640) filed after the date hereof. None of
the Company SEC Documents is the subject of any confidential treatment request by the Company. The consolidated financial statements of the Company (including the notes thereto) included in the Company SEC Documents complied as to form in all
material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto, or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC) and fairly presented in all material respects, in accordance with applicable
requirements of GAAP (subject, in the case of the unaudited statements, to normal, recurring adjustments, none of which are material), the consolidated financial position of the Company and the Company Subsidiaries, taken as a whole, as of their
respective dates and the consolidated statements of operations and the consolidated statements of cash flows of the Company and the Company Subsidiaries for the periods presented therein. No Company Subsidiary is required to make any filings with
the SEC. 
  
 (ii) The GP Units and LP Units are
not registered under Section 12 of the Exchange Act. 
  
 (f)
Absence of Certain Changes or Events. Except as disclosed or reflected in the Company SEC Documents or as disclosed in Section 3.1(f) of the Company Disclosure Letter, since December 31, 2003, the Company and the Company Subsidiaries have
conducted their business only in the ordinary course and there has not been: (i) (A) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to the Company Shares; (B) any
amendment of any term of any outstanding equity security of the Company or any Company Subsidiary; (C) any repurchase, redemption or other acquisition by Company or any Company Subsidiary of any outstanding shares of beneficial interest or stock or
other equity securities of, or other ownership interests in, the Company or any Company Subsidiary; (D) any material change in any method of accounting or accounting practice or any material change in any tax method or election by the Company or any
Company Subsidiary; (E) any amendment of any employment, consulting, severance, retention or any other agreement between the Company and any officer or director of the Company; or (F) any change, event, effect, damage, destruction or loss relating
to the business or operations of the Company that has had, or could reasonably be expected to have, a Company Material Adverse Effect and (ii) any split, combination or reclassification of any of the Company Shares or the LP Units, or any issuance
or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for, or giving the right to acquire by exchange or exercise, Company Shares or LP Units or any issuance of an ownership interest in any Company
Subsidiary. 
  
 (g) No Undisclosed Material Liabilities.
Except as disclosed in the Company SEC Documents or Section 3.1(g) of the Company Disclosure Letter or as otherwise could not reasonably be expected to have a Company Material Adverse Effect, there are no liabilities of the Company or any of the
Company Subsidiaries, whether accrued, contingent, absolute or 
  

 -17- 

 determined, other than: (i) liabilities adequately provided for or disclosed on the balance sheet of the Company dated as
of December 31, 2003 contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2003 of the Company or (ii) liabilities incurred in the ordinary course of business subsequent to December 31, 2003. 
  
 (h) No Default. Neither the Company nor any of the Company
Subsidiaries is in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of (A) the Company Charter or the Company By-laws or the
comparable charter or organizational documents of any of the Company Subsidiaries, (B) any loan or credit agreement or note, including, but not limited to, the Triggered Agreements or any bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license to which the Company or any of the Company Subsidiaries is now a party or by which Company or any of the Company Subsidiaries or any of their respective properties or assets is bound, or (C) any
order, writ, injunction or decree applicable to the Company or any of the Company Subsidiaries, except, in the case of clauses (B) and (C) for defaults or violations which, individually or in the aggregate, would not constitute a Company Material
Adverse Effect. 
  
 (i) Compliance with Applicable Laws.
The Company and the Company Subsidiaries hold all permits, licenses, certificates, registrations, variances, exemptions, orders, franchises and approvals of, from and with all Governmental Entities necessary for the lawful conduct of their
respective businesses (the “Company Permits”), except where the failure so to hold, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. The Company and the Company
Subsidiaries are in compliance with the terms of each of the Company Permits, except where the failure to so comply, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. Except as disclosed in
the Company SEC Documents or as would not constitute a Company Material Adverse Effect, the businesses of the Company and the Company Subsidiaries are not being conducted in violation of any Law of any Governmental Entity. No investigation or review
by any Governmental Entity with respect to the Company or any of the Company Subsidiaries is pending or, to the Knowledge of the Company, is threatened, other than those the outcome of which, individually or in the aggregate, would not constitute a
Company Material Adverse Effect. 
  
 (j) Litigation. Except
as disclosed in the Company SEC Documents or as disclosed in Section 3.1(j) of the Company Disclosure Letter and except for routine litigation arising from the ordinary course of business of the Company and the Company Subsidiaries which is
adequately covered by insurance (subject to applicable deductibles), there is no litigation, arbitration, claim, investigation, suit, action or proceeding pending in which service of process or written notice, as applicable, has been received by an
officer of the Company or, to the Knowledge of the Company, threatened in writing to an officer of the Company and against or affecting the Company or any Company Subsidiary that could reasonably be expected to constitute a Company Material Adverse
Effect, nor is there any judgment, award, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any Company Subsidiary which (A) could, individually or in the aggregate, reasonably be expected
to constitute a Company Material Adverse Effect, (B) would cause any of the transactions contemplated by the Transaction Documents to be rescinded following their 
  

 -18- 

 consummation, including, without limitation, the REIT Merger and OP Merger or (C) would materially adversely affect the
rights of any Purchaser Party to own the Company’s or any Company Subsidiary’s assets and to operate the Company’s or any Company Subsidiary’s business. 
  
 (k) Taxes. 
  
 (i) (A) Each of the Company and the Company Subsidiaries has timely filed all material Tax Returns required to be filed by it (after
giving effect to any filing extension properly granted by a Governmental Entity having authority to do so or otherwise permitted by Law), (B) each such Tax Return was, at the time filed, true, correct and complete in all material respects and (C)
each of the Company and the Company Subsidiaries has paid (or the Company has paid on behalf of such Company Subsidiary), within the time and in the manner prescribed by Law, all Taxes that are shown to be due and payable as reflected on such Tax
Returns. The most recent financial statements contained in the Company SEC documents filed with the SEC prior to the date of this Agreement reflect adequate accrued liabilities for all material Taxes due and payable by the Company and the Company
Subsidiaries as a group for all taxable periods and portions thereof through the date of such financial statements. To the Knowledge of the Company, the Company and the Company Subsidiaries (as a group) have established on their books and records
reserves or accrued liabilities or expenses that are adequate for the payment of all material Taxes for which the Company or any Company Subsidiary is liable but are not yet due and payable. Since the date of the most recent audited financial
statements included in the Company SEC Documents, (A) the Company has incurred no liability for any material Taxes under Sections 857(b), 860(c) or 4981 of the Code or IRS Notice 88-19 or Treasury Regulation Section 1.337(d)-5T, including, without
limitation, any material Tax arising from a prohibited transaction described in Section 857(b)(6) of the Code and (B) neither the Company nor any Company Subsidiary has incurred any material liability for Taxes other than in the ordinary course of
business. Except as set forth in Section 3.1(k) of the Company Disclosure Letter, no deficiencies for material Taxes have been asserted or assessed in writing by a Governmental Entity against the Company or any of the Company Subsidiaries which have
not been paid or remain pending, including claims by any Governmental Entity in a jurisdiction where the Company or any Company Subsidiary does not file Tax Returns, and no requests for waivers of the time to assess any such material Taxes have been
granted and remain in effect or are pending. 
  
 (ii) The Company (A) for each taxable year of the Company’s existence through its taxable year ended December 31, 2003, has been subject to taxation as a real estate investment trust (a “REIT”) within the meaning of
the Code and has satisfied the requirements to qualify as a REIT for such years, (B) has operated consistent with the requirements for qualification and taxation as a REIT for the period from December 31, 2003 through the date hereof, and (C) has
not taken any action or omitted to take any action which would reasonably be expected to result in a successful challenge by the IRS to its status as a REIT, and no such challenge is pending, or to the Company’s Knowledge, threatened. Except as
set forth in Section 3.1(k)(ii) of the Company Disclosure Letter, the assets owned by the Company and the Company Subsidiaries on 
  

 -19- 

 the date hereof are comprised of assets described in Section 856(c)(4) of the Code. Each Company
Subsidiary which files Tax Returns as a partnership for federal income tax purposes has since its inception or acquisition by the Company been classified for federal income tax purposes as a partnership and not as an association taxable as a
corporation, or a “publicly traded partnership” within the meaning of Section 7704(b) of the Code that is treated as a corporation for federal income tax purposes under Section 7704(a) of the Code. Each Company Subsidiary which is a
corporation has been since its formation classified as a qualified REIT subsidiary under Section 856(i) of the Code. Neither the Company nor any Company Subsidiary holds any asset (x) the disposition of which would be subject to rules similar to
Section 1374 of the Code as announced in IRS Notice 88-19 or Treasury Regulation Section 1.337(d)-5t or (y) that is subject to a consent filed pursuant to Section 341(f) of the Code. 
  
 (iii) As of the date of this Agreement, the Company does not have any earnings and profits attributable to
the Company or any other corporation in any non-REIT year within the meaning of Section 857 of the Code. 
  
 (iv) All material Taxes which the Company or the Company Subsidiaries are required by Law to withhold in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other third party and sales, gross receipts and use taxes, have been duly withheld or collected and, to the extent required, have been paid over to the proper Governmental
Entities or are held in separate bank accounts for such purpose. There are no Liens for material Taxes upon the assets of the Company or the Company Subsidiaries except for statutory Liens for Taxes not yet due. 
  
 (v) For periods beginning after December 31, 1997, except as
set forth in Section 3.1(k)(v) of the Company Disclosure Letter, (a) the Tax Returns of the Company or any current Company Subsidiary have not been audited by any federal or state income taxing authority and (b) there are no audits by and contests
with any taxing authority currently being conducted about which the Company has been notified with regard to material Taxes or Tax Returns of the Company or any Company Subsidiary and there are no audits pending with or proposed by any taxing
authority about which the Company has been notified with respect to any material Taxes or Tax Returns of the Company or any Company Subsidiary. 
  
 (vi) Except as set forth in Section 3.1(k)(vi) of the Company Disclosure Letter, neither the Company nor any of the Company Subsidiaries
is a party to any Tax allocation or sharing agreement. 
  
 (vii) Except as set forth in Section 3.1(k)(vii) of the Company Disclosure Letter, the Company does not have any material liability for the Taxes of any Person other than the Company and the Company Subsidiaries, and none of the Company
Subsidiaries have any material liability for the Taxes of any Person other than the Company and the Company Subsidiaries (A) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law), (B) as a transferee or
successor or (C) by contract. 
  

 -20- 

 (viii) Except as set forth in Section 3.1(k)(viii) of the Company Disclosure Letter,
neither the Company nor any of the Company Subsidiaries made any payments, is obligated to make any payments, or is a party to an agreement that could obligate it to make any payments that will not be deductible under Section 280G of the Code. The
Company and the Company Subsidiaries have disclosed to the IRS all positions taken on their federal income Tax Returns which could give rise to a substantial understatement of Tax under Section 6662 of the Code. 
  
 (ix) Except as set forth in Section 3.1(k)(ix) of the
Company Disclosure Letter, neither the Company nor any of the Company Subsidiaries has applied for, received or has pending a Tax Ruling or commenced negotiations or entered into a Closing Agreement with any taxing authority. As defined herein,
“Tax Ruling” means a written ruling of a taxing authority relating to Taxes, and “Closing Agreement” means a written and legally binding agreement with a taxing authority relating to Taxes. 
  
 (l) Pension and Benefit Plans; ERISA. 
  
 (i) Each “employee pension benefit plan,” as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), maintained or contributed to by the Company or any trade or business (whether or not incorporated) which is under common control,
or which is treated as a single employer, with the Company under Section 414(b), (c), (m) or (o) of the Code (a “Company ERISA Affiliate”) or to which the Company or any Company ERISA Affiliate contributed or is obligated to
contribute thereunder within six years prior to the Closing Date (the “Company Pension Plans”) intended to qualify under Section 401 of the Code has received a favorable determination letter from the IRS or is maintained under a
prototype plan approved by the IRS with respect to which the Company or the Company ERISA Affiliates may rely on the opinion letter issued to the prototype sponsor as to such Company Pension Plan’s qualified status and, to the Knowledge of the
Company, nothing has occurred with respect to the operation of such Company Pension Plan that could reasonably be expected to cause the loss of such qualification or the imposition of any material liability, penalty or Tax under ERISA or the Code;

  
 (ii) Except as set forth in Section
3.1(l)(ii) of the Company Disclosure Letter, neither the Company nor any Company ERISA Affiliate currently sponsors, contributes to, maintains or has liability (whether contingent or otherwise) under (i) a “multiemployer plan” (as defined
in Section 4001(a)(3) of ERISA) or (ii) an employee benefit plan that is subject to Part 3 of Subtitle B of Title I of ERISA, or Section 412 of the Code, or Title IV of ERISA; 
  
 (iii) There is no material violation of ERISA or the Code with respect to (A) the filing of applicable
reports, documents and notices with the Secretary of Labor and the Secretary of the Treasury regarding all “employee benefit plans,” as defined in Section 3(3) of ERISA, and all other employee compensation and benefit arrangements or
payroll practices, including, without limitation, severance pay, sick leave, vacation pay, salary continuation for disability, consulting or other compensation agreements, retirement, deferred compensation, bonus (including, without limitation, any
retention 
  

 -21- 

 bonus plan), long-term incentive, stock option, stock purchase, hospitalization, medical insurance, life
insurance and scholarship programs maintained by the Company or any of the Company Subsidiaries or with respect to which the Company or any of the Company Subsidiaries has any liability or the Company Pension Plans (all such plans, including Company
Pension Plans, being hereinafter referred to as the “Company Employee Benefit Plans”) or (B) the furnishing of such documents to the participants or beneficiaries of one or more of the Company Employee Benefit Plans; 
  
 (iv) Each Company Employee Benefit Plan is listed in Section
3.1(l)(iv) of the Company Disclosure Letter, and true and complete copies of which have been made available to the Purchaser Parties, as have the related trust (or other funding or financing arrangement) and all amendments thereto, the most recent
summary plan descriptions, administrative service agreements, Form 5500s and, with respect to any Company Employee Benefit Plan intended to be qualified pursuant to Section 401(a) of the Code, a current IRS determination letter or opinion letter;

  
 (v) Except as set forth in Section 3.1(l)(v)
of the Company Disclosure Letter, each of the Company Employee Benefit Plans is, and its administration is and has been, in material compliance with, and, none of the Company nor any of the Company ERISA Affiliates has received any written claim,
notice or information that any such Company Employee Benefit Plan is not in compliance with, its terms and all applicable Laws regulations and rulings, including, without limitation, the requirements of ERISA. Except as described in Section
3.1(l)(v) of the Company Disclosure Letter, there is no material liability for breaches of fiduciary duty in connection with any of the Company Employee Benefit Plans, and neither Company nor any of the Company Subsidiaries or any “party in
interest” or “disqualified person” with respect to any of the Company Employee Benefit Plans has engaged in a non-exempt “prohibited transaction” within the meaning of Section 4975 of the Code or Section 406 of ERISA;

  
 (vi) There are no actions, disputes, suits,
claims, arbitrations or legal, administrative or other proceedings or governmental investigations pending (other than routine claims for benefits) or, to the Knowledge of the Company, threatened in writing alleging any breach of the terms of any
Company Employee Benefit Plan or of any fiduciary duties thereunder or violation of any applicable Law with respect to any such Company Employee Benefit Plan that could reasonably be expected to constitute a Company Material Adverse Effect;

  
 (vii) Except for the payments contemplated by
Section 2.3 and except as described in Section 3.1(k)(vii), Section 3.1(k)(viii) or Section 3.1(l)(xiv) of the Company Disclosure Letter, neither the execution and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (A) result in any payment (including, but not limited to, any retention bonuses, parachute payments or noncompetition payments) becoming due to any employee or former employee or group of employees or former employees of the
Company or any of the Company Subsidiaries; (B) increase any benefits otherwise payable under any Company Employee Benefit Plan; (C) result in the acceleration of the time of payment or vesting of any such rights or benefits; or (D) otherwise result
in the payment of any “excess parachute payment” within the meaning of Section 280G of the Code with respect to a current or former employee of the Company or any of the Company Subsidiaries; 
  

 -22- 

 (viii) Except as set forth in Section 3.1(l)(viii) of the Company Disclosure Letter,
neither the Company nor any of the Company Subsidiaries has any consulting agreement or arrangement, whether oral or written, with any Person not an employee of the Company or any Company Subsidiary involving annual compensation in excess of
$100,000 other than legal, audit, accounting and tax services performed in the ordinary course of business; 
  
 (ix) All contributions, premiums and other payments required by Law or any Company Employee Benefit Plan or applicable collective
bargaining agreement have been made under any such plan to any fund, trust or account established thereunder or in connection therewith by the due date thereof, and no amounts are or will be due to the Pension Benefit Guaranty Corporation as of the
Closing Date (except for premiums in the ordinary course of business); and any and all contributions, premiums and other payments with respect to compensation or service before and through the Closing Date, or otherwise with respect to periods
before and through the Closing Date, due from any of the Company or Company ERISA Affiliates to, under or on account of each Company Employee Benefit Plan shall have been paid prior to the Closing Date or shall have been fully reserved and provided
for or accrued on the Company financial statements; 
  
 (x) Except as set forth in Section 3.1(l)(x) of the Company Disclosure Letter, no Company Employee Benefit Plan that is a “welfare benefit plan” as defined in Section 3(1) of ERISA provides for continuing benefits or coverage for
any participant or beneficiary or covered dependent of a participant after such participant’s termination of employment, except to the extent required by Law. The Company and the Company ERISA Affiliates have complied in all material respects
with the requirements of Section 4980B of the Code and Parts 6 and 7 of Subtitle B of Title I of ERISA regarding health care coverage under Company Employee Benefit Plans; 
  
 (xi) Except as set forth in Section 3.1(l)(xi) of the Company Disclosure Letter, no amount has been paid by
the Company or any of the Company ERISA Affiliates, and no amount is expected to be paid by the Company or any of the Company ERISA Affiliates, which would be subject to the provisions of Section 162(m) of the Code such that all or a part of such
payments would not be deductible by the payor; 
  
 (xii) Except as set forth in Section 3.1(l)(xii) of the Company Disclosure Letter and without limiting any other provision of this Section 3.1(l), no event has occurred and no condition exists, with respect to any Company Employee
Benefit Plan, that has subjected or could subject the Company or any Company ERISA Affiliate, or any Company Employee Benefit Plan or any successor thereto, to any Tax, fine, penalty or other liability (other than, in the case of the Company, a
Company ERISA Affiliate and the Company Employee Benefit Plans, a liability arising in the normal course to make contributions or payments, as applicable, when ordinarily due under a Company Employee Benefit Plan with respect to employees of the
Company and the Company Subsidiaries), other than such event or condition that would not constitute a 
  

 -23- 

 Company Material Adverse Effect. No plan other than a Company Employee Benefit Plan is or will be
directly or indirectly binding on the Purchaser Parties by virtue of the transactions contemplated hereby. Except as set forth in Section 3.1(l)(xii) of the Company Disclosure Letter, the Purchaser Parties and their Affiliates, including on and
after the Closing Date, the Company and any Company ERISA Affiliate, to the Knowledge of the Company, shall have no liability for, under, with respect to or otherwise in connection with any plan, which liability arises under ERISA or the Code, by
virtue of the Company or any Company Subsidiary being aggregated in a controlled group or affiliated service group with any Company ERISA Affiliate for purposes of ERISA or the Code at any relevant time prior to the Closing Date (other than a
liability from providing benefits arising in the ordinary course of business); 
  
 (xiii) Each Company Employee Benefit Plan may be unilaterally amended or terminated in its entirety by the Company or the Surviving Entity
without liability except as to benefits accrued thereunder prior to amendment or termination, subject to the applicable requirements of ERISA and the Code; and 
  

(xiv) All individual employment, termination, severance, change in control, retention bonus, post-employment, non-competition and other
compensation agreements, arrangements and plans existing prior to the execution of this Agreement, which are between the Company or a Company Subsidiary and any current or former director, officer or employee thereof and which are in effect as of
the date hereof which will exist prior to the Closing, including the name and title of such current or former director, officer or employee, the type of agreement and the amount of any estimated severance payment (including estimated gross up if
applicable) owed thereunder due solely to the transactions contemplated by this Agreement, are listed in Section 3.1(l)(xiv) of the Company Disclosure Letter (collectively, the “Company Severance Agreements”) and have been made
available to the Purchaser Parties. 
  
 (m) Labor Matters.
Except as disclosed in the Company SEC Documents or Section 3.1(m) of the Company Disclosure Letter or as would not constitute a Company Material Adverse Effect: 
  
 (i) Neither the Company nor any of the Company Subsidiaries is a party to any collective bargaining
agreement or other current labor agreement with any labor union or organization, and neither the Company nor any of the Company Subsidiaries have any Knowledge of any activity or proceeding of any labor organization (or representative thereof) or
employee group (or representative thereof) to organize any such employees. 
  
 (ii) There is no unfair labor practice charge or grievance arising out of a collective bargaining agreement or other grievance procedure pending, or, to the Knowledge of the Company, threatened against the Company or
any of the Company Subsidiaries. 
  
 (iii) Except
as otherwise provided above, there is no complaint, lawsuit or proceeding before any Governmental Entity of competent jurisdiction by or on behalf 
  

 -24- 

 of any present or former employee, any applicant for employment or any classes of the foregoing, alleging
breach of any express or implied contract of employment, any Law or regulation governing employment or the termination thereof or other discriminatory, wrongful or tortuous conduct in connection with the employment relationship pending, or, to the
Knowledge of the Company, threatened in writing against the Company or any of the Company Subsidiaries. 
  
 (iv) There is no strike, slowdown, work stoppage or lockout with respect to the employees of the Company or the Company Subsidiaries
pending, or, to the Knowledge of the Company, threatened in writing, against or involving the Company or any of the Company Subsidiaries. 
  
 (v) To the Knowledge of the Company, the employees of the Company and the Company Subsidiaries are lawfully authorized to work in the
United States according to federal immigration Laws. 
  
 (vi) To the Knowledge of the Company, the Company and each of the Company Subsidiaries are in compliance with all applicable Laws in respect of employment and employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health. 
  
 (vii) As
of the date of this Agreement, there is no proceeding, claim, suit, action or governmental investigation pending or, to the Knowledge of the Company, threatened in writing, with respect to which any current or former director, officer, employee or
agent of the Company or any of the Company Subsidiaries is claiming indemnification from the Company or any of the Company Subsidiaries. 
  
 (n) Intangible Property. The Company and the Company Subsidiaries own, possess or have adequate rights to use all trademarks, trade names, patents,
service marks, brand marks, brand names, computer programs, databases, industrial designs and copyrights currently used in the operation of the businesses of each of the Company and the Company Subsidiaries (collectively, the “Company
Intangible Property”), except where the failure to possess or have adequate rights to use such property, individually or in the aggregate, would not constitute a Company Material Adverse Effect. All of the Company Intangible Property is
owned or licensed by the Company or the Company Subsidiaries free and clear of any and all Liens, except as would not, individually or in the aggregate, constitute a Company Material Adverse Effect, and neither the Company nor any such Company
Subsidiary has forfeited or otherwise relinquished any Company Intangible Property. Except as set forth in Section 3.1(n) of the Company Disclosure Letter, to the Knowledge of the Company, the use of Company Intangible Property by the Company or the
Company Subsidiaries does not in any material respect, conflict with, infringe upon, violate or interfere with or constitute an appropriation of any right, title, interest or goodwill, including, without limitation, any intellectual property right,
trademark, trade name, patent, service mark, brand mark, brand name, computer program, database, industrial design, copyright or any pending application therefor, of any other Person. Except as set forth in Section 3.1(n) of the Company Disclosure
Letter, to the Knowledge of the Company, there have been no claims made, and neither the Company nor any of the Company Subsidiaries has received any notice of any claim nor does the Company otherwise have Knowledge that any of the Company

  

 -25- 

 Intangible Property is invalid or conflicts with the asserted rights of any other Person or has not been used or enforced
or has failed to have been used or enforced in a manner that would result in the abandonment, cancellation or unenforceability of any of the Company Intangible Property, except as would not, individually or in the aggregate, constitute a Company
Material Adverse Effect. 
  
 (o) Environmental Matters. For
purposes of this Agreement, (x) “Environmental Law” means any applicable Law of any Governmental Entity relating to the protection of human health and safety as it relates to exposure to Hazardous Material or the environment, (y)
“Hazardous Material” means (A) any petroleum or petroleum products, radioactive materials, asbestos-containing materials, urea formaldehyde foam insulation and polychlorinated biphenyls (“PCBs”), (B) any chemicals,
materials, substances or wastes which are defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous
wastes,” “toxic substances,” “toxic pollutants,” “pollutant,” “contaminant” or words of similar import, or regulated as such, under CERCLA, The Federal Insecticide, Fungicide and Rodenticide Act, the
Hazardous Materials Transportation Act or any other environmental law, and (z) “Release” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, leaching, dispersing, migrating, dumping
or disposing into the indoor or outdoor environment (including, without limitation, ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property, including the movement of Hazardous Material through or
into the air, soil, surface water, or groundwater. All representations and warranties regarding environmental matters are contained exclusively in this Section 3.1(o). Except as disclosed in Section 3.1(o) of the Company Disclosure Letter and
except as would not constitute a Company Material Adverse Effect: 
  
 (i) No administrative or compliance order has been issued that is still in effect, no complaint has been filed that has not been resolved, no penalty has been assessed that has not been paid and no investigation or
review is pending or, to the Knowledge of the Company, threatened by any Governmental Entity with respect to any alleged failure by the Company or any Company Subsidiary (x) to have any Company Permit required under any Environmental Law or (y) with
respect to any treatment, storage, recycling, transportation, disposal, Release or threatened Release by the Company or any Company Subsidiary, on any property currently or formerly owned, operated or leased by the Company or any Company Subsidiary,
of any Hazardous Material. 
  
 (ii) Neither the
Company nor any Company Subsidiary nor, to the Knowledge of the Company, any owner or lessee of any property currently or formerly owned, operated or leased by the Company or any Company Subsidiary, has used, generated, stored, treated or handled
any Hazardous Material on such property, except in compliance with Environmental Laws. To the Knowledge of the Company, (A) there are no asbestos-containing materials present on, in or under any property owned, leased or operated by the Company or
any Company Subsidiary, (B) there are no PCBs present on, in or under any property owned, leased or operated by the Company or any Company Subsidiary, and (C) there are no underground storage tanks, active or abandoned, used for the storage of
Hazardous Materials currently present on, in or under any property owned, leased or operated by the Company or any Company Subsidiary, except in each case where in compliance with Environmental Laws. 
  

 -26- 

 (iii) Neither the Company nor any of the Company Subsidiaries has received notice of a
claim, investigation, litigation, proceeding, notice of violation, complaint, or request for information that has not been resolved, to the effect that it is liable to a third party, including a Governmental Entity, as a result of a Release or
threatened Release of a Hazardous Material into the environment at any property currently or formerly owned, leased or operated by the Company or a Company Subsidiary, and, to the Knowledge of the Company, there is no reasonable basis for such
claim, investigation, litigation, proceeding, notice of violation, complaint, or request for information. 
  
 (iv) Neither the Company nor any Company Subsidiary has transported or arranged for the transportation of any Hazardous Material to any
location which is the subject of any action, suit or proceeding that has resulted in actual, or to the Knowledge of the Company, threatened in writing claims against the Company or any Company Subsidiary related to such Hazardous Material for
clean-up costs, remedial work, damages to natural resources or personal injury claims, including, but not limited to, claims under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and the rules and
regulations promulgated thereunder (“CERCLA”) and, to the Knowledge of the Company, there is no reasonable basis for such claim. All Hazardous Material which has been removed from any property currently or formerly owned, leased, or
operated by the Company or any Company Subsidiary has been handled, transported and disposed of in compliance with Environmental Laws. 
  
 (v) The Company has made notification of any and all Releases and threatened Releases of a Hazardous Material where required by applicable
Environmental Law, and neither the Company nor any Company Subsidiary has received any written notice that its property now or previously owned, leased or operated by the Company or any Company Subsidiary, is listed or proposed for listing on the
National Priorities List promulgated pursuant to CERCLA or on any similar state list of sites where such listing requires investigation or clean-up. 
  
 (vi) There are no Liens threatened or attached to any Company Property (as defined in Section 3.1(p)(i)(A)) arising under or
pursuant to any applicable Environmental Law, and no action of any Governmental Entity has been taken or, to the Knowledge of the Company, is in process which could subject any of such properties to such Liens. Neither the Company nor any Company
Subsidiary currently has a duty under any applicable Environmental Law to place any restriction on use relating to the presence of Hazardous Material at any such Company Property. 
  
 (vii) Neither the Company nor any Company Subsidiary has entered into any agreement which is still in effect
to provide indemnification to any third party purchaser pursuant to Environmental Laws in relation to any property or facility previously owned, leased or operated by the Company or a Company Subsidiary. 
  

 -27- 

 (viii) The Company and all Company Subsidiaries are in compliance with all Environmental
Laws at, in, on or under any of their owned or leased properties. 
  
 (ix) To the Knowledge of the Company, there has been no Release or threatened Release of Hazardous Material in violation of any Environmental Law on any property currently or formerly owned, leased or operated by the
Company or any Company Subsidiary or on adjacent parcels of real estate. 
  
 (p) Properties. 
  
