Document:

Unassociated Document

    Exhibit
      10.1

    

    ThermoEnergy
      Corporation

    

    Securities
      Purchase Agreement

    

    This
      Securities Purchase Agreement (this“Agreement”)
      is
      dated as of September 15, 2008, by and between ThermoEnergy Corporation, a
      Delaware corporation (the“Company”),
      and
      The Quercus Trust (the“Investor”).

    

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act (as defined below) and Rule 506 promulgated
      thereunder, the Company desires to issue and sell to the Investor, and the
      Investor desires to purchase from the Company certain 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 the Investor agree as
      follows:

    

    ARTICLE
      1

    

    Definitions

    

    Section
      1.1. Definitions.
      In
      addition to the terms defined elsewhere in this Agreement, for all purposes
      of
      this Agreement, the following terms have the meanings indicated in this Section
      1.1:

    

    “Action”
      means
      any action, suit, inquiry, notice of violation, proceeding (including any
      partial proceeding such as a deposition) or investigation pending or threatened
      in writing against or affecting the Company, any Subsidiary or any of their
      respective properties before or by any court, arbitrator, governmental or
      administrative agency, regulatory authority (federal, state, county, local
      or
      foreign), stock market, stock exchange or trading facility.

    

    “Adjusted
      Purchase Price”
      has the
      meaning set forth in Section 2.2.

    

    “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.

    

    “Arkansas
      Courts”
      has the
      meaning set forth in Section 7.9.

    

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

    

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

    

    “Cash
      Flow Trigger Date”
      means
      the date on which the Company first reports results of operations reflecting
      a
      positive cash flow in each of two successive fiscal quarters.

    

    “Claim”
      has
      the
      meaning set forth in Section 4.6(c).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Closing”
      means
      each closing of the purchase and sale of a Note and a Warrant pursuant to
      Article 2.

    

    “Closing
      Date”
      means
      the Initial Closing Date and the date on which the Second Closing, if any,
      occurs pursuant to Section 2.2 hereof.

    

    “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 may hereafter be reclassified.

    

    “Common
      Stock Equivalents”
      means
      any securities of the Company or any Subsidiary which entitle the holder thereof
      to acquire Common Stock at any time, 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 or other securities that entitle the holder
      to
      receive, directly or indirectly, Common Stock.

    

    “Company
      Counsel”
      means
      Nixon Peabody, LLP.

    

    “Company
      Deliverables”
      has the
      meaning set forth in Section 2.2(a). 

    

    “Company
      Stock Options”
has
      the
      meaning set forth in Section 3.1(g).

    

    “Contingent
      Obligations”
      has the
      meaning set forth in Section 3.1(r). 

    

    “Conversion
      Shares”
      means
      the shares of Common Stock issuable upon conversion of the Notes.

    

    “Convertible
      Securities”
has
      the
      meaning set forth in Section 3.1(g). 

    

    “Development
      Contract” means
      either a Letter to Proceed or a fully executed contract between the Company
      and
      the City of New York, New York (or any agency thereof) or for the development
      of
      the 26th
      Ward
      wastewater treatment plant substantially as set forth in the business plan
      previously provided by the Company to the Investor. 

    

    “Effective
      Date”
      means
      the date that any Registration Statement filed pursuant to Article 4 is first
      declared effective by the Commission. 

    

    “Effectiveness
      Period”
      has the
      meaning set forth in Section 4.1(b). 

    

    “Environmental
      Law”
      has the
      meaning set forth in Section 3.1(aa).

    

    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, and the rules
      and regulations promulgated thereunder.

     

    “ERISA
      Affiliate” means
      any
      trade or business, whether or not incorporated, that together with the Company
      would be deemed to be a single employer for purposes of Section 4001 of ERISA
      or
      Sections 414(b), (c), (m), (n) or (o) of the Internal Revenue Code of 1986,
      as
      amended.

     

    “Evaluation
      Period” has
      the
      meaning set forth in Section 3.1(r). 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Event”
      has the
      meaning set forth in Section 4.1(d). 

    

    “Event
      Date”
      has the
      meaning set forth in Section 4.1(d).

    

    “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended.

    

    “Exempt
      Issuance”
      means
the
      issuance by the Company (a) to employees, officers, directors of,
      and
      consultants to, the
      Company of shares of Common Stock or options for the purchase of shares of
      Common Stock pursuant to stock option or long-term incentive plans approved
      by
      the Board, (b) of shares of Common Stock upon the exercise of Warrants issued
      hereunder, (c) of shares of Common Stock upon conversion of shares of Series
      A
      Preferred Stock, (d) of shares of Common Stock upon exercise of Prior Warrants
      or conversion of Prior Convertible Securities, (e) of securities issued pursuant
      to acquisitions, licensing agreements, or
      other
      strategic transactions, (f) of securities issued in connection with equipment
      leases, real
      property leases, loans, credit lines, guaranties or similar transactions
      approved by the Board,
      (g) of
      securities issued in connection with join ventures or similar strategic
      relationships approved by the Board, (h) of securities in a merger, or (i)
      of
      securities in a public offering registered under the Securities
      Act.

     

    “Filing
      Date” means
      the
      date that is 60 days after the Initial Closing Date. 

    

    “Financing
      Notice” has
      the
      meaning set forth in Section 5.5(b).

    

    “GAAP”
      means
      generally accepted accounting principles as in effect from time to time in
      the
      United States of America.

    

    “Governmental
      Authority” has
      the
      meaning set forth in Section 3.1(e). 

    

    “Hazardous
      Substance”
      has the
      meaning set forth in Section 3.1(aa).

    

    “Indebtedness”
      has the
      meaning set forth in Section 3.1(r).

    

    “Indemnified
      Party” has
      the
      meaning set forth in Section 4.6(c).

    

    “Indemnified
      Person”
      has the
      meaning set forth in Section 4.6(a). 

    

    “Indemnifying
      Party” has
      the
      meaning set forth in Section 4.6(c). 

    

    “Initial
      Closing Date”
      means
      the Business Day immediately following the date on which all of the conditions
      set forth in Sections 6.1 and 6.2 hereof are satisfied, or such other date
      as
      the parties may agree. 

    

    “Intellectual
      Property Rights”
      has the
      meaning set forth in Section 3.1(o). 

    

    “Interest
      Shares”
      means
      the shares of Common Stock issuable interest due and payable under the
      Notes.

    

    “Investor
      Deliverables”
      has the
      meaning set forth in Section 2.2(b).

    

    “Lien”
      means
      any lien, charge, encumbrance, security interest, right of first refusal or
      other restrictions of any kind.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Losses”
      has the
      meaning set forth in Section 5.7.

    

    “Material
      Adverse Effect”
      means
      any of (i) a material and adverse effect on the legality, validity or
      enforceability of any Transaction Document, (ii) a material and 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) a material impairment of the Company’s ability to perform on a timely
      basis its obligations under any Transaction Document.

    

    “NASD
      Rules”
      has the
      meaning set forth in Section 4.3(o).

    

    “Note”
      means
      any
      of the Senior Convertible Promissory Notes of the Company, in the form of
Exhibit A,
      which
      are issuable to the Investor at the Closings.

     

    “OFAC”
      has the
      meaning set forth in Section 3.1(ee).

    

    “Penalty
      Base”
      has the
      meaning set forth in Section 4.1(d).

    

    “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.

    

    “Placement
      Agent”
      has the
      meaning set forth in Section 3.1(s).

    

    “Post-Effective
      Amendment” means
      a
      post-effective amendment to the Registration Statement.

     

    “Post-Effective
      Amendment Filing Deadline”
means
      the seventh Business Day after the Registration Statement ceases to be effective
      pursuant to applicable securities laws due to the passage of time or the
      occurrence of an event requiring the Company to file a Post-Effective
      Amendment.

     

    “Prior
      Warrants”
has
      the
      meaning set forth in Section 3.1(g).

    

    “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.

    

    “Prospectus”
      has
      the
      meaning set forth in Section 4.3. 

    

    “Proposed
      Financing”
      has the
      meaning set forth in Section 5.5(a).

    

    “Purchase
      Price” means
      the
      price payable by the Investor for the Notes and Warrants pursuant to Sections
      2.1 and 2.2.

    

    “Registrable
      Securities” means
      the
      Interest Shares, the Conversion Shares and the Warrant Shares; provided,
      however, that the Investor shall not be required to Convert the Notes or
      exercise the Warrants in order to have the Conversion Shares or the Warrant
      Shares included in any Registration Statement.

    

    “Registration
      Period”
      means
      the period commencing on the date hereof and ending on the date on which all
      of
      the Registrable Securities may be sold to the public without registration under
      the Securities Act in reliance on Rule 144.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Registration
      Statement”
      means a
      registration statement filed on the appropriate Form with, and declared
      effective by, the Commission under the Securities Act and covering the resale
      by
      the Investor of the Registrable Securities.

    

    “Requested
      Information”
      has the
      meaning set forth in Section 4.3(a).

    

    “Required
      Effectiveness Date”
      means
      the earlier of (i) the date that is 150 days after the Initial Closing Date
      or
      (ii) five Business Days after receipt by the Company from the Commission of
      notice of “no review” of the Registration Statement.

    

    “Rule
      144”
      means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

    

    “SEC
      Reports”
      has the
      meaning set forth in Section 3.1(h).

    

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

    

    “Securities
      Act”
      means
      the Securities Act of 1933, as amended.

    

    “Series
      A Preferred Stock”
      means
      the shares of the preferred stock of the Company, par value $0.01 per share,
      that have been designated as “Series A Convertible Preferred
      Stock.”

    

    “Shares”
      means
      the Conversion Shares, the Interest Shares and the Warrant Shares.

    

    “Subsidiary”
      means
      any “significant subsidiary” as defined in Rule 1-02(w) of Regulation S-X
      promulgated by the Commission under the Exchange Act.

    

    “Trading
      Day”
      means
      (i) a day on which the Common Stock is traded on a Trading Market, or (ii)
      if
      the Common Stock is not listed on a Trading Market, a day on which the Common
      Stock is traded in the over-the-counter market, as reported by the OTC Bulletin
      Board, or (iii) if the Common Stock is not then listed or quoted on the OTC
      Bulletin Board, a day on which the Common Stock is quoted in the
      over-the-counter market as reported by the National Quotation Bureau
      Incorporated (or any similar organization or agency succeeding to its functions
      of reporting prices); provided, that in the event that the Common Stock is
      not
      listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
      shall mean a Business Day.

    

    “Trading
      Market”
      means
      whichever of the New York Stock Exchange, the American Stock Exchange, the
      Nasdaq National Market, or the Nasdaq Over-the-Counter Market on which the
      Common Stock is listed or traded on the date in question.

    

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

    

    “2007
      Agreement”
      means
      that certain Securities Purchase Agreement dated as of December 18, 2007 between
      the Company and the Investor, as amended.

    

    “Warrant”
      means
      any of the Common Stock Purchase Warrants, in the form of Exhibit B,
      which
      are issuable to the Investor at the Closings.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

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

    

    ARTICLE
      2

    

    Purchase
      and Sale

    

    Section
      2.1. Issuance
      of Securities at the Initial Closing.
      Upon
      the
      terms and subject to the conditions set forth in this Agreement, and in
      accordance with applicable law, the Company agrees to sell to the Investor,
      and
      the Investor agrees to purchase from the Company, for the Purchase Price of
      $2,000,000, on the Initial Closing Date, (i) a Note in the original principal
      amount of $2,000,000 and (ii) a Warrant to purchase 3,000,000 shares of Common
      Stock. 

    

    Section
      2.2. Issuance
      of Securities at the Second Closing.
      On the
      fifth Business Day following the filing by the Company with the Commission
      of a
      Current Report on Form 8-K reporting the execution and delivery of the
      Development Contract, the Company will sell to the Investor, and the Investor
      will purchase from the Company, at the Purchase Price of $5,000,000,
(i)
      a
      Note in the original principal amount of $5,000,000 and (ii) a Warrant to
      purchase 7,500,000 shares of Common Stock.

     

    Section
      2.3. Payment
      of Purchase Price.
      As
      consideration for the issuance of the Securities being purchased at each
      Closing, the
      Investor
      shall on the respective Closing Date pay to the Company, by wire transfer or
      other form of immediately available funds, an amount equal to the applicable
      aggregate Purchase Price for the Securities being purchased at such
      Closing.

     

    Section
      2.4. Delivery
      of Securities.
      At each
      Closing, the Company shall,
      against payment by the Investor of the applicable Purchase Price, issue to
      the
      Investor the Note and the Warrant being purchased at such Closing.

     

    Section
      2.5. Additional
      Closing Deliveries.
      At
      each
      Closing, the Company shall deliver or cause to be delivered to the Investor
      the
      following (the“Company
      Deliverables”):

    

    
      	 	
              (i)
                

            	
              The
                legal opinion of Company Counsel, in substantially the form of
                Exhibit
                C
                hereto, addressed to the Investor; 

            

    

    

    
      	 	
              (ii)

            	
              The
                Certificate of Incorporation of the Company, together with all amendments
                thereto, certified by the Secretary of State of the State of Delaware
                as
                of a date not more than five Business Days prior to the Closing Date;
                

            

    

    

    
      	 	
              (iii)

            	
              Copies
                of each of the following documents, in each case certified by the
                Secretary of the Company to be in full force and effect on the Closing
                Date:

            

    

    

    
      	 	
              (A)

            	
              resolutions
                of the board of directors of the Company approving the execution,
                delivery
                and performance of the Transaction Documents and the transactions
                contemplated thereby; 

            

    

    

    
      	 	
              (B)

            	
              the
                By-laws of the Company; and

            

    

    

    
      	 	
              (C)

            	
              irrevocable
                instructions to the Company’s transfer agent as to the reservation and
                issuance of the Conversion Shares and the Warrant Shares;
                and

            

    

    

    
      	 	
              (iv)

            	
              A
                good standing certificate of the Company issued by the Secretary
                of State
                of the State of Delaware dated as of a date no earlier than five
                Business
                Days prior to the Closing Date.

            

    

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      3

    

    Representations
      and Warranties

    

    Section
      3.1. Representations
      and Warranties of the Company.
      The
      Company hereby makes the following representations and warranties to the
      Investor:

    

    
      	 	
              (a)

            	
              Subsidiaries.
                The Company has no direct or indirect Subsidiaries other than as
                specified
                in the SEC Reports. Except as disclosed in the SEC Reports, the Company
                owns, directly or indirectly, all of the capital stock of each Subsidiary
                free and clear of any and all Liens other than Liens disclosed in
                the SEC
                Reports, 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.

            

    

    

    
      	 	
              (b)

            	
              Organization
                and Qualification.
                Each of the Company and each Subsidiary is 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 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 each Subsidiary is duly qualified
                to
                conduct its respective 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,
                have or reasonably be expected to result in a Material Adverse Effect,
                and
                no proceedings have been instituted in any such jurisdiction revoking,
                limiting or curtailing, or seeking to revoke, such power and authority
                or
                qualification.

            

    

    

    
      	 	
              (c)

            	
              Authorization;
                Enforcement.
                The Company has the requisite corporate power and authority to enter
                into
                and to consummate the transactions contemplated by each of the Transaction
                Documents and otherwise to carry out its obligations thereunder.
                The
                execution and delivery of each of the Transaction Documents by the
                Company
                and the consummation by it of the transactions contemplated thereby
                have
                been duly authorized by all necessary action on the part of the Company
                and no further action is required by the Company in connection therewith.
                Each Transaction Document has been (or upon delivery will have been)
                duly
                executed by the Company and, when delivered in accordance with the
                terms
                hereof, will constitute the valid and binding obligation of the Company
                enforceable against the Company in accordance with its terms, except
                as
                such enforceability may be limited by applicable bankruptcy, insolvency,
                reorganization, moratorium, liquidation or similar laws relating
                to, or
                affecting generally the enforcement of, creditors’ rights and remedies or
                by other equitable principles of general
                application.

            

    

    

    
      	 	
              (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) 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, or result in the imposition
                of any Lien upon any of the material properties or assets of the
                Company
                or of any Subsidiary pursuant to, 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 reasonably be expected
                to result
                in a Material Adverse Effect.

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (e)

            	
              Filings,
                Consents and Approvals.
                The Company is not required to obtain any consent, waiver, authorization
                or order of, give any notice to, or make any filing or registration
                with,
                any court or other federal, state, local or other governmental authority
                (a “Governmental
                Authority”)
                or other Person in connection with the execution, delivery and performance
                by the Company of the Transaction Documents and the consummation
                of the
                transactions contemplated thereby, other than (i) the filing of a
                Notice
                of Sale of Securities on Form D with the Commission (ii) filings
                required
                under applicable state securities laws, (iii) the filing of a Current
                Notice on Form 8-K with the Commission and (iv) the filing with the
                Commission of one or more Registration Statements in accordance with
                the
                requirements of Article 4 of this
                Agreement,.

            

    

    

    
      	 	
              (f)

            	
              Issuance
                of the Securities.
                The Securities have been duly authorized. Each Note and Warrant,
                when
                issued and paid for in accordance with this Agreement, will be duly
                and
                validly issued. The Company has reserved and set aside from its duly
                authorized capital stock a sufficient number of shares of Common
                Stock to
                satisfy in full the Company’s obligations to issue (i) the Conversion
                Shares upon conversion of the Notes, (ii) the Interest Shares in
                payment
                of interest that shall become due and payable under the Notes, and
                (iii)
                the Warrant Shares upon exercise of the Warrants. The Shares, when
                issued
                and paid for in payment of interest under the Notes or upon conversion
                of
                the Notes or exercise of the Warrants in accordance with their respective
                terms, will be duly and validly issued, fully paid and nonassessable,
                free
                and clear of all Liens.

            

    

    

    
      	 	
              (g)

            	
              Capitalization.
                The authorized capital stock of the Company consists of 150,000,000
                shares
                of Common Stock and 20,000,000 shares of Preferred Stock, par value
                $0.01,
                of which 10,000,000 shares have been designed Series A Preferred
                Stock and
                10,000,000 shares are undesignated. As of the close of business on
                the
                Business Day immediately prior to the date hereof, (i) 208,334
                shares
                of Series A Preferred Stock were issued and outstanding, all of which
                are
                validly issued, fully-paid and non-assessable, (ii) 49,448,044 shares
                of
                Common Stock were issued and outstanding, all of which are validly
                issued,
                fully-paid and non-assessable, (iii) 83,797 shares of Common Stock
                were
                held by the Company in Treasury, (iv) 9,688,200 shares of Common
                Stock
                were reserved for issuance upon exercise of outstanding options granted
                to
                employees, directors, and consultants of the Company (the “Company
                Stock Options”);
                (v) 26,109,323 shares of Common Stock were reserved for issuance
                upon
                exercise of outstanding warrants to purchase Common Stock (the
                “Prior
                Warrants”);
                (vi) 208,334 shares of Common Stock were reserved for issuance upon
                conversion of outstanding shares of Series A Preferred Stock, and
                (vii)
                10,159,351 shares of Common Stock were reserved for issuance upon
                conversion of other convertible notes, debentures or securities
                (“Prior
                Convertible Securities”).
                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 pursuant to (i)
                the outstanding shares of Series A Preferred Stock, (ii) the Company
                Stock
                Options, (iii) the Prior Warrants or (iv) the Prior Convertible
                Securities, or as a result of the purchase and sale of the Securities
                as
                contemplated by this Agreement, 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 Common Stock Equivalents.  The issue 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 Investor) and will
                not
                result in a right of any holder of Company securities to adjust the
                exercise or conversion price under such securities. No further approval
                or
                authorization of any stockholder, the Board of Directors of the Company
                or
                any other Person is required for the issuance and sale of the
                Securities.  There are no stockholders agreements, voting agreements
                or other similar agreements with respect to the Company’s capital stock to
                which the Company is a party or, to the knowledge of the Company,
                between
                or among any of the Company’s
                stockholders.

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (h)

            	
              SEC
                Reports; Financial Statements.
                The Company has filed all reports required to be filed by it under
                the
                Securities Act and the Exchange Act, including pursuant to Section
                13(a)
                or 15(d) thereof, for the twelve months preceding the date hereof
                (the
                foregoing materials, being collectively referred to herein as
                the“SEC
                Reports”).
                As of their respective dates, the SEC Reports complied in all material
                respects with the requirements of the Securities Act and the Exchange
                Act
                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 GAAP applied on a consistent basis during the periods involved,
                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 reasonably be expected to result in a Material Adverse Effect,
                (ii)
                the Company has not incurred any liabilities (contingent or otherwise)
                other than (A) trade payables, accrued expenses and other liabilities
                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 plans.
                The
                Company does not have pending before the Commission any request for
                confidential treatment of
                information.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (j)

            	
              Litigation
                and Investigations.
                There is no Action which (i) adversely affects or challenges the
                legality,
                validity or enforceability of any of the Transaction Documents or
                the
                Securities or (ii) except as specifically disclosed in the SEC Reports,
                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 (in his capacity as such), 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, except
                as
                specifically disclosed in the SEC Reports. There has not been, and
                to the
                knowledge of the Company, there is not pending any investigation
                by the
                Commission involving the Company or any current or former director
                or
                officer of the Company (in his or her capacity as such). 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. There are no outstanding
                comments
                by the Staff of the Commission on any filing by the Company or any
                Subsidiary under the Exchange Act or the Securities
                Act.

            

    

    

    
      	 	
              (k)

            	
              Labor
                Relations.
                No
                material labor dispute exists or, to the knowledge of the Company,
                is
                imminent with respect to any of the employees of the
                Company.

            

      	 	 	 

    

    
      	 	
              (l)

            	
              Compliance.
                Neither the Company nor any Subsidiary (i) is in default under or
                in
                violation of (and no event has occurred that has not been waived
                that,
                with notice or lapse of time or both, would result in a default by
                the
                Company or any Subsidiary under), nor has the Company or any Subsidiary
                received notice of a claim that it is in default under or that it
                is in
                violation of, any indenture, loan or credit agreement or any other
                agreement or instrument to which it is a party or by which it or
                any of
                its properties is bound (whether or not such default or violation
                has been
                waived), (ii) is in violation of any order of any court, arbitrator
                or
                governmental body, or (iii) is or has been in violation of any statute,
                rule or regulation of any governmental authority, including without
                limitation all foreign, federal, state and local laws relating to
                taxes,
                environmental protection, occupational health and safety, product
                quality
                and safety and employment and labor matters, except in each case
                as could
                not, individually or in the aggregate, have or reasonably be expected
                to
                result in a Material Adverse
                Effect.