 (i) (A) Except as listed in Section 3.1(p)(i)(A) of the Company Disclosure Letter, the Company or a Company Subsidiary owns fee simple title to, or has a valid leasehold interest in, each of the real properties reflected on the most recent
balance sheet of the Company included in the Company SEC Documents and as identified in Section 3.1(p)(i)(A) of the Company Disclosure Letter (each, a “Company Property” and collectively, the “Company Properties”),
which are all of the real estate properties owned by them, free and clear of Liens except for (1) debt and other matters identified in Section 3.1(p)(i)(A)(1) of the Company Disclosure Letter, (2) inchoate Liens imposed for construction work in
progress or otherwise incurred in the ordinary course of business, (3) mechanics’, workmen’s and repairmen’s Liens (other than inchoate Liens for work in progress), (4) leases, reciprocal easement agreements and all matters disclosed
on existing title policies or as would be disclosed on current title reports or surveys (excluding outstanding indebtedness listed in Section 3.1(p)(i)(A)(1) of the Company Disclosure Letter) and (5) real estate Taxes and special assessments; (B)
except as listed in Section 3.1(p)(i)(B) of the Company Disclosure Letter or as would not constitute a Company Material Adverse Effect, none of the Company Properties is subject to any rights of way, written agreements or reservations of an interest
in title (collectively, “Company Property Restrictions”), except for (1) Company Property Restrictions imposed or promulgated by Law with respect to real property, including zoning regulations, (2) leases on the Rent Roll,
reciprocal easement agreements and all matters disclosed on existing title policies or as would be disclosed on current title reports or surveys (excluding outstanding indebtedness listed in Section 3.1(p)(i)(A)(1) of the Company Disclosure Letter)
and (3) real estate Taxes and special assessments; (C) except as listed in Section 3.1(p)(i)(C) of the Company Disclosure Letter, valid policies of title insurance have been issued insuring the Company’s or a Company Subsidiary’s or a
predecessor in interest’s fee simple title or leasehold estate to the Company Properties except as noted therein, and such policies are, at the date of this Agreement, in full force and effect and no claim has been made against any such policy;
(D) except as listed in Section 3.1(p)(i)(D) of the Company Disclosure Letter or as would not constitute a Company Material Adverse Effect, there is no certificate, permit or license from any Governmental Entity having jurisdiction over any of the
Company Properties or any agreement, easement or any other right which is necessary to permit the lawful use and operation of the buildings and improvements on any of the Company Properties or which is necessary to permit the lawful use and
operation of all driveways, roads and other means of egress and ingress to and from any of the Company Properties (collectively, the “Property Agreements”) that has not been obtained and is not in full force and effect; (E) except
as listed in Section 3.1(p)(i)(E) of the Company Disclosure Letter or as would not 
  

 -28- 

 constitute a Company Material Adverse Effect, neither the Company nor any Company Subsidiary has received
written notice of, or has any Knowledge of, any violation of any federal, state or municipal Law, ordinance, order, regulation or requirement affecting any portion of any of the Company Properties issued by any Governmental Entity that has not
otherwise been resolved; (F) except as listed in Section 3.1(p)(i)(F) of the Company Disclosure Letter or as would not constitute a Company Material Adverse Effect, neither the Company nor any Company Subsidiary has received written notice to the
effect, or has any Knowledge, that there are any, and there are no, (1) condemnation or rezoning or proceedings that are pending or, to the Knowledge of the Company, threatened with respect to any portion of any of the Company Properties or (2)
zoning, building or similar Laws or orders that are presently being violated or will be violated by the continued maintenance, operation or use of any buildings or other improvements on any of the Company Properties or by the continued maintenance,
operation or use of the parking areas; (G) except as listed in Section 3.1(p)(i)(G) of the Company Disclosure Letter or as would not constitute a Company Material Adverse Effect, neither the Company nor any Company Subsidiary has received written
notice that it is currently in default or violation of any Company Property Restrictions; and (H) except as listed in Section 3.1(p)(i)(H) of the Company Disclosure Letter or as would not constitute a Company Material Adverse Effect, neither the
Company nor any Company Subsidiary has received written notice, and has no Knowledge, that it is currently in default of any Property Agreements. 
  
 (ii) Except for discrepancies that would not, individually or in the aggregate, constitute a Company Material Adverse Effect, all
properties currently under development or construction (other than in connection with tenant improvements) by the Company or any of the Company Subsidiaries and all properties currently proposed for acquisition, development or commencement of
construction prior to the Effective Time by the Company or any of the Company Subsidiaries are listed as such in Section 3.1(p)(ii) of the Company Disclosure Letter. Except for discrepancies that would not, individually or in the aggregate,
constitute a Company Material Adverse Effect, all executory agreements entered into by the Company or any of the Company Subsidiaries which would require payments by the Company or any Company Subsidiary in excess of $150,000, individually, relating
to the development or construction of real estate properties (other than agreements for tenant improvements, leases, accounting, legal or other professional services or agreements for material or labor) are listed in Section 3.1(v)(i) of the Company
Disclosure Letter. 
  
 (iii) The rent roll for
each of the Company Properties (the “Rent Roll”) as of a date not more than 30 days prior to the date of this Agreement has been provided or made available to the Purchaser Parties. Except as disclosed in Section 3.1(p)(iii) of the
Company Disclosure Letter and for discrepancies that, either individually or in the aggregate, would not constitute a Company Material Adverse Effect, the information set forth in the Rent Roll is true, correct and complete as of the date thereof.
Except as disclosed in Section 3.1(p)(iii) of the Company Disclosure Letter, neither the Company nor any Company Subsidiary, on the one hand, nor any other party, on the other hand, is in monetary default under any lease which, individually or in
the aggregate, would reasonably be expected to result in a Company Material Adverse Effect. 
  

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 (iv) Section 3.1(p)(iv) of the Company Disclosure Letter sets forth a complete and
correct list, as of the date of this Agreement, of all material leases which have been executed, but are either not yet included on the Rent Roll or relate to property not yet open for business. 
  
 (v) Except as disclosed in Section 3.1(p)(v) of the Company
Disclosure Letter, no tenants have been granted options to purchase, rights of first refusal or rights to terminate their leases under their applicable leases which would require consent or be triggered by the REIT Merger or the OP Merger. Section
3.1(p)(v) of the Company Disclosure Letter sets forth a complete list of Company leases in excess of 20,000 square feet per lease that grant tenants the right to terminate their leases prior to expiration without lessor default under their
applicable leases. 
  
 (vi) Section 3.1(p)(vi) of
the Company Disclosure Letter contains a list of any unfunded tenant improvements due from the Company or any Company Subsidiary in excess of $200,000 with respect to any one tenant. 
  
 (vii) Except as set forth in Section 3.1(p)(vii) of the Company Disclosure Letter, there are no written
agreements which restrict the Company or any Company Subsidiary from transferring any of the Company Properties. 
  
 (viii) Except as set forth in Section 3.1(p)(i)(A)(1) of the Company Disclosure Letter, the Company and each of the Company Subsidiaries
have good and sufficient title to, or are permitted to use under valid and existing leases, all their personal and non-real properties and assets reflected in their books and records as being owned by them (including those reflected in the
consolidated balance sheet of the Company as of December 31, 2003, except as since sold or otherwise disposed of in the ordinary course of business) or used by them in the ordinary course of business, free and clear of all Liens and encumbrances,
except such as are reflected on the consolidated balance sheet of the Company as of December 31, 2003, and the notes thereto, and except for Liens for current taxes not yet due and payable, and Liens or encumbrances which are normal to the business
of the Company and the Company Subsidiaries and are not, in the aggregate, material in relation to the assets of the Company on a consolidated basis and except also for such imperfections of title or leasehold interest, easement and encumbrances, if
any, as do not materially interfere with the present use of the properties subject thereto or affected thereby, or as would not otherwise constitute a Company Material Adverse Effect. 
  
 (q) Insurance. Section 3.1(q) of the Company Disclosure Letter sets forth an insurance schedule of the Company. The
Company and each of the Company Subsidiaries maintains insurance with financially responsible insurers in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in businesses similar to those of
the Company and each of the Company Subsidiaries (taking into account the cost and availability of such insurance). Except as set forth in Section 3.1(q) of the Company Disclosure Letter, neither the Company nor any of the Company Subsidiaries has
received any written notice of cancellation or termination with respect to any existing material insurance policy of the Company or any of the Company Subsidiaries. 
  

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 (r) Opinion of Financial Advisor. The Company Board has received the written opinion (the
“Fairness Opinion”) of Wachovia Capital Markets, LLC (the “Company Financial Advisor”) to the effect that, based on, and subject to the various assumptions and qualifications set forth in such opinion, as of the
date of such opinion, the REIT Merger Consideration to be received by holders of Common Shares pursuant to this Agreement is fair from a financial point of view to such holders. 
  
 (s) Beneficial Ownership of Company Shares. Except as set forth in Section 3.1(s) of the Company Disclosure Letter
and with the exception of the Series A Shares, one hundred percent (100%) of which are owned by the Operating Partnership, neither the Company nor the Company Subsidiaries “beneficially own” (as defined in Rule 13d-3 promulgated under the
Exchange Act) any of the outstanding Company Shares. 
  
 (t)
Brokers. Except for the fees and expenses payable to the Company Financial Advisor (which fees and the engagement letter have been disclosed to each of the Purchaser Parties) and except as set forth in Section 3.1(t) of the Company Disclosure
Letter, no broker, investment banker or other Person is entitled to any broker’s, finder’s or other similar fee or commission in connection with the transactions contemplated by the Transaction Documents based upon arrangements made by or
on behalf of the Company. 
  
 (u) Investment Company Act of
1940. Neither the Company nor any of the Company Subsidiaries is, or at the Closing Date will be, required to be registered as an investment company under the Investment Company Act of 1940, as amended. 
  
 (v) Material Contracts. 
  
 (i) Section 3.1(v)(i) of the Company Disclosure Letter lists
all Material Contracts (as defined below) of the Company and each Company Subsidiary. Except as set forth in Section 3.1(v)(i) of the Company Disclosure Letter, each Material Contract is valid, binding and enforceable and in full force and effect,
except where such failure to be so valid, binding and enforceable and in full force and effect would not, individually or in the aggregate, constitute a Company Material Adverse Effect, and there are no defaults or violations thereunder, nor does
there exist any condition which upon the passage of time or the giving of notice or both would cause such a violation of or a default thereunder, except those defaults or violations that would not, individually or in the aggregate, constitute a
Company Material Adverse Effect. For purposes of this Agreement, “Material Contracts” shall mean (i) any loan agreement, indenture, note, bond, debenture, mortgage or any other document, agreement or instrument evidencing a
capitalized lease obligation or other indebtedness to any Person, other than indebtedness in a principal amount of less than $200,000, (ii) each material commitment, contractual obligation, capital expenditure or transaction entered into by the
Company or any Company Subsidiary which may result in total payments by or liability of the Company or any Company Subsidiary in excess of $200,000, other than leases reflected in Section 3.1(p)(v) of the Company Disclosure Letter or leases
reflected on the Rent Roll, and (iii) any other agreements filed or required to be filed as exhibits to the Company SEC Documents pursuant to Item 601(b)(10) of Regulation S-K of Title 17, Part 229 of the Code of Federal Regulations;
provided, however, any contract, agreement or other 
  

 -31- 

 arrangement under clause (ii) or (iii) above that, by its terms, is terminable within 31 days (without
penalty) of the date of this Agreement and that does not require any payments in excess of $50,000 thereunder in connection with such termination shall not be deemed a Material Contract. 
  
 (ii) All mortgages on any of the assets of the Company or the Operating Partnership are listed in Section
3.1(v)(ii) of the Company Disclosure Letter. 
  
 (iii) Except as set forth in Section 3.1(v)(iii) of the Company Disclosure Letter, there is no confidentiality agreement, non-competition agreement or other contract or agreement that contains covenants that restrict the Company’s
ability to conduct its business in any location. 
  
 (iv) Except as set forth in Section 3.1(v)(iv) of the Company Disclosure Letter, there are no indemnification agreements entered into by and between the Company and any director or officer of the Company or any of the Company Subsidiaries.

  
 (w) Inapplicability of Takeover Statutes and Certain
Charter and Bylaw Provisions. Assuming none of the Purchaser Parties is an “interested stockholder” or an “affiliate” of an “interested stockholder” (as each such term is defined in Subtitle 6 of Title 3 of the
MGCL) nor has been an “interested stockholder” or an “affiliate” of an “interested stockholder” within five (5) years of the date of this Agreement, other than as a result of being an “affiliate” of Michael W.
Reschke, the Company has taken appropriate and necessary actions to exempt the REIT Merger and this Agreement from the restrictions of Subtitles 6 and 7 of Title 3 of the MGCL (the “Takeover Statute”). The Company and the Company
Board have taken appropriate and necessary actions to render any and all limitations on transfer or ownership of (i) Company Shares as set forth in the Company Charter, including, without limitation, those set forth in Section 4 thereof, and
(ii) the LP Units in the Operating Partnership, inapplicable to the REIT Merger, the OP Merger and the other Transactions. 
  
 (x) Related Party Transactions. Except as disclosed in the Company SEC Documents or as disclosed in Section 3.1(x) of the Company Disclosure
Letter, there are no material arrangements, agreements or contracts entered into by the Company or any of the Company Subsidiaries, on the one hand, and any Person who is a current or former officer, trustee, director or affiliate of the Company or
any Company Subsidiary, any relative of the foregoing or an entity of which any of the foregoing is an affiliate, on the other hand and which are in effect as of the date of this Agreement. Copies of all such documents have been made available to
each of the Purchaser Parties. 
  
 (y) Disclosure
Documents. 
  
 (i) Each document required to
be filed by the Company with the SEC in connection with the REIT Merger, the OP Merger and the other transactions contemplated by this Agreement (the “Company Disclosure Documents”), including, without limitation, the Company Proxy
Statement and any amendments or supplements thereto, will comply in all material respects with the provisions of applicable federal securities laws. 
  

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 (ii) At the time the Company Proxy Statement, including any amendment or supplement
thereto filed with the SEC, is first mailed, published or given to the holders of Common Shares, the Company Proxy Statement as supplemented or amended, if applicable, will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. At the time of the filing of any Company Disclosure Document filed after the date of this Agreement,
such Company Disclosure Document will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in Section 3.1(y)(i) and this Section 3.1(y)(ii) will not apply to information furnished in writing to the Company by any Purchaser Party specifically for inclusion in a Company
Disclosure Document. 
  
 (iii) The Company shall
promptly correct the Company Proxy Statement if and to the extent that it shall have become false or misleading in any material respect and the Company shall take all steps necessary to cause such document as so corrected to be filed with the SEC
and disseminated to holders of Company Shares to the extent required by applicable federal securities laws. 
  
 (z) Vote Required. 
  
 (i) The affirmative vote of the holders of Common Shares casting at least a majority of the votes entitled to be cast (the
“Company Shareholder Approval”) is the only vote of the holders of any class or series of the Company Stock required to approve this Agreement, the REIT Merger and the other Transactions. 
  
 (ii) The affirmative vote of the holders of a majority of
the GP Units and the LP Units, voting as a single class with the Company voting the GP Units in the same proportion as the holders of the Common Shares voted the Common Shares in the Company Shareholder Approval (the “Partnership Unitholder
Approval”) are the only votes of any unitholders of the Operating Partnership (including, without limitation, any holders of the Series A Preferred Units and the Series B Preferred Units) required to approve this Agreement, the REIT Merger,
the OP Merger and the other Transactions. 
  
 (aa) Accounting
Controls. The Company and the Company Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management’s general or specific
authorizations; (B) transactions are recorded as necessary to permit preparation of the Company’s consolidated financial statements in conformity with GAAP and to maintain accountability for assets; (C) access to assets is permitted only in
accordance with management’s general or specific authorizations; and (D) the recorded accountability for the assets of the Company and the Company Subsidiaries is compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. 
  

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 (bb) Compliance with Sarbanes-Oxley Act. At the time each Company SEC Document filed after July
30, 2002 containing financial statements was filed with the SEC, such Company SEC Document complied in all material respects with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as and to the extent applicable thereto,
and the rules and regulations of the SEC promulgated thereunder and applicable to such Company SEC Document. Each of the principal executive officer of the Company and the principal financial officer of the Company (or each former principal
executive officer of the Company and each former principal financial officer of the Company, as applicable) has made the certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act and the rules and regulations of the SEC promulgated
thereunder with respect to the Company SEC Documents pursuant to the Exchange Act, when applicable. For purposes of the preceding sentence, “principal executive officer” and “principal financial officer” shall have
the meaning given to such terms in the Sarbanes-Oxley Act. 
  
 (cc) Foreign Corrupt Practices Act. None of the Company, any Company Subsidiary or, to the Knowledge of the Company or any Company Subsidiary, any current or former officer, director, trustee, employee or agent of the Company or any
Company Subsidiary acting on behalf of the Company has violated the United States Foreign Corrupt Practices Act of 1977, as amended, applied to such entity or person. 
  
 Section 3.2. Representations and Warranties of the Purchaser Parties. Each of the Purchaser Parties represents and
warrants to the Company as follows: 
  
 (a) Organization,
Standing and Entity Power of each of the Purchaser Parties. Parent is a limited liability company duly formed and validly existing under the Laws of the State of Delaware, is in good standing in such jurisdiction and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted. Merger Sub is a limited liability company duly formed and validly existing under the Laws of the
State of Maryland, is in good standing in such jurisdiction and has the requisite power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted. OP
Merger Sub is a limited liability company duly formed and validly existing under the Laws of the State of Delaware, is in good standing in such jurisdiction and has the requisite power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being conducted. Each of the Purchaser Parties has made or will make available to the Company complete and correct copies of its respective organizational documents, each of
which is in full force and effect as of the date hereof. 
  
 (b)
Authority; No Violations; Consents and Approvals. 
  
 (i) Each of the Purchaser Parties has all requisite power and authority to enter into the Transaction Documents to which it is a party and to consummate the transactions contemplated hereby or thereby. The execution
and delivery of the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby or thereby have been duly authorized by all necessary action on the part of each Purchaser Party. Except as have been
obtained, no consent or approval of any Purchaser Party’s shareholders or members is required in order for such Purchaser Party to execute and deliver the Transaction Documents to which such Purchaser Party is a party or to consummate the
transactions contemplated hereby and thereby. 
  

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 (ii) The Transaction Documents to which any of the Purchaser Parties are a party have
been duly executed and delivered by such Purchaser Party, as the case may be, and constitute valid and binding obligations of such Purchaser Party, as the case may be, enforceable in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws of general applicability relating to or affecting creditors’ rights and by the exercise of judicial discretion in accordance with general principles
of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law). 
  
 (iii) The execution and delivery of the Transaction Documents to which it is a party by each of the Purchaser Parties, as the case may be,
does not, and the consummation of the transactions contemplated hereby or thereby, and compliance with the provisions hereof or thereof, will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or acceleration of any material obligation or the loss of a material benefit under, or give rise to a right of purchase under, result in the creation of any Lien upon any of the
properties or assets of such Purchaser Party under, require the consent or approval of any third party or otherwise result in a material detriment to such Purchaser Party under, require the consent or approval of any third party or otherwise result
in a material detriment to such Purchaser Party under, any provision of (A) the respective charter, by-laws or other organizational documents of such Purchaser Party, (B) any contract, lease, license, indenture, note, bond, agreement, permit,
concession, franchise or other instrument applicable to such Purchaser Party, its respective properties or assets or any guarantee by such Purchaser Party, (C) any joint venture or other ownership arrangement or (D) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in Section 3.2(b)(iv) are duly and timely obtained or made, any judgment, order, decree, statute, Law, ordinance, rule or regulation applicable to such Purchaser Party or any
of its respective properties or assets, other than, in the case of clauses (B), (C) and (D), any such conflicts, violations, defaults, rights, Liens, detriments or failure to obtain any such consent that, individually or in the aggregate, would not
reasonably be expected to materially impair or delay the ability of such Purchaser Party to perform its obligations hereunder or under any of the other Transaction Documents or prevent the consummation of any of the transactions contemplated hereby
or thereby. 
  
 (iv) No consent, approval, order
or authorization of, or registration, declaration or filing with, or permit from any Governmental Entity is required by or with respect to any Purchaser Party in connection with the execution and delivery by such Purchaser Party of the Transaction
Documents to which such Purchaser Party is a party or the consummation by such Purchaser Party of the transactions contemplated hereby or thereby, except for: (A) the filing of the Articles of Merger with the Maryland Department and the OP Merger
Certificate with the Secretary of State of Delaware; (B) the filing with the SEC of such reports under Section 13(a) of the Exchange Act and such other compliance with the Securities Act and the Exchange Act and the rules and 
  

 -35- 

 regulations thereunder as may be required in connection with this Agreement and the transactions
contemplated hereby; (C) such filings and approvals as may be required by any applicable state securities or “blue sky” Laws, Takeover Statute or Environmental Laws; (D) filings under the HSR Act, if applicable; and (E) any such consent,
approval, order, authorization, registration, declaration, filing or permit that the failure to obtain or make would not reasonably be expected to materially impair or delay the ability of such Purchaser Party to perform its obligations hereunder or
under any of the other Transaction Documents or prevent the consummation of any of the transactions contemplated hereby or thereby. 
  
 (c) Financing Commitment Letters; Adequate Funds; Post-Merger Solvency. 
  
 (i) At and after the time and date that the Financing Letters (as defined in Section 5.16(a)) are
delivered to the Company pursuant to Section 5.16(a), the Financing Letters shall be effective and shall not have been withdrawn or further modified and all commitment fees due and payable thereunder shall have been paid. At and after the
time and date that the Financing Letters are delivered to the Company pursuant to Section 5.16(a), the Purchaser Parties shall be aware of no reason why the conditions for borrowing set forth in the Financing Letters will not be satisfied
prior to the OP Effective Time. The Purchaser Parties are highly confident that they can obtain the Financings Letters on or prior to November 9, 2004. 
  
 (ii) The Purchaser Parties will have available on the Closing Date immediately prior to the OP Effective Time all funds necessary to pay
(A) the aggregate OP Merger Consideration, REIT Merger Consideration and Option Merger Consideration the Purchaser Parties become obligated to pay pursuant to Sections 2.2(b) and 2.7 of this Agreement and (B) all transaction expenses
and lender commitment fees reasonably expected to be incurred in connection with the transactions contemplated by this Agreement. The Purchaser Parties or their Affiliates have on hand adequate, unrestricted funds (and will have such funds at the
Effective Time) (the “Purchaser Parties’ Equity Funds”) necessary, when taken together with the net proceeds of the borrowings contemplated by the Financing Letters and unrestricted cash of the Company, to pay (A) the aggregate
OP Merger Consideration, REIT Merger Consideration and Option Merger Consideration the Purchaser Parties become obligated to pay pursuant to Sections 2.2(b) and 2.7 of this Agreement and (B) all transaction expenses and lender
commitment fees reasonably expected to be incurred in connection with the transactions contemplated by this Agreement. 
  
 (iii) At the Effective Time, after giving effect to the transactions contemplated by this Agreement, including without limitation, (1) the
borrowings to be made or indebtedness to be incurred by the Company, the Operating Partnership or any of the Company Subsidiaries (including the application of the proceeds of such borrowings or indebtedness) as part of the Purchaser Parties’
financing of the REIT Merger and the OP Merger, the other transactions contemplated hereby and the establishment of the Payment Fund in accordance with Section 2.2(b) and 2.7, (2) the creation of any Liens against the Company, the
Operating Partnership or the Company Subsidiaries or against any of their respective assets and (3) the payment of the distributions on the Series B 
  

 -36- 

 Shares pursuant to Section 5.10, (x) the sum of the Company’s consolidated assets, at a fair
valuation, will exceed the Company’s consolidated liabilities plus the liquidation preference of the Series B Shares and, to the extent outstanding, the Series A Shares; (y) neither the Company nor any of the Operating Partnership or the
Company Subsidiaries will have incurred (or as a result of the transactions contemplated by this Agreement will incur) debts beyond its ability to pay such debts as such debts mature; and (z) each of the Company, the Operating Partnership and each
Company Subsidiary will have sufficient capital with which to conduct its business in the ordinary course. 
  
 (d) Documents Relating to REIT Merger and OP Merger. At the time of the filing of any Company Disclosure Document, none of the information that may
be supplied in writing by any Purchaser Party or any of their respective Affiliates specifically for use in such document will contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. 
  
 (e) No Other Business. Each of Merger Sub and OP Merger Sub was formed solely for the purpose of engaging in the transactions contemplated hereby, has engaged in no other business activities and has conducted
its operations only as contemplated hereby. All of the outstanding equity interests in Merger Sub have been validly issued, are fully paid and nonassessable and are owned by Parent free and clear of any Lien. All of the outstanding equity interests
in OP Merger Sub have been validly issued, are fully paid and non-assessable and are owned by Parent free and clear of any Lien. 
  
 (f) Brokers. No broker, investment banker or other person is entitled to any broker’s, finder’s or other similar fee or commission in
connection with the transactions contemplated by the Transaction Documents based upon arrangements made by or on behalf of any Purchaser Party, for which fee or commission the Company or any Company Subsidiary may be liable. 
  
 (g) Litigation. There is no litigation, arbitration, claim,
investigation, suit, action or proceeding pending in which service of process or written notice, as applicable, has been received by an officer of a Purchaser Party or, to the Knowledge of any Purchaser Party, threatened in writing to an officer of
a Purchaser Party and against or affecting such Purchaser Party, nor is there any judgment, award, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against any Purchaser Party which would reasonably be expected
to, individually or in the aggregate, (A) cause any of the transactions contemplated by the Transaction Documents to be rescinded following their consummation, including, without limitation, the REIT Merger or the OP Merger or (B) materially impair
or delay the ability of such Purchaser Party to perform its obligations hereunder or under any of the other Transaction Documents or prevent the consummation of any of the transactions contemplated hereby or thereby. 
  
 (h) REIT Status. The ownership of any one or more shares of beneficial
interest, options or warrants of the Company or the Surviving Entity, or units or other equity interests, options or warrants of the Operating Partnership, by any Purchaser Party will not at any time, in and of itself, adversely affect the
Company’s or the Surviving Entity’s status as a REIT under the Code or cause the Company or the Surviving Entity to be treated as a “pension held REIT” under Section 856(h) of the Code. 
  

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 ARTICLE IV 
  

COVENANTS RELATING TO CONDUCT OF BUSINESS PENDING THE MERGERS 
  
 Section 4.1. Conduct of Business. 
  
 (a) During the period from the date of this Agreement to the earlier of the termination of this Agreement or the Effective
Time, each of the Company and the Operating Partnership shall, and shall cause each of the Company Subsidiaries to, carry on its businesses in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and, to
the extent consistent therewith use its commercially reasonable efforts to preserve intact its current business organization, goodwill, ongoing businesses and the Company’s status as a REIT within the meaning of the Code. The Company shall
confer on a regular and frequent basis with Parent, report on operational matters and promptly advise Parent orally and in writing of any Company Material Adverse Effect or any matter which could reasonably be expected to have a Company Material
Adverse Effect (including, without limitation, (1) any new pending or, to the knowledge of the Company, threatened litigation having potential liability to the Company or any of the Company Subsidiaries in excess of $200,000 not covered by insurance
subject to applicable deductibles or (2) any material complaint, investigation or hearing by a Governmental Entity involving the Company or any of the Company Subsidiaries). The Company shall promptly make available (including via EDGAR filings) to
Parent (and its counsel) all filings made by the Company with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. 
  
 (b) Without limiting the generality of the foregoing, during the period from the date of this Agreement until the earlier of
the termination of this Agreement or the Closing, except as set forth in Section 5.3(b) and as otherwise contemplated by this Agreement or to the extent consented to by Parent, the Company and Operating Partnership shall not and shall not
authorize or commit or agree to, and shall cause the Company Subsidiaries not to (and not to authorize or commit or agree to); provided, however, that any consent of Parent the Company is required to obtain pursuant to the terms hereof
will not be unreasonably withheld by Parent and will be deemed given by Parent if not denied in writing within five (5) Business Days after the receipt by Parent of a written request for such consent: 
  
 (i) (A) declare, set aside or pay any distributions on, or
make any other distributions in respect of, any Company Shares or the partnership interests, stock or other equity interests in any Company Subsidiary that is not directly or indirectly wholly-owned by the Company, except for the declaration and
payment of a distribution on the Series B Shares and Series B Preferred Units, to the extent and only to the extent of one declaration and payment of a distribution of $0.5625 per Series B Share and Series B Preferred Unit in each calendar quarter
ending after September 30, 2004, and provided, that the Company may make distribution payments it is required to make by the Code in order to maintain REIT status and those that are sufficient to eliminate any federal tax liability; (B) reclassify,
recapitalize, split, reverse split or combine, exchange or readjust 
  

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 any shares of beneficial interest, stock, partnership interests or other equity interests or issue
(except for the issuance of Common Shares in exchange for LP Units or upon any exercises of Company Options or the Warrants, the conversion of Series A Shares to Common Shares pursuant to Section 2.1(f) and the conversion of Series A
Preferred Units to LP Units pursuant to Section 2.6(e)) or authorize the issuance of any other securities in respect of, in lieu of or in substitution for such shares of beneficial interest, stock, partnership interests or other equity
interests; or (C) purchase, redeem (except for the exchange of any LP Units for Common Shares in accordance with their terms) or otherwise acquire any Company Shares or the partnership interests, stock or other equity interests in any Company
Subsidiary or any options, warrants or rights to acquire, or security convertible into, Company Shares or the partnership interests, stock or other equity interests in any Company Subsidiary, except with respect to any of the foregoing in connection
with the use of Company Shares to pay the exercise price or Tax withholding obligation upon the exercise of a Company Option as presently permitted under the Company’s Share Incentive Plan; 
  
 (ii) issue, deliver, sell or grant any option or other right
in respect of any shares of beneficial interest, stock, any other voting or redeemable securities (including LP Units or other partnership interests) of the Company or a Company Subsidiary or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or convertible or redeemable securities, except (A) to the Company or a Company Subsidiary; (B) as required under the Partnership Agreement as presently in effect; or (C) in connection with
the exercise of outstanding Company Options under the Company’s Share Incentive Plan or the exchange of LP Units for Common Shares, pursuant to the terms of such units; 
  
 (iii) amend the Company Charter or the Company By-laws or the Partnership Agreement; 
  
 (iv) merge, consolidate or enter into any other business
combination transaction with any Person; 
  
 (v)
(A) enter into any new commitments obligating the Company or any Company Subsidiary to make capital expenditures or acquire assets in excess of $250,000 in the aggregate for each successive period of 45 days following the date hereof, not including
tenant allowances under existing leases and the commitments set forth in Section 4.1(b)(v) of the Company Disclosure Letter; provided however, that the Company shall be permitted to enter into commitments to make repairs and/or prevent
damage to any Company Properties as is necessary in the event of an emergency situation as long as the Company provides the Purchaser Parties with a copy of such commitment promptly after such commitment is entered into; (B) acquire, enter into any
option to acquire, or exercise an option or other right or election or enter into any commitment or contractual obligation (each, a “Commitment”) for the acquisition of any real property (other than any Commitment referred to in
Section 4.1(b)(v) of the Company Disclosure Letter); (C) incur additional indebtedness (secured or unsecured) in excess of $500,000, except (I) Commitments for indebtedness described in Section 4.1(b)(v) of the Company Disclosure Letter or (II)
refinancings or extensions of existing indebtedness upon 
  

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 maturity in an amount not to exceed the amount refinanced or extended (except for the CT Refinancing
which shall be governed by Section 5.21), or amend any existing indebtedness in a manner not favorable to the Company, the Operating Partnership or any Company Subsidiary; provided that the Company provides the Parent with prompt
notice of any refinancings, amendments or extensions of existing indebtedness permitted hereunder; or (D) enter into, amend or modify in any material way or terminate any lease in excess of 50,000 square feet; provided, however, that
the Company shall provide Parent with prompt written notice in the event the Company or any Company Subsidiary enters into, amends or modifies in any material way or terminates any lease in excess of 25,000 square feet but not greater than 50,000
square feet; 
  
 (vi) sell, mortgage, subject to
Lien or otherwise dispose of or agree to do any of the foregoing with respect to any of the Company Properties, except in connection with refinancings permitted under Section 4.1(b)(v) above or as disclosed in Section 4.1(b)(vi) of the
Company Disclosure Letter; 
  
 (vii) sell, lease,
mortgage, subject to Lien or otherwise dispose of or agree to do any of the foregoing with respect to any of its personal or intangible property in excess of $250,000, except in connection with refinancings permitted under Section 4.1(b)(v)
above; 
  
 (viii) except as set forth in Section
4.1(b)(viii) of the Company Disclosure Letter, guarantee the indebtedness of another Person, enter into any “keep well” or other agreement to maintain any financial statement condition of another Person or enter into any arrangement having
the economic effect of any of the foregoing or make any investments in any other Person, in each case in excess of $100,000, and other than a Company Subsidiary; 
  
 (ix) make or rescind any material election relating to Taxes, unless the Company reasonably determines,
after prior consultation with Parent, that such action is (A) required by Law; (B) necessary or appropriate to preserve the Company’s status as a REIT or the partnership status of the Operating Partnership or any other Company Subsidiary which
files Tax Returns as a partnership for federal tax purposes; or (C) commercially reasonable in the context of the Company’s business and relates to a change in Law in 2004 or thereafter; 
  
 (x) (A) change any of its methods, principles or practices
of accounting in effect other than as required by GAAP or the SEC, provided that Parent receives notice of any required changes that are material; or (B) settle or compromise any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes; 
  
 (xi) other than as set forth in Section 5.7 and except as set forth in Section 4.1(b)(xi) of the Company Disclosure Letter, adopt any new employee benefit plan, incentive plan, severance plan, bonus plan, share option or similar
plan, grant new share appreciation rights or amend any existing plan or rights, or enter into or amend any employment agreement or similar agreement or arrangement or grant or become 
  

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 obligated to grant any increase in the compensation of officers or employees, except such changes as are
required by Law; provided, however, that the Company may take any actions and enter into any agreement (other than severance agreements) in connection with (A) filling the positions set forth in Section 4.1(b)(xi)(A) of the Company
Disclosure Letter, (B) replacing employees whose employment with the Company or any Company Subsidiary has been terminated (voluntarily by such employee or otherwise) after the date of this Agreement, (C) subject to Section 5.7(a), paying
bonuses pursuant to the MBO Plan and/or the Company’s ordinary course annual performance appraisal review process or (D) granting increases in annual base salary to executive officers and employees pursuant to the MBO Plan and/or the
Company’s ordinary course annual performance appraisal process (I) in the aggregate not in excess of three percent (3%) of all employees’ current annual base salaries and (II) individually not in excess of six percent (6%) of any such
employee’s current annual base salary; provided, further, that in no event shall the Company fill positions or replace employees pursuant to clauses (A) or (B) hereof where the annual base salary for such new employee exceeds
$85,000. 
  