            

    

    

    
      	 	
              (m)

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

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (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 their
                respective businesses and good and marketable title in all personal
                property owned by them that is material to their respective businesses,
                in
                each case free and clear of all Liens, except for Liens that 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. All real property and facilities
                held
                under lease by the Company and the Subsidiaries are held by them
                under
                valid, subsisting and enforceable leases of which the Company and
                the
                Subsidiaries are in material compliance, except as could not, individually
                or in the aggregate, have or reasonably be expected to result in
                a
                Material Adverse Effect.

            

    

    

    
      	 	
              (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 that are
                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, individually or in the aggregate, have or reasonably
                be
                expected to result in a Material Adverse Effect (collectively,
                the“Intellectual
                Property Rights”).
                No claims or Actions have been made or filed by any Person against
                the
                Company to the effect that Intellectual Property Rights used by the
                Company or any Subsidiary violate or infringe upon the rights of
                such
                claimant. To the knowledge of the Company, all of the 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. The Company has no reason to believe
                that it
                will not be able to renew its and the Subsidiaries’ 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
                on
                terms consistent with the market for the Company’s and such Subsidiaries’
                respective lines of business.

            

    

    

    
      	 	
              (q)

            	
              Transactions
                With Affiliates and Employees.
                Except as set forth in the SEC Reports, none of the officers or directors
                of the Company and, to the knowledge of the Company, none of the
                employees
                of the Company is 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 (including the rules and regulations of
                the
                Commission adopted thereunder) which are applicable to it as of the
                Closing Date.  The Company’s certifying officers have evaluated the
                effectiveness of the Company’s controls and procedures as of 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.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (s)

            	
              Certain
                Fees.
                No
                brokerage or finder’s fees or commissions are or will be payable by the
                Company to any broker, financial advisor or consultant, finder, placement
                agent, investment banker, bank or other Person with respect to the
                transactions contemplated by this Agreement except to Merriman Curhan
                Ford
                (the “Placement
                Agent”).
                The Investor shall have no obligation with respect to any fees or
                with
                respect to any claims (other than such fees or commissions owed by
                the
                Investor pursuant to written agreements executed by the Investor
                which
                fees or commissions shall be the sole responsibility of the Investor)
                made
                by or on behalf of the Placement Agent or any other Persons for fees
                of a
                type contemplated in this Section that may be due in connection with
                the
                transactions contemplated by this Agreement.

            

    

    

    
      	 	
              (t)

            	
              Investment
                Company.
                The Company is not, and is not an Affiliate of, and immediately following
                the Closing will not have become, an “investment company” within the
                meaning of the Investment Company Act of 1940, as
                amended.

            

    

    

    
      	 	
              (u)

            	
              No
                Additional Agreements.
                The Company does not have any agreement or understanding with the
                Investor
                with respect to the transactions contemplated by the Transaction
                Documents
                other than as specified in the Transaction
                Documents.

            

    

    

    
      	 	
              (v)

            	
              Full
                Disclosure.
                All
                disclosures provided to the Investor regarding the Company, its business
                and the transactions contemplated hereby, furnished by or on behalf
                of the
                Company (including the Company’s representations and warranties set forth
                in this Agreement) are true and correct in all material respects
                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.

            

    

    

    
      	 	
              (w)

            	
              Environmental
                Matters.
                To
                the Company’s knowledge: (i) the Company and its Subsidiaries have
                complied with all applicable Environmental Laws; (ii) the properties
                currently owned or operated by Company (including soils, groundwater,
                surface water, buildings or other structures) are not contaminated
                with
                any Hazardous Substances; (iii) the properties formerly owned or
                operated
                by Company or its Subsidiaries were not contaminated with Hazardous
                Substances during the period of ownership or operation by Company
                and its
                Subsidiaries; (iv) Company and its Subsidiaries are not subject to
                liability for any Hazardous Substance disposal or contamination on
                any
                third party property; (v) Company and its Subsidiaries have not been
                associated with any release or threat of release of any Hazardous
                Substance; (vi) Company and its Subsidiaries have not received any
                notice,
                demand, letter, claim or request for information alleging that Company
                and
                its Subsidiaries may be in violation of or liable under any Environmental
                Law; and (vii) Company and its Subsidiaries are not subject to any
                orders,
                decrees, injunctions or other arrangements with any Governmental
                Authority
                or subject to any indemnity or other agreement with any third party
                relating to liability under any Environmental Law or relating to
                Hazardous
                Substances.

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    As
      used
      in this Agreement, the term “Environmental
      Law”
means
      any federal, state, local or foreign law, regulation, order, decree, permit,
      authorization, opinion, common law or agency requirement relating to: (A) the
      protection, investigation or restoration of the environment, health and safety,
      or natural resources; (B) the handling, use, presence, disposal, release or
      threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
      pollution, contamination or any injury or threat of injury to persons or
      property.

     

    As
      used
      in this Agreement, the term “Hazardous
      Substance”
means
      any substance that is: (i) listed, classified or regulated pursuant to any
      Environmental Law; (ii) any petroleum product or by-product, asbestos-containing
      material, lead-containing paint or plumbing, polychlorinated biphenyls,
      radioactive materials or radon; or (iii) any other substance which is the
      subject of regulatory action by any Governmental Authority pursuant to any
      Environmental Law.

     

    
      	
            	(x)	
              Taxes.
                The Company and its Subsidiaries have filed all necessary federal,
                state
                and foreign income and franchise tax returns when due (or obtained
                appropriate extensions for filing) and have paid or accrued all taxes
                shown as due thereon, and the Company has no knowledge of a tax deficiency
                which has been or might be asserted or threatened against it or any
                Subsidiary which would have a Material Adverse
                Effect.

            

    

     

    
      	
            	(y)	
              Private
                Offering.
                Assuming the correctness of the representations and warranties of
                the
                Investor set forth in this Agreement, the offer and sale of the Notes
                and
                the Warrants hereunder are, and upon (i) exercise of the Warrants,
                the
                issuance of the Warrant Shares, (ii) upon conversion of the Notes,
                the
                issuance of the Conversion Shares and (iii) upon issuance of the
                Interest
                Shares in payment of interest due and payable under the Notes, such
                issuance will be, exempt from registration under the Securities Act.
                The
                Company has offered the Notes and the Warrants for sale only to the
                Investor.

            

    

     

    
      	
            	(z)	
              ERISA.
                Neither the Company nor any ERISA Affiliate maintains, contributes
                to or
                has any liability or contingent liability with respect to any employee
                benefit plan subject to ERISA.

            

    

     

    
      	
            	(aa)	
              Foreign
                Assets Control Regulations and Anti-Money
                Laundering.

            

    

     

    (i)
      OFAC.
      Neither
      the issuance of the Convertible Note and Warrant to the Investor, nor the use
      of
      the respective proceeds thereof, shall cause the Investor to violate the U.S.
      Bank Secrecy Act, as amended, and any applicable regulations thereunder or
      any
      of the sanctions programs administered by the U.S. Department of the Treasury’s
      Office of Foreign Assets Control (“OFAC”)
      of the
      United States Department of Treasury, any regulations promulgated thereunder
      by
      OFAC or under any affiliated or successor governmental or quasi-governmental
      office, bureau or agency and any enabling legislation or executive order
      relating thereto. Without limiting the foregoing, neither the Company nor any
      Subsidiary (i) is a person whose property or interests in property are blocked
      or subject to blocking pursuant to Section 1 of Executive Order 13224 of
      September 23, 200l Blocking Property and Prohibiting Transactions With Persons
      Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
      (2001)), (ii) engages in any dealings or transactions prohibited by
      Section 2 of such executive order, or is otherwise associated with any such
      person in any manner violative of Section 2, or (iii) is a person on the
      list of Specially Designated Nationals and Blocked Persons or subject to the
      limitations or prohibitions under any other OFAC regulation or executive
      order.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (ii)
      Patriot
      Act.
      The
      Company and each of its Subsidiaries are in compliance, in all material
      respects, with the USA PATRIOT Act. No part of the proceeds of the sale of
      the
      Shares and the Warrants hereunder will be used, directly or indirectly, for
      any
      payments to any governmental official or employee, political party, official
      of
      a political party, candidate for political office, or anyone else acting in
      an
      official capacity, in order to obtain, retain or direct business or obtain
      any
      improper advantage, in violation of the United States Foreign Corrupt Practices
      Act of 1977, as amended.

    

    Section
      3.2. Representations
      and Warranties of the Investor.
      The
      Investor hereby represents and warrants to the Company as follows:

    

    
      	 	
              (a)

            	
              Authority.
                This Agreement has been duly executed by the Investor, and when delivered
                by the Investor in accordance with terms hereof, will constitute
                the valid
                and legally binding obligation of the Investor, enforceable against
                it in
                accordance with its terms, except as such enforceability may be limited
                by
                applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
                or similar laws relating to, or affecting generally the enforcement
                of,
                creditors’ rights and remedies or by other equitable principles of general
                application.

            

    

    

    
      	 	
              (b)

            	
              Investment
                Intent.
                The Investor is acquiring the Securities as principal for its own
                account
                for investment purposes only and not with a view to or for distributing
                or
                reselling such Securities or any part thereof, without prejudice,
                however,
                to the Investor’s right at all times to sell or otherwise dispose of all
                or any part of such Securities in compliance with applicable federal
                and
                state securities laws. The Investor does not have any agreement or
                understanding, directly or indirectly, with any Person to distribute
                any
                of the Securities.

            

    

    

    
      	 	
              (c)

            	
              Investor
                Status.
                The Investor is an “accredited investor” as defined in Rule 501(a) under
                the Securities Act and
                a “qualified institutional buyer” as defined in Rule 144A under the
                Securities Act.  The Investor is not a registered broker-dealer under
                Section 15 of the Exchange Act.

            

    

    

    
      	 	
              (d)

            	
              Access
                to Information.
                The Investor acknowledges that it has reviewed the SEC Reports and
                has
                been afforded (i) the opportunity to ask such questions as he has
                deemed
                necessary of, and to receive answers from, representatives of the
                Company
                concerning the terms and conditions of the offering of the Securities
                and
                the merits and risks of investing in the Securities; (ii) access
                to
                information about the Company and the Subsidiaries and their respective
                financial condition, results of operations, business, properties,
                management and prospects sufficient to enable him to evaluate his
                investment; and (iii) the opportunity to obtain such additional
                information that the Company possesses or can acquire without unreasonable
                effort or expense that is necessary to make an informed investment
                decision with respect to the
                investment.

            

    

    

    
      	 	
              (e)

            	
              General
                Solicitation.
                The
                Investor 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.

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (f)

            	
              Disclosure.
                The Investor acknowledges and agrees that the Company neither makes
                nor
                has made any representations or warranties with respect to the
                transactions contemplated hereby other than those specifically set
                forth
                in Section
                3.1.

            

    

    

    ARTICLE
      4

    

    Registration
      Rights

    

    Section
      4.1. Shelf
      Registration.