 (xii) settle or compromise any
material litigation, including, without limitation, any material stockholder derivative or class action claims arising out of or in connection with any of the transactions contemplated by this Agreement or waive, release or assign any material
rights or claims; 
  
 (xiii) except as set forth
in Section 4.1(b)(xiii) of the Company Disclosure Letter and excluding the matters covered by Section 4.1(b)(xi) above, enter into or amend or otherwise modify any agreement or arrangement with persons that are Affiliates of the Company
(other than agreements with Company Subsidiaries or, to the extent such actions may be taken by the applicable joint venture partner or partners without the consent of the Company or the applicable Company Subsidiary or are required to be taken by
the Company or the applicable Company Subsidiary, joint ventures in which the Company or any Company Subsidiary is a partner or member) or, as of the date of this Agreement, are employees, officers, trustees, partners or directors of the Company or
any Company Subsidiary without the prior written consent of Parent and the approval of a majority of the “independent” members of the Company Board; 
  

(xiv) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of the
Company or any of the Company Subsidiaries; 
  
 (xv) fail to use its commercially reasonable efforts to maintain with financially responsible insurance companies insurance in such amounts and against such risks and losses as are customary for companies engaged in their respective
businesses; 
  
 (xvi) materially amend or
terminate, or waive compliance with the terms of or breaches under, or fail to use commercially reasonable efforts to comply with or remain in compliance with any Material Contract or enter into a new contract, agreement or arrangement that, if
entered into prior to the date of this Agreement, would have been required to be listed in Section 3.1(v)(i) of the Company Disclosure Letter; 
  

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 (xvii) fail to use its commercially reasonable efforts to comply or remain in compliance
with all material terms and provisions of any agreement relating to any outstanding indebtedness of the Company or any Company Subsidiary; 
  
 (xviii) take any action that would, or that would reasonably be expected to, result in (A) any of the representations and warranties of
the Company set forth in this Agreement becoming untrue or (B) any of the conditions specified in Section 6.1 or 6.2 not being satisfied; and 
  
 (xix) agree in writing or otherwise to take any action inconsistent with any of the foregoing. 
  
 (c) Notwithstanding anything to the contrary contained in this Agreement,
each Purchaser Party acknowledges (i) receipt of a copy of that certain Purchase Agreement dated August 2, 2004 by and between CenterPoint Properties Trust and the Operating Partnership, as amended by that certain First Amendment to Purchase
Agreement dated October 8, 2004 (as so amended, the “Industrial Sale Agreement”), with respect to the sale of the real property set forth in Section 4.1(c) of the Company Disclosure Letter and (ii) that no actions taken by the
Company or any Company Subsidiary pursuant to and consistent with the terms of the Industrial Sale Agreement and/or to enforce their respective rights under the Industrial Sale Agreement shall constitute a breach of the Company’s obligations
and representations and warranties under this Agreement; provided, however, that the Company shall (A) diligently proceed to take such reasonable actions necessary to consummate the transactions contemplated by the Industrial Sales
Agreement and (B) not consent to any further amendment or waiver of the Industrial Sale Agreement without the consent of Parent the results of which would, in the aggregate, (I) reduce the net proceeds to be received by the Company pursuant to such
sale or (II) increase the obligations of the Company thereunder, by an amount in excess of $100,000 or otherwise cause such sale not to be consummated prior to the Effective Time; provided, however, that any consent required pursuant
to this clause shall not be unreasonably withheld and will be deemed given if not denied in writing within five (5) Business Days after the receipt by Parent of a written request for such consent. 
  
 ARTICLE V 
  
 ADDITIONAL COVENANTS 
  

Section 5.1. Access to Information; Confidentiality. The Company shall, and shall cause each of the Company Subsidiaries to, afford to Parent
and its officers, employees, accountants, counsel, financial advisors, other representatives, investors and lenders and their representatives, reasonable access during normal business hours and upon reasonable advance notice during the period prior
to the Effective Time to all its properties (but not for the purpose of any physical testing), books, contracts, commitments and records, and to each of the individuals listed in Section 5.1 of the Company Disclosure Letter and such other personnel
as requested by Parent and to which the Company consents and to which the Company is notified as to time and place to permit the Company the opportunity to be present during any communications with such personnel, and, during such period, the
Company shall, and shall cause each of the Company Subsidiaries to, furnish reasonably promptly to Parent (a) a copy 
  

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 (including via EDGAR filings) of each report, schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities Laws and (b) all other information concerning its business, properties and personnel as Parent may reasonably request. Each Purchaser Party will hold, and will cause its respective
officers, employees, accountants, counsel, financial advisors, and other representatives and Affiliates, investors and lenders and their representatives to hold, any nonpublic information in confidence to the extent required by, and in accordance
with, and will comply with all the provisions of the confidentiality and standstill agreement between the Company and an Affiliate of Parent dated March 22, 2004 and the confidentiality and standstill agreement between the Company and an Affiliate
of Parent dated March 24, 2004 (collectively, the “Confidentiality Agreements”). 
  
 Section 5.2. Reasonable Efforts; Notification. 
  
 (a) Upon the terms and subject to the conditions set forth in this Agreement, each of the Purchaser Parties, the Company and the Operating Partnership
agrees to use its commercially reasonable efforts to take, or cause to be taken, such actions and to do, or cause to be done, and to assist and cooperate with the other parties in doing, such things necessary, proper or advisable to fulfill all
conditions applicable to such party pursuant to this Agreement and to consummate and make effective, in the most expeditious manner practicable, the REIT Merger, the OP Merger and the other transactions contemplated by the Transaction Documents,
including (i) the obtaining of the necessary actions or nonactions, waivers, consents and approvals from Governmental Entities and the making of the necessary registrations and filings and the taking of the reasonable steps as may be necessary to
obtain all necessary approvals, waivers or exemptions from any Governmental Entity; (ii) the obtaining of the necessary consents, approvals, waivers or exemptions from non-governmental third parties; and (iii) the execution and delivery of any
additional documents or instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement and the Transaction Documents. In addition, each of the Purchaser Parties and the Company agree to
use its commercially reasonable efforts to defend any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement, the Transaction Documents or the transactions contemplated by either thereof, including
seeking to have any stay, temporary restraining order, injunction, or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated by the Transaction Documents entered by any court or
other Governmental Entity vacated or reversed; provided, that each of the Purchaser Parties, the Company and the Operating Partnership shall pay its own legal expenses with respect thereto. If, at any time after the Closing, any further
action is necessary or desirable to carry out the purpose of this Agreement, the proper officers, trustees, directors or partners, of the Purchaser Parties, the Company and the Operating Partnership, as applicable, shall take such necessary action.
From the date of this Agreement through the Effective Time, the Company shall timely file, or cause to be filed, with the SEC all Company SEC Documents required to be so filed by applicable Law. 
  
 (b) If required by the HSR Act, the Purchaser Parties, the Company and the
Operating Partnership shall promptly compile and file (or will cause their “ultimate parent entities” (as determined for purposes of the HSR Act) to file) a pre-merger notification and report pursuant to the HSR Act containing such
information respecting such party as the HSR Act requires. Each of the Purchaser Parties, the Company and the Operating Partnership shall be 
  

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 responsible for its own expenses incurred in connection with the preparation of any of the reports and other information
required by the HSR Act. Any filing fees under the HSR Act shall be split equally between the Company and Parent. 
  
 (c) The Company or the Operating Partnership shall give prompt notice to the Purchaser Parties and the Purchaser Parties shall give prompt notice to the
Company, if (i) any representation or warranty made by it contained in this Agreement that is qualified as to materiality becomes untrue or inaccurate in any respect or any such representation or warranty that is not so qualified becomes untrue or
inaccurate in any material respect or (ii) it fails to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided, however, that (A) such
notification shall only be required to the extent that the matter in question would prevent satisfaction of a condition specified in Article VI and (B) no such notification shall affect the representations, warranties, covenants or agreements
of the parties or the conditions to the obligations of the parties under this Agreement; provided further, however, that such notification required pursuant to clause (i) above shall be required only as soon as practicable after
the Company or the Purchaser Parties, as the case may be, becomes aware of such untruth or inaccuracy. 
  
 (d) The Company agrees to take any further actions necessary to render any and all limitations on transfer or ownership of (i) Company Shares as set forth
in the Company Charter, including, but not limited to, those set forth in Section 4 thereof, and (ii) LP Units in the Operating Partnership inapplicable to the REIT Merger, the OP Merger and the other Transactions. 
  
 Section 5.3. Tax Treatment. 
  
 (a) Unless required by Law (as evidenced by the legal opinion of a
nationally recognized U.S. law firm reasonably acceptable to the Purchaser Parties and the Company), neither the Purchaser Parties, on the one hand, nor the Company and the Operating Partnership, on the other hand, will take or omit to take any
action, or permit any status to exist, prior to the Effective Time, that would or may jeopardize, or that is inconsistent with, the Company’s status as a REIT under the Code or the status of the Operating Partnership or any applicable Company
Subsidiary as a partnership for purposes of Taxes for any period. 
  
 (b) Notwithstanding anything to the contrary contained in this Agreement, prior to the Effective Time, the Company, each Company Subsidiary and any Affiliate of any of them, shall be permitted to take or omit to take any action, or permit
any status to exist, in order to maintain the Company’s status as a REIT under the Code or the status of the Operating Partnership or any Company Subsidiary as a partnership for purposes of Taxes for any period. 
  
 (c) The Purchaser Parties shall prepare and file, on a timely basis (or cause
to be prepared and filed on a timely basis), all federal and state income Tax Returns and shall use their commercially reasonable efforts to so prepare and file (or cause to be prepared and filed) all other Tax Returns and reports required to be
filed from and after the Effective Time (whether such return or report related to a time period prior to, at or after the Effective Time) for the Company and the Company Subsidiaries (i) in good faith and (ii) with respect to any federal 

 

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 income Tax Return of the Company for the first taxable year ending on or after the Effective Time, on a basis and in a
manner that preserves the qualification of the Company as a REIT within the meaning of Section 856 of the Code. 
  
 (d) The Company shall not, nor shall the Company permit any Company Subsidiary to, change in any material respect any of its methods of reporting income
or deductions for federal income tax purposes from those employed in the preparation of its federal income tax return for the taxable year ended December 31, 2003, except as may be required by applicable Law or except for such changes that would
reduce consolidated federal taxable income or alternative minimum taxable income. 
  
 Section 5.4. No Solicitation of Transactions. 
  
 (a) After the date hereof, the Company shall not, nor shall it permit any Company Subsidiary to, nor shall it authorize or permit any officer, director, trustee or employee of, or any investment banker, attorney or
other advisor or representative of, the Company or any Company Subsidiary to (i) solicit or initiate, encourage, or facilitate, directly or indirectly, any inquiries relating to, or the submission of, any proposal or offer, whether in writing or
otherwise, from any person other than the Purchaser Parties or any Affiliates thereof (a “Third Party”) to acquire beneficial ownership (as defined under Rule 13(d) of the Exchange Act) of all or more than 15% of the assets of the
Company and the Company Subsidiaries, taken as a whole, or 15% or more of any class of equity securities of the Company or the Operating Partnership pursuant to a merger, consolidation or other business combination, sale of shares of beneficial
interests, sale of assets, tender offer, exchange offer or similar transaction or series of related transactions, which is structured to permit such Third Party to acquire beneficial ownership of more than 15% of the assets of the Company and the
Company Subsidiaries, taken as a whole, or 15% or more of any class of equity securities of the Company or the Operating Partnership (a “Competing Transaction”); (ii) participate in any discussions or negotiations regarding, or
furnish to any person any information or data with respect to or access to the properties of the Company or any Company Subsidiary with respect to, or take any other action to knowingly facilitate the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Competing Transaction; or (iii) enter into any agreement (written or oral) with respect to any Competing Transaction, approve or recommend or resolve to approve or recommend any Competing Transaction or enter
into any agreement (written or oral) requiring it to abandon, terminate or fail to consummate the REIT Merger, the OP Merger and the other transactions contemplated by this Agreement; provided, however, that notwithstanding anything to
the contrary contained herein, (A) the Company and the Operating Partnership may take such actions reasonably necessary or otherwise appropriate in connection with the transactions contemplated by the Industrial Sale Agreement and/or the Commercial
Properties Sale and (B) the Company may participate in ordinary course investor relations discussions relating to ordinary course transactions in the Company’s equity securities. Notwithstanding the foregoing sentence, prior to the Effective
Time, if the Company receives an unsolicited bona fide, written proposal or offer for a Competing Transaction by a Third Party, which the Company Board determines in good faith (after consulting the Company Board’s independent financial advisor
and independent legal counsel) (A) is on terms which are more favorable from a financial point of view to the holders of Common Shares than the REIT Merger and the other transactions contemplated by this Agreement, (B) is not subject to any material
contingency, including any contingency relating to 
  

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 financing, to which neither (1) the Company Board determines may likely be overcome or addressed nor (2) the other party
thereto has reasonably demonstrated in its written offer its ability to overcome or address, including the receipt of government consents or approvals (including any such approval required under the HSR Act), and (C) is reasonably capable of being
consummated (provided, that the Company, including the Company Board, and any of its advisors shall be permitted to contact such Third Party and its advisors and financing sources solely for the purpose of clarifying the proposal and any
material contingencies and the capability of consummation) (a “Superior Competing Transaction”), then the Company may, in response to an unsolicited request therefor and subject to compliance with Section 5.4(b), furnish
information with respect to the Company and the Company Subsidiaries to, and participate in discussions and negotiations directly or through its representatives with, such Third Party, subject to a confidentiality agreement not less favorable to the
Company than the confidentiality and standstill agreements referred to in Section 5.1. Nothing contained in this Agreement shall prevent the Company Board from complying with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act or
from making any other disclosure required by applicable Law. 
  
 (b) The Company and each of the Company Subsidiaries will cease and cause to be terminated any existing discussions or negotiations with any Persons conducted or commenced heretofore with respect to, or that could be expected to lead to, a
Superior Competing Transaction and will cause each of their respective trustees, directors, officers, employees, advisors, consultants and agents to comply with such obligations. 
  
 (c) The Company shall advise the Purchaser Parties orally and in writing of (i) any Competing Transaction or any inquiry
with respect to or which could reasonably be expected to lead to any Competing Transaction received by any officer or trustee of the Company or, to the Knowledge of the Company, any employee, financial advisor, attorney or other advisor or
representative of the Company or any Company Subsidiary, (ii) the material terms of such Competing Transaction (including a copy of any written proposal) and (iii) the identity of the person making the proposal or offer for any such Competing
Transaction or inquiry promptly following receipt by the Company or any officer or trustee of the Company or, to the Knowledge of the Company, any employee, financial advisor, attorney or other advisor or representative of the Company or any Company
Subsidiary of such Competing Transaction proposal or inquiry. The Company will keep the Purchaser Parties informed of the status and details of any such Competing Transaction proposal or inquiry in a timely manner. None of the Purchaser Parties or
their respective affiliates or advisors shall contact any Person regarding such Competing Transaction or otherwise interfere with such Competing Transaction. 
  
 Section 5.5. Public Announcements. The Company and the Purchaser Parties shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or any of the transactions contemplated by the Transaction Documents and shall not issue any such press release or make any such public statement without the prior consent of the
other party, which consent shall not be unreasonably withheld or delayed; provided, however, that a party may, without the prior consent of the other party, issue such press release or make such public statement as may be required by
Law or the applicable rules of any stock exchange if it has used its commercially reasonable efforts to consult with the other party and to obtain such party’s consent but has been unable to do so in a timely manner. In this regard, the parties
shall make a joint public announcement of the 
  

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 transactions contemplated by the Transaction Documents no later than (i) promptly after the close of trading on the New
York Stock Exchange on the day this Agreement is signed, if such signing occurs during regular business hours on a Business Day or (ii) prior to the opening of trading on the New York Stock Exchange on the Business Day following the date on which
this Agreement is signed, if such signing does not occur during a Business Day. 
  
 Section 5.6. Transfer and Gains Taxes; Shareholder Demand Letters. The Purchaser Parties shall, with the Company’s good faith cooperation and assistance, prepare, execute and file, or cause to be prepared,
executed and filed, all returns, questionnaires, applications or other documents regarding any real property transfer or gains, sales, use, transfer, value added stock transfer and stamp taxes, any transfer, recording, registration and other fees
and any similar taxes which become payable in connection with the transactions contemplated by this Agreement (together, with any related interests, penalties or additions to tax, “Transfer and Gains Taxes”). From and after the
Effective Time, the Purchaser Parties shall cause the Operating Partnership to pay or cause to be paid all Transfer and Gains Taxes. 
  
 Section 5.7. Employee Arrangements; Accrued Bonuses; Employee Brokerage Arrangements. 
  
 (a) Company Severance Agreements. On the Closing Date, the Operating
Partnership shall pay or cause to be paid (and the Purchaser Parties agree and acknowledge that Company shall pay or cause to be paid) the amounts due to certain of the Company’s or the Operating Partnership’s executive officers and other
employees under such executive officers’ and other employees’ Company Severance Agreements, as set forth in Section 5.7(a) of the Company Disclosure Letter and in accordance with such Company Severance Agreements (the “Designated
Severance”); provided, that the aggregate amount to be paid pursuant to this sentence shall not exceed Three Million Seven Hundred Thousand Dollars ($3,700,000), plus any other amounts permitted below (the “Severance
Cap”); provided, further, that if the Company or the Operating Partnership incurs any obligations under any Company Severance Agreement between the date hereof and the Effective Time for such specified executive officers and
other employees (other than as set forth in the last proviso of this sentence), the Severance Cap shall be reduced by a corresponding amount; provided, further, to the extent that persons employed by the Company or any Company
Subsidiary other than the executive officers and employees identified in Section 5.7(a) of the Company Disclosure Letter are terminated at the request of the Purchaser Parties after the date hereof, the Company or the Operating Partnership shall pay
all amounts due under any Company Severance Agreement applicable to such persons and such amounts shall be in addition to the Severance Cap. In addition, and also on the earlier of the Closing Date or January 2005, the Company shall pay or cause to
be paid (and the Purchaser Parties agree and acknowledge that Company shall pay or cause to be paid) to each employee, the annual bonus amount earned by such employee as of the Closing Date pursuant to the MBO Plan and/or the Company’s normal
appraisal review process (the “Annual Bonuses”) and subject to the parameters set forth in Section 5.7(a) of the Company Disclosure Letter; provided, that the aggregate amount of such bonuses shall not exceed One Million Four
Hundred Thousand Dollars ($1,400,000) (the “Bonus Cap”), subject to reduction as provided in the following sentence; provided, further, that bonuses for property level employees which have been accrued in the ordinary
course of business in the budget for the applicable property and which are to be paid in the ordinary course of business shall be in addition to the Bonus Cap. Notwithstanding the foregoing, to the extent the Annual Bonuses are less than the Bonus
Cap, such savings, in an amount not to exceed $250,000, shall be added to the Severance Cap and deducted from the Bonus Cap. 
  

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 (b) Benefit Plans. 
  
 (i) Upon and after the Effective Time, the Parent shall cause the Surviving Entity (or its successors or
assigns) to continue in effect the Company Employee Benefit Plans and provide benefits to the employees of the Company that are substantially similar in all material respects, on an aggregate basis, to the Company Employee Benefit Plans in which
such employees participated prior to the Effective Time for a period of not less than one year. As of the Effective Time, a trustee and an administrator of Company Employee Benefit Plans will be designated by the Purchaser Parties. With respect to
any Company Employee Benefit Plan which is an “employee benefit plan” as defined in Section 3(3) of ERISA and any other service based benefits (including vacations) in which the employees of the Company may participate at any time after
the Effective Time, solely for purposes of determining eligibility to participate, vesting and entitlement to benefits but not for purposes of accrual of benefits (except in the case of accrued vacation, sick or personal time), service with the
Company or any Company Subsidiary shall be treated as service with each of the Purchaser Parties; provided, however, that such service shall not be recognized to the extent that such recognition would result in a duplication of
benefits under both a Company Employee Benefit Plan and a benefit plan of any Purchaser Party (or is not otherwise recognized for such purposes under the benefit plans of Purchaser Party). Without limiting the foregoing, the Purchaser Parties shall
not treat any Company employee as a “new” employee for purposes of any pre-existing condition exclusions, waiting periods, evidence of insurability requirements or similar provision under any health or other welfare plan, and will make
appropriate arrangements with its insurance carrier(s), to the extent applicable, to ensure such result.  
  
 (ii) Effective as of the Closing Date, the Company or the Purchaser Parties shall, or shall cause the Company or the Surviving Entity, to
take all necessary actions to fully vest the account balances and benefits of all individuals who are employed by the Company or any Company Subsidiary on the Closing Date under any Company Pension Plan in which such employees participate. With
respect to any employees of the Company or a Company Subsidiary whose employment is terminated on or after the Closing Date and not employed by the Surviving Entity (the “Terminated Employees”), Parent shall, or shall cause the
Suriving Entity to, (i) distribute or cause to be distributed to such Terminated Employees such notices and forms that are provided to participants who incur a severance from employment so that such Terminated Employees may elect to receive a
distribution of their benefits under any Company Pension Plan in which such Terminated Employees participate or rollover such benefits to an “eligible retirement plan,” as defined in Section 402(c)(8)(B) of the Code and shall promptly
cooperate with such Terminated Employees in effecting the foregoing and (ii) be responsible for all liabilities and obligations in connection with the continuation coverage requirements, including notice requirements, of Section 4980B of the
Internal Revenue Code of 1986, as amended, and Part 6 of Subtitle B of Title I of Employee Retirement Income Security Act of 1974, as amended (“COBRA”) with respect to such Terminated 
  

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 Employees (and their dependents) who participate in any Company Employee Benefit Plan that is subject to
COBRA, including, but not limited to, any “qualified beneficiary” (within the meaning of COBRA) who is receiving COBRA coverage as of the Closing Date. With respect to any Terminated Employee who elects COBRA coverage, Parent shall pay, or
shall cause the Surviving Entity to pay, for the period set forth opposite such Terminated Employees name in Section 4.7(b)(ii) of the Company Disclosure Letter, the full cost of any premium or other costs associated with such COBRA coverage.

  
 (c) Employee Loans. Except as set forth in Section
5.7(c) of the Company Disclosure Letter, prior to the Effective Time, the Company shall use its commercially reasonable efforts to cause each officer, trustee, director or employee who has any outstanding loan (other than a 401(k) loan) from, or
other debt obligations to, the Company or any Company Subsidiary, for any purpose, to repay such loan in accordance with the terms thereof. 
  
 (d) Company Options. The Company and each Company Subsidiary shall take such actions as are necessary under the Company Share Incentive Plan to
effect the cancellations described in Section 2.3 and shall comply with all requirements regarding tax withholding in connection therewith. In addition to the foregoing and subject to the terms of the Company Share Incentive Plan and
applicable Law, the Company and the Operating Partnership shall take such actions as are necessary to cause the Company Share Incentive Plan to be terminated at or prior to the REIT Effective Time, and to reasonably satisfy Parent that no holder of
Company Options or other awards under such plan or participant in the Company Share Incentive Plan, will have any right to acquire any interest in the Purchaser Parties or any Affiliate or Subsidiary of Parent as a result of the exercise of Company
Options or other awards or rights pursuant to the Company Share Incentive Plan at or after the Effective Time. 
  
 (e) Employee Brokerage Arrangements. The Company and the Purchaser Parties agree that after the Effective Time if any of the tenants listed in
Section 5.7(e) of the Company Disclosure Letter as of the date of this Agreement or in updated Section 5.7(e) of the Company Disclosure Letter delivered to the Purchaser Parties on the Closing Date shall execute a lease with the Surviving Entity or
any subsidiary thereof within 150 days of the Effective Time, the Surviving Entity shall pay, and Parent shall cause the Surviving Entity to pay, the individual whose name is opposite such tenant in Section 5.7(e) of the Company Disclosure Letter,
regardless if such individual remains an employee of the Surviving Entity or any subsidiary thereof, a brokerage commission in the amount set forth in Section 5.7(e) of the Company Disclosure Letter. In the event that any Company Property is sold to
any other Person or entity after the Effective Time and before the expiration of such 150-day period or pursuant to the Commercial Properties Sale, the Company and the Purchaser Parties shall make proper provision so that such Person or entity
assumes the obligations set forth in this Section 5.7(e). 
  
 (f) Employees. The Purchaser Parties shall be responsible for compliance with the Worker Adjustment and Retraining Notification Act of 1988 (the “Federal WARN Act”) and the Illinois Worker Adjustment and Retraining
Notification Act (together with the Federal WARN Act, the “WARN Acts”) with respect to terminations occurring at or after the Effective Time at the request or direction of the Purchaser Parties. The Company shall refrain from
causing an “employment loss” (as defined in the WARN Acts) in the 90 days prior to the Effective Time; provided, that any such “employment loss” resulting from actions taken by the 
  

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 Company with the consent or at the request of the Purchaser Parties shall not constitute a breach of this covenant;
provided, further, that such consent shall be deemed to be given if the Purchaser Parties do not object in writing within five (5) Business Days of receipt of the written notice from the Company of its intention to take such action.
The Company shall cooperate with and provide reasonable assistance to the Purchaser Parties in delivering any notices required or potentially required pursuant to any Company Severance Agreement or the WARN Acts to effectuate the termination of
Company employees as of the Effective Time; provided, however, that all such notices shall indicate that the terminations shall be contingent upon the consummation of the REIT Merger. 
  
 (g) In the event the Surviving Entity or any of its successors or assigns (i)
consolidates with or merges into any other person or entity after the Effective Time and shall not be the continuing or surviving entity of such consolidation or merger or (ii) transfers or conveys a majority of its properties and assets to any
person or entity after the Effective Time, then, and in each such case, proper provision shall be made so that the successors, assigns and transferees of the Surviving Entity, as the case may be, assume the obligations set forth in this Section
5.7. 
  
 Section 5.8. Indemnification; Trustees’ and
Officers’ Insurance. 
  
 (a) In the event of any
threatened or actual claim, action, suit, demand, proceeding or investigation, whether civil, criminal or administrative, including, without limitation, any such claim, action, suit, demand, proceeding or investigation in which any person who is
now, or has been at any time prior to the date hereof, or who becomes prior to the Closing, a trustee, director, officer, employee, fiduciary or agent of the Company or any Company Subsidiary (the “Indemnified Parties”) is, or is
threatened to be, made a party based in whole or in part on, or arising in whole or in part out of, or pertaining to (i) the fact that he is or was a trustee, director, officer, employee, fiduciary or agent of the Company or any Company Subsidiary,
or is or was serving at the request of the Company or any Company Subsidiary as a trustee, director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust or other enterprise or (ii) the negotiation,
execution or performance of this Agreement or any of the transactions contemplated hereby, whether in any case asserted or arising before or after the Closing, the parties hereto agree to cooperate and use their commercially reasonable efforts to
defend against and respond thereto. It is understood and agreed that the Company shall indemnify and hold harmless, and after the Effective Time, Parent shall cause the Surviving Entity to, and the Surviving Entity shall, indemnify and hold
harmless, as and to the full extent permitted by applicable Law, each Indemnified Party against any losses, claims, damages, liabilities, costs, expenses (including reasonable attorneys’ fees and expenses), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim, action, suit, demand, proceeding or investigation, and in the event of any such threatened or actual claim, action, suit, demand, proceeding or investigation (whether asserted or
arising before or after the Effective Time), (A) the Company, and after the Effective Time, Parent shall cause the Surviving Entity to, and the Surviving Entity shall, promptly pay expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the full extent permitted by law, subject to the provision by such Indemnified Party of an undertaking to reimburse the amounts so advanced in the event of a final non-appealable determination
by a court of competent jurisdiction that such Indemnified Party is not entitled to such amounts, (B) the Indemnified Parties may retain one counsel reasonably satisfactory to 
  

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 them and the Company (except in the case of a potential conflict of interest among two or more Indemnified Parties, in
which case more than one counsel may be retained), and after the Effective Time, Parent shall cause the Surviving Entity to, and the Surviving Entity shall, pay all reasonable fees and expenses of such counsel for the Indemnified Parties within 30
days after statements therefor are received and (C) the Company and the Surviving Entity will, and Parent will cause the Surviving Entity to, use their commercially reasonable efforts to assist in the defense of any such matter; provided,
that neither the Company nor the Surviving Entity shall be liable for any settlement effected without its prior written consent (which consent shall not be unreasonably withheld or delayed); and provided further, neither the Surviving
Entity nor Company shall have any obligation hereunder to any Indemnified Party when and if, but only to the extent that, a court of competent jurisdiction shall ultimately determine, and such determination shall have become final and
non-appealable, that indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by applicable Law. Any Indemnified Party wishing to claim indemnification under this Section 5.8, upon learning of any such claim,
action, suit, demand, proceeding or investigation, shall promptly notify the Company and, after the Effective Time, the Surviving Entity thereof; provided, that the failure to so notify shall not affect the obligations of the Company and the
Surviving Entity except and only to the extent such failure to notify materially prejudices such party. The obligations pursuant to this Section 5.8(a) are in addition to, and shall in no way affect or limit, the rights to indemnification
granted pursuant to the Company Charter and the Company By-laws. 
  
 (b) The Purchaser Parties agree that all rights to indemnification existing in favor of, and all exculpations and limitations of the personal liability of, the trustees, directors, officers, employees and agents of the Company and the
Company Subsidiaries provided for in the Company Charter or the Company By-laws as in effect as of the date hereof with respect to matters occurring at or prior to the Effective Time, including the OP Merger and the REIT Merger, shall continue in
full force and effect for a period of not less than six years from the Effective Time; provided, however, that all rights to indemnification in respect of any claims (each, a “Claim”) asserted or made within such
period shall continue until the final disposition of such Claim. At or prior to the Effective Time, the Company shall obtain and pay for, at the Company’s expense, a fully paid policy or policies of directors’ and officers’ liability
insurance (including side A coverage) providing ‘tail’ coverage for the Persons currently covered by the Company’s existing policies for a period of six (6) years from and after the Effective Time with respect to claims arising from
facts or events that occurred at or prior to the Effective Time, and providing at least the same coverage and amounts as, and containing terms and conditions which are not less advantageous to the covered Persons in any material respect than, the
Company’s current policies. 
  
 (c) This Section 5.8
is intended for the irrevocable benefit of, and to grant third party rights to, the Indemnified Parties and shall be binding on all successors and assigns of the Purchaser Parties. Each of the Indemnified Parties shall be entitled to enforce the
covenants contained in this Section 5.8, each of which such covenants shall survive the Closing Date. 
  
 (d) In the event that the Surviving Entity or any of its successors or assigns (i) consolidates with or merges into any other person or entity after the
REIT Effective Time and shall not be the continuing or surviving entity of such consolidation or merger or (ii) transfers or conveys a majority of its properties and assets to any person or entity after the REIT Effective 
  

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 Time, then, and in each such case, proper provision shall be made so that the successors, assigns and transferees of the
Surviving Entity, as the case may be, assume the obligations set forth in this Section 5.8. 
  
 (e) To the extent permitted by law, all rights of indemnification for the benefit of any Indemnified Party shall be mandatory rather than permissive.

  
 Section 5.9. Deposit Escrow Agreement. (a) On the date
of this Agreement, Parent shall deposit Five Hundred Thousand Dollars ($500,000) (the “Initial Deposit Funds”) in immediately available funds with the Company and (b) on or prior to 5:00 p.m., Chicago time, on November 9, 2004,
Parent shall deposit Four Million Five Hundred Thousand Dollars ($4,500,000) in immediately available funds (the “Deposit Balance Funds” and, together with the Initial Deposit Funds, the “Earnest Money”) with
Citibank, N.A., as escrow agent (the “Deposit Escrow Agent”) pursuant to an escrow agreement substantially in the form attached hereto as Exhibit A (the “Deposit Escrow Agreement”). The terms of the Escrow
shall be governed by the Deposit Escrow Agreement and Section 7.2(d). To the extent this Agreement is not terminated pursuant to Section 7.1(i), the Company will transfer the Initial Deposit Funds (or an amount in immediately available
funds equal thereto) to the Deposit Escrow Agent by 5:00 p.m., Chicago time, on November 10, 2004. 
  
 Section 5.10. Series B Share Distribution. The Company shall (and the Purchaser Parties agree and acknowledge that Company shall), prior to the
Closing Date, conditionally declare and, on the Closing Date, pay distributions on the Series B Preferred Shares for (i) each of the quarters set forth in Section 5.10 of the Company Disclosure Letter which have not been declared and paid prior to
the Closing Date and (ii) the quarter in which the Closing Date occurs if such quarter is not set forth in Section 5.10 of the Company Disclosure Letter. 
  
 Section 5.11. Sale of Properties. Immediately prior to the Closing, the Company or the Operating Partnership shall, if directed by Parent, sell
such properties as directed by Parent on the terms and conditions set forth by Parent (the “Commercial Properties Sale”), and the Company and the Operating Partnership shall cooperate, at the Purchaser Parties request, and use
commercially reasonable efforts to obtain any consents, approvals, waivers, exemptions and tenant estoppel certificates as are necessary to complete the Commercial Properties Sale; provided, however, that the definitive sale
agreement(s) affecting or proposed to affect the Commercial Properties Sale shall be reasonably satisfactory to the Company and subject only to satisfaction or permissible waiver of all the conditions set forth in Article VI hereof and to
customary conditions for similar real estate sale transactions and all actions taken by the Company or any Company Subsidiary pursuant to this Section 5.11 shall be at the sole expense of the Purchaser Parties. Notwithstanding the foregoing
and anything else in this Agreement to the contrary, in no event shall (i) the successful results of such cooperation by the Company, the Operating Partnership or any Company Subsidiary (including but not limited to the receipt of any certain number
of satisfactory consents, approvals, waivers, exemptions and tenant estoppel certificates or the receipt thereof in specific forms) or (ii) the successful completion of the Commercial Properties Sale, be in any manner whatsoever a condition to the
Purchaser Parties’ obligations to close the transactions contemplated by this Agreement. 
  

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 Section 5.12. Company Proxy Statement. As promptly as practicable following the date of this
Agreement, the Company shall prepare and file the preliminary Company Proxy Statement relating to the Company Shareholders Meeting with the SEC. The Company shall use its commercially reasonable efforts to (i) respond to any comments from the SEC
staff on the preliminary Company Proxy Statement or requests for additional information from the SEC staff promptly after receipt of any such comments or requests and (ii) cause the definitive Company Proxy Statement to be mailed to the holders of
Common Shares as promptly as practicable following the date of this Agreement. The Company shall promptly (A) notify the Purchaser Parties upon the receipt of any such comments or requests and (B) provide the Purchaser Parties with copies of all
correspondence between the Company and its representatives, on the one hand, and the SEC staff, on the other hand relating to the preliminary Company Proxy Statement and the definitive Company Proxy Statement. Prior to responding to any such
comments or requests or the filing or mailing of the Company Proxy Statement, the Company (x) shall provide the Purchaser Parties with a reasonable opportunity to review and comment on any drafts of the Company Proxy Statement and related
correspondence and filings and (y) to the extent practicable, the Company and its outside counsel shall permit the Purchaser Parties and its outside counsel to participate in all communications with the SEC and its staff (including all meetings and
telephone conferences) relating to the Company Proxy Statement, this Agreement or any of the transactions contemplated thereby. The Company Proxy Statement shall include the Company Board Recommendation and a copy of the written opinion of the
Company Financial Advisor referred to in Section 3.1(r). If at any time prior to the Effective Time any event shall occur that should, in the reasonable judgment of the Company, be set forth in an amendment of or a supplement to the Company
Proxy Statement, the Company shall, in accordance with the procedures set forth in this Section 5.12, prepare and file with the SEC such amendment or supplement as soon thereafter as is reasonably practicable. 
  
 Section 5.13. Company Shareholders Meeting; Partnership Unitholder
Approval. 
  
 (a) The Company shall call and hold the Company
Shareholders Meeting as promptly as practicable following the date hereof for the purpose of voting on approval of this Agreement. Subject to Section 5.17, the Company shall use commercially reasonable efforts to obtain the Company
Shareholder Approval and otherwise comply in all material respects with the legal requirements applicable to the Company Shareholders Meeting. 
  
 (b) The Company shall use its reasonable efforts to obtain the Partnership Unitholder Approval. 
  
 Section 5.14. Director Resignations. The Company shall cause to be
delivered to Parent resignations of all of the non-independent directors of the Company’s Subsidiaries to be effective upon the consummation of the REIT Merger. 
  
 Section 5.15. Undertakings of Parent. Parent shall perform or comply with or cause to be performed or complied with,
when due all agreements, covenants and obligations of Parent, Merger Sub and OP Merger Sub under this Agreement to be performed or complied with prior to the REIT Merger and the OP Merger. 
  

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 Section 5.16. Financing. 
  
 (a) The Purchaser Parties shall deliver to the Company fully executed copies of their financing commitment letters
(including any exhibits, schedules or amendments thereto (the “Financing Letters”)) for an acquisition loan to the Purchaser Parties (or their Affiliates) to fund a portion of their obligations under this Agreement in an amount of
not less than One Hundred Twenty-Two Million Dollars ($122,000,000) from their financing sources on or before 5:00 p.m., Chicago time, on November 9, 2004. Other than customary conditions, including, but not limited to, no material adverse change,
and subject to the negotiation and execution of customary definitive loan documentation, such Financing Letters shall not be subject to any further conditions, including, but not limited to, environmental reports, physical condition reports or
appraisals. The Purchaser Parties shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to (i) preserve the Purchaser Parties’ Equity
Funds, (ii) maintain in effect the Financing Letters and to satisfy the conditions (to the extent such conditions are under the reasonable control of the Purchaser Parties) to obtaining the financing set forth therein (the
“Financing”), (iii) enter into definitive financing agreements (the “Financing Agreements”) with respect to the Financing so that the Financing Agreements are in effect as promptly as practicable following
satisfaction of the conditions to this Agreement set forth in Sections 6.1 and 6.2 and (iv) consummate the Financing as soon as practicable following satisfaction of the conditions to this Agreement set forth in Sections 6.1 and
6.2. The Purchaser Parties shall keep the Company promptly and reasonably informed of the status of the financing process, and will promptly provide the Company with copies of any written amendments, modifications or terminations of any of
the Financing Letters. If the Financing Letters or the Financing Agreements expire or are terminated for any reason, the Purchaser Parties shall (i) promptly notify the Company of such expiration or termination and the reasons therefor and (ii) use
commercially reasonable efforts to obtain alternative financing to consummate the transactions contemplated by this Agreement. 
  
 (b) From and after the date of this Agreement, if the Purchaser Parties request, the Company, the Operating Partnership and the Company Subsidiaries shall
cooperate, and shall use their commercially reasonable efforts to cause Company’s attorneys, accountants and other representatives to cooperate, in connection with any financing efforts (including, without limitation, the refinancing or
assumption of existing indebtedness or the sale of assets) of the Purchaser Parties (including providing assistance in the Purchaser Parties’ preparation of one or more offering circulars, private placement memoranda, registration statements or
other offering documents relating to debt and/or equity financing and using commercially reasonable efforts to assist the Purchaser Parties in obtaining any consents, approvals, waivers, exemptions and tenant estoppels reasonably requested in
connection with such financing) and any other filings that may be made by the Purchaser Parties or their Affiliates, including, if applicable, with the SEC, all at the sole expense of the Purchaser Parties (or their Affiliates). The Purchaser
Parties shall enter into fee agreements with the Company’s attorneys and/or accountants to the extent their services are required in connection with the matters described in the preceding sentence and the Commercial Properties Sale. The Company
shall permit access to the Company Properties to the extent necessary to allow the Purchaser Parties to obtain surveys and title commitments and/or policies with respect to the Company Properties (it being understood that such activities shall be
conducted at Purchaser Parties’ sole expense). Notwithstanding the foregoing and anything else in this Agreement to the contrary, in no event shall (i) the successful results of such cooperation 
  

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 by the Company, the Operating Partnership and/or any of the Company Subsidiaries (including but not limited to the
receipt of a certain number of satisfactory consents, approvals, waivers, exemptions or tenant estoppels or the receipt of such consents, approvals, waivers, exemptions or tenant estoppels in specific forms), (ii) the failure by the Purchaser
Parties to enter into acceptable fee agreements with the Company’s attorneys or accountants or (iii) the successful completion of such financing efforts (including, without limitation, the refinancing or assumption of existing indebtedness or
the sale of assets), be in any manner whatsoever a condition to the Purchaser Parties’ obligations to close the transactions contemplated by this Agreement. 
  
 (c) Immediately prior to Closing, the Company shall consent to the filing, at the Purchaser Parties’ sole expense, of
financing statements identifying Liens on the Company Properties required by the Purchaser Parties’ financing sources. The Purchaser Parties hereby agree that, to the extent that this Agreement is terminated in accordance with its terms but
after any such financing statements have been filed, the Purchaser Parties will promptly cause all such financing statements to be terminated or removed at the Purchaser Parties’ sole expense. 
  
 Section 5.17. Company Board Recommendation. 
  
 (a) In connection with the REIT Merger and the Company Shareholders’
Meeting, the Company Board shall (i) subject to Section 5.17(c), recommend to the holders of Common Shares to vote in favor of the REIT Merger (the “Company Board Recommendation”) and use commercially reasonable efforts to
obtain the Company Shareholder Approval and (ii) otherwise comply in all material respects with the legal requirements applicable to the Company Shareholders Meeting. 
  
 (b) The Company Board shall not, except as expressly permitted by Section 5.17(c): 
  
 (i) withdraw, qualify, or in a manner adverse to any of the
Purchaser Parties, modify, or propose publicly to withdraw, qualify or in a manner adverse to the Purchaser Parties, modify, the approval or recommendation of the Company Board of the REIT Merger or this Agreement, or 
  
 (ii) approve or recommend, or propose to approve or
recommend, a Competing Transaction. 
  
 (c) Notwithstanding
Sections 5.17(a) and 5.17(b), prior to the Company Shareholder Approval, the Company Board may (subject to this Section 5.17(c)) inform the holders of Common Shares that it no longer believes that the REIT Merger (a
“Subsequent Determination”) is advisable and no longer recommends approval of the REIT Merger, but only if (A) the Company Board receives a Superior Competing Transaction which is not subsequently withdrawn or (B) the Company Board
determines in good faith and on a reasonable basis, after consultation with outside counsel, that failure to take such action would be inconsistent with the fiduciary duties of the trustees of the Company under applicable Law. 
  
 (d) Nothing contained in this Section 5.17 shall prohibit the Company
from taking and disclosing to holders of Company Shares a position contemplated by Rule 14e-2(a) 
  

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 promulgated under the Exchange Act and the rules and regulations thereunder or from making any disclosure to the holders
of Company Shares if, in the good faith judgment of the Company Board, after consultation with outside counsel, such disclosure is advisable under applicable Law. 
  
 Section 5.18. Certain Post-Closing Covenants. 
  
 (a) The Purchaser Parties covenant and agree that, for the lesser of (i) a period of five (5) years following the Effective
Time and (ii) the period from the Effective Time until no Series B Shares remain issued and outstanding, whether or not required by the Securities and Exchange Commission (the “SEC”), the Purchaser Parties will cause the Surviving
Entity to file with the SEC for public availability within the time periods specified in the SEC’s rules and regulations (unless the SEC will not accept such a filing) (i) all quarterly and annual financial information that would be required to
be contained in a filing with the SEC on Forms 10-Q and 10-K if the Surviving Entity were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with
respect to the annual information only, a report on the annual financial statements by the Surviving Entity’s certified independent accountants, and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the
Surviving Entity were required to file such reports. In addition, after the Effective Time and for so long as any Series B Shares remain outstanding, the Purchaser Parties agree to cause the Surviving Entity to furnish to the holders of the Series B
Shares and to securities analysts and prospective investors, upon their request, the information required to be available pursuant to Rule 144(c) under the Securities Act to the extent such information is not electronically filed with the SEC and
electronically available to the public free of cost. 
  
 (b) The
Purchaser Parties covenant and agree that, after the Effective Time and so long as the Series B Shares are issued and outstanding, the Purchaser Parties will not propose, and the Purchaser Parties and their respective Affiliates will not vote or
cause to be voted any Common Shares with respect to which they are entitled to vote against, any action which would impair the Surviving Entity’s status as a REIT for purposes of the Code, unless a majority of the then Independent Trustees of
the Surviving Entity has determined that it would be in the best interests of the Surviving Entity and its shareholders that the Surviving Entity no longer maintain its status as a REIT under the Code. 
  
 Section 5.19. Environmental Matters. The Company and the Company
Subsidiaries shall make available to the Purchaser Parties such environmental investigations, studies, tests, reviews, or other written analysis within the possession or control of the Company or any Company Subsidiary in relation to any property or
facility now or previously owned, leased or operated by the Company or any Company Subsidiary and which have previously not been provided to Parent. 
  
 Section 5.20. Environmental Indemnity Agreement Payments. On or prior to 5:00 p.m., Chicago time, on November 9, 2004, The Prime Group, Inc.
(“PGI”) shall pay, in immediately available funds, to the Operating Partnership an amount in immediately available funds equal to One Million Eight Hundred Fifty Thousand Dollars ($1,850,000) (the “Second Payment”),
which payment, together with the payment of One Million Two Hundred Fifty Thousand Dollars 
  

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 ($1,250,000) made on September 23, 2004 by PGI to the Operating Partnership, shall constitute full satisfaction of
PGI’s obligations under that certain Environmental Remediation and Indemnification Agreement dated as of November 17, 1997 by and between the Operating Partnership and PGI, as amended. Such satisfaction shall be evidenced by a release between
PGI and the Operating Partnership, which shall be executed by PGI and the Operating Partnership on or prior to 5:00 p.m., Chicago time, on the date of the Second Payment and be substantially in the form attached hereto as Exhibit B (the
“PGI Release”). 
  
 Section 5.21. Continental
Towers. The Company or an appropriate Company Subsidiary shall (and the Purchaser Parties acknowledge and agree that the Company or an appropriate Company Subsidiary shall) provide notice, shortly prior to the date such notice is required, to
the lenders of the Company’s Continental Towers project located in Rolling Meadows, Illinois (“Continental Towers”), that the Company intends to refinance the mortgage loan encumbering Continental Towers (the “CT
Refinancing”) upon the early call of such mortgage loan. From the date of this Agreement until February 1, 2005, the Company and the Purchaser Parties shall reasonably cooperate to structure and negotiate a proposed loan arrangement to
accomplish the CT Refinancing with a financing source or sources with the goal of the Company or an appropriate Company Subsidiary entering into a loan commitment for the CT Refinancing mutually satisfactory to the Company and the Purchaser Parties.
If the Company does not enter into a loan commitment for the CT Refinancing by February 1, 2005, then, notwithstanding anything to the contrary contained in this Agreement, including Section 4.1(b), the Company may, without the consent of any
Purchaser Party, enter into a loan commitment and pay a loan commitment fee for the CT Refinancing acceptable to the Company; provided, that (i) the terms of the loan commitment shall provide for a loan (A) with a variable interest rate
(which may be subject to an interest rate cap or other hedge), (B) that shall be in a principal amount not to exceed the principal amount being refinanced, (C) that has a term of no less than two (2) years or more than five (5) years, (D) which
shall not close prior to April 30, 2005; and (ii) such loan commitment fee shall not be in excess of one percent (1%) of the principal balance of the loan plus the reasonable expenses of the lender. 
  
 ARTICLE VI 
  
 CONDITIONS TO CLOSING 
  
 Section 6.1. Conditions to Each Party’s Obligation to Effect the
Mergers. The respective obligations of each party to effect the Mergers are subject to the satisfaction or waiver (as permitted by applicable Law) at or prior to the OP Effective Time or REIT Effective Time, as the case may be, of the following
conditions: 
  
 (a) The Company Shareholder Approval shall have
been obtained at the Company Shareholders Meeting (or an adjournment or postponement thereof). 
  
 (b) The Partnership Unitholder Approval shall have been obtained pursuant to the applicable procedures set forth in the Partnership Agreement. 
  

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 (c) Any applicable waiting period (and any extension thereof) under the HSR Act shall have expired or
been terminated, and all consents, approvals and actions of, filings with, and notices to, all Governmental Entities required of the Purchasing Parties or the Company or any of their respective Subsidiaries in connection with the transactions
contemplated hereby shall have been made, obtained or effected, as the case may be. 
  
 (d) No Law or temporary restraining order, preliminary or permanent injunction or other binding order restraining, prohibiting or preventing consummation of either Merger issued by any Governmental Entity of competent
jurisdiction shall be in effect; provided, however, that the parties invoking this condition shall use all commercially reasonable efforts to have any such legal prohibition removed or such order or injunction vacated. 
  
 Section 6.2. Conditions to the Obligation of the Purchaser Parties to
Effect the Mergers. The obligations of the Purchaser Parties to effect the Mergers are further subject to satisfaction or waiver (as permitted by applicable Law) at or prior to the OP Effective Time or REIT Effective Time, as the case may be, of
the following conditions: 
  
 (a) The representations and
warranties of the Company contained herein (without giving effect to any materiality or Company Material Adverse Effect qualification) shall be true and correct, as of the Effective Time, as if such representations and warranties were made at the
Effective Time (except to the extent that any such representation or warranty, by its terms, is expressly limited to a specific date, in which case such representation or warranty shall be true and correct as of such date), except where the failure
to be so true and correct would not constitute a Company Material Adverse Effect. 
  
 (b) The Company and the Operating Partnership shall have performed or complied with in all material respects each of its agreements and covenants contained in this Agreement required to be performed or complied with
by it at or prior to the Effective Time. 
  
 (c) Since the date of
this Agreement there shall not have occurred any event, occurrence or condition that would constitute a Company Material Adverse Effect. 
  
 (d) The Purchaser Parties shall have received a certificate, signed by a senior executive officer of the Company, certifying as to the matters set forth
in Sections 6.2(a), 6.2(b) and 6.2(c). 
  
 (e) The Company shall have consummated the transactions contemplated by the Industrial Sale Agreement and received the net proceeds thereof. 
  
 (f) The Purchaser Parties shall have received the opinion of Winston & Strawn LLP stating that the Company qualifies as a REIT under the Code for all
periods through the date of Closing and the treatment of the Operating Partnership and all Company Subsidiaries (which are organized as partnerships or limited liability companies or which file tax returns as partnerships) as partnerships and not as
associations taxable as corporations or publicly-traded partnerships for federal income tax purposes since the acquisition or formation of Company Subsidiaries by the Company and the parties to the Financing shall be entitled to rely on such
opinion. 
  

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 Section 6.3. Conditions to the Obligation of the Company to Effect the Mergers. The obligation of
the Company to effect the Mergers is further subject to satisfaction or waiver (as permitted by applicable Law) at or prior to the OP Effective Time or REIT Effective Time, as the case may be, of the following conditions: 
  
 (a) The representations and warranties of the Purchaser Parties contained
herein that are qualified as to materiality shall be true and correct and any such representations and warranties that are not so qualified shall be true and correct in all material respects, as of the Effective Time, as if such representations and
warranties were made at the Effective Time (except to the extent that any such representation or warranty, by its terms, is expressly limited to a specific date, in which case such representation or warranty shall be true and correct as of such
date). 
  
 (b) Each of the Purchaser Parties shall have performed
or complied with in all material respects each of its respective agreements and covenants contained in this Agreement required to be performed or complied with by it at or prior to the Effective Time. 
  
 (c) The Company shall have received a certificate, signed by a senior
executive officer of each of the Purchaser Parties, certifying as to the matters set forth in Sections 6.3(a) and 6.3(b). 
  
 Section 6.4. Frustration of Closing Conditions. Neither the Purchasing Parties nor the Company or the Operating Partnership may rely on the failure
of any condition set forth in this Article VI to be satisfied if such failure was caused by such party’s failure to use its commercially reasonable efforts to consummate the OP Merger, REIT Merger and the other transactions contemplated
by this Agreement in a timely manner, as required by and subject to Section 5.2. 
  
 ARTICLE VII 
  
 TERMINATION, AMENDMENT AND WAIVER 
  
 Section 7.1. Termination. This Agreement may be terminated (and shall be terminated, in the case of Section 7.1(i)) and the Mergers may be abandoned (and shall be abandoned in the case of Section 7.1(i)) at any time
prior to the Effective Time, whether before or after the Company Shareholder Approval (with any termination by Parent also being an effective termination by OP Merger Sub and Merger Sub): 
  
 (a) by mutual written consent of the Company and Parent; 
  
 (b) by written notice by the Company or Parent if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the consummation of either Merger, which is final and non-appealable; provided, that the party seeking to
terminate this Agreement pursuant to this clause (b) shall have used all commercially reasonable efforts to remove such order, decree, ruling or judgment or to reverse such action; 
  

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 (c) by written notice by the Company, at any time prior to obtaining the Company Shareholder Approval,
upon the Company Board resolving to enter into, subject to the terms of this Agreement, including Section 7.2(b), a definitive agreement for a Competing Transaction by a third party; provided, that (i) the Company Board shall not so
resolve unless the Company Board shall have determined in good faith (after consultation with its independent financial advisors and outside counsel) that such Competing Transaction constitutes a Superior Competing Transaction; (ii) immediately
following the Company so resolving, the Company shall have so notified Parent and provided to Parent in writing the terms and conditions of such Competing Transaction; (iii) such termination pursuant to this Section 7.1(c) shall not be
effective until the end of the third Business Day after Parent’s receipt of notice of the final terms and conditions of such Competing Transaction; and (iv) the Company shall have the right to enter into a definitive agreement for a Competing
Transaction during the period commencing upon the Company Board so resolving in accordance with this Section 7.1(c) and ending upon the termination of this Agreement pursuant to this Section 7.1(c) so long as (A) the effectiveness of
such agreement is conditioned upon the Company complying with its obligations under Section 7.1(c) and Section 7.2(b) and (B) the effectiveness of such agreement is conditioned upon the termination of this Agreement pursuant to this
Section 7.1(c); 
  
 (d) by written notice by Parent, if
prior to the Company Shareholder Approval being obtained, (i) the Company Board shall have withdrawn or adversely modified its recommendation of this Agreement and the REIT Merger (it being understood, however, that for all purposes of this
Agreement, the fact that the Company has supplied any person with information regarding the Company or has entered into discussions or negotiations with such person as permitted by this Agreement, or the disclosure of such facts, shall not be deemed
in and of itself a withdrawal or modification of the Company Board’s recommendation of the REIT Merger or this Agreement so long as such actions are in compliance with Section 5.4); or (ii) the Company Board shall have (A) recommended to
the Company shareholders that they approve a Competing Transaction rather than the transactions contemplated by this Agreement or (B) determined to accept a proposal or offer for a Superior Competing Transaction; 
  
 (e) by written notice by the Company or Parent, if, by April 30, 2005, the
REIT Merger has not been consummated (provided, that the right to terminate this Agreement pursuant to this subparagraph (e)) shall not be available to any party whose (or whose Subsidiary’s) failure to fulfill any obligation under this
Agreement has been the proximate cause of the failure of the REIT Merger to be consummated on or prior to such date); 
  
 (f) by written notice by Parent or the Company, if the Company Shareholder Approval shall not have been obtained at the Company Shareholders Meeting or at
any adjournment or postponement thereof; 
  
 (g) by written notice
by Parent, upon a breach of any representation, warranty, agreement or covenant of the Company contained in this Agreement (in any case, other than as a result of a breach by the Purchaser Parties of any of their respective representations,
warranties, agreements or covenants contained in this Agreement) such that the conditions set forth in Section 6.2(a) or (b), as the case may be, cannot be satisfied (any such breach, a “Terminating Company Breach”);
provided, however, that if such Terminating Company Breach is capable of being cured by the Company within twenty (20) days after Parent notifies the Company of the 
  

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 occurrence of the Terminating Company Breach through the exercise of its commercially reasonable efforts and is so cured
within such period, so long as the Company continues to exercise such commercially reasonable efforts, Parent may not terminate this Agreement under this Section 7.1(g); 
  
 (h) by written notice by the Company, upon a breach of any representation, warranty, agreement or covenant of the Purchaser
Parties contained in this Agreement such that the conditions set forth in Sections 6.3(a) or (b), as the case may be, cannot be satisfied (any such event or condition, a “Terminating Purchaser Party Breach”);
provided, however, that (i) if such Terminating Purchaser Party Breach (other than a breach of the representations and warranties contained in Section 3.2(c)(ii) or (iii)) is capable of being cured by the Purchaser
Parties within twenty (20) days or (ii) if such Terminating Purchaser Party Breach resulting from a breach of the representations and warranties contained in Section 3.2(c)(ii) or (iii) is capable of being cured by the Purchaser
Parties within five (5) days, in each case, after the Company notifies Parent of the Terminating Purchaser Party Breach through the exercise of its commercially reasonable efforts and is so cured within such period, so long as the Purchaser Parties
continue to exercise such commercially reasonable efforts, the Company may not terminate this Agreement under this Section 7.1(h); or 
  
 (i) automatically, without any action or notice by the Company or any other Person, upon the occurrence of any of the following events: (i) the Purchaser
Parties fail to make the Four Million Five Hundred Thousand Dollar ($4,500,000) deposit of immediately available funds with the Deposit Escrow Agent in accordance with Section 5.9 by 5:00 p.m., Chicago time, on November 9, 2004; (ii) the
Purchaser Parties fail to deliver to the Company fully executed copies of the Financing Letters in accordance with Section 5.16 by 5:00 p.m., Chicago time, on November 9, 2004; or (iii) PGI fails to deliver the One Million Eight Hundred Fifty
Thousand Dollar ($1,850,000) in immediately available funds to the Operating Partnership and to execute and deliver the PGI Release in accordance with Section 5.20 by 5:00 p.m., Chicago time, on November 9, 2004. 
  
 The right of any party hereto to terminate this Agreement pursuant to this Section 7.1
shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any party hereto, any person controlling or controlled by any such party or any of their respective officers, directors, trustees, employees,
agents or representatives, whether prior to or after the execution of this Agreement. 
  
 Section 7.2. Expenses; Break-up Fee; Earnest Money. 
  