     

    (a)
      As
      promptly as possible, and in any event on or prior to the Filing Date, the
      Company shall prepare and file with the Commission a “shelf” Registration
      Statement covering the resale of all Registrable Securities for an offering
      to
      be made on a continuous basis pursuant to Rule 415. If for any reason
      (including, without limitation, the Commission’s interpretation of Rule 415) the
      Commission does not permit all of the Registrable Securities to be included
      in
      such Registration Statement, then the Company shall prepare and file with the
      Commission a separate Registration Statement with respect to any such
      Registrable Securities not included with the initial Registration Statements,
      as
      expeditiously as possible, but in no event later than the date which is 30
      days
      after the date on which the Commission shall indicate as being the first date
      such filing may be made. The Registration Statement shall be on a Form S-3;
      in
      the event Form S-3 is not available for the registration of the resale of
      Registrable Securities hereunder, the Company shall (i) register the resale
      of
      the Registrable Securities on another appropriate form in accordance herewith
      and (ii) attempt to register the Registrable Securities on Form S-3 as soon
      as
      such form is available, provided that the Company shall maintain the
      effectiveness of the Registration Statements then in effect until such time
      as a
      Registration Statement on Form S-3 covering the Registrable Securities has
      been
      declared effective by the Commission. 

     

    (b)
      The
      Company shall use its best efforts to cause the Registration Statement to be
      declared effective by the Commission as promptly as possible after the filing
      thereof, but in any event prior to the Required Effectiveness Date, and shall
      use its best efforts to keep the Registration Statement continuously effective
      under the Securities Act until the earlier of (i) the fifth anniversary of
      the
      Effective Date, (ii) the date when all Registrable Securities covered by such
      Registration Statement have been sold publicly, or (iii) the date on which
      the
      Registrable Securities are eligible for sale without registration pursuant
      to
      subparagraph (k) of Rule 144 (the “Effectiveness
      Period”).
      The
      Company shall notify the Investor in writing promptly (and in any event within
      one Business Day) after receiving notification from the Commission that the
      Registration Statement has been declared effective.

     

    (c)
      As
      promptly as possible, and in any event no later than the Post-Effective
      Amendment Filing Deadline, the Company shall prepare and file with the
      Commission a Post-Effective Amendment. The Company shall use its best efforts
      to
      cause the Post-Effective Amendment to be declared effective by the Commission
      as
      promptly as possible after the filing thereof. The Company shall notify the
      investor in writing promptly (and in any event within one Business Day) after
      receiving notification from the Commission that the Post-Effective Amendment
      has
      been declared effective. 

     

    (d)
      If:
      (i)
      any Registration Statement is not filed on or prior to the Filing Date or a
      Post-Effective Amendment is not filed on or prior to the Post-Effective
      Amendment Filing Deadline, or (ii) the Company fails to file with the Commission
      a request for acceleration of effectiveness in accordance with Rule 461
      promulgated under the Securities Act, within five Business Days after 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 will not be
      subject to further review, or (iii) the Company fails to respond to any comments
      made by the Commission within 15 Business Days after the receipt of such
      comments, or (iv) a Registration Statement filed hereunder is not declared
      effective by the Commission by the Required Effectiveness Date (which date
      shall
      be extended by 30 days in the case of a comment regarding Rule 415), or a
      Post-Effective Amendment is not declared effective on or prior to the fifteenth
      Business Day following the Post-Effective Amendment Filing Deadline, or (v)
      after a Registration Statement is filed with and declared effective by the
      Commission, such Registration Statement ceases to be effective as to all
      Registrable Securities to which it is required to relate at any time prior
      to
      the expiration of the Effectiveness Period for a period of more than 60 days
      without being succeeded by an amendment to such Registration Statement or by
      a
      subsequent Registration Statement filed with and declared effective by the
      Commission, or (vi) an amendment to a Registration Statement is not filed by
      the
      Company with the Commission within 15 Business Days after the Commission’s
      having notified the Company that such amendment is required in order for such
      Registration Statement to be declared effective (any such failure or breach
      being referred to as an “Event”
      and the
      date on which such Event occurs being referred to as “Event
      Date”),
      then:
      (x) on each such Event Date the Company shall pay to the Investor an amount
      in
      cash, as liquidated damages and not as a penalty, equal to 1% of the aggregate
      Purchase Price paid by the Investor pursuant to this Agreement for the
      Registrable Securities covered by such Registration Statement (the “Penalty
      Base”);
      and
      (y) on the same day of each successive month following such Event Date (so
      long
      as the applicable Event shall not have been cured by such date) until the
      applicable Event is cured, the Company shall pay to the Investor an amount
      in
      cash, as liquidated damages and not as a penalty, equal to 1% of the Penalty
      Base. Such payments shall be the Investor’s sole and exclusive remedy for such
      Events. If the Company fails to pay any liquidated damages pursuant to this
      Section in full within seven Business 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 Investor, accruing
      daily from the date such liquidated damages are due until such amounts, plus
      all
      such interest thereon, are paid in full.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (e)
      The
      Company shall not, prior to the Effective Date of the Registration Statement,
      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.

     

    (f)
      If
      the
      Company issues to the Investor any Common Stock pursuant to the Transaction
      Documents that is not included in the initial Registration Statement, then
      the
      Company shall file an additional Registration Statement covering such number
      of
      shares of Common Stock on or prior to the Filing Date and shall use it best
      efforts, but in no event later than the Required Effectiveness Date, to cause
      such additional Registration Statement to be declared effective by the
      Commission.

     

    Section
      4.2. Registration
      Process.
      In
      connection with the registration of the Registrable
      Securities pursuant to Section 4.1, the Company shall:

     

    (a)
      Prepare
      and file
      with the
      Commission the
      Registration Statement
      and such
      amendments (including post-effective amendments) to the Registration Statement
      and supplements to the prospectus included therein (a “Prospectus”)
      as the
      Company may deem necessary or appropriate and take all lawful action such that
      the Registration Statement and any amendment thereto does not, when it becomes
      effective, 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, not misleading and that the Prospectus forming part of the Registration
      Statement, and any amendment or supplement thereto, does not at any time during
      the Registration
      Period include an untrue statement of a material fact or omit to state a
      material fact required to be stated therein or necessary to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading;

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (b)
      Comply
      with the provisions of the Securities Act with respect to the Registrable
      Securities covered by the Registration Statement until the earlier of (i) such
      time as all of such Registrable Securities have been disposed of in accordance
      with the intended methods of disposition by the Investor as set forth in the
      Prospectus forming part of the Registration Statement or (ii) the date on which
      the Registration Statement is withdrawn;

     

    (c)
      Prior
      to
      the filing with the Commission of the
      Registration Statement (including any amendments thereto) and the distribution
      or delivery of any Prospectus (including any supplements thereto), provide
      draft
      copies thereof to the Investor and reflect in such documents all such comments
      as the Investor (and its counsel) reasonably may propose and furnish to the
      Investor and its legal counsel identified to the Company (i) promptly after
      the same is prepared and publicly distributed, filed with the Commission, or
      received by the Company, one copy of the Registration Statement, each
      Prospectus, and each amendment or supplement thereto, and (ii) such number
      of copies of the Prospectus and all amendments and supplements thereto and
      such
      other documents, as the Investor may reasonably request in order to facilitate
      the disposition of the Registrable
      Securities;

     

    (d)
      (i) register
      or qualify the Registrable Securities covered by the Registration Statement
      under such securities or “blue sky” laws of such jurisdictions as the Investors
reasonably
      request, (ii) prepare and file in such jurisdictions such amendments
      (including post-effective amendments) and supplements to such registrations
      and
      qualifications as may be necessary to maintain the effectiveness thereof at
      all
      times during the Registration Period, (iii) take all such other lawful
      actions as may be necessary to maintain such registrations and qualifications
      in
      effect at all times during the Registration Period, and (iv) take all such
      other lawful actions reasonably necessary or advisable to qualify the
      Registrable Securities for sale in such jurisdictions; provided,
      however,
      that the
      Company shall not be required in connection therewith or as a condition thereto
      to (A) qualify to do business in any jurisdiction where it would not
      otherwise be required to qualify, (B) subject itself to general taxation in
      any such jurisdiction or (C) file a general consent to service of process
      in any such jurisdiction;

     

    (e)
      As
      promptly as practicable after becoming aware of such event, notify the Investor
      of the occurrence of any event, as a result of which the Prospectus included
      in
      the Registration Statement, as then in effect, includes an untrue statement
      of a
      material fact or omits to state a material fact required to be stated therein
      or
      necessary to make the statements therein, in light of the circumstances under
      which they were made, not misleading, and promptly prepare an amendment to
      the
      Registration Statement and supplement to the Prospectus to correct such untrue
      statement or omission, and deliver a number of copies of such supplement and
      amendment to each Investor as such Investor may reasonably request;

     

    (f)
      As
      promptly as practicable after becoming aware of such event, notify the Investor
      (or, in the event of an underwritten offering, the managing underwriters) of
      the
      issuance by the Commission of any stop order or other suspension of the
      effectiveness of the Registration Statement and take all lawful action to effect
      the withdrawal, rescission
      or
      removal of such stop order or other suspension;

     

    (g)
      Take
      all
      such other lawful actions reasonably necessary to expedite and facilitate the
      disposition by the Investor of his Registrable Securities in accordance with
      the
      intended methods therefor provided in the Prospectus which are customary under
      the circumstances;

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (h)
      Make
      generally available to its security holders as soon as practicable, but in
      any
      event not later than 18
      months
      after the Effective Date of the Registration Statement, an earnings
      statement of the Company and its subsidiaries complying with Section 11(a)
      of the Securities Act and the rules and regulations of the Commission
      thereunder;

     

    (i)
      In
      the
      event of an underwritten offering, promptly include or incorporate in a
      Prospectus supplement or post-effective amendment to the Registration Statement
      such information as the underwriters reasonably agree should be included therein
      and to which the Company does not reasonably object and make all required
      filings of such Prospectus supplement or post-effective amendment as soon as
      practicable after it is notified of the matters to be included or incorporated
      in such Prospectus supplement or post-effective amendment;

     

    (j)
      Make
      reasonably available for inspection by the Investor, any underwriter
      participating in any disposition pursuant to the Registration Statement, and
      any
      attorney, accountant or other agent retained by such Investors or any such
      underwriter all relevant financial and other records, pertinent corporate
      documents and properties of the Company and its subsidiaries, and cause the
      Company’s officers, directors and employees to supply all information reasonably
      requested by the Investor or any such underwriter, attorney, accountant or
      agent
      in connection with the Registration Statement, in each case, as is customary
      for
      similar due diligence examinations; provided,
      however,
      that all
      records, information and documents that are designated in writing by the
      Company, in good faith, as confidential, proprietary or containing any nonpublic
      information shall be kept confidential by such Investors and any such
      underwriter, attorney, accountant or agent (pursuant to an appropriate
      confidentiality agreement in the case of any such holder or agent), unless
      such
      disclosure is made pursuant to judicial process in a court proceeding (after
      first giving the Company an opportunity promptly to seek a protective order
      or
      otherwise limit the scope of the information sought to be disclosed) or is
      required by law, or such records, information or documents become available
      to
      the public generally or through a third party not in violation of an
      accompanying obligation of confidentiality; and provided,
      further,
      that, if
      the foregoing inspection and information gathering would otherwise disrupt
      the
      Company’s conduct of its business, such inspection and information gathering
      shall, to the maximum extent possible, be coordinated on behalf of the Investors
      and the other parties entitled thereto by one firm of counsel designated
      by and
      on behalf of the majority in interest of Investors and other
      parties;

     

    (k)
      In
      connection with any offering,
      make such representations and warranties to the Investor and to the underwriters
      if an underwritten offering,
      in
      form, substance and scope as are customarily made by a company to underwriters
      in secondary underwritten offerings;

     

    (l)
      In
      connection with any underwritten offering, deliver such documents and
      certificates as may be reasonably required by the underwriters;

     

    (m)
      Cooperate
      with the Investor to facilitate the timely preparation and delivery of
      certificates representing Registrable
      Securities
      to be
      sold pursuant to the Registration Statement, which certificates shall, if
      required under the terms of this Agreement, be free of all restrictive legends,
      and to enable such Registrable
      Securities
      to be in
      such denominations and registered in such names as any Investor may request
      and
      maintain a transfer agent for the Common Stock; and

     

    (n)
      Use
      its
      commercially reasonable efforts to cause all Registrable
      Securities
      covered
      by the Registration Statement to be listed or qualified for trading on the
      principal Trading Market, if any, on which the Common Stock is traded or listed
      on the Effective Date of the Registration Statement.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    Section
      4.3. Obligations
      and Acknowledgements of the Investor.
      In
      connection with the registration of the Registrable
      Securities, the Investor shall have the following obligations and hereby make
      the following acknowledgements:

     

    (a)
      It
      shall
      be a condition precedent to the obligations of the Company to include
      the
      Registrable Securities in
      the
      Registration Statement
      that the
      Investor (i) shall furnish to the Company such information regarding
      itself, the Registrable Securities held by it and the intended method of
      disposition of the Registrable Securities held by it as shall be reasonably
      required to effect the registration of such Registrable Securities and
      (ii) shall execute such documents in connection with such registration as
      the Company may reasonably request. At least five Business Days prior to the
      first anticipated filing date of a Registration Statement, the Company shall
      notify the Investor of the information the Company requires from the Investor
      (the “Requested
      Information”)
      if the
      Investor elects to have any of its Registrable Securities included in the
      Registration Statement. If at least two Business Days prior to the anticipated
      filing date the Company has not received the Requested Information from the
      Investor, then the Company may file the Registration Statement without including
      any Registrable Securities of the Investor and the Company shall have no further
      obligations under this Article 4 to the Investor
      after
      such Registration Statement has been declared effective. If the Investor
      notifies the Company and provides the Company the information required hereby
      prior to the time the Registration Statement is declared effective, the Company
      will file an amendment to the Registration Statement that includes the
      Registrable Securities of the Investor;
      provided,
      however,
      that the
      Company shall not be required to file such amendment to the Registration
      Statement at any time less than 5 Business Days prior to the Effectiveness
      Date.

     

    (b)
      The
      Investor agrees to cooperate with the Company in connection with the preparation
      and filing of a Registration Statement hereunder, unless the Investor has
      notified the Company in writing of its election to exclude all of its
      Registrable Securities from such Registration Statement;

     

    (c)
      The
      Investor agrees that, upon receipt of any notice from the Company of the
      occurrence of any event of the kind described in Section 4.2(e) or 4.2(f),
      the Investor shall immediately discontinue its disposition of Registrable
      Securities pursuant to the Registration Statement covering such Registrable
      Securities until the Investor’s receipt of the copies of the supplemented or
      amended Prospectus contemplated by Section 4.2(e) and, if so directed by
      the Company, the Investor shall deliver to the Company (at the expense of the
      Company) or destroy (and deliver to the Company a certificate of destruction)
      all copies in the Investor’s possession, of the Prospectus covering such
      Registrable Securities current at the time of receipt of such notice;
      and

     

    (d)
      The
      Investor acknowledges that it may be deemed to be a statutory underwriter within
      the meaning of the Securities Act with respect to the Registrable Securities
      being registered for resale by it, and if the Investor includes Registrable
      Securities for offer and sale within a Registration Statement the Investor
      hereby consents to the inclusion in such Registration Statement of a disclosure
      to such effect.

     

    Section
      4.4. Expenses
      of Registration.
      All
      expenses (other than underwriting discounts and commissions and the fees an
      expenses of the Investor’s counsel) incurred in connection with registrations,
      filings or qualifications pursuant to this Article 4, including, without
      limitation, all registration, listing, and qualifications fees, printing and
      engraving fees, accounting fees, and the fees and disbursements of counsel
      for
      the Company, shall be borne by the Company.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    Section
      4.6. Indemnification
      and Contribution

     

    (a)
      Indemnification
      by the Company.
      The
      Company shall indemnify and hold harmless the Investor and each underwriter,
      if
      any, which facilitates the disposition of Registrable Securities, and each
      of
      their respective officers and directors and each Person who controls such
      underwriter within the meaning of Section 15 of the Securities Act or
      Section 20 of the Exchange Act (each such Person being sometimes
      hereinafter referred to as an“Indemnified
      Person”)
      from
      and against any losses, claims, damages or liabilities, joint or several, to
      which such Indemnified Person may become subject under the Securities Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon an untrue statement or alleged
      untrue statement of a material fact contained in any Registration Statement
      or
      an omission or alleged omission to state therein a material fact required to
      be
      stated therein or necessary to make the statements therein, not misleading,
      or
      arise out of or are based upon an untrue statement or alleged untrue statement
      of a material fact contained in any Prospectus or an omission or alleged
      omission to state therein a material fact required to be stated therein or
      necessary to make the statements therein, in the light of the circumstances
      under which they were made, not misleading; and the Company hereby agrees to
      reimburse such Indemnified Person for all reasonable legal and other expenses
      incurred by them in connection with investigating or defending any such action
      or claim as and when such expenses are incurred; provided,
      however, that
      the
      Company shall not be liable to any such Indemnified Person in any such case
      to
      the extent that any such loss, claim, damage or liability arises out of or
      is
      based upon (i) an untrue statement or alleged untrue statement made in, or
      an omission or alleged omission from, such Registration Statement or Prospectus
      in reliance upon and in conformity with written information furnished to the
      Company by such Indemnified Person expressly for use therein or (ii) in the
      case of the occurrence of an event of the type specified in Section 4.3(e),
      the use by the Indemnified Person of an outdated or defective Prospectus after
      the Company has provided to such Indemnified Person an updated Prospectus
      correcting the untrue statement or alleged untrue statement or omission or
      alleged omission giving rise to such loss, claim, damage or
      liability.

     

    (b)
      Indemnification
      by the Investor and Underwriters.
      The
      Investor agrees, as
      a
      consequence of the inclusion of any of its Registrable Securities in a
      Registration Statement, and each underwriter, if any, which facilitates the
      disposition of Registrable Securities shall agree, severally
      and not jointly, as
      a
      consequence of facilitating such disposition of Registrable Securities to
      (i) indemnify and hold harmless the Company, its directors (including any
      person who, with his or her consent, is named in the Registration Statement
      as a
      director nominee of the Company), its officers who sign any Registration
      Statement and each Person, if any, who controls the Company within the meaning
      of either Section 15 of the Securities Act or Section 20 of the
      Exchange Act, against any losses, claims, damages or liabilities to which the
      Company or such other persons may become subject, under the Securities Act
      or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon an untrue statement or alleged
      untrue statement of a material fact contained in such Registration Statement
      or
      Prospectus or arise out of or are based upon the omission or alleged omission
      to
      state therein 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, in the case of the Prospectus), not misleading, in each case to the
      extent, but only to the extent, that such untrue statement or alleged untrue
      statement or omission or alleged omission was made in reliance upon and in
      conformity with written information furnished to the Company by the Investor
      or
      underwriter expressly for use therein,
      and
      (ii) reimburse the Company for any legal or other expenses incurred by the
      Company in connection with investigating or defending any such action or claim
      as such expenses are incurred;
      provided,
      however,
      that the
      Investor shall not be liable under this Section 4.5(b) for any amount in
      excess of the net proceeds paid to the Investor in respect of Registrable
      Securities sold by it.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (c)
      Notice
      of Claims, etc. 
      Promptly
      after receipt by a Person seeking indemnification pursuant to this
      Section 4.5 (an “Indemnified
      Party”)
      of
      written notice of any investigation, claim, proceeding or other action in
      respect of which indemnification is being sought (each, a “Claim”),
      the
      Indemnified Party promptly shall notify the Person against whom indemnification
      pursuant to this Section 4.5 is being sought (the“Indemnifying
      Party”)
      of the
      commencement thereof; but the omission to so notify the Indemnifying Party
      shall
      not relieve it from any liability that it otherwise may have to the Indemnified
      Party, except to the extent that the Indemnifying Party is materially prejudiced
      and forfeits substantive rights and defenses by reason of such failure. In
      connection with any Claim as to which both the Indemnifying Party and the
      Indemnified Party are parties, the Indemnifying Party shall be entitled to
      assume the defense thereof. Notwithstanding the assumption of the defense of
      any
      Claim by the Indemnifying Party, the Indemnified Party shall have the right
      to
      employ separate legal counsel and to participate in the defense of such Claim,
      and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
      and expenses of such separate legal counsel to the Indemnified Party if (and
      only if): (i) the Indemnifying Party shall have agreed to pay such fees,
      costs and expenses, (ii) the Indemnified Party shall
      reasonably have concluded that representation of the Indemnified Party by the
      Indemnifying Party by the same legal counsel would not be appropriate due to
      actual or, as reasonably determined by legal counsel to the Indemnified Party,
      potentially differing interests between such parties in the conduct of the
      defense of such Claim, or if there may be legal defenses available to the
      Indemnified Party that are in addition to or disparate from those available
      to
      the Indemnifying Party, or (iii) the Indemnifying Party shall have failed
      to employ legal counsel reasonably satisfactory to the Indemnified Party within
      a reasonable period of time after notice of the commencement of such Claim.
      If
      the Indemnified Party employs separate legal counsel in circumstances other
      than
      as described in the preceding sentence, the fees, costs and expenses of such
      legal counsel shall be borne exclusively by the Indemnified Party. Except as
      provided above, the Indemnifying Party shall not, in connection with any Claim
      in the same jurisdiction, be liable for the fees and expenses of more than
      one
      firm of counsel for the Indemnified Party (together with appropriate local
      counsel). The Indemnified Party shall not, without the prior written consent
      of
      the Indemnifying Party (which consent shall not unreasonably be withheld),
      settle or compromise any Claim or consent to the entry of any judgment that
      does
      not include an unconditional release of the Indemnifying Party from all
      liabilities with respect to such Claim or judgment
      or
      contain any admission of wrongdoing.