 (a) Except as otherwise specified in this Section 7.2 or agreed in writing by the parties, all out-of-pocket costs and expenses incurred in connection with this Agreement, the OP Merger, the REIT Merger and the
other transactions contemplated hereby shall be paid by the party incurring such cost or expense (with respect to such party, its “Expenses”); provided, however, that, if applicable, any filing fees under the HSR Act
shall be split equally between the Company and Parent. The Company agrees that if (i) this Agreement is terminated pursuant to Section 7.1(g) or (ii) if (A) this Agreement is terminated pursuant to Section 7.1(f) and (B) (I) separate voting
agreements with and for the benefit of the Purchaser Parties had not been entered into by Vornado Realty Trust (or its applicable Affiliates) (“Vornado”) and by Cadim, inc. (or its applicable Affiliates) (“Cadim”
and together with Vornado, the “Significant Shareholders”) prior to the Company Shareholders Meeting pursuant to which each Significant Shareholder agreed to vote its respective Common Shares to approve this Agreement and the REIT
Merger or (II) such voting agreements had not been entered into and all of the Common Shares beneficially owned by each of the Significant Shareholders were not voted to approve this Agreement and the REIT Merger at the Company Shareholders Meeting,
then, subject to the limitation set forth in the proviso to the first sentence of Section 7.2(b), the Company shall pay to Parent an amount equal to the actual out-of-pocket expenses of Parent or its affiliates incurred in connection with
this Agreement and the 
  

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 transactions contemplated hereby (including all attorneys’, accountants’ and financing sources’ fees and
expenses) but in no event in an amount greater than Three Million Dollars ($3,000,000) (the “Parent Expenses”). Any payment of the Parent Expenses pursuant to this Section 7.2(a) shall be made, as directed by Parent, by
prompt wire transfer of immediately available funds, but in no event later than five (5) Business Days after the amount is due as provided herein; provided, that in any such event of the required payment of the Parent Expenses, Parent shall
provide the Company with customary documentation or other reasonable support evidencing the incurrence of the Parent Expenses. 
  
 (b) The Company agrees that (i) if this Agreement is terminated pursuant to Section 7.1(c), (d) or (g) (but only in the event of a
Terminating Company Breach that was the result of a knowing and willful determination or decision by the Company Board or the Company’s senior executive management to cause such breach of this Agreement) or (ii) if (A) this Agreement is
terminated pursuant to Section 7.1(f), (B) within three hundred sixty-five (365) days thereafter, the Company enters into an agreement to consummate a Superior Competing Transaction which is subsequently consummated, and (C) (I) the Significant
Shareholders had not each entered into separate voting agreements with and for the benefit of the Purchaser Parties prior to the Company Shareholders Meeting pursuant to which such Significant Shareholder agreed to vote its respective Common Shares
to approve this Agreement and the REIT Merger or (II) no such voting agreements had been entered into and all of the Common Shares beneficially owned by each of the Significant Shareholders were not voted to approve this Agreement and the REIT
Merger at the Company Shareholders Meeting, then, the Company shall pay to Parent an amount equal to Seven Million Eight Hundred Thousand Dollars ($7,800,000) (the “Break-Up Fee”); provided, that, with respect to any
termination of this Agreement pursuant to Section 7.1(g) in circumstances where the Break-Up Fee is payable in accordance with this Section 7.2(b), in no event shall the Company also be obligated to pay the Parent Expenses,
notwithstanding anything to the contrary contained in this Agreement; provided, further, that with respect to any termination of this Agreement pursuant to Section 7.1(f) in circumstances where the Break-Up Fee is payable in accordance with this
Section 7.2(b), the amount of such Break-Up Fee due and payable shall be reduced by the amount of Parent Expenses previously and irrevocably paid by the Company pursuant to Section 7.2(a). Any payment of such amount shall be made, as directed by
Parent, by prompt wire transfer of immediately available funds, but in no event later than five (5) Business Days after the amount is due as provided herein. 
  
 (c) Notwithstanding anything to the contrary in this Agreement, the Purchaser Parties expressly acknowledge and agree that, with respect to any
termination of this Agreement pursuant to Section 7.1(c), (d), (f) or (g) in circumstances where the Parent Expenses or the Break-Up Fee, as applicable, are payable in accordance with Section 7.2(a) or Section
7.2(b), respectively, the payment of the Parent Expenses or the Break-Up Fee, as applicable, shall constitute liquidated damages with respect to any claim for damages or any other claim which the Purchaser Parties would otherwise be entitled to
assert against the Company, the Operating Partnership or any other Company Subsidiary or any of their respective assets, or against any of their respective trustees, directors, officers, employees, partners, shareholders or stockholders, with
respect to this Agreement and the transactions contemplated by the Transaction Documents and shall constitute the sole and exclusive remedy available to the Purchaser Parties. The parties hereto expressly acknowledge and agree that, in light of the
difficulty of accurately determining actual damages with respect to the foregoing upon any termination of this Agreement pursuant to Section 7.1(c), (d), (f) or (g) in circumstances where the Parent Expenses or the
Break-Up Fee, as applicable, are payable in accordance with Section 7.2(a) or Section 7.2(b), respectively, the amount of the Parent Expenses or the Break-Up Fee, as applicable: (i) constitutes a reasonable estimate of the damages that
will be suffered by reason of any such proposed or actual termination of this Agreement pursuant to said section, and (ii) shall be in full and complete satisfaction of any and all damages arising as a result of the foregoing. Except for nonpayment
of the amounts set forth in Section 7.2(a) or Section 7.2(b), the Purchaser Parties hereby agree that, upon any termination of this Agreement pursuant to Section 7.1(c), (d), (f) or (g) in circumstances
where the Parent Expenses or the Break-Up Fee, as applicable, are payable in accordance with Section 7.2(a) or Section 7.2(b), respectively, in no event shall any of the Purchaser Parties (A) seek to obtain any recovery or judgment
against the Company, the Operating Partnership or any other Company Subsidiary or any of their respective assets, or 
  

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 against any of their respective trustees, directors, officers, employees, partners, shareholders or stockholders with
respect to this Agreement and the transactions contemplated by the Transaction Documents, or (B) be entitled to seek or obtain any other damages of any kind, including, without limitation, consequential, indirect or punitive damages with respect to
this Agreement and the transactions contemplated by the Transaction Documents. 
  
 (d) Each of the Purchaser Parties agrees that if this Agreement shall be terminated pursuant to Section 7.1(h), then the Company shall be entitled to retain the Earnest Money. In addition, each of the Purchaser
Parties agree that if this Agreement terminates automatically pursuant to Section 7.1(i), then the Company shall be entitled to retain the Initial Deposit Funds. Notwithstanding anything to the contrary in this Agreement, the Company
expressly acknowledges and agrees that, with respect to any termination of this Agreement pursuant to Section 7.1(h) or (i) in circumstances where the Company is entitled to retain the Earnest Money or the Initial Deposit Funds in
accordance with this Section 7.2(d), the Earnest Money or the Initial Deposit Funds, as applicable, shall constitute liquidated damages with respect to any claim for damages or any other claim which the Company would otherwise be entitled to
assert against any of the Purchaser Parties or any of their respective assets, or against any of their respective trustees, directors, managers, officers, employees, partners, shareholders, stockholders or members, with respect to this Agreement and
the transactions contemplated by the Transaction Documents and shall constitute the sole and exclusive remedy available to the Company. The parties hereto expressly acknowledge and agree that, in light of the difficulty of accurately determining
actual damages with respect to the foregoing upon any termination of this Agreement pursuant to Section 7.1(h) or (i) in circumstances where the Company is entitled to retain the Earnest Money or the Initial Deposit Funds in accordance
with this Section 7.2(d), the amount of the Earnest Money or the Initial Deposit Funds, as applicable: (i) constitutes a reasonable estimate of the damages that will be suffered by reason of any such proposed or actual termination of this
Agreement pursuant to said section, and (ii) shall be in full and complete satisfaction of any and all damages arising as a result of the foregoing. Except for nonpayment of the applicable amount set forth in this Section 7.2(d), the Company
hereby agrees that, upon any termination of this Agreement pursuant to Section 7.1(h) or (i) in circumstances where the Company is entitled to retain the Earnest Money or the Initial Deposit Funds in accordance with this Section
7.2(d), in no event shall the Company (A) seek to obtain any recovery or judgment against any of the Purchaser Parties or any of their respective assets, or against any of their respective trustees, directors, managers, officers, employees,
partners, shareholders or stockholders with respect to this Agreement and the transactions contemplated by the Transaction Documents, or (B) be entitled to seek or obtain any other damages of any kind, including, without limitation, consequential,
indirect or punitive damages with respect to this Agreement and the transactions contemplated by the Transaction Documents. If this Agreement is terminated for any reason other than a termination pursuant to Section 7.1(h) or (i) in
circumstances where the Earnest Money or the Initial Deposit Funds is payable to the Company in accordance with this Section 7.2(d), then the Earnest Money or the Initial Deposit Funds, as applicable, shall be refunded to the Purchaser
Parties. 
  
 Section 7.3. Notice of Termination. The party
desiring to terminate this Agreement pursuant to Section 7.1 shall give written notice of such termination to the other party in accordance with Section 8.2, specifying the provision or provisions of Section 7.1 (describing in
reasonable detail the basis therefor) pursuant to which such termination is effected. 
  

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 Section 7.4. Effect of Termination. In the event of termination of this Agreement by either the
Company or Parent as provided in Section 7.1, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of any party hereto or their respective affiliates, trustees, directors, managers,
officers, shareholders, stockholders or members (including, without limitation, in connection with a termination pursuant to Section 7.1(i), the obligation pursuant to Section 5.20), except that the last sentence of Section 5.1,
Section 7.1, Section 7.2, this Section 7.4 and Article VIII shall survive such termination and except to the extent that such termination results from a willful breach by a party of any of its covenants or agreements set
forth in this Agreement. 
  
 Section 7.5. Return of Earnest
Money. The parties agree that if this Agreement is terminated pursuant to Section 7.1, the parties shall instruct the Deposit Escrow Agent to return the Earnest Money to Parent with interest within two (2) Business Days of termination by
wire transfer of immediately available funds to an account designated in writing by Parent; provided, however, that notwithstanding the foregoing, if the Agreement is terminated pursuant to Section 7.1(h), the parties shall
instruct the Escrow Agent to transfer the Deposit to Company with interest within two (2) Business Days of termination by wire transfer of immediately available funds to an account designated in writing by Company. 
  
 Section 7.6. Amendment. To the extent permitted by applicable Law,
this Agreement may be amended by the parties in writing by action of their respective boards of trustees, managers or directors or members, as applicable, at any time before or after the Company Shareholder Approval is obtained but, after the
Company Shareholder Approval is obtained, no amendment shall be made which decreases the REIT Merger Consideration or which adversely affects the rights of the holders of the Common Shares without the approval of such holders. 
  
 Section 7.7. Extension; Waiver. At any time prior to the Effective
Time, each of the Company and the Purchaser Parties may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies in the representations and warranties of the other party contained
in this Agreement or in any document delivered pursuant to this Agreement or (c) subject to the provisions of Section 7.6, waive (as permitted by applicable Law) compliance with any of the agreements or conditions of the other party contained
in this Agreement. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those rights. 
  
 ARTICLE VIII 
  
 GENERAL PROVISIONS 
  
 Section 8.1.
Nonsurvival of Representations, Warranties, Covenants and Agreements. None of the representations, warranties, covenants and agreements contained in this Agreement or in any certificate or other instrument delivered pursuant to this Agreement
shall survive the Effective Time except for covenants and agreements that contemplate performance after the Effective Time (which covenants and agreements shall survive the Effective Time in accordance with their respective terms). 
  

 -64- 

 Section 8.2. Notices. All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if delivered personally, sent by overnight courier (provided proof of delivery is received) to the parties or sent by telecopy (provided a confirmation of transmission is received) at the
following addresses or telecopy numbers (or at such other address or telecopy number for a party as shall be specified by like notice): 
  

	 	(a)	if to the Purchaser Parties, to 

  
 Prime/Mansur Investment Partners, LLC 
 c/o Mansur & Company 
 John Hancock Center 
 875 North Michigan Avenue 
 Chicago, Illinois 60611 
 Attn: Barry Mansur 
 Fax No.: (312) 642-6278 
  
 and 
  
 Prime/Mansur Investment Partners, LLC 
 c/o The Prime Group, Inc. 
 321 North Clark Street 
 Suite 2500 
 Chicago, Illinois 60610 
 Attn: Michael W. Reschke 
 Fax No.: (312) 917-1511 
  

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 with copies to: 
  
 The Prime Group, Inc. 
 321 North Clark Street 
 Suite 2500 
 Chicago, Illinois 60610 
 Attn: Robert J. Rudnik 
 Fax No.: (312) 917-8442 
  
 Piper Rudnick 
 203 North LaSalle Street 
 Suite 1800 
 Chicago, Illinois 60610 
 Attn: David B. Sickle, Esq. 
 Fax No.: (312) 630-7361 
  
 Skadden, Arps, Slate, Meagher & Flom LLP 
 333 West Wacker Drive 
 Chicago, Illinois 60606 
 Attn: William R. Kunkel, Esq. 
 Fax No.: (312) 407-0411 
  

	 	(b)	if to the Company or the Operating Partnership, to 

  
 Prime Group Realty Trust 
 77 West Wacker Drive 
 Suite 3900 
 Chicago, Illinois 60601 
 Attention: Jeffrey A. Patterson 
 Facsimile number: (312) 917-1597 
  
 with copies to: 
  
 Prime Group Realty Trust 
 77 West Wacker Drive 
 Suite 3900 
 Chicago, Illinois 60601 
 Attention: James F. Hoffman 
 Facsimile number: (312) 917-1684 
  
 Winston & Strawn LLP 
 35 West Wacker Drive 
 Chicago, Illinois 60601 
 Attention: Wayne D. Boberg, Esq. 
 Facsimile number: (312) 558-5700 
  
 Section 8.3. Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not 
  

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 affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,”
“includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” 
  
 Section 8.4. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. 
  
 Section 8.5. Entire Agreement; No Third-Party Beneficiaries. This Agreement, the Deposit Escrow Agreement, the Company Disclosure Letter, the
Confidentiality Agreements and the PGI Release constitute the entire agreement and supersede all prior agreements and understandings (including the Exclusivity Agreement), both written and oral, between the parties with respect to the subject matter
of this Agreement. Except for the provisions of Section 5.8, this Agreement is not intended to confer upon any Person other than the parties hereto any rights or remedies. 
  
 Section 8.6. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF MARYLAND (WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES THEREOF). 
  
 Section 8.7. Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned or delegated, in whole or in part, by operation of Law or otherwise by any
of the parties without the prior written consent of the other parties. Any such purported assignment or delegation in violation of the foregoing sentence shall be null and void. Subject to the preceding sentences, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. 
  
 Section 8.8. Enforcement. The parties agree that irreparable damage would occur and the parties would not have any adequate remedy at Law in the
event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of Maryland or in any Maryland State court, this being in addition to any other remedy to which they are
entitled at Law or in equity. In addition, each of the parties hereto (i) consents to submit itself (without making such submission exclusive) to the personal jurisdiction of any federal court located in the State of Maryland or any Maryland state
court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement and (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any
such court. Each of the parties further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth herein shall be effective service of process for any action, suit or
proceeding in Maryland with respect to any matters to which it has submitted to jurisdiction as set forth in this section. 
  

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 Section 8.9. Exhibits; Disclosure Letter. All Exhibits referred to herein and in the Company
Disclosure Letter are intended to be and hereby are specifically made a part of this Agreement. 
  
 ARTICLE IX 
  
 CERTAIN
DEFINITIONS 
  
 Section 9.1. Certain Definitions.
For purposes of this Agreement: 
  
 “Adjusted Exercise
Price” has the meaning set forth in Section 2.1(e). 
  
 “Affiliate” of any Person means another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person. 
  
 “Agreement” has the meaning set forth in the introductory
paragraph. 
  
 “Annual Bonuses” has the meaning
set forth in Section 5.7(a). 
  
 “Articles of
Merger” means the articles of merger with respect to the REIT Merger, containing the provisions required by, and executed in accordance with, the Maryland REIT Law and the MGCL. 
  
 “Bonus Cap” has the meaning set forth in Section 5.7(a). 
  
 “Break-Up Fee” has the meaning set forth in Section
7.2(b). 
  
 “Business Day” means any day
other than a Saturday, Sunday or a day on which banking institutions in Chicago, Illinois or New York, New York are authorized or obligated by law or executive order to be closed. 
  
 “Cadim” has the meaning set forth in Section 7.2(a). 
  
 “CERCLA” means the Comprehensive Environmental Response,
Compensation, and Liability Act. 
  
 “Certificates” has the meaning set forth in Section 2.1(a). 
  
 “Claim” has the meaning set forth in Section 5.8(b). 
  
 “Closing” has the meaning set forth in Section 1.2. 
  
 “Closing Date” has the meaning set forth in Section 1.2. 
  
 “COBRA” has the meaning set forth in Section
5.7(b)(ii). 
  
 “Code” means the Internal
Revenue Code of 1986, as amended. 
  
 “Commercial
Properties Sale” has the meaning set forth in Section 5.11. 
  

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 “Commitment” has the meaning set forth in Section 4.1(b)(v)(B). 
  
 “Common Shares” has the meaning set forth in Section
2.1. 
  
 “Company” has the meaning set forth
in the introductory paragraph. 
  
 “Company
Board” has the meaning set forth in the Recitals. 
  
 “Company Board Recommendation” has the meaning set forth in Section 5.17(a). 
  
 “Company By-laws” has the meaning set forth in Section 3.1(a). 
  
 “Company Charter” has the meaning set forth in Section 3.1(a). 
  
 “Company Disclosure Documents” has the meaning set forth in
Section 3.1(y)(i). 
  
 “Company Disclosure
Letter” has the meaning set forth in the introductory paragraph to Section 3.1. 
  
 “Company Employee Benefit Plans” has the meaning set forth in Section 3.1(l)(iii). 
  
 “Company ERISA Affiliate” has the meaning set forth in
Section 3.1(l)(i). 
  
 “Company Financial
Advisor” has the meaning set forth in Section 3.1(r). 
  
 “Company Intangible Property” has the meaning set forth in Section 3.1(n). 
  
 “Company Material Adverse Effect” means, with respect to the Company, an event, occurrence or condition that, either individually or in
the aggregate with all other events, occurrences or conditions, had or would have a material adverse effect on the business, operating results, liabilities, assets or condition, financial or otherwise, of the Company, the Operating Partnership and
the Company Subsidiaries, taken as a whole, or prevent or materially delay the consummation of the OP Merger or the REIT Merger, not including the effect of (i) general economic changes, (ii) changes in the United States financial markets generally,
(iii) changes that affect REITs generally, (iv) changes that affect office real estate properties generally, (v) changes in national or international political or social conditions including the engagement by the United States in hostilities,
whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon or within the United States, or any of its territories, possessions or diplomatic or consular offices or upon any
military installation, equipment or personnel of the United States (except to the extent that any such change affects the Company in a disproportionate manner), (vi) any change in the price or trading volume of the Common Shares or the Series B
Shares, (vii) the failure by the Company to lease space, including but not limited to the renewal or non-renewal of any leases for real property owned, leased or operated by the Company or any Company Subsidiary or the announcement or decision by a
prospective tenant of its intention not to lease space or by an existing tenant of its intention to renew or not renew its current lease or (viii) changes arising as a result of the public announcement of this Agreement or the transactions
contemplated hereby. 
  

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 “Company Option” has the meaning set forth in Section 2.3(a). 
  
 “Company Other Interests” has the meaning set forth in
Section 3.1(b)(ii). 
  
 “Company Pension
Plans” has the meaning set forth in Section 3.1(l)(i). 
  
 “Company Permits” has the meaning set forth in Section 3.1(i). 
  
 “Company Properties” has the meaning set forth in Section 3.1(p)(i)(A). 
  
 “Company Property Restrictions” has the meaning set forth in
Section 3.1(p)(i)(B). 
  
 “Company Proxy
Statement” has the meaning set forth in Section 3.1(d)(iii). 
  
 “Company SEC Documents” has the meaning set forth in Section 3.1(e)(i). 
  
 “Company Severance Agreements” has the meaning set forth in Section 3.1(l)(xiv). 
  
 “Company Share Incentive Plan” has the meaning set forth in
Section 3.1(c)(i)(C). 
  
 “Company Shareholder
Approval” has the meaning set forth in Section 3.1(z)(i). 
  
 “Company Shareholders Meeting” has the meaning set forth in Section 3.1(d)(iii). 
  
 “Company Shares” means the Common Shares, the Series A Shares and the Series B Shares. 
  
 “Company Subsidiary” means the Operating Partnership and
each other Subsidiary of the Company or the Operating Partnership. 
  
 “Competing Transaction” has the meaning set forth in Section 5.4(a). 
  
 “Confidentiality Agreements” has the meaning set forth in Section 5.1. 
  
 “Deposit Balance” has the meaning set forth in Section
5.9. 
  
 “Deposit Escrow Agent” has the
meaning set forth in Section 5.9. 
  
 “Deposit
Escrow Agreement” has the meaning set forth in Section 5.9. 
  
 “Designated Severance” has the meaning set forth in Section 5.7(a). 
  
 “DRULPA” has the meaning set forth in Section 1.1(a). 
  
 “Earnest Money” has the meaning set forth in Section 5.9. 
  
 “EDGAR” means the Electronic Data Gathering Analysis and
Retrieval system. 
  
 “Effective Time” has the
meaning set forth in Section 1.3(b). 
  

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 “Eligible LP Unit” has the meaning set forth in Section 2.6(a). 
  
 “Environmental Law” has the meaning set forth in Section
3.1(o). 
  
 “ERISA” has the meaning set forth
in Section 3.1(l)(i). 
  
 “Exchange Act”
has the meaning set forth in Section 3.1(d)(iii). 
  
 “Excluded LP Units” has the meaning set forth in Section 2.6(b). 
  
 “Excluded Shares” has the meaning set forth in Section 2.1(b). 
  
 “Exclusivity Agreement” means the Exclusivity Agreement dated as of September 7, 2004 among Mansur
Interests II, Ltd., The Prime Group, Inc., the Company and the Operating Partnership. 
  
 “Expenses” has the meaning set forth in Section 7.2(a). 
  
 “Fairness Opinion” has the meaning set forth in Section 3.1(r). 
  
 “Federal WARN Act” has the meaning set forth in Section 5.7(f). 
  
 “Financing” has the meaning set forth in Section
5.16(a)(ii). 
  
 “Financing Agreements” has
the meaning set forth in Section 5.16(a)(iii). 
  
 “Financing Letters” has the meaning set forth in Section 5.16(a). 
  
 “GAAP” has the meaning set forth in Section 3.1(e)(i). 
  
 “Governmental Entities” means any federal, state, local, municipal, or other government or governmental
authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); or any body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature. 
  
 “GP Units” has the meaning set forth in Section 3.1(c)(ii). 
  
 “Hazardous Material” has the meaning set forth in Section 3.1(o). 
  
 “HSR Act” has the meaning set forth in Section 3.1(d)(iii). 
  
 “Indemnified Parties” has the meaning set forth in Section 5.8(a). 
  
 “Independent Trustees” shall mean the members of the board
of trustees of the applicable board of trustees who are “independent,” are defined in Section 303A.02 of the New York Stock Exchange’s Listed Company Manual, as presently in effect. 
  
 “Industrial Sale Agreement” has the meaning set forth in
Section 4.1(c)(i). 
  

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 “Initial Deposit Funds” has the meaning set forth in Section 5.9. 
  
 “IRS” means the Internal Revenue Service. 
  
 “Knowledge,” or any similar expression, shall mean (a) with
respect to the Company (or any Company Subsidiary), the actual knowledge of the persons set forth on Schedule 9.1(a), after due inquiry, and (b) with respect to the Purchaser Parties (or any of their respective Subsidiaries), the actual
knowledge of the persons set forth on Schedule 11.1(b), after due inquiry. The Company, the Parent and Merger Sub acknowledge and agree that the individuals named in Schedules 9.1(a) and 9.1(b) are named solely for the purpose
of defining and narrowing the scope of the Company, any Company Subsidiary, the Parent and Merger Sub’s knowledge, and not for the purpose of imposing any liability on or creating any duties running from such individuals to the parties hereto
or any affiliate, related party, employee, agent, lender, investor, shareholder or representative of the parties hereto. 
  
 “Law” means any statute, law, regulation, order, interpretation, permit, license, approval, authorization, rule or ordinance of any
Governmental Entity applicable to the Purchaser Parties or the Company or any of their respective Subsidiaries as the case may be. 
  
 “Liens” has the meaning set forth in Section 3.1(b)(i). 
  
 “LP Unit Certificates” has the meaning set forth in Section 2.6(a). 
  
 “LP Units” means the common units of limited partner
interest of the Operating Partnership. 
  
 “Maryland
Department” means the State Department of Assessments and Taxation of Maryland. 
  
 “Maryland REIT Law” has the meaning set forth in Section 1.1(b). 
  
 “Material Contracts” has the meaning set forth in Section 3.1(v)(i). 
  
 “MBO Plan” means the Management by Objective Plan of the Company. 
  
 “Mergers” has the meaning set forth in Section
1.1(b). 
  
 “Merger Sub” has the meaning set
forth in the introductory paragraph. 
  
 “MGCL”
has the meaning set forth in Section 1.1(b). 
  
 “OP Effective Time” has the meaning set forth in Section 1.3(a). 
  
 “OP Merger” has the meaning set forth in Section 1.1(a). 
  
 “OP Merger Certificate” means the certificate of merger with respect to the OP Merger, containing the
provisions required by, and executed in accordance with, DRULPA. 
  
 “OP Merger Consideration” has the meaning set forth in Section 2.6(a). 
  

 -72- 

 “OP Merger Sub” has the meaning set forth in the introductory paragraph. 
  
 “Operating Partnership” has the meaning set forth in the
introductory paragraph. 
  
 “Option Merger
Consideration” has the meaning set forth in Section 2.3(a). 
  
 “Parent” has the meaning set forth in the introductory paragraph. 
  
 “Parent Expenses” has the meaning set forth in Section 7.2(a). 
  
 “Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership of the Operating
Partnership, as amended through the date hereof. 
  
 “Partnership Unitholder Approval” has the meaning set forth in Section 3.1(z)(ii). 
  
 “Partnership Units” mean the GP Units, the Series A Preferred Units, the Series B Preferred Units and LP Units, collectively, or any of
them. 
  
 “Paying Agent” has the meaning set
forth in Section 2.2(a). 
  
 “Payment
Fund” has the meaning set forth in Section 2.2(b). 
  
 “PCBs” has the meaning set forth in Section 3.1(o). 
  
 “Person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. 
  
 “PGI” has the meaning set forth in Section 5.20.

  
 “PGI Release” has the meaning set forth in
Section 5.20. 
  
 “Property Agreements”
has the meaning set forth in Section 3.1(p)(i). 
  
 “Purchaser Parties” means Parent and, prior to the Effective Time, Merger Sub and OP Merger Sub and, at and after the OP Effective Time, the Surviving Partnership and, at and after the REIT Effective Time, the Surviving
Entity. 
  
 “Purchaser Parties’ Equity
Funds” has the meaning set forth in Section 3.2(c)(ii). 
  
 “REIT” has the meaning set forth in Section 3.1(k)(ii). 
  
 “REIT Effective Time” has the meaning set forth in Section 1.3(b). 
  
 “REIT Merger” has the meaning set forth in Section 1.1(b). 
  
 “REIT Merger Consideration” has the meaning set forth in Section 2.1(a). 
  
 “Release” has the meaning set forth in Section
3.1(o). 
  

 -73- 

 “Rent Roll” has the meaning set forth in Section 3.1(p)(iii). 
  
 “Rule 16b-3 No-Action Letter” means a certain no-action
letter of the SEC Staff publicly available as of January 12, 1999. 
  
 “Sarbanes-Oxley Act” has the meaning set forth in Section 3.1(bb). 
  
 “SEC” has the meaning set forth in Section 5.18(a). 
  
 “Second Payment” has the meaning set forth in Section 5.20. 
  
 “Securities Act” has the meaning set forth in Section
3.1(e)(i). 
  
 “Series A Preferred Units” has
the meaning set forth in Section 3.1(c)(ii)(A). 
  
 “Series A Shares” means the Company’s Series A Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share. 
  
 “Series A-2 Share Purchase Warrant” has the meaning set forth in the definition of “Warrants”.

  
 “Series B Preferred Units” has the meaning
set forth in Section 3.1(c)(ii)(A). 
  
 “Series B
Share Purchase Warrant” has the meaning set forth in the definition of “Warrants”. 
  
 “Series B Shares” means the Company’s Series B Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per
share. 
  
 “Series C Share Purchase Warrant” has
the meaning set forth in the definition of “Warrants”. 
  
 “Severance Cap” has the meaning set forth in Section 5.7(a). 
  
 “Shares” has the meaning set forth in Section 2.1(a). 
  
 “Significant Shareholder” has the meaning set forth in Section 7.2(a). 
  
 “Subsequent Determination” has the meaning set forth in Section 5.17(c). 
  
 “Subsidiary” of any Person means any corporation,
partnership, limited liability company, joint venture or other legal entity of which such Person (either directly or through or together with another Subsidiary of such Person) owns more than 50% of the voting stock or value of such corporation,
partnership, limited liability company, joint venture or other legal entity. 
  
 “Superior Competing Transaction” has the meaning set forth in Section 5.4(a). 
  
 “Surviving Bylaws” has the meaning set forth in Section 1.7. 
  
 “Surviving Charter” has the meaning set forth in Section 1.6. 
  

 -74- 

 “Surviving Entity” has the meaning set forth in Section 1.1(b). 
  
 “Surviving Entity Shares” has the meaning set forth in
Section 2.1(c). 
  
 “Surviving
Partnership” has the meaning set forth in Section 1.1(a). 
  
 “Surviving Partnership LP Units” has the meaning set forth in Section 2.6(c). 
  
 “Takeover Statute” has the meaning set forth in Section 3.1(w). 
  
 “Tax” or “Taxes” means any federal, state or local income, sales, use, employment,
payroll, excise taxes, tariffs or governmental charges, together with penalties, interest or additions thereto but not including any taxes, tariffs or governmental charges relating to real property. 
  
 “Tax Return” means any return relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof. 
  
 “Terminated Employees” has the meaning set forth in Section 5.7(b)(ii). 
  
 “Terminating Company Breach” has the meaning set forth in Section 7.1(g). 
  
 “Terminating Purchaser Party Breach” has the meaning set
forth in Section 7.1(h). 
  
 “Third Party”
has the meaning set forth in Section 5.4(a). 
  