     

    (d)
      Contribution.
      If the
      indemnification provided for in this Section 4.5 is unavailable to or
      insufficient to hold harmless an Indemnified Party in respect of any losses,
      claims, damages or liabilities (or actions in respect thereof) referred to
      therein, then each Indemnifying Party shall contribute to the amount paid or
      payable by such Indemnified Party as a result of such losses, claims, damages
      or
      liabilities (or actions in respect thereof) in such proportion as is appropriate
      to reflect the relative fault of the Indemnifying Party and the Indemnified
      Party in connection with the statements or omissions or
      alleged statements or omissions which
      resulted in such losses, claims, damages or liabilities (or actions in respect
      thereof), 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 the untrue or alleged untrue statement
      of a material fact or omission or alleged omission to state a material fact
      relates to information supplied by such Indemnifying Party or by such
      Indemnified Party, and the parties’ relative intent, knowledge, access to
      information and opportunity to correct or prevent such statement or omission.
      The parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 4.5(d) were determined by pro rata allocation
      (even if the Investors or any underwriters were treated as one entity for such
      purpose) or by any other method of allocation which does not take account of
      the
      equitable considerations referred to in this Section 4.5(d). The amount
      paid or payable by an Indemnified Party as a result of the losses, claims,
      damages or liabilities (or actions in respect thereof) referred to above shall
      be deemed to include any legal or other fees or expenses reasonably incurred
      by
      such Indemnified Party in connection with investigating or defending any such
      action or claim. No person guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the Securities Act) shall be entitled to
      contribution from any person who was not guilty of such fraudulent
      misrepresentation. 

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (e)
      Limitation
      on Investor’s and Underwriters’ Obligations.
      Notwithstanding any other provision of this Section 4.5, in no event shall
      (i) the Investor have
      any
      liability under
      this Section 4.5 for any amounts in excess of the dollar amount of the
      proceeds actually
      received
      by the Investor from the sale of Registrable Securities (after deducting any
      fees, discounts and commissions applicable thereto) pursuant to any Registration
      Statement under which such Registrable Securities are
      registered under the Securities Act and (ii) any underwriter be required to
      undertake liability to any Person hereunder for any amounts in excess of the
      aggregate discount, commission or other compensation payable to such underwriter
      with respect to the Registrable Securities underwritten by it and distributed
      pursuant to the Registration Statement.

     

    (f)
      Other
      Liabilities.
      The
      obligations of the Company under this Section 4.5 shall be in addition to
      any liability which the Company may otherwise have to any Indemnified Person
      and
      the obligations of any Indemnified Person under this Section 4.5 shall be
      in addition to any liability which such Indemnified Person may otherwise have
      to
      the Company. The remedies provided in this Section 4.5 are not exclusive and
      shall not limit any rights or remedies which may otherwise be available to
      an
      indemnified party at law or in equity.

     

    Section
      4.6. Rule
      144.
      With a
      view to making available to the Investor the benefits of Rule 144, the
      Company agrees to use its best efforts to:

     

    (i)
      comply
      with the provisions of paragraph (c)(1) of Rule 144; and

     

    (ii)
      file
      with
      the Commission in a timely manner all reports and other documents required
      to be
      filed by the Company pursuant to Section 13 or 15(d) under the Exchange
      Act; and, if at any time it is not required to file such reports but in the
      past
      had been required to or did file such reports, it will, upon the request of
      any
      Investor, make available other information as required by, and so long as
      necessary to permit sales of, its Registrable Securities pursuant to
      Rule 144.

     

    Section 4.7.
      Common
      Stock Issued Upon Stock Split, etc.
      The
      provisions of this Article 4 shall apply to any shares of Common Stock or
      any other securities issued as a dividend or distribution in respect of the
      Shares or the Warrant Shares.

    

    ARTICLE
      5

    

    Other
      Agreements of the Parties

    

    Section
      5.1. Certificates;
      Legends.

    

    (a)
       The
      Securities may only be transferred in compliance with state and federal
      securities laws. In connection with any transfer of the Securities other than
      (i) pursuant to an effective registration statement, (ii) to the Company, or
      (iii) to an Affiliate of the Investor, 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.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (b)
       The
      certificates representing the Shares and the Warrants to be delivered at the
      Closings and the certificates evidencing the Warrant Shares to be delivered
      upon
      exercise of the Warrants will contain appropriate legends referring to
      restrictions on transfer relating to the registration requirements of the
      Securities Act and applicable state securities laws.

    

    Section
      5.2. Integration.
      The
      Company has not and 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 Investor, or that would be integrated
      with the offer or sale of the Securities for purposes of the rules and
      regulations of any Trading Market in a manner that would require stockholder
      approval of the sale of the securities to the Investor.

    

    Section
      5.3. Securities
      Laws Disclosure; Publicity.
      By 9:00
      a.m. (New York time) on the Trading Day following the execution of this
      Agreement, and by 5:00 p.m. (New York time) on the Initial Closing Date, the
      Company shall issue press releases disclosing the transactions contemplated
      hereby and the Closing. On the Trading Day following the execution of this
      Agreement the Company will file a Current Report on Form 8-K disclosing the
      material terms of the Transaction Documents (and attach the Transaction
      Documents as exhibits thereto), and on each Closing Date the Company will file
      an additional Current Report on Form 8-K to disclose the Closing. In addition,
      the Company will make such other filings and notices in the manner and time
      required by the Commission and the Trading Market on which the Common Stock
      is
      listed. 

     

    Section
      5.4. Use
      of Proceeds.
      The
      Company shall use the net proceeds from the sale of the Securities hereunder
      (i)
      for working capital purposes, (ii) to purchase fixed assets used in the
      development or production of the Company’s products or (iii) for investment in
      new technologies related to the Company’s business. 

    

    Section
      5.5. Right
      of First Refusal

     

    (a)
      Proposed
      Financings.
      In the
      event that, during the period commencing on the Initial Closing Date and
      continuing to the later of (i) the second anniversary of the First Closing
      Date
      or (ii) the Cash Flow Trigger Date, the Company seeks to raise additional funds
      through a private placement of its securities (a “Proposed
      Financing”),
      other
      than Exempt Issuances, the Investor shall have the right to participate in
      the
      Proposed Financing on a pro rata basis, based on the percentage that (a) the
      number of shares of Common Stock then held by the Investor plus
      the
      number of shares of Common Stock issuable upon conversion of the Warrants bears
      to (b) the total number of shares of Common Stock outstanding plus
      the
      number of shares of Common Stock issuable upon conversion of the Series A
      Preferred Stock and the Prior Convertible Securities and exercise of the
      Warrants and the Prior Warrants. 

     

    (b)
      Investment
      Terms.
      The
      terms
      on which the Investor shall purchase securities pursuant to the Proposed
      Financing shall be the same as such securities are purchased by other investors
      in such Proposed Financing. The Company shall give the Investor written notice,
      no later than the date of the initial closing of the Proposed Financing, setting
      forth the terms of the Proposed Financing (the “Financing
      Notice”).
      In the
      event that the terms of the Proposed Financing are changed, the Borrower shall
      provide the Investor with the same notice of the revised terms that are provided
      to the other investors in such Proposed Financing. 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (c)
      Financings.
      In
      the
      event that the Investor does not exercise, within ten Business Days after
      receipt of the Financing Notice, its right to participate in the Proposed
      Financing, the Company may sell the securities in the Proposed Financing at
      a
      price and on terms which are no more favorable to the investors in such Proposed
      Financing than the terms offered to the Investor. If the Company subsequently
      changes the price or terms so that the terms are at a price or more favorable
      to
      the investors in the Proposed Financing, the Company shall re-offer the
      securities to the Investor as provided in this Section 5.5. 

     

    Section
      5.6. Negative
      Covenants.
      During
      the period from the First Closing Date to the Cash Flow Trigger Date, the
      Company shall not, without the prior written consent of the Investor (which
      consent may be granted or withheld by the Investor in its sole discretion),
      take
      any of the following actions:

    

    
      	 	
              (a)

            	
              grant,
                during any fiscal year, incentive stock options, non-qualified options
                or
                any similar equity incentive to employees, officers, directors or
                consultants of the Company for more than an aggregate of 2,000,000
                shares
                of Common Stock;

            

    

    

    
      	 	
              (b)

            	
              grant
                to employee, officer, director or consultant of the Company an option
                for
                the purchase of shares of Common Stock at an exercise price less
                than
                $1.50 per share (other than automatic grants of non-qualified options
                to
                non-employee directors of the Company pursuant to the Company’s 2007
                Incentive Stock Plan); or

            

    

    

    
      	 	
              (c)

            	
              issue
                any promissory note or evidence of debt having rights of repayment
                senior
                to the Notes. 

            

    

    

    ARTICLE
      6

    

    Conditions
      Precedent to Closing

    

    Section
      6.1. Conditions
      Precedent to the Obligations of the Investor to Purchase
      Securities.
      The
      obligation of the Investor to acquire Securities at any Closing is subject
      to
      the satisfaction or waiver by the Investor, at or before the Closing, of each
      of
      the following conditions:

    

    
      	 	
              (a)

            	
              Representations
                and Warranties.
                The Company shall have delivered a certificate of the Company’s Chief
                Executive Officer certifying that the representations and warranties
                of
                the Company contained herein are true and correct in all material
                respects
                as of the date when made and as of the Closing Date as though made
                on and
                as of such Closing Date;

            

    

    

    
      	 	
              (b)

            	
              Performance.
                The Company shall have performed, satisfied and complied in all material
                respects with all covenants, agreements and conditions required by
                the
                Transaction Documents to be performed, satisfied or complied with
                by it at
                or prior to the Closing;

            

    

    

    
      	 	
              (c)

            	
              No
                Injunction.
                No
                statute, rule, regulation, executive order, decree, ruling or injunction
                shall have been enacted, entered, promulgated or endorsed by any
                court or
                governmental authority of competent jurisdiction that prohibits the
                consummation of any of the transactions contemplated by the Transaction
                Documents;

            

    

    

    
      	 	
              (d)

            	
              No
                Adverse Changes.
                Since the date of execution of this Agreement, no event or series
                of
                events shall have occurred that reasonably could have or result in
                a
                Material Adverse Effect;

            

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (e)

            	
              Board
                of Directors.
                David Gelbaum shall have been elected a director of the Company,
                to serve
                in the class of directors whose term expires in 2011. Joseph P. Bartlett
                shall have been appointed an advisory director, with full rights
                to
                receive notice of all meetings of the Company’s Board of Directors, to
                receive copies of all materials provided by the Company to the members
                of
                its Board of Directors, and to attend and participate in (but not
                vote at)
                all meetings of the Company’s Board of Directors.
                

            

    

    

    
      	 	
              (f)

            	
              Compensation
                Committee.
                The number of directors constituting the Compensation Committee of
                the
                Company’s Board of Directors shall have been set at two (2) and David
                Gelbaum shall have been designated as one of the two members of such
                committee.

            

    

    

    
      	 	
              (g)

            	
              2007
                Warrants.
                The Common Stock Purchase Warrant issued to the Investor pursuant
                to the
                2007 Agreement shall have been amended to change the exercise price
                thereof to $1,25 per share and to extend the expiration thereof to
                December 31, 2012.

            

    

    

    
      	 	
              (h)

            	
              Company
                Deliverables.
                The Company shall have delivered the Company Deliverables in accordance
                with Section 2.2(a).

            

    

    

    Section
      6.2. Conditions
      Precedent to the Obligations of the Company to Sell
      Securities.
      The
      obligation of the Company to sell Securities at any Closing is subject to the
      satisfaction or waiver by the Company, at or before the Closing, of each of
      the
      following conditions:

    

    
      	 	
              (a)

            	
              Representations
                and Warranties.
                The representations and warranties of the Investor contained herein
                shall
                be true and correct in all material respects as of the date when
                made and
                as of the Closing Date as though made on and as of such
                date;

            

    

    

    
      	 	
              (b)

            	
              Performance.
                The Investor shall have performed, satisfied and complied in all
                material
                respects with all covenants, agreements and conditions required by
                the
                Transaction Documents to be performed, satisfied or complied with
                by such
                Investor at or prior to the Closing;

            

    

    

    
      	 	
              (c)

            	
              No
                Injunction.
                No
                statute, rule, regulation, executive order, decree, ruling or injunction
                shall have been enacted, entered, promulgated or endorsed by any
                court or
                governmental authority of competent jurisdiction that prohibits the
                consummation of any of the transactions contemplated by the Transaction
                Documents; and

            

    

    

    
      	 	
              (d)

            	
              Purchase
                Price.
                The Investor shall have paid the Purchase Price payable at such Closing
                in
                accordance with Section 2.3.