 “Transaction Documents” means this Agreement, the Articles of Merger, the OP Merger Certificate, the PGI Release and the Deposit Escrow Agreement. 
  
 “Transactions” means the transactions contemplated by the Transaction Documents, other than the Financing
and the Commercial Properties Sale. 
  
 “Transfer and
Gains Taxes” has the meaning set forth in Section 5.6. 
  
 “Triggered Agreements” has the meaning set forth in Section 3.1(d)(ii). 
  
 “Vornado” has the meaning set forth in Section 7.2(a). 
  
 “WARN Acts” has the meaning set forth in Section 5.7(f). 
  
 “Warrant REIT Merger Consideration” has the meaning set
forth in Section 2.1(e). 
  
 “Warrants”
means collectively, (1) the Series A-2 Share Purchase Warrant to purchase 500,000 Common Shares (the “Series A-2 Share Purchase Warrant”), (2) the Series B Share Purchase Warrant to purchase 250,000 Common Shares (the
“Series B Share Purchase Warrant”) and (3) the Series C Share Purchase Warrant to purchase 250,000 Common Shares (the “Series C Share Purchase Warrant”), in each case, dated July 16, 2002. 
  
 [signature page follows] 
  

 -75- 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of Merger to be signed by
their respective officers thereunto duly authorized, all as of the date first written above. 
  

			
	PRIME/MANSUR INVESTMENT PARTNERS, LLC
		
	 By:
	 	 /s/    E. Barry Mansur

	 Name:
	 	 E. Barry Mansur

	 Title:
	 	 Chairman

	
	CUMBERLAND BLUES MERGER SUB, LLC
		
	 By:
	 	 /s/    E. Barry Mansur

	 Name:
	 	 E. Barry Mansur

	 Title:
	 	 Chairman

	
	CUMBERLAND BLUES, LLC
		
	 By:
	 	 /s/    E. Barry Mansur

	 Name:
	 	 E. Barry Mansur

	 Title:
	 	 Chairman

	
	PRIME GROUP REALTY TRUST
		
	 By:
	 	 /s/    Jeffrey A. Patterson

	 Name:
	 	 Jeffrey A. Patterson

	 Title:
	 	 President and Chief Executive Officer

	
	PRIME GROUP REALTY, L.P.
		
	 By:
	 	 PRIME GROUP REALTY TRUST

	 	 	 Its General Partner

		
	 By:
	 	 /s/    Jeffrey A. Patterson

	 Name:
	 	 Jeffrey A. Patterson

	 Title:
	 	 President and Chief Executive OfficerSecurities Purchase Agreement

 Exhibit 4.1 
  

SECURITIES PURCHASE AGREEMENT 
  
 This Securities Purchase Agreement (this “Agreement”) is dated as of October 22, 2004, among World Health Alternatives, Inc., a Florida
corporation (the “Company”), and the purchasers identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”). 
  
 WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully described in this Agreement. 
  
 NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees as follows: 
  
 ARTICLE I 
 DEFINITIONS 
  
 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not
otherwise defined herein have the meanings given to such terms in the Debentures (as defined herein), and (b) the following terms have the meanings indicated in this Section 1.1: 
  
 “Action” shall have the meaning ascribed to such term in Section 3.1(j). 
  
 “Affiliate” means any Person that, directly
or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act. 
  
 “Business Day” means any day except Saturday, and
Sunday. 
  
 “Closing” means the
closing of the purchase and sale of the Securities pursuant to Section 2.1. 
  
 “Closing Date” means the Business Day when all of the Transaction Documents have been executed and delivered by the
applicable parties thereto, and all conditions precedent to (i) each Purchaser’s obligations to pay the Subscription Amount have been satisfied or waived (ii) and the Company’s obligations to deliver the Securities have been satisfied or
waived. 
  

 1 

 “Closing Price” means the closing bid price of the Common Stock as reported by
Bloomberg Financial L.P. 
  
 “Commission” means the Securities and Exchange Commission. 
  
 “Common Stock” means the common stock of the Company, par value $0.001 per share, and any securities into which such
common stock shall hereinafter have been reclassified into. 
  
 “Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. 
  
 “Company Counsel” means Joseph I. Emas,
Esq. 
  
 “Debentures” means, the
Senior Secured Convertible Debentures due twelve months from their date of issuance, issued by the Company to the Purchasers hereunder, in the form of Exhibit A. 
  
 “Disclosure Schedules” means the meaning ascribed to such term in Section 3.1 hereof.

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

“Escrow Agent” shall have the meaning set forth in the Escrow Agreement. 
  
 “Escrow Agreement” shall mean the Escrow
Agreement in substantially the form of Exhibit E hereto executed and delivered contemporaneously with this Agreement. 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  
 “Exempt Issuances” the issuance of (a)
shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted by the Board of Directors of the Company or (b) securities upon the exercise of or conversion of any
securities issued hereunder, convertible securities, options or warrants 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. 
  
 “Exchange
Act” means the Securities Exchange Act of 1934, as amended. 
  
 “GAAP” shall have the meaning ascribed to such term in Section 3.1(h) hereof. 
  

 2 

 “Liens” shall have the meaning ascribed to such term in Section 3.1(a)
hereof. 
  
 “Losses” means any
and all losses, claims, damages, liabilities, settlement costs and expenses, including without limitation costs of preparation and reasonable attorneys’ fees. 
  
 “Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b)
hereof. 
  
 “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. 
  
 “Principal Amount” shall mean, as to each
Purchaser, the amounts set forth below such Purchaser’s signature block on the signature pages hereto and next to the heading “Principal Amount”, in United States Dollars, which shall be 107.5% of such Purchaser’s
Subscription Amount. 
  
 “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. 
  
 “Registration Rights Agreement” means the
Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit B attached hereto. 
  
 “Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights
Agreement and covering the resale of the Underlying Shares by each Purchaser as provided for in the Registration Rights Agreement. 
  
 “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e) hereof. 
  
 “Required Minimum” means, as of any date,
the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise or conversion in full of all Warrants and
Debentures (including Underlying Shares issuable as payment of interest), ignoring any conversion or exercise limits set forth therein, and assuming that the Set Price is at all times on and after the date of determination 75% of the then Set Price
on the Business Day immediately prior to the date of determination. 
  
 “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule. 
  

 3 

 “SEC Reports” shall have the meaning ascribed to such term in Section
3.1(h) hereof. 
  
 “Securities”
means the Debentures, the Warrants and the Underlying Shares. 
  
 “Securities Act” means the Securities Act of 1933, as amended. 
  
 “Security Documents” means any documents and filings required under the Security Agreement in order to grant the Purchasers a
first priority perfected security interest in all of the assets of the Company, including all UCC-1 filing receipts. 
  
 “Set Price” shall have the meaning ascribed to such term in the Debentures. 
  
 “Subscription Amount” means, as to each
Purchaser, the aggregate amount to be paid for Debentures 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. 
  
 “Subsequent Financing” shall have the meaning ascribed to such term in Section 4.13. 
  
 “Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) attached hereto. 
  
 “Subsidiary Security
Documents” means any documents and filings required under the Security Agreement in order to grant the Purchasers a first priority perfected security interest in all of the assets of the Company, including all UCC-1 filing receipts.

  
 “Trading Day” means any day
during which the Trading Market shall be open for business. 
  
 “Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: OTC Bulletin Board, the American Stock Exchange, the New
York Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market. 
  
 “Transaction Documents” means this Agreement, the Debentures, the Warrants, the Registration Rights Agreement, the Escrow
Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder. 
  
 “Underlying Shares” means the shares of Common Stock issuable upon conversion of the Debentures and upon exercise of the
Warrants and issued and issuable in lieu of the cash payment of interest on the Debentures. 
  
 “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common
Stock is then listed or quoted on a Trading 
  

 4 

 Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based on a trading day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is not then
listed or quoted on a Trading Market and if prices for the Common Stock are then reported in the “Pink Sheets” published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common Stock so reported; or (c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers
and reasonably acceptable to the Company. 
  
 “Warrants” means collectively the Common Stock purchase warrants, in the form of Exhibit C delivered to the Purchasers at the Closing in accordance with Section 2.2 hereof, which Warrants shall be exercisable
immediately and for a term of 5 years. 
  
 “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants. 
  
 ARTICLE II 
 PURCHASE AND SALE 
  
 2.1 Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and each Purchaser agrees to purchase in the aggregate, severally and not jointly, up to $11,825,000
Principal Amount of the Debentures. Each Purchaser shall deliver or cause to deliver to the Company via wire transfer or a certified check immediately available funds equal to their Subscription Amount and the Company shall deliver or cause to
deliver to each Purchaser their respective Debenture and Warrants as determined pursuant to Section 2.2(a) and the other items set forth in Section 2.2 issuable at the Closing. Upon satisfaction of the conditions set forth in Section 2.2, the
Closing shall occur at the offices of the Escrow Agent or such other location as the parties shall mutually agree. 
  
 2.2 Conditions to Closing. The Closing shall be subject to the following conditions and deliveries being met on the Closing Date: 
  
 (a) At or prior to the Closing, unless otherwise indicated
below, the Company shall deliver or cause to be delivered to the Escrow Agent with respect to each Purchaser the following: 
  
 (i) a Debenture with a principal amount equal to such Purchaser’s Principal Amount, registered in the name of such Purchaser;

  
 (ii) a Warrant registered in the name of such
Purchaser to purchase up to a number of shares of Common Stock equal to 25% of such Purchaser’s 
  

 5 

 Subscription Amount divided by the Closing Price on the day hereof, with an exercise price of 105% of the
average of the five Closing Prices for the five Business Days prior to the date hereof; 
  
 (iii) the legal opinion of Company Counsel, in the form of Exhibit D attached hereto, addressed to the Purchasers; 
  
 (iv) the Registration Rights Agreement duly executed by the
Company in the form of Exhibit B attached hereto; 
  
 (v) the Escrow Agreement duly executed by the Company; 
  
 (vi) the Security Agreement duly executed by the Company along with all Security Documents; 
  
 (vii) the Subsidiary Guarantee Agreements; 
  
 (viii) the Subsidiary Security Agreement along with all of
the Subsidiary Security Documents; and 
  
 (ix)
this Agreement, duly executed by the Company. 
  
 (b) At or prior to the Closing, each Purchaser shall deliver or cause to be delivered to the Escrow Agent the following: 
  
 (i) such Purchaser’s Subscription Amount; 
  

(ii) this Agreement, duly executed by such Purchaser; 
  
 (iii) the Security Agreement duly executed by such Purchaser; 
  
 (x) the Subsidiary Guarantee Agreements duly executed by
such Purchaser; 
  
 (iv) the Subsidiary Security
Agreement duly executed by such Purchaser; 
  
 (v) the Escrow Agreement duly executed by such Purchaser; and 
  
 (vi) the Registration Rights Agreement duly executed by such Purchaser. 
  
 (c) All representations and warranties of the other parties contained herein shall remain true and correct as of the Closing Date and all
covenants of the other party shall have been performed if due prior to such date. 
  

 6 

  
 (d) From
the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the
Closing), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg Financial Markets 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 the Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Purchasers, makes it impracticable or inadvisable to purchase
the Debentures at the Closing. 
  
 ARTICLE III 

REPRESENTATIONS AND WARRANTIES 
  
 3.1 Representations and Warranties of the Company. Except as set forth under the corresponding section of the disclosure schedules delivered to the
Purchasers concurrently herewith (the “Disclosure Schedules”) which Disclosure Schedules shall be deemed a part hereof, the Company hereby makes the representations and warranties set forth below to each 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 lien, charge, security interest, encumbrance,
right of first refusal or other restriction (collectively, “Liens”), and all 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. If the Company has no subsidiaries, then references in the Transaction Documents to the Subsidiaries shall be disregarded. 
  
 (b) Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate: (i) adversely affect the legality, validity or enforceability 
  

 7 

 of any Transaction Document, (ii) have or result in or be reasonably likely to have or result in a
material adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) adversely impair the Company’s ability to perform fully on a
timely basis its obligations under any of the Transaction Documents (any of (i), (ii) or (iii), a “Material Adverse Effect”). 
  
 (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 or thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby or thereby have been duly authorized by all necessary action on the part of the Company and no further consent or action is required by the Company other than Required Approvals. Each of the Transaction Documents has
been (or upon delivery will be) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and general principles of equity. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its respective certificate or articles of incorporation, by-laws or other organizational or charter documents except where such violation could not, individually or in the aggregate, constitute a Material
Adverse Effect. 
  
 (d) No Conflicts. The
execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) subject to obtaining the Required Approvals, conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (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) result, in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property
or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not, individually or in the aggregate, have or result in a Material Adverse Effect. 
  
 (e) Filings, Consents and Approvals. Neither the
Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, give any 
  

 8 

 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 under Section 4.7, (ii) the filing with the Commission of the
Registration Statement, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Debentures and Warrants and the listing of the Underlying Shares for trading thereon in the time and manner required
thereby and (iv) the filing of Form D with the Commission and applicable Blue Sky filings (collectively, the “Required Approvals”). 
  
 (f) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens. The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying
Shares at least equal to the Required Minimum on the date hereof. The Company has not, and to the knowledge of the Company, no Affiliate of the Company has sold, offered for sale or solicited offers to buy or otherwise negotiated 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 in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers, or
that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market. 
  
 (g) Capitalization. The number of shares and type of all authorized, issued and outstanding capital stock of the Company is set
forth in the Disclosure Schedules attached hereto. No securities of the Company are entitled to preemptive or similar rights, and 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, script rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into 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 securities or rights convertible or exchangeable into shares of Common Stock. 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 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 of the Company or others is required for the issuance 
  

 9 

 and sale of the Shares. Except as disclosed in the SEC Reports, there are no stockholders agreements,
voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. 
  
 (h) SEC Reports; Financial Statements. The Company
has filed all reports required to be filed by it under 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 to file such
material) (the foregoing materials 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. The Company has identified and made available to the Purchasers a copy of all SEC Reports filed within the 10 days preceding the date hereof. As of their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, 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 light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in
all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted
accounting principles 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 fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments. 
  
 (i) Material
Changes. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports: (i) there has been no event, occurrence or development that has had or that could 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 required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting or the identity of its auditors,
(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 or similar plans. 
  

 10 

 (j) Litigation. There is no action, suit, inquiry, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign) (collectively, an “Action”) which: (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. The Company does not have pending before the Commission any request for confidential treatment of
information. 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) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of
(and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default
under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, except in each case as could not, individually or in the
aggregate, have or result in a Material Adverse Effect. 
  
 (l) 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. 
  
 (m) Regulatory Permits. The Company and the
Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the
failure to possess such permits could not, individually or in the aggregate, have or 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 that is material to the 
  

 11 

 business of the Company and the Subsidiaries 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. Any real property and facilities held under lease by the Company and the Subsidiaries are held under valid, subsisting and enforceable leases of 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, copyrights, licenses and other similar rights necessary or
material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the
Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. 
  
 (p) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including but not limited to, directors and officer insurance which policy has been provided to the Purchasers prior
to the Closing. To the best of Company’s knowledge, such insurance contracts and policies are accurate and complete. Neither the Company nor any Subsidiary has any reason to believe it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost. 
  
 (q) Transactions With Affiliates and Employees. Except as required to be set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. 
  
 (r) Sarbanes-Oxley; Internal Accounting Controls. The
Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. The Company and the Subsidiaries maintain a 
  

 12 

 system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material
information relating to the Company, including its Subsidiaries, is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s most recently filed periodic report under the
Exchange Act, as the case may be, is being prepared. The Company’s certifying officers have evaluated the effectiveness of the Company’s controls and procedures as of the date prior to the filing date of the most recently filed periodic
report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the Company’s internal controls (as such term is defined in Item 307(b) of Regulation
S-K under the Exchange Act) or, to the Company’s knowledge, in other factors that could significantly affect the Company’s internal controls. 
  
 (s) Solvency/Indebtedness. Based on the financial condition of the Company as of the Closing Date: (i) the fair saleable value of
the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature; (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted
by the Company, and projected capital requirements and capital availability thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into
account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the
bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The SEC Reports set forth as of the dates thereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed 
  

 13 

 money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary
course of business), (b) all guaranties, endorsements and other contingent obligations, whether or not the same are or should be reflected in the Company’s balance sheet or the notes thereto, except guaranties by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business, and (c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness. 
  
 (t) Certain Fees. Except for a 6% fee payable to HPC Capital Management, 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 this Agreement, and the Company has not taken any action that would cause any Purchaser to be liable for any such fees or commissions.
The Company agrees that the Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of any Person for fees of the type contemplated by this Section with the transactions contemplated by this
Agreement. 
  
 (u) Private Placement.
Assuming the accuracy of the representations and warranties of the Purchasers set forth in Sections 3.2(b)-(f), the offer, issuance and sale of the Securities to the Purchasers as contemplated hereby are exempt from the registration requirements of
the Securities Act. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market. 
  
 (v) Listing and Maintenance Requirements. The Company’s Common Stock is registered pursuant to Section 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. 
  
 (w) Registration
Rights. The Company has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the Commission or any other governmental authority that
have not been satisfied. 
  
 (x) Application
of Takeover Protections. The Company and its 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 
  

 14 

 under a rights agreement) or other similar anti-takeover provision under the Company’s Certificate
of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights
under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities. 
  
 (y) Seniority. As of the Closing Date, no indebtedness of the Company is senior to the Debentures in
right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital
lease obligations (which is senior only as to the property covered thereby). 
  
 (z) Disclosure. 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 constitutes or might constitute material, nonpublic information. The Company understands and confirms that the Purchasers will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, furnished by or on behalf of the Company
with respect to the representations and warranties made herein are true and correct with respect to such representations and warranties and do 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. 
  
 (aa) Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax
returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and 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, except those being contested in good faith and
has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign,
federal, statue or local tax. None of the Company’s tax returns is presently being audited by any taxing authority. 
  

 15 

 (bb) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that the Purchasers are acting solely in the capacity of arm’s length purchasers with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that no Purchaser is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by any Purchaser or any of their respective representatives or agents in
connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and 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 has been based solely on the independent evaluation of the Company and its representatives. 
  
 (cc) No General Solicitation or Advertising in Regard to this Transaction. 
  
 Neither the Company nor, to the knowledge of the Company, any
of its directors or officers (i) has conducted or will conduct any general solicitation (as that term is used in Rule 502(c) of Regulation D) or general advertising with respect to the sale of the Debentures or the Warrants, or (ii) made any offers
or sales of any security or solicited any offers to buy any security under any circumstances that would require registration of the Debentures, the Underlying Shares or the Warrants under the Securities Act or made any “directed selling
efforts” as defined in Rule 902 of Regulation S. 
  
 (dd) No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the accountants and lawyers formerly or presently employed by
the Company and the Company is current with respect to any fees owed to its accountants and lawyers. 
  
 (ee) Intentionally Omitted. 
  
 (ff) No Integrated Offering. 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
the Securities Act or which could violate any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of the Trading Market. 
  
 (gg) 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 corrupt 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 
  

 16 

 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. 
  
 3.2 Representations and Warranties of the
Purchasers. Each Purchaser hereby, for itself and for no other Purchaser, represents and warrants to the Company as follows: 
  
 (a) Organization; Authority. If the Purchaser is not an individual, such Purchaser is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to
carry out its obligations thereunder. If the Purchaser is not an individual, the purchase by such Purchaser of the Securities hereunder has been duly authorized by all necessary action on the part of such Purchaser. Each of this Agreement and the
Registration Rights Agreement has been duly executed by such Purchaser if the Purchaser is not an individual, 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 applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally
(ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. 
  
 (b) Purchaser Representation. 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, without prejudice, however, to such Purchaser’s right, subject to the provisions of this
Agreement, at all times to sell or otherwise dispose of all or any part of such Securities pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable
federal and state securities laws. Nothing contained herein shall be deemed a representation or warranty by such Purchaser to hold Securities for any period of time or limit such Purchaser’s right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable federal and state securities laws. Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the Securities. 
  
 (c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and at the date hereof it is, and on each date
on which it exercises any Warrants or converts any Debentures it will be, an “accredited investor” as defined in Rule 501(a) under the Securities Act. If the Purchaser is not an individual, such Purchaser has not been formed solely for the
purpose of acquiring the Securities. Such Purchaser is not a registered broker-dealer under Section 15 of the Exchange Act. 
  

 17 

 (d) Experience of such Purchaser. Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and
risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. 
  
 (e) General Solicitation. Such Purchaser is not
purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or
any other general solicitation or general advertisement. 
  
 The Company acknowledges and agrees that each Purchaser does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in
this Section 3.2. 
  
 ARTICLE IV 
 OTHER AGREEMENTS OF THE PARTIES 
  
 4.1 Transfer Restrictions. 
  
 (a) The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the
transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the
Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement and the Registration Rights Agreement. 
  
 (b) Each Purchaser, severally and not jointly with the other
Purchasers, agrees to the imprinting, so long as is required by this Section 4.1(b), of the following legend on any certificate evidencing Securities: 
  

[NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [EXERCISABLE] [CONVERTIBLE]] HAVE BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, 
  

 18 

 AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. 
  
 The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement or grant a
security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured parties. Such pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably
request in connection with a pledge or transfer of the Securities, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder. 
  
 (c) Certificates evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a registration statement (including the Registration Statement)
covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Underlying Shares pursuant to Rule 144, or (iii) if such Underlying Shares are eligible for sale under Rule 144(k), or (iv) if such legend
is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission); provided, however, in connection with the issuance of the Underlying
Shares, each Purchaser, severally and not jointly with the other Purchasers, hereby agrees to adhere to and abide by all prospectus delivery requirements under the Securities Act and rules and regulations of the Commission. The Company shall cause
its counsel to issue a legal opinion to the Company’s transfer agent promptly after the Effective Date if required by the Company’s transfer agent to effect the removal of the legend hereunder. If all or any portion of a Debenture or
Warrant is converted or exercised (as applicable) at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if such Underlying Shares may be sold under Rule 144(k) or if 
  

 19 

 such legend is not otherwise required under applicable requirements of the Securities Act
(including judicial interpretations thereof) then such Underlying Shares shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it
will, no later than three Business Days following the delivery by a Purchaser to the Company or the Company’s transfer agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend (such third Business
Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section. 
  
 (d) In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $5,000 of Underlying Shares (based on the VWAP of the Common Stock on the date such Securities are submitted to the Company’s transfer agent) delivered for removal of the restrictive legend and subject to
this Section 4.1(c), $50 per Business Day (increasing to $100 per Business Day 3 Business Days after such damages have begun to accrue) for each Business Day after the Legend Removal Date until such certificate is delivered without a legend. Nothing
herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue
all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. 
  
 (e) So long as at least 20% of the principal amount of the Debentures, in the aggregate, are then outstanding, the Company will not
undertake a forward or reverse stock split or reclassification of the Common Stock without the prior written consent of each Purchaser holding Debentures at such time. 
  
 4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution
of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations under the Transaction Documents, including without limitation its obligation to issue
the Underlying Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have
against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company. 
  
 4.3 Furnishing of Information. As long as any Purchaser owns Securities, the Company covenants to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. Upon the request of any Purchaser, the Company shall deliver to 
  

 20 

 such Purchaser a written certification of a duly authorized officer as to whether it has complied with the preceding
sentence. As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such
Person to sell such Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144. 
  
 4.4 Integration. The Company shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, 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 in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers, or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market. 
  
 4.5 Reservation and Listing of Securities. 
  
 (a) The Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may be required to fulfill its obligations in full under the Transaction Documents. 
  
 (b) If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock
is less than the Required Minimum on such date, then the Board of Directors of the Company shall use commercially reasonable efforts to amend the Company’s certificate or articles of incorporation to increase the number of authorized but
unissued shares of Common Stock to at least the Required Minimum at such time, as soon as possible and in any event not later than the 75th day after such date. 
  
 (c) The Company shall, if applicable: (i) in the time and manner required by the Trading Market, prepare and
file with such Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common
Stock to be approved for listing on the Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing, and (iv) maintain the listing of such Common Stock on any date at least equal to the Required Minimum on
such date on such Trading Market or another Trading Market. 
  
 4.6 Conversion and Exercise Procedures. The form of Notice of Exercise included in the Warrants and the form of Notice of Conversion included in the Debentures set forth the totality of the procedures required of the Purchasers in
order to exercise the Warrants or convert the Debentures. No additional legal opinion or other information or instructions shall be required of the Purchasers to exercise their Warrants or convert their Debentures. The Company shall honor exercises
of the Warrants and conversions of the Debentures and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents. 
  

 21 

 4.7 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. Eastern time on the
Business Day following the date of this Agreement, issue a press release or file a Current Report on Form 8-K reasonably acceptable to each Purchaser disclosing all material terms of the transactions contemplated hereby. The Company and the
Purchasers shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby and neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of any Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld, except if such disclosure is required by law, in which
case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, other than in any registration statement filed pursuant to the Registration Rights Agreement
and filings related thereto, 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 to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide each Purchaser with prior notice of such disclosure. 
  
 4.8 Non-Public Information. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have
executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the
Company. 
  
 4.9 Use of Proceeds. The Company shall use the
net proceeds from the sale of the Securities hereunder in a manner set forth on Schedule 4.9 and not for the satisfaction of any portion of the Company’s debt (other than payment of trade payables, capital lease obligations and accrued expenses
in the ordinary course of the Company’s business and prior practices), to redeem any Company equity or equity-equivalent securities or to settle any outstanding litigation. 
  
 4.10 Reimbursement. If any Purchaser becomes involved in any capacity in any Proceeding by or against any Person who
is a stockholder of the Company, solely as a result of such Purchaser’s acquisition of the Securities under this Agreement and without causation by any other activity, obligation, condition or liability on the part of, or pertaining to such
Purchaser and not to the purchase of Securities pursuant to this Agreement, the Company will reimburse such Purchaser, to the extent such reimbursement is not provided for in Section 4.11, for its reasonable legal and other expenses (including the
cost of any investigation, preparation and travel in connection therewith) incurred in connection therewith, as such expenses are incurred. The reimbursement obligations (and limitations thereon) of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend upon 
  

 22 

 the same terms and conditions to any Affiliates of the Purchasers who are actually named in such action, proceeding or
investigation, and partners, directors, agents, employees and controlling persons (if any), as the case may be, of the Purchasers and any such Affiliate, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company, the Purchasers and any such Affiliate and any such Person. The Company also agrees that neither the Purchasers nor any such Affiliates, partners, directors, agents, employees or controlling persons shall have
any liability to the Company or any Person asserting claims on behalf of or in right of the Company solely as a result of acquiring the Securities under this Agreement except to the extent any covenant or warranty owing to the Company is breached.

  
 4.11 Indemnification. The Company will indemnify and
hold the Purchasers and their directors, officers, shareholders, partners, employees and agents (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 misrepresentation,
breach or inaccuracy, or any allegation by a third party that, if true, would constitute a breach or inaccuracy, of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction
Documents; or (b) any cause of action, suit or claim brought or made against such Purchaser Party and arising solely out of or solely resulting from the execution, delivery, performance or enforcement of this Agreement or any of the other
Transaction Documents and without causation by any other activity, obligation, condition or liability pertaining to such Purchaser and not to the transactions contemplated by this Agreement. The Company will reimburse such Purchaser for its
reasonable legal and other expenses (including the cost of any investigation, preparation and travel in connection therewith) incurred in connection therewith, as such expenses are incurred. 
  
 4.12 Shareholders Rights Plan. In the event that a shareholders rights
plan is adopted by the Company, no claim will be made or enforced by the Company or any other Person that any Purchaser is an “Acquiring Person” under the plan or in any way could be deemed to trigger the provisions of such plan by virtue
of receiving Securities under the Transaction Documents. 
  
 4.13
Participation in Future Financing. So long as any portion of this Debentures are outstanding, upon any financing by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (a “Subsequent
Financing”), each Purchaser shall have the right to participate up to 35% of such Subsequent Financing (the “Participation Maximum”). At least 10 Business Days prior to the closing of the Subsequent Financing, the Company
shall deliver to each Purchaser a written notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser if it wants to review the details of such financing (such additional
notice, a “Subsequent Financing Notice”). Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later than 1 Business Day after such
request, deliver a Subsequent Financing Notice to such Purchaser. The Subsequent Financing Notice shall describe in reasonable detail 
  

 23 

 the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder, the Person with
whom such Subsequent Financing is proposed to be effected, and attached to which shall be a term sheet or similar document relating thereto. If by 6:30 p.m. (New York City time) on the 10th Business Day after all of the Purchasers have received the
Pre-Notice, notifications of the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the total amount of the Participation Maximum, then the Company
may effect the remaining portion of such Participation Maximum on the terms and to the Persons set forth in the Subsequent Financing Notice. If the Company receives no notice from a Purchaser as of such 10th Business Day, such Purchaser shall be
deemed to have notified the Company that it does not elect to participate. The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of participation set forth above in this
Section 4.13, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason substantially on terms no more favorable to the Purchasers than those set forth in such Subsequent Financing Notice within
60 Business Days after the date of the initial Subsequent Financing Notice. In the event the Company receives responses to Subsequent Financing Notices from Purchasers seeking to purchase more than the aggregate amount of the Participation Maximum,
each such Purchaser shall have the right to purchase their Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata Portion” is the ratio of (x) the Subscription Amount of a participating Purchaser and (y) the sum
of the aggregate Subscription Amount of all participating Purchasers. Notwithstanding the foregoing, this Section 4.13 shall not apply in respect of an Exempt Issuance. 
  
 4.14 Prohibition on Subsequent Financings. From the date hereof until 90 days after the Effective Date, other than as
contemplated by this Agreement, neither the Company nor any Subsidiary shall issue or sell any Common Stock or Common Stock Equivalents. Notwithstanding anything herein to the contrary, the 90 day period set forth in this Section 4.14 shall be
extended for the number of Business Days during such period in which (y) trading in the Common Stock is suspended by any Trading Market, or (z) following the Effective Date, the Registration Statement is not effective or the prospectus included in
the Registration Statement may not be used by the Purchasers for the resale of the Underlying Shares. Notwithstanding anything to the contrary herein, this Section 4.14 shall not apply in respect of an Exempt Issuance. Additionally, in additional to
the limitations set forth herein, from the date hereof until such time as no Purchaser holds any of the Securities, the Company shall be prohibited from effecting or enter into an agreement to effect any Subsequent Financing involving a
“Variable Rate Transaction” or an “MFN Transaction” (each as defined below). The term “Variable Rate Transaction” shall mean a transaction in which the Company issues or sells (i) any debt or equity
securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the
trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after
the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market 
  

 24 

 for the Common Stock. An equity line of credit agreement shall be deemed to be a Variable Rate Transaction for purposes
of this provision. The term “MFN Transaction” shall mean a transaction in which the Company issues or sells any securities in a capital raising transaction or series of related transactions which grants to an investor the right to
receive additional shares based upon future transactions of the Company on terms more favorable than those granted to such investor in such offering. 
  
 4.15 Equal Treatment of Purchasers. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. Further, the Company shall not make any payment of principal or interest on the Debentures in amounts
which are disproportionate to the respective principal amounts outstanding on the Debentures at any applicable time. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser, and is intended to treat for the Company the Debenture holders 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. 
  
 4.17 Warrant Exercise
Proceeds. Commencing on the date hereof and ending on the 121st day, the Company shall set aside and deliver, within 3 Business Days, to the Purchasers their pro rata portion of 50% of the gross proceeds of any warrant exercises in order to
decrease the principal amount of the Debentures pursuant to Section 6 of the Debentures. 
  
 4.18 Financing and Factoring Arrangement. The Company hereby represents and warrants to the Purchasers that, as of the date hereof, $3,067,430 in accounts receivables are due to APF, LLC under the Factoring
Agreement, the Security Agreement, the Purchase and Sale Agreement and the Funding Agreement (collectively, the “Financing Agreements”), each dated May 19, 2004, by and between APF, LLC and the Company’s wholly-owned subsidiaries,
MedTech of Orlando, Inc. The Company hereby agrees that it will not, and not cause its Subsidiaries to, engage in any transactions under the Financing Agreements or any other factoring agreements without the prior written consent of the Purchasers
as long as the Debentures are outstanding. 
  
 ARTICLE V

 MISCELLANEOUS 
  
 5.1 Termination. This Agreement may be terminated by any Purchaser, by written notice to the other parties, if the Closing has not been consummated
on or before October    , 2004; provided that no such termination will 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 
  

 25 

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

 
 5.4 Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number
specified on the signature page attached hereto prior to 5:30 p.m. (New York City time) on a Business Day and an electronic confirmation of delivery is received by the sender, (b) the next Business Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business Day, (c) three Business Days 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 addresses for such notices and communications are those set forth on the signature
pages hereof, or such other address as may be designated in writing hereafter, in the same manner, by such Person. 
  
 5.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and each of the Purchasers or, in the case of a waiver, by the party against whom enforcement of any such waiver 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 either party to exercise any right hereunder in any
manner impair the exercise of any such right. 
  
 5.6
Construction. 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. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. 
  
 5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchasers. Any Purchaser may assign its rights under this Agreement and the Registration Rights Agreement to any
Person to whom such Purchaser assigns or transfers any Securities. 
  

 26 

 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 4.11. 
  
 5.9 Governing Law; Venue; Waiver of Jury Trial. 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 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 manner permitted by law. The parties hereby waive all rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its 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, exercise and/or conversion of the Securities, as applicable for the applicable statue of
limitations. 
  
 5.11 Execution. This Agreement may be
executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is
executed) such document with the same force and effect as if such facsimile signature page were an original thereof. 
  
 5.12 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and 
  

 27 

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

  
 5.14 Replacement of Securities. If any certificate or
instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. 
  
 5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including
recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any
breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. 
 5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a
Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or
setoff had not occurred. 
 5.17 Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or
in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or proceeding that may
be brought by any 
  

 28 

 Purchaser in order to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the
contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized
under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the
Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or
any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date forward, unless such application is
precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by
such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser’s election. 
  
 5.18 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any
Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. Nothing
contained herein or in any 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 Document. Each Purchaser shall be entitled to independently protect and enforce its
rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.
Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. For reasons of administrative convenience only, Purchasers and their respective counsel have chosen to communicate
with the Company through Sichenzia Ross Friedman Ference LLP. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by
the Purchasers. 
  
 5.19 Liquidated Damages. The
Company’s obligations to pay any liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid liquidated damages and other amounts have been paid
notwithstanding the fact that the instrument or security pursuant to which such liquidated damages or other amounts are due and payable shall have been canceled. 
  
 (Signature Pages Follow) 
  

 29 

 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. 
  

					
	WORLD HEALTH ALTERNATIVES, INC.	 	Address for Notice:
			
	 By:
	 	 /s/ Richard McDonald

	 	 777 Penn Center Blvd.

	 Name:
	 	 Richard McDonald
	 	 Suite 111

	 Title:
	 	 President
	 	 Pittsburgh, PA 15235

	 	 	 	 	 T 412-829-7800

	 	 	 	 	 F 412-829-8905

	 With a copy to (which shall not constitute notice):
  
	 	 
		
	  
 Joseph I.
Emas
	 	 
	 Attorney at Law
	 	 
	 1224 Washington Avenue
	 	 
	 Miami Beach, Florida 33139
	 	 
	 T 305-531-1174
	 	 
	 F 305-531-1274
	 	 

  
 [REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK 
 SIGNATURE PAGE FOR PURCHASER FOLLOWS] 
  

 30 

 [PURCHASER SIGNATURE PAGES TO WHAI 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 Investing Entity or Individual:___________________________________________ 
  
 Signature of Authorized Signatory of Investing Entity:__________________________ 
  
 Name of Authorized Signatory if not an Individual:_______________________________ 
  
 Title of Authorized Signatory if not an
Individual:____________________________________________ 
  
 Email
Address:___________________________________________ 
  
 Address for Notice of
Investing Entity or Individual: 
  
 Address for Delivery of Securities for
Investing Entity or Individual (if not same as above): 
  
 Subscription Amount:

 Principal Amount: 
 Warrant Shares: 
 EIN or SSN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
  
 [SIGNATURE PAGES CONTINUE] 
  

 31 

 Schedule 3.1(a) 
  

Subsidiaries 
  
 MedTech Medical Staffing of New England, Inc. (DE corp.) 
 MedTech
Medical Staffing of Orlando, Inc. (DE corp.) 
 World Health Staffing, Inc. (CA corp.) 
 MedTech Medical Staffing of Florida, Inc. (DE corp) 
 MedTech Franchising, Inc. (DE corp.) 
  

 32 

 Schedule 3.1(g) 
  
 Shares Authorized for Issuance: 
  
 200,000,000 Common 
 100,000,000 Preferred

  
 Shares Issued and Outstanding including reserved shares for warrants

  
 0(zero) - Preferred 
  
 0(zero) – Options * 

	*	There are no outstanding Options issued at this time, however there are 10,000 for each independent board member for a total of 20,000 options that are to be voted and issued at the
next annual meeting as part of there compensation for services as board members for the year. 

  
 35,626,568 Common issued and outstanding 
  
 Additionally there are shares registered but not issued for a past debenture and the interest reserve for the debenture. 
  

 33 

 Schedule 4.9 
  
 Use of Proceeds October 20, 2004 
  

 34 

 EXHIBIT A 
  

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. 
  
 Original
Issue Date: October 22, 2004 
 Original Set Price (subject to adjustment herein): $2.15 
  
 $             
  
 SENIOR SECURED CONVERTIBLE DEBENTURE 
 DUE OCTOBER 22, 2005 
  
 THIS DEBENTURE is one of a series of duly authorized and issued Senior
Convertible Debentures of World Health Alternatives, Inc., a Florida corporation, having a principal place of business at 777 Penn Center Blvd., Suite 111, Pittsburgh, PA 15235 (the “Company”), designated as its Senior Convertible
Debenture, due October 22, 2005 (the “Debentures”). 
  
 FOR VALUE RECEIVED, promises to pay to                              or its registered assigns
(the “Holder”), the principal sum of $             on October 22, 2005 or such earlier date as the Debentures are required or permitted to be repaid as provided
hereunder (the “Maturity Date”). In the event this Debenture is not converted on or before the Maturity Date, then the Company promises to pay the Holder 120% of the principal amount of this Debenture on the 366th day after the
Original Issue Date. Except as set forth in this Debenture, the Company may not prepay any portion of the principal amount of this Debenture without the prior written consent of the Holder. 
  
 This Debenture is subject to the following additional provisions: 

 
 Section 1. This Debenture is exchangeable for an equal aggregate
principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration of transfer or exchange. 
  

 35 

 Section 2. This Debenture has been issued subject to certain investment representations of the
original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations. Prior to due presentment to the Company for
transfer of this Debenture, the Company and any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for
all other purposes, whether or not this Debenture is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. 
  
 Section 3. Events of Default. 
  
 a) “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it
shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body): 
  
 i) any default in the payment of (A) the principal of amount
of any Debenture, or (B) liquidated damages in respect of, any Debenture, in each case free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or
otherwise) which default is not cured, within 3 Business Days; 
  
 ii) the Company shall fail to observe or perform any other covenant or agreement contained in this Debenture or any of the other Transaction Documents (other than a breach by the Company of its obligations to deliver shares of Common Stock
to the Holder upon conversion which breach is addressed in clause (xii) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Business Days after notice of such default sent by the Holder or by any other Holder
and (B) 10 Business Days after the Company shall become or should have become aware of such failure; 
  
 iii) a default or event of default (subject to any grace or cure period provided for in the applicable agreement, document or instrument) shall occur
under (A) any of the Transaction Documents other than the Debentures, or (B) any other material agreement, lease, document or instrument to which the Company or any Subsidiary is bound; 
  

 36 

 iv) any representation or warranty made herein, in any other Transaction Document, in any written
statement pursuant hereto or thereto, or in any other report, financial statement or certificate made or delivered to the Holder or any other holder of Debentures shall be untrue or incorrect in any material respect as of the date when made or
deemed made; 
  
  
 v) the Company or any of its subsidiaries shall commence, or there shall be commenced against the Company or any such subsidiary a case
under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any Subsidiary commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary thereof or there is commenced against the Company or any subsidiary thereof any such bankruptcy,
insolvency or other proceeding which remains undismissed for a period of 60 days; or the Company or any subsidiary thereof is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered;
or the Company or any subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of 60 days; or the Company or any subsidiary thereof
makes a general assignment for the benefit of creditors; or the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company or any subsidiary thereof shall
call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary thereof shall by any act or failure to act expressly indicate its consent to, approval of or
acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary thereof for the purpose of effecting any of the foregoing; 
  
 vi) the Company or any Subsidiary shall default in any of its obligations under any mortgage, credit
agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or
factoring arrangement of the Company in an amount exceeding $150,000, whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise become due and payable; 
  
 vii) the Common Stock shall not be eligible for quotation on or quoted for trading on a Trading Market and shall not again be eligible for and quoted or listed for trading thereon within five Business Days; 
  

 37 

 viii) the Company shall be a party to any Change of Control Transaction, Fundamental
Transaction, or shall agree to sell or dispose of all or in excess of 33% of its assets in one or more transactions (whether or not such sale would constitute a Change of Control Transaction) or shall redeem or repurchase more than a de minimis
number of its outstanding shares of Common Stock or other equity securities of the Company (other than redemptions of Conversion Shares and repurchases of shares of Common Stock or other equity securities of departing officers and directors of the
Company; provided such repurchases shall exceed $100,000, in the aggregate, for all officers and directors during the term of this Debenture); 
  
  
 ix) a Registration Statement shall not have been declared
effective by the Commission on or prior to the 165th calendar day after the Closing Date or any other Event (as defined in the Registration Rights Agreement) shall have occurred; 
  
 x) if, during the Effectiveness Period (as defined in the Registration Rights Agreement), the effectiveness
of the Registration Statement lapses for any reason or the Holder shall not be permitted to resell Registrable Securities (as defined in the Registration Rights Agreement) under the Registration Statement, in either case, for more than 15
consecutive Business Days or 25 non-consecutive Business Days during any 12 month period; provided, however, that in the event that the Company is negotiating a merger, consolidation, acquisition or sale of all or substantially all of
its assets or a similar transaction and in the written opinion of counsel to the Company, the Registration Statement, would be required to be amended to include information concerning such transactions or the parties thereto that is not available or
may not be publicly disclosed at the time, the Company shall be permitted an additional 10 consecutive Business Days during any 12 month period relating to such an event; 
  
 xi) an Event (as defined in the Registration Rights Agreement) shall not have been cured to the satisfaction
of the Holder prior to the expiration of thirty days from the Event Date (as defined in the Registration Rights Agreement) relating thereto (other than an Event resulting from a failure of an Registration Statement to be declared effective by the
Commission on or prior to the Effectiveness Date (as defined in the Registration Rights Agreement), which shall be covered by Section 3(a)(vii)); 
  
 xii) the Company shall fail for any reason to deliver certificates to a Holder prior to the Third Business Day after a Conversion
Date pursuant to and in accordance with Section 4(b) or the Company shall provide notice to the Holder, including by way of public announcement, at any time, of its intention not to comply with requests for conversions of any Debentures in
accordance with the terms hereof; or 
  

 38 

 (d) the Company shall fail for any reason to deliver the payment in cash pursuant to a
Buy-In (as defined herein) within five days after notice thereof is delivered hereunder; or 
  
 (e) the Company shall not have amended its certificate of articles of incorporation to increase the number of authorized but unissued
shares of Common Stock to at least the Required Minimum as of the Closing date. 
  
  

b) If any Event of Default occurs, the full principal amount of this Debenture and other amounts owing in respect thereof, to the date
of acceleration shall become, at the Holder’s election, immediately due and payable in cash. The aggregate amount payable upon an Event of Default shall be equal to the Mandatory Prepayment Amount. Commencing 5 days after the occurrence of any
Event of Default that results in the eventual acceleration of this Debenture, interest shall accrue at the rate of 18% per annum, or such lower maximum amount of interest permitted to be charged under applicable law. All Debentures for which the
full Mandatory Prepayment Amount hereunder shall have been paid in accordance herewith shall promptly be surrendered to or as directed by the Company. The Holder need not provide and the Company hereby waives any presentment, demand, protest or
other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a Debenture holder until such time, if any, as the full payment under this Section shall have been received by it. No such rescission or
annulment shall affect any subsequent Event of Default or impair any right consequent thereon. 
  
 Section 4. Conversion. 
  
 a) i) At any time after the 121st day after the Original Issue Date until this Debenture is no longer outstanding, this Debenture shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time
and from time to time (subject to the limitations on conversion set forth in Section 4(a)(ii) hereof). The Holder shall effect conversions by delivering to the Company the form of Notice of Conversion attached hereto as Annex A (a
“Notice of Conversion”), specifying therein the principal amount of Debentures to be converted and the date on which such conversion is to be effected (a “Conversion Date”). If no Conversion Date is specified in a
Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is provided hereunder. To effect conversions hereunder, the Holder shall not be required to physically surrender Debentures to the Company unless the entire

  

 39 

 principal amount of this Debenture has been so converted. Conversions hereunder shall have the effect of
lowering the outstanding principal amount of this Debenture in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount converted and the date of such conversions. The Company shall
deliver any objection to any Notice of Conversion within 1 Business Day of receipt of such notice. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The
Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture
may be less than the amount stated on the face hereof. 
  
  
 ii) Conversion Limitations. 
  
 (A) Reserved. 
  
 (B) The Company shall not effect any conversion of this Debenture, and the Holder shall not have the right to convert any portion of this
Debenture, pursuant to Section 4(a)(i) or otherwise, to the extent that after giving effect to such conversion, the Holder (together with the Holder’s affiliates), as set forth on the applicable Notice of Conversion, would beneficially own in
excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be
issuable upon (A) conversion of the remaining, nonconverted portion of this Debenture beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the
Company (including, without limitation, any other Debentures or the Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set
forth in the preceding sentence, for purposes of this Section 4(a)(ii), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. To the extent that the limitation contained in this section applies, the
determination of whether this Debenture is convertible (in relation to other securities owned by the Holder) and of which a portion of this Debenture is convertible shall be in the sole discretion of such Holder. To ensure compliance with this
restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of 
  

 40 

 Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph
and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 4(a)(ii), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s
Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within two Business Days confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Debenture, by the Holder or its
affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 4(a)(ii) may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice
to the Company, and the provisions of this Section 4(a)(ii)(B) shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). 
  
 iii) Conversion Shares Issuable Upon Conversion of
Principal Amount. The number of shares of Common Stock issuable upon a conversion shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be converted by (y) the Set Price. 

 
 (b) i) Not later than three Business Days after any Conversion Date, the
Company will deliver to the Holder a certificate or certificates representing the Conversion Shares which shall be free of restrictive legends and trading restrictions (other than those required by the Purchase Agreement) representing the number of
shares of Common Stock being acquired upon the conversion of Debentures. The Company shall, if available and if allowed under applicable securities laws, use its best efforts to deliver any certificate or certificates required to be delivered by the
Company under this Section electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions. If in the case of any Notice of Conversion such certificate or certificates are not
delivered to or as directed by the applicable Holder by the Third Business Day after a Conversion Date, the Holder shall be entitled by written notice to the Company at any time on or before its receipt of such certificate or certificates
thereafter, to rescind such conversion, in which event the Company shall immediately return the certificates representing the principal amount of Debentures tendered for conversion. 
  

 41 

 ii) If the Company fails for any reason to deliver to the Holder such certificate or
certificates pursuant to Section 4(b)(i) by the third Business Day after the Conversion Date, the Company shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of principal amount being converted, $50 per
Business Day (increasing to $100 per Business Day after 3 Business Days after such damages begin to accrue and increasing to $200 per Business Day 6 Business Days after such after such damages begin to accrue) for each Business Day after such third
Business Day until such certificates are delivered. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any
action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, such delivery shall not operate as a waiver by the Company of any such action the Company may
have against the Holder. In the event a Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or any one associated or
affiliated with the Holder of has been engaged in any violation of law, agreement or for any other reason, unless, an injunction from a court, on notice, restraining and or enjoining conversion of all or part of this Debenture shall have been sought
and obtained and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the principal amount of this Debenture outstanding, which is subject to the injunction, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of an injunction precluding the same, the Company shall issue Conversion Shares or, if applicable,
cash, upon a properly noticed conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 3 herein for the Company’s failure to deliver Conversion Shares within the
period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall
not prohibit the Holders from seeking to enforce damages pursuant to any other Section hereof or under applicable law. 
  
 iii) In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such
certificate or 
  

 42 

 certificates pursuant to Section 4(b)(i) by the third Business Day after the Conversion Date, and if
after such third Business Day the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which the Holder
anticipated receiving upon such conversion (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition to any remedies available to or elected by the Holder) the amount by which (x) the Holder’s total purchase
price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder anticipated receiving from the conversion at issue multiplied by (2) the
actual sale price of the Common Stock at the time of the sale (including brokerage commissions, if any) giving rise to such purchase obligation and (B) at the option of the Holder, either reissue Debentures in principal amount equal to the principal
amount of the attempted conversion or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its delivery requirements under Section 4(b)(i). For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of Debentures with respect to which the actual sale price of the Conversion Shares at the time of the sale (including brokerage
commissions, if any) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In. Notwithstanding anything contained herein to the contrary, if a Holder requires the Company to make payment in respect of a Buy-In for the failure to timely deliver certificates
hereunder and the Company timely pays in full such payment, the Company shall not be required to pay such Holder liquidated damages under Section 4(b)(ii) in respect of the certificates resulting in such Buy-In. 
  
 (c) i) The conversion price in effect on any Conversion Date shall be equal
to $2.15 (subject to adjustment herein) (the “Set Price”). 
  
 ii) If the Company, at any time while the Debentures are outstanding: (A) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Debenture), (B) subdivide outstanding shares of Common Stock into a larger
number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company,
then the Set Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding 
  

 43 

 treasury shares, if any) outstanding before such event and of which the denominator shall be the number
of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and
shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. 
  
 iii) If the Company or any subsidiary thereof, as applicable, at any time while Debentures are outstanding, shall offer, sell, grant any
option to purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents
entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Set Price (“Dilutive Issuance”), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so
issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such
issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Set Price, such issuance shall be deemed to have occurred for less than the Set Price), then the Set Price shall be reduced to equal the
effective conversion, exchange or purchase price for such Common Stock or Common Stock Equivalents (including any reset provisions thereof) at issue. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.
The Company shall notify the Holder in writing, no later than the business day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or of applicable reset
price, exchange price, conversion price and other pricing terms. 
  
 iv) If the Company, at any time while Debentures are outstanding, shall distribute to all holders of Common Stock (and not to Holders) evidences of its indebtedness or assets or rights or warrants to subscribe for or
purchase any security, then in each such case the Set Price shall be determined by multiplying such price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of
which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then fair market value at such record date of the portion of such assets or evidence
of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holders of the portion of
assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date
mentioned above. 
  

 44 

 v) All calculations under this Section 4 shall be made to the nearest cent or the nearest
1/100th of a share, as the case may be. For purposes of this Section 4, the number of shares of Common Stock outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) outstanding.

  
 vi) Whenever the Set Price is adjusted
pursuant to any of Section 4(c)(ii) - (v), the Company shall promptly mail to each Holder a notice setting forth the Set Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. If the Company issues a
variable rate security, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may
be converted or exercised in the case of a Variable Rate Transaction (as defined in the Purchase Agreement), or the lowest possible adjustment price in the case of an MFN Transaction (as defined in the Purchase Agreement). 
  
 vii) If (A) the Company shall declare a dividend (or any
other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to
which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of the Debentures,
and shall cause to be mailed to the Holders at their last addresses as they shall appear upon the stock books of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to exchange their shares of the 
  

 45 

 Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such
notice. Holders are entitled to convert Debentures during the 20-day period commencing the date of such notice to the effective date of the event triggering such notice. 
  
 viii) If, at any time while this Debenture is outstanding, (A) the Company effects any merger or
consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or
another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then upon any subsequent conversion of this
Debenture, the Holder shall have the right to receive, for each Underlying Share that would have been issuable upon such conversion absent such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been
entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock (the “Alternate Consideration”). For purposes of any
such conversion, the determination of the Set Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Set Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new debenture consistent with the foregoing provisions and
evidencing the Holder’s right to convert such debenture into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to
comply with the provisions of this paragraph (c) and insuring that this Debenture (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. 
  

 46 

 ix) Notwithstanding the foregoing, no adjustment will be made under this paragraph (c)
(i) in respect of an Exempt Issuances; and (ii) that would result in an increase to the Set Price. 
  
 (d) The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock
solely for the purpose of issuance upon conversion of the Debentures, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holders, not less than such number of shares of the
Common Stock as shall (subject to any additional requirements of the Company as to reservation of such shares set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 4(b)) upon the conversion
of the outstanding principal amount of the Debentures. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid, nonassessable and, if the Registration
Statement is then effective under the Securities Act, registered for public sale in accordance with such Registration Statement. 
  
 (e) Upon a conversion hereunder the Company shall not be required to issue stock certificates representing fractions of shares of the
Common Stock, but may if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the VWAP at such time. If the Company elects not, or is unable, to make such a cash payment, the Holder shall be entitled to
receive, in lieu of the final fraction of a share, one whole share of Common Stock. 
  
 (f) The issuance of certificates for shares of the Common Stock on conversion of the Debentures shall be made without charge to the
Holders thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of such Debentures so converted and the Company shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. 
  
 (g) Any and all notices or other communications or
deliveries to be provided by the Holders hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service, addressed to the
Company, at the address set forth above, facsimile number 412-829-8905, Attn: Richard McDonald or such other address or facsimile number as the Company may specify for such purposes by notice to the Holders delivered in accordance with this Section.
Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service 
  

 47 

 addressed to each Holder at the facsimile telephone number or address of such Holder appearing on the
books of the Company, or if no such facsimile telephone number or address appears, at the principal place of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 5:30 p.m. (New York City time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number specified in this Section later than 5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the second Business Day
following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. 
  
 Section 5. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Debenture:
(a) capitalized terms not otherwise defined herein have the meanings given to such terms in the Purchase Agreement, and (b) the following terms shall have the following meanings: 
  
 “Business Day” means any day except Saturday and Sunday. 
  
 “Change of Control Transaction” means the
occurrence after the date hereof of any of (i) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through
legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 33% of the voting securities of the Company, or (ii) a replacement at one time or within a three year period of more than one-half of the
members of the Company’s board of directors which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on
any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), or (iii) the execution by the Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth above in (i) or (ii). 
  
 “Commission” means the Securities and Exchange Commission. 
  
 “Common Stock” means the common stock, $0.001 par value per share, of the Company and stock
of any other class into which such shares may hereafter have been reclassified or changed. 
  
 “Conversion Date” shall have the meaning set forth in Section 4(a)(i) hereof. 
  

 48 

 “Conversion Shares” means the shares of Common Stock issuable upon
conversion of Debentures in accordance with the terms hereof. 
  
 “Equity Conditions” shall mean, during the period in question, (i) the Company shall have duly honored all conversions and redemptions scheduled to occur or occurring by virtue of one or more
Conversion Notices, if any, (ii) all liquidated damages and other amounts owing in respect of the Debentures shall have been paid; (iii) there is an effective Registration Statement pursuant to which the Holder is permitted to utilize the prospectus
thereunder to resell all of the shares issuable pursuant to the Transaction Documents (and the Company believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future), (iv) the Common Stock is trading on the
Trading Market and all of the shares issuable pursuant to the Transaction Documents are listed for trading on a Trading Market (and the Company believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted
for the foreseeable future), (v) there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the shares issuable pursuant to the Transaction Documents, (vi) there is then
existing no Event of Default or event which, with the passage of time or the giving of notice, would constitute and Event of Default and (vii) all of the shares issued or issuable pursuant to the transaction documents in full, ignoring for such
purposes any conversion or exercise limitation therein, would not violate the limitation set forth in Section 4(a)(ii)(B) and (ix) no public announcement of a pending or proposed Fundamental Transaction or acquisition transaction has occurred that
has not been consummated. 
  
 “Exchange
Act” means the Securities Exchange Act of 1934, as amended. 
  
 “Late Fees” shall have the meaning set forth in the second paragraph to this Debenture. 
  
 “Mandatory Prepayment Amount” for any Debentures shall equal the sum of (i) the greater of: (A) 130% of the principal
amount of Debentures to be prepaid, or (B) the principal amount of Debentures to be prepaid divided by the Set Price on (x) the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid
in full, whichever is less, multiplied by the VWAP on (x) the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid in full, whichever is greater, and (ii) all other amounts, costs,
expenses and liquidated damages due in respect of such Debentures. 
  
 “Original Issue Date” shall mean the date of the first issuance of the Debentures regardless of the number of transfers of any Debenture and regardless of the number of instruments which may be issued
to evidence such Debenture. 
  

 49 

 “Person” means a corporation, an association, a partnership,
organization, a business, an individual, a government or political subdivision thereof or a governmental agency. 
  
 “Purchase Agreement” means the Securities Purchase Agreement, dated as of October 22, 2004, to which the Company and the
original Holder are parties, as amended, modified or supplemented from time to time in accordance with its terms. 
  
 “Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement,
to which the Company and the original Holder are parties, as amended, modified or supplemented from time to time in accordance with its terms. 
  
 “Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights
Agreement, covering among other things the resale of the Conversion Shares and naming the Holder as a “selling stockholder” thereunder. 
  
 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

  
 “Set Price” shall have the
meaning set forth in Section 4(c)(i). 
  
 “Trading Day” means (a) a day on which the shares of Common Stock are traded on a Trading Market on which the shares of Common Stock are then listed or quoted, or (b) if the shares of Common Stock are not quoted on a
Trading Market, a day on which the shares of Common Stock are quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices);
provided, that in the event that the shares of Common Stock are not listed or quoted as set forth in (a), (b) and (c) hereof, then Trading Day shall mean a Business Day. 
  
 “Transaction Documents” shall have the meaning set forth in the Purchase Agreement.

  
 “VWAP” means, for any date,
the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based on a trading day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is not then listed or quoted on
a Trading Market and if prices for the Common Stock are then quoted on the OTC Bulletin Board, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is
not then listed or quoted on the OTC Bulletin Board and if prices for the 
  

 50 

 Common Stock are then reported in the “Pink Sheets” published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by the Purchasers and reasonably acceptable to the Company. 
  
 Section 6. Optional Redemption Right. Commencing from the Closing Date and notwithstanding anything to the contrary contained in this
Debenture, so long as the Equity Conditions are met, the Company shall have the right, exercisable on not less than ten (10) Trading Days prior written notice to the Holder of the Debentures, to prepay in part or in full the Debenture in accordance
with this Section 6. Any notice of prepayment hereunder (an “Optional Prepayment”) shall be delivered to the Holders of the Debentures and shall state (1) that the Company is exercising its right to prepay the Debentures issued on
the Original Issue Date and (2) the date of prepayment (the “Optional Prepayment Notice”). On the date fixed for prepayment (the “Optional Prepayment Date”), the Company shall make payment of the Optional Prepayment
Amount (as defined below) to the Holder. If the Company exercises its right to prepay the Debenture, the Company shall make payment to the Holder of an amount in cash equal to (i) 112% (for prepayments occurring within one hundred and twenty (120)
days of the Original Issue Date), or (ii) 120% (for prepayments occurring after the one hundred and twentieth (120th) day following the Original Issue Date), multiplied by the sum of the then outstanding principal amount of this Debenture plus any
amounts owed to the Holder (“Optional Prepayment Amounts”. After one hundred and twenty (120) days from the Original Issue Date and notwithstanding notice of an Optional Prepayment, the Holder shall at all times prior to the
Optional Prepayment Date maintain the right to convert all or any portion of the Debenture and any portion of Debenture so converted so converted after receipt of an Optional Prepayment Notice and prior to the Optional Prepayment Date set forth in
such notice and payment of the aggregate Optional Prepayment Amount shall be deducted from the principal amount of Debenture which are otherwise subject to prepayment pursuant to such notice. If the Company delivers an Optional Prepayment Notice and
fails to pay the Optional Prepayment Amount due to the Holder of the Debenture on the Optional Prepayment Date, then the Company shall forfeit its right to prepay the Debenture pursuant to such Optional Prepayment Notice and shall thereafter forfeit
their right to Optional Prepayment. 
  
 Section 7.
Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and liquidated damages (if any) on, this Debenture at the time,
place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of the Company. This Debenture ranks pari passu with all other Debentures now or hereafter issued under the terms set forth
herein. The Company acknowledges and agrees that the amount actually paid for this Debenture is less than the principal amount issued, such difference representing an original issue discount to the Holder and, pursuant to the Security Agreement, is
secured by a first priority security interest in all of the assets of the Company for the benefit of the Holders. As long as this Debenture is outstanding, the Company shall not and shall cause it subsidiaries not to, 
  

 51 

 without the consent of the Holder, (a) amend its certificate of incorporation (except to increase its authorized Common
Stock), bylaws or other charter documents so as to adversely affect any rights of the Holder; (b) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or other equity
securities other than as to the Conversion Shares to the extent permitted or required under the Transaction Documents or as otherwise permitted by the Transaction Documents; or (c) enter into any agreement with respect to any of the foregoing.