            

    

    

    ARTICLE
      7

    

    Miscellaneous

    

    Section
      7.1. Fees
      and Expenses.
      Each
      party shall pay the fees and expenses of its advisers, counsel, accountants
      and
      other experts, if any, and all other expenses incurred by such party incident
      to
      the negotiation, preparation, execution, delivery and performance of the
      Transaction Documents. The Company shall pay all stamp and other taxes and
      duties levied in connection with the sale of the Shares.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

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

    

    Section
      7.3. 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 (provided the sender receives a machine-generated
      confirmation of successful transmission) at the facsimile number specified
      in
      this Section prior to 6:30 p.m. (Little Rock time) on a Business Day, (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 6:30 p.m. (Little
      Rock time) on any Business Day, (c) the Business Day following the date of
      transmission, if sent by a nationally recognized overnight courier service,
      or
      (d) upon actual receipt by the party to whom such notice is required to be
      given. The address for such notices and communications shall be as
      follows:

    

    
      	
              If to the Company:

            	
              ThermoEnergy Corporation

            
	 	
              Attn.:
                Andrew T. Melton

            
	 	
              124
                West Capitol Avenue, Suite 880

            
	 	
              Little
                Rock, AR 72201

            
	 	 
	 	
              Telephone:
                (501) 376-6477

            
	 	
              Facsimile:
                (501) 376-5249

            
	 	 
	
              With a copy to:

            	
              Nixon
                Peabody, LLP

            
	 	
              Attn.:
                William E. Kelly, Esq.

            
	 	
              100
                Summer Street

            
	 	
              Boston,
                MA 02110

            
	 	 
	 	
              Telephone:
                (617) 345-1195

            
	 	
              Facsimile:
                (866) 743-4899

            
	 	 
	
              If to the Investor:

            	
              The Quercus Trust

            
	 	
              2309
                Santiago Drive

            
	 	
              Newport
                Beach, California 92660

            
	 	 
	
              With a copy to:

            	
              Joseph
                P. Bartlett, Esq.

            
	 	
              1900
                Avenue of the Stars, Suite 2100

            
	 	
              Los
                Angeles, CA 90067

            
	 	 
	 	
              Telephone:
                (310) 201-7481

            
	 	
              Facsimile:
                (310) 201-2380;

            

    

    

    or
      such
      other address as may be designated in writing hereafter, in the same manner,
      by
      such Person.

    

    Section
      7.4. Amendments;
      Waivers; No Additional Consideration.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed by the Company and the Investor. 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. 

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    Section
      7.5  Termination.
      This
      Agreement may be terminated prior to Initial Closing:

    

    
      	 	
              (a)
                

            	
              by
                written agreement of the Investor and the Company;
                or

            

    

    

    
      	 	
              (b)
                

            	
              by
                the Company or the Investor, upon written notice to the other, if
                the
                Closing shall not have taken place by 6:30 p.m., Little Rock time,
                on the
                September 30, 2008; provided,
                that the right to terminate this Agreement under this Section 7.5(b)
                shall
                not be available to any Person whose failure to comply with its
                obligations under this Agreement has been the cause of or resulted
                in the
                failure of the Closing to occur on or before such
                time.

            

    

    

    Upon
      a
      termination in accordance with this Section 7.5, the Company and the Investor
      shall have no further obligation or liability (including as arising from such
      termination) to the other.

    

    Section
      7.6. 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. This Agreement shall be
      construed as if drafted jointly by the parties, and no presumption or burden
      of
      proof shall arise favoring or disfavoring any party by virtue of the authorship
      of any provisions of this Agreement or any of the Transaction
      Documents.

    

    Section
      7.7. Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. Neither party may assign this Agreement
      or any rights or obligations hereunder without the prior written consent of
      the
      other party.

    

    Section
      7.8. 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 4.6 (with respect to rights to indemnification and
      contribution).

    

    Section
      7.9. 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 Delaware, without regard to the
      principles of conflicts of law thereof. Each party agrees that all Proceedings
      concerning the interpretations, enforcement and of the transactions contemplated
      by this Agreement and any other Transaction Documents (whether brought against
      a
      party hereto or its respective Affiliates,
      employees or agents) shall be commenced exclusively in the state or federal
      courts sitting in, or having jurisdiction over, Little Rock, Arkansas (the
      “Arkansas
      Courts”).
      Each
      party hereto hereby irrevocably submits to the exclusive jurisdiction of the
      Arkansas 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 the any of the Transaction
      Documents), and hereby irrevocably waives, and agrees not to assert in any
      Proceeding, any claim that it is not personally subject to the jurisdiction
      of
      any such Arkansas Court, or that such Proceeding has been commenced in an
      improper or inconvenient forum. Each party hereto hereby irrevocably waives
      personal service of process and consents to process being served in any such
      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. 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 a Transaction Document, then the prevailing party
      in
      such Proceeding shall be reimbursed by the other party for its reasonable
      attorneys’ fees and other costs and expenses incurred with the investigation,
      preparation and prosecution of such Proceeding.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    Section
      7.10. Survival.
      The
      representations, warranties, agreements and covenants contained herein shall
      survive the Closings and the delivery of the Securities.

    

    Section
      7.11. 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) with the same
      force and effect as if such facsimile signature page were an original thereof,
      notwithstanding any subsequent failure or refusal of the signatory to deliver
      an
      original executed in ink.

    

    Section
      7.12. 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 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.

    

    Section
      7.13. 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. The applicants for a new
      certificate or instrument under such circumstances shall also pay any reasonable
      third-party costs associated with the issuance of such replacement Securities.
      If a replacement certificate or instrument evidencing any Securities is
      requested due to a mutilation thereof, the Company may require delivery of
      such
      mutilated certificate or instrument as a condition precedent to any issuance
      of
      a replacement.

    

    Section
      7.14. Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of the Investors and the Company will
      be entitled to specific performance under the Transaction Documents. The parties
      agree that, except as expressly set forth herein with respect to liquidated
      damages, 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.

    

    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.

    

    
      	
              The
                Quercus Trust

            	 	
              ThermoEnergy
                Corporation

            
	
              By:
                

            	
              /s/
                David Gelbaum

            	 	
              By:

            	
               /s/
                Andrew T. Melton

            
	 	
              David
                Gelbaum

            	 	 	
              Andrew
                T. Melon

            
	 	
              Trustee

            	 	 	
              Executive
                Vice President and CFO

            

    

    

    
      
        
        

      

      
        28WARRANT
        AGREEMENT

       

      THIS WARRANT AGREEMENT
        is made
        as of __, 2008 between Korea Milestone Acquisition Corporation, a Cayman
        Islands
        corporation, with offices at 545-7 Dogokdong, Gangnam, Seoul, Korea 135-170
        (the
“Company”),
        and
        Continental Stock Transfer & Trust Company, a New York corporation, with
        offices at 17 Battery Place, New York, New York 10004 (the “Warrant
        Agent”).
        

       

      WHEREAS,
        the
        Company is engaged in an initial public offering (“Public
        Offering”)
        and,
        in connection therewith, has determined to issue and deliver: (i) up to
        5,750,000 units (“Public Units”),
        each
        Public Unit consisting of two of the Company’s ordinary shares, par value
        $0.0001 per share (“Ordinary
        Shares”)
        and
        one warrant (“Public
        Warrants”),
        each
        of such Public Warrants evidencing the right of the holder thereof to purchase
        one Ordinary Share for $6.00, subject to adjustment as described herein and
        (ii)
        375,000 warrants issuable pursuant to the Unit Purchase Option issued to
        Broadband Capital Management, LLC (the “Representative”)
        or its
        designees (the “Representative’s
        Warrants”);

       

      WHEREAS,
        immediately prior to the completion of the Public Offering, the Company shall
        sell and issue (i) 2,307,692 (the “Private
        Warrants”)
        to
        Sang-Chul Kim, each of such Private Warrants evidencing the right of the
        holder
        thereof to purchase one Ordinary Share for $6.00, subject to adjustment as
        described herein, (the Public Warrants, the Representative’s Warrants and the
        Private Warrants are together referred herein as “Warrants”);
        

       

      WHEREAS,
        the
        Company has filed with the Securities and Exchange Commission a Registration
        Statement, No. 333-153155, on Form F-1 (“Registration
        Statement”)
        for
        the registration under the Securities Act of 1933, as amended (“Act”),
        of,
        among other securities, the Public Warrants, the Representative’s Warrants and
        the Ordinary Shares issuable upon exercise of the Public Warrants and the
        Representative’s Warrants; 

       

      WHEREAS,
        the
        Company desires the Warrant Agent to act on behalf of the Company, and the
        Warrant Agent is willing to so act, in connection with the issuance,
        registration, transfer, exchange, redemption, exercise and cancellation of
        the
        Warrants; 

       

      WHEREAS,
        the
        Company desires to provide for the form and provisions of the Warrants, the
        terms upon which they shall be issued and exercised, and the respective rights,
        limitation of rights, and immunities of the Company, the Warrant Agent, and
        the
        holders of the Warrants; and 

       

      WHEREAS,
        all
        acts and things have been done and performed that are necessary to make the
        Warrants, when executed on behalf of the Company and countersigned by or
        on
        behalf of the Warrant Agent, as provided herein, the valid, binding and legal
        obligations of the Company, and to authorize the execution and delivery of
        this
        Agreement. 

       

      NOW,
        THEREFORE,
        in
        consideration of the mutual agreements herein contained, the parties hereto
        agree as follows: 

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

       

      1. Appointment
        of Warrant Agent.
        The
        Company hereby appoints the Warrant Agent to act as agent for the Company
        with
        respect to the Warrants, and the Warrant Agent hereby accepts such appointment
        and agrees to perform the same in accordance with the terms and conditions
        set
        forth in this Agreement. 

       

      2. Warrants.
        

       

      2.1 Form
        of Warrant.
        Each
        Warrant shall be issued in registered form only, shall be in substantially
        the
        form of Exhibit
        A
        hereto,
        the provisions of which are incorporated herein and shall be signed by, or
        bear
        the facsimile signature of, the Chairman of the Board, Chief Executive Officer,
        President, Chief Financial Officer, Vice President or Secretary of the Company
        and shall bear a facsimile of the Company’s seal. In the event the person whose
        facsimile signature has been placed upon any Warrant shall have ceased to
        serve
        in the capacity in which such person signed the Warrant before such Warrant
        is
        issued, it may be issued with the same effect as if he or she had not ceased
        to
        be such at the date of issuance. All of the Warrants shall initially be
        represented by one or more book-entry certificates (each a “Book
        Entry Warrant Certificate”).
        