  
 Section 8. If this Debenture shall be mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the
principal amount of this Debenture so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, and indemnity, if requested, all reasonably satisfactory
to the Company. 
  
 Section 9. So long as any portion of
this Debenture is outstanding, the Company will not and will not permit any of its subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness or liens of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any income or profits therefrom that is senior to, or pari passu with, in any respect, the Company’s obligations under the Debentures without the prior consent of the Holder.

  
 Section 10. All questions concerning the construction,
validity, enforcement and interpretation of this Debenture 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 any of the Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts 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, or such New York Courts are improper or 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 Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or
relating to this Debenture or the transactions contemplated 
  

 52 

 hereby. If either party shall commence an action or proceeding to enforce any provisions of this Debenture, then the
prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 
  
 Section 11. Any waiver by the Company or the Holder of a breach of any
provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Company or the Holder to insist upon strict adherence
to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in
writing. 
  
 Section 12. If any provision of this
Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.
If it shall be found that any interest or other amount deemed interest due hereunder violates applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of
interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the principal of this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this
indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein
granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted. 
  
 Section 13. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day. 
  
 ********************* 

 

 53 

 IN WITNESS WHEREOF, the Company has caused this Convertible Debenture to be duly executed by a duly
authorized officer as of the date first above indicated. 
  

			
	WORLD HEALTH ALTERNATIVES, INC.
		
	By:	 	 /s/ Richard McDonald

	Name:	 	Richard McDonald
	Title:	 	President

  

 54 

 ANNEX A 
  

NOTICE OF CONVERSION 
  
 The undersigned hereby elects to convert principal under the Convertible Debenture of World Health Alternatives, Inc., a Florida corporation (the “Company”),
due on October 22, 2005, into shares of common stock, $0.001 par value per share (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below. If shares are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be
charged to the holder for any conversion, except for such transfer taxes, if any. 
  
 The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock. 
  

			
	Conversion calculations:	 	 
	 	 	Date to Effect Conversion:
		
	 	 	Principal Amount of Debentures to be Converted:
		
	 	 	Number of shares of Common Stock to be issued:
		
	 	 	Signature:
		
	 	 	Name:
		
	 	 	Address:

  

 55 

 Schedule 1 
  
 CONVERSION SCHEDULE 
  
 Convertible Debentures due on October 22, 2005, in the aggregate principal amount of $            
issued by World Health Alternatives, Inc. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture. 
  
 Dated: 
  

							
	 Date of Conversion
 (or for first
entry,
 Original Issue Date)

	 	 Amount of
 Conversion

	 	 Aggregate
 Principal
 Amount
 Remaining
 Subsequent to
 Conversion
 (or original
 Principal
 Amount)

	  	Company Attest

  
  

 56 

 Exhibit B 
  
 REGISTRATION RIGHTS AGREEMENT 
  
 This Registration Rights Agreement (this “Agreement”) is made and entered into as of October 22, 2004, by and among World Health
Alternatives, Inc., a Florida corporation (the “Company”), and the purchasers signatory hereto (each such purchaser, a “Purchaser” and collectively, the “Purchasers”). 
  
 This Agreement is made pursuant to the Securities Purchase Agreement, dated
as of the date hereof among the Company and the Purchasers (the “Purchase Agreement”). 
  
 The Company and the Purchasers hereby agree as follows: 
  
 1. Definitions 
  
 Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the
Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: 
  
 “Effectiveness Date” means, with respect to the initial Registration Statement required to be filed hereunder, the
165th calendar day following the Closing Date and, with respect to any additional Registration Statements which may
be required pursuant to Section 3(c), the 90th calendar day following the date on which the Company first knows, or
reasonably should have known, that such additional Registration Statement is required hereunder; provided, however, in the event the Company is notified by the Commission that one of the above Registration Statements will not be
reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following the date on which the Company is so notified if such date precedes the dates required
above. 
  
 “Effectiveness
Period” shall have the meaning set forth in Section 2(a). 
  
 “Filing Date” means, with respect to the initial Registration Statement required hereunder, the 120th calendar day following the Closing Date and, with respect to any additional Registration Statements which may be required pursuant to Section 3(c), the 15th day following the date on which the Company first knows, or reasonably should have known that such additional Registration Statement is required hereunder.

  
 “Holder” or
“Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities. 
  
 “Indemnified Party” shall have the meaning set forth in Section 5(c) hereof. 
  
 “Indemnifying Party” shall have the meaning
set forth in Section 5(c) hereof. 
  
 “Losses” shall have the meaning set forth in Section 5(a). 
  
 “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation
or partial proceeding, such as a deposition), whether commenced or threatened. 
  

 57 

 “Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. 
  
 “Registrable Securities” means (i) all of the shares of Common Stock issuable upon conversion in full of the Debentures,
(ii) all shares issuable as interest on the Debentures assuming all interest payments are made in shares of Common Stock and the Debentures are held until maturity, (iii) all Warrant Shares, (iv) any securities issued or issuable upon any stock
split, dividend or other distribution recapitalization or similar event with respect to the foregoing and (v) any additional shares issuable in connection with any anti-dilution provisions in the Debentures. 
  
 “Registration Statement” means the
registration statements required to be filed hereunder and any additional registration statements contemplated by Section 3(c), including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. 
  
 “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. 
  
 “Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. 
  

 58 

 2. Shelf Registration 
  
 (a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a “Shelf” Registration
Statement covering the resale of 150% of the Registrable Securities on such Filing Date for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (unless the Company is not then eligible
to register the Registrable Securities for resale on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith) and shall contain (unless otherwise directed by the Holders) substantially the “Plan of
Distribution” attached hereto as Annex A. Subject to the terms of this Agreement, the Company shall use its best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after
the filing thereof, but in any event prior to the applicable Effectiveness Date, and shall use its best efforts to keep such Registration Statement continuously effective under the Securities Act until all Registrable Securities covered by such
Registration Statement have been sold or may be sold without volume restrictions pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s
transfer agent and the affected Holders (the “Effectiveness Period”). The Company shall immediately notify the Holders via facsimile of the effectiveness of the Registration Statement on the same day that the Company receives notification
of the effectiveness from the Commission. Failure to so notify the Holder the same day of such notification shall be deemed an Event under Section 2(b). 
  
 (b) If: (i) a Registration Statement is not filed on or prior to its Filing Date (if the Company files a Registration Statement without affording the
Holders the opportunity to review and comment on the same as required by Section 3(a), the Company shall not be deemed to have satisfied clause (i)), or (ii) the Company fails to file with the Commission a request for acceleration in accordance with
Rule 461 promulgated under the Securities Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that a Registration Statement will not be “reviewed,” or not
subject to further review, or (iii) prior to its Effective Date, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement within 10 Trading Days
after the receipt of comments by or notice from the Commission that such amendment is required in order for a Registration Statement to be declared effective, or (iv) a Registration Statement filed or required to be filed hereunder is not declared
effective by the Commission by its Effectiveness Date, or (v) after the Effective Date, a Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities for which it is required to be effective, or the
Holders are not permitted to utilize the Prospectus therein to resell such Registrable Securities for 15 consecutive days or an aggregate of 25 days during any 12-month period (which need not be consecutive days) (any such failure or breach being
referred to as an “Event”, and for purposes of clause (i) or (iv) the date on which such Event occurs, or for purposes of clause (ii) the date on which such five Trading Day period is exceeded, or for purposes of clause (iii) the
date which such 10 Trading Day period is exceeded, or for purposes of clause (v) the date on which such 15 or 25 day period, as applicable, is exceeded being referred to as “Event Date”), then in addition to any other rights the
Holders may have hereunder or under applicable law: (x) on each such Event Date the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to 1.5% of the aggregate Subscription Amount paid by
such Holder pursuant to the Purchase Agreement for any Registrable Securities then held by such Holder; and (y) on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable
Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to 1.5% of the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement for any Registrable
Securities then held by such Holder. If the Company fails to pay any partial liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such
lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated
damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event. 
  
 3. Registration Procedures 
  
 In connection with the Company’s registration obligations hereunder, the Company shall: 
  
 (a) Not less than five Trading Days prior to the filing of each Registration
Statement or any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall, (i) furnish to each Holder copies of all such
documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent certified
public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file the Registration
Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably and in good faith object, provided, the Company is notified of such objection in writing no
later than 3 Trading Days after the Holders have been so furnished copies of such documents. 
  

 59 

 (b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a
Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the
Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement
(subject to the terms of this Agreement), and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or
any amendment thereto and as promptly as reasonably possible provide the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the
intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented. 
  
 (c) If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 75% of the number of shares of Common Stock then
registered in a Registration Statement, then the Company shall file as soon as reasonably practicable but in any case prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than 150%
of the number of such Registrable Securities. 
  
 (d) Notify the
Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (ii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as
reasonably possible (and, in the case of (i)(A) below, not less than five Trading Days prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one Trading Day following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders); and (C) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional
information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for
such purpose; (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the
Prospectus, as the case may be, it 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, in light of the circumstances under which they
were made, not misleading; and (vi) the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best
interest of the Company to allow continued availability of the Registration Statement or Prospectus; provided that any and all of such information shall remain confidential to each Holder until such information otherwise becomes public, unless
disclosure by a Holder is required by law; provided, further, notwithstanding each Holder’s agreement to keep such information confidential, the Holders make no acknowledgement that any such information is material, non-public
information. 
  
 (e) Promptly deliver to each Holder, without
charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request. Subject to the terms of this Agreement, the Company hereby consents to the
use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto. 
  

 60 

 (f) Use commercially reasonable efforts to register or qualify the resale of such Registrable Securities
as required under applicable securities or Blue Sky laws of each State within the United States as any Holder requests in writing, to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period;
provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or subject the Company to any material tax in any such jurisdiction where it is not then so subject.

  
 (g) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all
restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request. 
  
 (h) Upon the occurrence of any event contemplated by this Section 3, as promptly as reasonably possible under the circumstances taking into account the
Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will
contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company
notifies the Holders in accordance with clauses (ii) through (v) of Section 3(d) above to suspend the use of the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such
Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(h) to suspend the availability of a
Registration Statement and Prospectus, subject to the payment of partial liquidated damages pursuant to Section 2(b), for a period not to exceed 60 days (which need not be consecutive days) in any 12 month period. 
  
 (i) Comply with all applicable rules and regulations of the Commission.

  
 (j) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction,
at the earliest practicable moment. 
  
 (k) The Company may
require, at any time prior to the third Trading Day prior to the Filing Date, each Holder to furnish to the Company a statement as to the number of shares of Common Stock beneficially owned by such Holder and, if requested by the Commission and the
Holder is not an individual, the controlling person thereof, within three Trading days of the Company’s request. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable
Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s request, any partial liquidated damages that are accruing as to the Holders at such time shall be tolled and any Event that may
otherwise occur as to such Holder solely because of such delay shall be suspended, until such information is delivered to the Company. 
  
 4. Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by
the Company whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be made with the Trading Market on which the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws reasonably
agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities and determination of the 
  

 61 

 eligibility of the Registrable Securities for investment under the laws of such jurisdictions as requested by the
Holders), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses requested by the Holders), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, and (v) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or
similar commissions or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders. 
  
 5. Indemnification 
  
 (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder,
the officers, directors, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and reasonable attorneys’ fees) and expenses (collectively, “Losses”),
as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (1) such untrue statements or omissions or alleged untrue statements or omissions are based upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in
Section 3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(e). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware.

  
 (b) Indemnification by Holders. Each Holder shall,
severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or
review) arising out of or based upon any untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of or based solely
upon: (i) such Holder’s failure to comply with the prospectus delivery requirements of the Securities Act or (ii) any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading to the
extent, but only to the extent, such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically for inclusion in such Registration Statement or such Prospectus or to the extent
that (1) such untrue statements or omissions are based upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment
or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or 
  

 62 

 defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(e). In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. 
  
 (c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in
writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that such failure shall have prejudiced
the Indemnifying Party. 
  
 An Indemnified Party shall have the
right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
in writing to pay such fees and expenses; or (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the
named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a material conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the expense of one such counsel for each Holder shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for
any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. 
  
 Subject to the terms of this Agreement, all fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party
may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder). 
  
 (d) Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 5(c), any reasonable attorneys’ or
other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party
in accordance with its terms. 
  
 The parties hereto agree that it
would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this 
  

 63 

 Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which
the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 
  
 The indemnity and
contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. 
  
 6. Miscellaneous 
  
 (a) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and all of the Holders of the then outstanding Registrable Securities. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of all
of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately
preceding sentence. 
  
 (b) No Inconsistent Agreements.
Neither the Company nor any of its subsidiaries has entered, as of the date hereof, nor shall the Company or any of its subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have
the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth on Schedule 6(b), neither the Company nor any of its subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full. 
  
 (c) No Piggyback on Registrations. Except as set forth on Schedule 6(c) attached hereto, neither the Company nor any of its security holders
(other than the Holders in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable Securities. The Company shall not file any other registration statements until the initial
Registration Statement required hereunder is declared effective by the Commission, provided that this Section 6(c) shall not prohibit the Company from filing amendments to registration statements already filed. 
  
 (d) Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. 
  
 (e) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt
of a notice from the Company of the occurrence of any event of the kind described in Sections 3(d)(ii), (iii) or (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until such
Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 3(h), or until it is advised in writing (the “Advice”) by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph. The Company agrees and acknowledges that any period during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to
the provisions of Section 2(b). 
  
 (f) Piggy-Back
Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Holder
written notice of such determination and, if within fifteen days after receipt of such notice, any such Holder shall so request in writing, the Company shall 
  

 64 

 include in such registration statement all or any part of such Registrable Securities such holder requests to be
registered; provided, that, the Company shall not be required to register any Registrable Securities pursuant to this Section 6(f) that are eligible for resale pursuant to Rule 144(k) promulgated under the Securities Act or that are the subject of a
then effective Registration Statement. 
  
 (g) Notices. Any
and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement. 
  

(h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of all of the Holders of the then-outstanding Registrable Securities. Each Holder may assign
their respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement. 
  
 (i) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. 
  
 (j) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement 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 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, 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. Each party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address 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 manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all
right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of this Agreement, then the prevailing party
in such Proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding. 
  
 (k) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. 
  
 (l)
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 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. 
  
 (m) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

  
 (n) Remedies. In the event of a breach by the Company
or by a Holder, of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would 
  

 65 

 not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. 
  
 (o) Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser hereunder is
several and not joint with the obligations of any other Purchaser hereunder, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser hereunder. Nothing contained herein or in any other agreement
or document delivered at any closing, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Purchaser shall be entitled to protect and enforce its rights, including without limitation
the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. 
  
 ******************** 
  

 66 

 IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first
written above. 
  

			
	WORLD HEALTH ALTERNATIVES, INC.
		
	 By:
	 	 /s/ Richard McDonald

	 Name:
	 	 Richard McDonald

	 Title:
	 	 President

  
 [SIGNATURE PAGE
OF HOLDERS FOLLOWS] 
  

 67 

 [SIGNATURE PAGE OF HOLDERS TO WHAI RRA] 
  
 Name of Investing Entity or Individual:
                                 
 Signature of Authorized Signatory of Investing Entity or Individual:
                                 
 Name of Authorized Signatory (if not an Individual):
                                 
 Title of Authorized Signatory (if not an Individual):
                                 
  
 [SIGNATURE PAGES CONTINUE] 
  

 68 

 Plan of Distribution 
  
 Each Selling Stockholder (the “Selling Stockholders”) of the common stock (“Common Stock”)
of World Health Alternatives, Inc., a Florida corporation (the “Company”) and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on the American Stock
Exchange or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when
selling shares: 
  

	 	(i)	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; 

  

	 	(ii)	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

  

	 	(iii)	purchases by a broker-dealer as principal and resale by the broker-dealer for its account; 

  

	 	(iv)	an exchange distribution in accordance with the rules of the applicable exchange; 

  

	 	(v)	privately negotiated transactions; 

  

	 	(vi)	settlement of short sales; 

  

	 	(vii)	broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share; 

  

	 	(viii)	a combination of any such methods of sale; 

  

	 	(ix)	through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or 

  

	 	(x)	any other method permitted pursuant to applicable law. 

  
 The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if
available, rather than under this prospectus. 
  
 Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares,
from the purchaser) in amounts to be negotiated. Each Selling Stockholder does not expect these commissions and discounts relating to its sales of shares to exceed what is customary in the types of transactions involved. 
  
 In connection with the sale of our common stock or interests therein, the
Selling Stockholders may enter into hedging transactions with broker-dealers or other financial 
  

 69 

 institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they
assume. The Selling Stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of
shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). 
  
 The Selling Stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any agreement or understanding, directly or indirectly, with any
person to distribute the Common Stock. 
  
 The Company is required
to pay certain fees and expenses incurred by the Company incident to the registration of the shares. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under
the Securities Act. 
  
 Because Selling Stockholders may be deemed
to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. Each Selling Stockholder has advised us that they have not entered into any agreements, understandings or arrangements with any underwriter or
broker-dealer regarding the sale of the resale shares. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling Stockholders. 
  
 We agreed to keep this prospectus effective until the earlier of (i) the date
on which the shares may be resold by the Selling Stockholders without registration and without regard to any volume limitations by reason of Rule 144(e) under the Securities Act or any other rule of similar effect or (ii) all of the shares have been
sold pursuant to the prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In
addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

  
 Under applicable rules and regulations under the Exchange Act,
any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to our common stock for a period of two business days prior to the commencement of the distribution. In addition, the
Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which 
  

 70 

 may limit the timing of purchases and sales of shares of our common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale. 
  

 71 

 Exhibit C 
  
 NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT. 
  
 COMMON STOCK PURCHASE WARRANT 
  

To Purchase              Shares of Common Stock of 
  
 World Health Alternatives, Inc. 
  
 THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) CERTIFIES
that, for value received,                      (the “Holder”), is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after the date of issuance of this Warrant (the “Initial Exercise Date”) and on or prior to the Third anniversary of the Initial Exercise Date (the
“Termination Date”) but not thereafter, to subscribe for and purchase from World Health Alternatives, Inc., a Texas corporation (the “Company”), up to
             shares (the “Warrant Shares”) of Common Stock, par value $0.0001 per share, of the Company (the “Common Stock”). The purchase price of
one share of Common Stock (the “Exercise Price”) under this Warrant shall be $[105% of the average of the five Closing Prices prior to the date hereof]            ,
subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated October 22, 2004, among the Company and the purchasers signatory thereto. 
  

 1 

 (i) Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws
and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with
the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company. 
  
 (ii) Authorization of Warrant Shares. The Company covenants that all Warrant Shares which may be issued upon the
exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in
respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). 
  
 (iii) Exercise of Warrant. 
  
 (a) Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and
on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered
Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Business Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company and
the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. Certificates for shares purchased hereunder shall be delivered to the
Holder within 3 Business Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”). This Warrant shall be
deemed to have been exercised on the later of the date the Notice of Exercise is delivered to the Company by facsimile copy and the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all
taxes required to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of such shares, have been paid. If the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this
Section 3(a) by the Third Business Day following the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a
certificate or certificates representing the Warrant Shares pursuant to an exercise by the Third Business Day after the Warrant Share Delivery Date, and if after such day the Holder is required by its broker to purchase (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the
Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the
Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in
respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity

  

 2 

 including, without limitation, a decree of specific performance and/or injunctive relief with respect to
the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. 
  
 (b) If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the
certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant. 
  
 (c) The Holder
shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s affiliates), as set forth on
the applicable Notice of Exercise, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of
Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the
number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including, without limitation, any other Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of
its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by Holder that the Company is not
representing to Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this
Section 3(c) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the
submission of a Notice of Exercise shall be deemed to be such Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case
subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock,
the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice
by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within two Business Days confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant,
by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. 
  
 (d) If at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the
resale of the Warrant Shares by the Holder at such time, then this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares
equal to the quotient obtained by 
 dividing [(A-B) (X)] by (A), where: 
  

	 	(A)	= the VWAP on the Trading Day immediately preceding the date of such election; 

  

	 	(B)	= the Exercise Price of this Warrant, as adjusted; and 

  

	 	(X)	= the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by     means of a cash exercise rather than a
cashless exercise. 

  
  

 3 

	 	(iv)	No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which
Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price. 

  

	 	(v)	Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and
the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. 

  

	 	(vi)	Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

  

	 	(vii)	Transfer, Division and Combination. 

  
 (d) Subject to compliance with any applicable securities laws and the conditions set forth in Sections 1 and 7(e) hereof and to the
provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued. 
  
 (e) This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. 
  
 (f) The Company shall
prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7. 
  
 (g) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

  
 (h) If, at the time of the surrender of this
Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement 
  

 4 

 under the Securities Act and under applicable state securities or blue sky laws, the Company may require,
as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the
Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or
a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act. 
  

	 	(viii)	No Rights as Shareholder until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof.
Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the
close of business on the later of the date of such surrender or payment. 

  

	 	(ix)	Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the
posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such
Warrant or stock certificate. 

  

	 	(x)	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 be a Saturday, Sunday or
a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday. 

  

	 	(xi)	Adjustments of Exercise Price and Number of Warrant Shares. 

  
 (i) Stock Splits, etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall
be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company
which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company that are
purchasable pursuant hereto immediately after such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

  

 5 

 (j) Anti-Dilution Provisions. During the Exercise Period, the Exercise Price shall
be subject to adjustment from time to time as provided in this Section 11(b). In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up or down to the nearest
cent. 
  
 (i) Adjustment of Exercise
Price. If and whenever the Company issues or sells, or in accordance with Section 11(b)(ii) hereof is deemed to have issued or sold, any shares of Common Stock for an effective consideration per share of less than the then Exercise Price or for
no consideration (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”), then, the Exercise Price shall be reduced to equal the Base Share Price. Such adjustment shall be
made whenever shares of Common Stock or Common Stock Equivalents are issued. 
  
 (ii) Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section 11(b) hereof, the following will be applicable: 
  
 (A) Issuance of Rights or Options. If the Company in
any manner issues or grants any warrants, rights or options, whether or not immediately exercisable, to subscribe for or to purchase Common Stock or Common Stock Equivalents (such warrants, rights and options to purchase Common Stock or Common Stock
Equivalents are hereinafter referred to as “Options”) and the effective price per share for which Common Stock is issuable upon the exercise of such Options is less than the Exercise Price (“Below Base Price
Options”), then the maximum total number of shares of Common Stock issuable upon the exercise of all such Below Base Price Options (assuming full exercise, conversion or exchange of Common Stock Equivalents, if applicable) will, as of the
date of the issuance or grant of such Below Base Price Options, be deemed to be outstanding and to have been issued and sold by the Company for such price per share and the maximum consideration payable to the Company upon such exercise (assuming
full exercise, conversion or exchange of Common Stock Equivalents, if applicable) will be deemed to have been received by the Company. For purposes of the preceding sentence, the “effective price per share for which Common Stock is issuable
upon the exercise of such Below Base Price Options” is determined by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the issuance or granting of all such Below Base Price Options, plus the
minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise of all such Below Base Price Options, plus, in the case of Common Stock Equivalents issuable upon the exercise of such Below Base Price Options,
the minimum aggregate amount of additional consideration payable upon the exercise, conversion or exchange thereof at the time such Common Stock Equivalents first become exercisable, convertible or exchangeable, by (ii) the maximum total number of
shares of Common Stock issuable upon the exercise of all such Below Base Price Options (assuming full conversion of Common Stock Equivalents, if applicable). No further adjustment to the Exercise Price will be made upon the actual issuance of such
Common Stock upon the exercise of such Below Base Price Options or upon the exercise, conversion or exchange of Common Stock Equivalents issuable upon exercise of such Below Base Price Options. 
  
 (B) Issuance of Common Stock Equivalents. If the
Company in any manner issues or sells any Common Stock Equivalents, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options) and the effective price per share for which Common Stock is issuable
upon such exercise, conversion or exchange is less than the Exercise Price, then the maximum total number of shares of Common Stock issuable upon the exercise, conversion or exchange of all such Common Stock Equivalents will, as of the date of the
issuance of such Common 
  

 6 

 Stock Equivalents, be deemed to be outstanding and to have been issued and sold by the Company for such
price per share and the maximum consideration payable to the Company upon such exercise (assuming full exercise, conversion or exchange of Common Stock Equivalents, if applicable) will be deemed to have been received by the Company. For the purposes
of the preceding sentence, the “effective price per share for which Common Stock is issuable upon such exercise, conversion or exchange” is determined by dividing (i) the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Common Stock Equivalents, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise, conversion or exchange thereof at the time such Common
Stock Equivalents first become exercisable, convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise, conversion or exchange of all such Common Stock Equivalents. No further adjustment to the
Exercise Price will be made upon the actual issuance of such Common Stock upon exercise, conversion or exchange of such Common Stock Equivalents. 
  
 (C) Change in Option Price or Conversion Rate. If there is a change at any time in (i) the amount of additional consideration
payable to the Company upon the exercise of any Options; (ii) the amount of additional consideration, if any, payable to the Company upon the exercise, conversion or exchange of any Common Stock Equivalents; or (iii) the rate at which any Common
Stock Equivalents are convertible into or exchangeable for Common Stock (in each such case, other than under or by reason of provisions designed to protect against dilution), the Exercise Price in effect at the time of such change will be readjusted
to the Exercise Price which would have been in effect at such time had such Options or Common Stock Equivalents still outstanding provided for such changed additional consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold. 
  
 (D)
Calculation of Consideration Received. If any Common Stock, Options or Common Stock Equivalents are issued, granted or sold for cash, the consideration received therefor for purposes of this Warrant will be the amount received by the Company
therefor, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance, grant or sale. In case any Common Stock, Options or Common
Stock Equivalents are issued or sold for a consideration part or all of which shall be other than cash, the amount of the consideration other than cash received by the Company will be the fair market value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration received by the Company will be the fair market value (closing bid price, if traded on any market) thereof as of the date of receipt. In case any Common Stock, Options
or Common Stock Equivalents are issued in connection with any merger or consolidation in which the Company is the surviving corporation, the amount of consideration therefor will be deemed to be the fair market value of such portion of the net
assets and business of the non-surviving corporation as is attributable to such Common Stock, Options or Common Stock Equivalents, as the case may be. The fair market value of any consideration other than cash or securities will be determined in
good faith by an investment banker or other appropriate expert of national reputation selected by the Company and reasonably acceptable to the holder hereof, with the costs of such appraisal to be borne by the Company. 
  
 (E) Offerings of Other Property to Common Stock Holders. If
the Company, at any time prior to the Termination Date, shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security
other than the Common Stock (which shall be subject to Section 11(b)(i)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such 
  

 7 

 distribution by a fraction of which the denominator shall be the Closing Price determined as of the
record mentioned above, and of which the numerator shall be such Closing Price on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed to one
outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holders of the portion of assets or evidence of indebtedness so distributed
or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. 
  
 (F) Exceptions to Adjustment of Exercise Price.
Notwithstanding the foregoing, no adjustment will be made under this Section 11(b) in respect of an Exempt Issuance. 
  
 4 Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments
so carried forward, shall amount to not less than 1% of such Exercise Price. 
  

	 	(xii)	Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or
merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of its property, assets
or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or
other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received
by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock of the successor or
acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number

  

 8 

 of shares of Common Stock for which this Warrant is exercisable immediately prior to such event or (b)
cash equal to the value of this Warrant as determined in accordance with the Black Scholes option pricing formula. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is
exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, “common stock of the successor or acquiring corporation” shall include stock of such
corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other
securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock.
The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets. 
  

	 	(xiii)	Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the Company. 

  

	 	(xiv)	Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares (and other securities or 

  

 9 

 property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment
and setting forth the computation by which such adjustment was made. 
  

	 	(xv)	Notice of Corporate Action. If at any time: 

  
 (a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or 
  
 (b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company
to, another corporation or, 
  
 (c) there shall be
a voluntary or involuntary dissolution, liquidation or winding up of the Company; 
  
 then, in any one or more of such cases, the Company shall give to Holder (i) at least 20 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights
to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 20 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any
such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of
Holder appearing on the books of the Company and delivered in accordance with Section 17(d). 
  

	 	(xv)	Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the 

  

 10 

 purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary
to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. 
  
 Except and to the extent as waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect
the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and
(c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

  
 Before taking any action which would result in an adjustment
in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof. 
  

	 	(xvii)	Miscellaneous. 

  
 (k) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be
determined in accordance with the provisions of the Purchase Agreement. 
  
 (l) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

  
 (m) Nonwaiver and Expenses. No course
of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the
Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs
and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder. 
  

 11 

 (n) Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement. 
  
 (o) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or
purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company. 
  
 (p) Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

  
 (q) Successors and Assigns. Subject to
applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this
Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares. 
  
 (r) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder. 
  
 (s) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant. 
  
 (t) Headings. The headings used in this Warrant are
for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. 
  
 ******************** 
  

 12 

 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized. 
  
 Dated: October 22, 2004 
  

			
	WORLD HEALTH ALTERNATIVES, INC.
		
	 By:
	 	 /s/ Richard McDonald

	 Name:
	 	Richard McDonald
	 Title:
	 	President

  

 13 

 NOTICE OF EXERCISE 
  
 To: World Health Alternatives, Inc. 
  
 4 The undersigned hereby elects to purchase              Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. 
  
 5 Payment shall take the form of (check applicable box): 
  
  ̈ in lawful money
of the United States; or 
  
  ̈ the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 3(d), to exercise this Warrant with respect to the
maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 3(d). 
  
 6 Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

  
 ___________________ 
  
 The Warrant Shares shall be delivered to the following: 
  
 ___________________ 
  
 ___________________ 
  
 ___________________ 
  
 (4) Accredited Investor. The undersigned is an “accredited
investor” as defined in Regulation D under the Securities Act of 1933, as amended. 
  

			
	 [PURCHASER]

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 
		
	 Dated:
	 	  

 ASSIGNMENT FORM 
  
 (To assign the foregoing warrant, execute this form and supply required information. Do not use this form
to exercise the warrant.) 
  
 FOR VALUE RECEIVED,
the foregoing Warrant and all rights evidenced thereby are hereby assigned to 
  
                                       
                              whose address is 
  
                                       
                                        
                  . 
  
 Dated:                     ,
             
  

			
	Holder’s Signature:	 	  

		
	Holder’s Address:  	 	  

  
 Signature Guaranteed:
                                        

  
 NOTE: The signature to this Assignment Form must correspond with the name as
it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should
file proper evidence of authority to assign the foregoing Warrant. 

 Exhibit D 
  
 Form of Counsel Opinion

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