       

      2.2 Effect
        of Countersignature.
        Unless
        and until countersigned by the Warrant Agent pursuant to this Agreement,
        a
        Warrant shall be invalid and of no effect and may not be exercised by the
        holder
        thereof. 

       

      2.3 Detachability
        of Warrants.
        The
        securities comprising the Units will not be separately transferable until
        the
        90th day after the date of the prospectus relating to the Company’s Public
        Offering (unless the Representative determines that an earlier date is
        acceptable) (the “Detachment
        Date”),
        but
        in no event will separate trading of the securities comprising the Units
        be
        allowed until the Company files a Report of Foreign Private Issuer on Form
        6-K
        that includes an audited balance sheet reflecting the receipt by the Company
        of
        the gross proceeds of the Public Offering including the proceeds received
        by the
        Company from the exercise of the Underwriter’s over-allotment option if the
        over-allotment option is exercised prior to the filing of the Form 6-K.

       

      2.4 Registration.
        

       

      2.4.1 Warrant
        Register.
        The
        Warrant Agent shall maintain books (“Warrant
        Register”)
        for
        registration of original issuance and the registration of transfer of the
        Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall
        issue and register the Warrants in the names of the respective holders thereof
        in such denominations and otherwise in accordance with instructions delivered
        to
        the Warrant Agent by the Company. All of the Public Warrants shall initially
        be
        represented by one or more Book-Entry Warrant Certificates deposited with
        the
        Depository Trust Company (the “Depository”)
        and
        registered in the name of Cede & Co., a nominee of the Depository. Ownership
        of beneficial interests in the Public Warrants shall be shown on, and the
        transfer of such ownership shall be effected through, records maintained
        by (i)
        the Depository or its nominee for each Book-Entry Warrant Certificate, or
        (ii)
        institutions that have accounts with the Depository (such institution, with
        respect to a Warrant in its account, a “Participant”).
        

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      

       

      If
        the
        Depository subsequently ceases to make its book-entry settlement system
        available for the Public Warrants, the Company may instruct the Warrant Agent
        regarding making other arrangements for book-entry settlement. In the event
        that
        the Public Warrants are not eligible for, or it is no longer necessary to
        have
        the Public Warrants available in, book-entry form, the Warrant Agent shall
        provide written instructions to the Depository to deliver to the Warrant
        Agent
        for cancellation each Book-Entry Warrant Certificate, and the Company shall
        instruct the Warrant Agent to deliver to the Depository definitive Warrant
        Certificates in physical form evidencing such Public Warrants. Such definitive
        Warrant Certificates shall be in the form annexed hereto as Exhibit
        A
        with
        appropriate insertions, modifications and omissions, as provided above.

       

      2.4.2 Beneficial
        Owner; Registered Holder.
        The
        term “beneficial
        owner”
shall
        mean, on or after the Detachment Date, any person in whose name ownership
        of a
        beneficial interest in the Warrants evidenced by a Book-Entry Warrant
        Certificate is recorded in the records maintained by the Depository or its
        nominee, and prior to the Detachment Date, the person in whose name the Unit
        to
        which such Warrant Certificate was initially attached as registered upon
        the
        register relating to such Units. Prior to due presentment for registration
        of
        transfer of any Warrant, the Company and the Warrant Agent may deem and treat
        the person in whose name such Warrant shall be registered upon the Warrant
        Register (a “Registered
        Holder”)
        as the
        absolute owner of such Warrant and of each Warrant represented thereby
        (notwithstanding any notation of ownership or other writing on the Warrant
        Certificate made by anyone other than the Company or the Warrant Agent) for
        the
        purpose of any exercise thereof, and for all other purposes, and neither
        the
        Company nor the Warrant Agent shall be affected by any notice to the contrary.
        

       

      3. Terms
        and Exercise of Warrants 

       

      3.1 Warrant
        Price.
        Each
        Warrant shall, when countersigned by the Warrant Agent, entitle the Registered
        Holder thereof, subject to the provisions of (a) such Public Warrant, Private
        Warrant or Representative’s Warrant, as the case may be, and (b) this Warrant
        Agreement, to purchase from the Company the number of Ordinary Shares stated
        therein, at the price of $6.00 per whole share, subject to the adjustments
        provided in Section 4 hereof and in the last sentence of this Section 3.1.
        The
        term “Warrant
        Price”
as
        used
        in this Warrant Agreement refers to the price per share at which Ordinary
        Shares
        may be purchased at the time a Warrant is exercised. The Company in its sole
        discretion may lower the Warrant Price at any time prior to the Expiration
        Date.

       

      3.2 Duration
        of Warrants.
        A
        Warrant may be exercised only during the period (“Exercise
        Period”)
        commencing on the later of the consummation by the Company of a merger, capital
        stock exchange, stock purchase, asset acquisition or other similar business
        combination or a combination of any of the foregoing, of one or more operating
        businesses having collectively, a fair market value (as calculated in accordance
        with the requirements as set forth in the Company’s Memorandum and Articles of
        Incorporation) of at least 80% of the balance in the trust account at the
        time
        of the execution of a definitive agreement for the business combination (a
        “Business
        Combination”),
        or
        ___________ 2008, and terminating at 5:00 p.m., New York City time on the
        earlier to occur of (i) ____________, 2012, or (ii) the date fixed for
        redemption of the Warrants as provided in Section 6 of this Agreement
        (“Expiration
        Date”).
        Except with respect to the right to receive the Redemption Price (as set
        forth
        in Section 6 hereunder), each Warrant not exercised on or before the Expiration
        Date shall become void, and all rights thereunder and all rights in respect
        thereof under this Agreement shall cease at the close of business on the
        Expiration Date. The Company in its sole discretion may extend the duration
        of
        the Warrants by delaying the Expiration Date. 

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

      

       

      3.3 Exercise
        of Warrants.
        A
        Registered Holder may exercise a Warrant by delivering, not later than 5:00
        P.M., New York time, on any Business Day during the Exercise Period (the
        “Exercise
        Date”)
        to the
        Warrant Agent at its corporate trust department (i) the Warrant Certificate
        evidencing the Warrants to be exercised, or, in the case of a Book-Entry
        Warrant
        Certificate, the Warrants to be exercised (the “Book-Entry
        Warrants”)
        free
        on the records of the Depository to an account of the Warrant Agent at the
        Depository designated for such purpose in writing by the Warrant Agent to
        the
        Depository from time to time, (ii) an election to purchase the Shares underlying
        the Warrants to be exercised (“Election
        to Purchase”),
        properly completed and executed by the Registered Holder on the reverse of
        the
        Warrant Certificate or, in the case of a Book-Entry Warrant Certificate,
        properly delivered by the Participant in accordance with the Depository’s
        procedures, and (iii) the Warrant Price for each Warrant to be exercised
        as
        follows: 

       

      (a)
        in cash, good certified check or good bank draft payable to the order of
        the
        Company (or as otherwise agreed to by the Company);

      

      (b)
        in the event of redemption pursuant to Section 6 hereof in which the Company’s
        management has elected to require all holders of Public Warrants to exercise
        such Public Warrants on a “cashless basis,” by surrendering the Public Warrants
        for that number of Ordinary Shares equal to the quotient obtained by dividing
        (x) the product of the number of Ordinary Shares underlying the Public Warrants,
        multiplied by the difference between the Warrant Price and the “Fair Market
        Value” (defined below) by (y) the Fair Market Value. Solely for purposes of this
        Section 3.3, the “Fair Market Value” shall mean the average reported last sale
        price of the Ordinary Shares for the 10 trading days ending on the third
        trading
        day prior to the date on which the notice of redemption is sent to holders
        of
        Warrant pursuant to Section 6 hereof; or

      

      (c)
        with respect to any Private Warrants, in the event of redemption pursuant
        to
        Section 6 hereof in which the Company’s management has not elected to require
        all holders of Private Warrants to exercise such Private Warrants on a “cashless
        basis” or at any time other than in connection with a redemption pursuant to
        Section 6 hereof, in any case so long as such Private Warrants are held by
        Sang-Chul Kim or his permitted transferees, by surrendering such Private
        Warrants for that number of Ordinary Shares equal to the quotient obtained
        by
        dividing (x) the product of the number of Ordinary Shares underlying the
        Private
        Warrants, multiplied by the difference between the exercise price of the
        Private
        Warrants and the “Fair Market Value” by (y) the Fair Market Value. Solely for
        purposes of this Section 3.3, the “Fair Market Value” shall mean the average
        reported last sale price of the Ordinary Shares for the five trading days
        ending
        on the trading day preceding the date the Private Warrants are
        exercised.

      

      If
        any of
        (A) the Warrant Certificate or the Book-Entry Warrants, (B) the Election
        to
        Purchase, or (C) the Warrant Price therefor, is received by the Warrant Agent
        after 5:00 P.M., New York time, on the specified Exercise Date, the Warrants
        will be deemed to be received and exercised on the Business Day next succeeding
        the Exercise Date. If the date specified as the Exercise Date is not a Business
        Day, the Warrants will be deemed to be received and exercised on the next
        succeeding day that is a Business Day. If the Warrants are received or deemed
        to
        be received after the Expiration Date, the exercise thereof will be null
        and
        void and any funds delivered to the Warrant Agent will be returned to the
        Holder
        or Participant, as the case may be, as soon as practicable. In no event will
        interest accrue on funds deposited with the Warrant Agent in respect of an
        exercise or attempted exercise of Warrants. The validity of any exercise
        of
        Warrants will be determined by the Company in its sole discretion and such
        determination will be final and binding upon the Holder and the Warrant Agent.
        Neither the Company nor the Warrant Agent shall have any obligation to inform
        a
        Holder of the invalidity of any exercise of Warrants. 

       

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      

       

      The
        Warrant Agent shall deposit all funds received by it in payment of the Warrant
        Price in the account of the Company maintained with the Warrant Agent for
        such
        purpose and shall advise the Company at the end of each day on which funds
        for
        the exercise of the Warrants are received of the amount so deposited to its
        account. The Warrant Agent shall promptly confirm such telephonic advice
        to the
        Company in writing. 

       

      (i) The
        Warrant Agent shall, by 11:00 A.M. Eastern Time on the Business Day following
        the Exercise Date of any Warrant, advise the Company and the transfer agent
        and
        registrar in respect of (a) the Ordinary Shares issuable upon such exercise
        as
        to the number of Warrants exercised in accordance with the terms and conditions
        of this Agreement, (b) the instructions of each Registered Holder or
        Participant, as the case may be, with respect to delivery of the Ordinary
        Shares
        issuable upon such exercise, and the delivery of definitive Warrant
        Certificates, as appropriate, evidencing the balance, if any, of the Warrants
        remaining after such exercise, (c) in case of a Book-Entry Warrant Certificate,
        the notation that shall be made to the records maintained by the Depository,
        its
        nominee for each Book-Entry Warrant Certificate, or a Participant, as
        appropriate, evidencing the balance, if any, of the Warrants remaining after
        such exercise and (d) such other information as the Company or such transfer
        agent and registrar shall reasonably require. 

       

      (ii) The
        Company shall, by 5:00 P.M., New York time, on the third Business Day next
        succeeding the Exercise Date of any Warrant and the clearance of the funds
        in
        payment of the Warrant Price, execute, issue and deliver to the Warrant Agent,
        the Ordinary Shares to which such Registered Holder or Participant, as the
        case
        may be, is entitled, in fully registered form, registered in such name or
        names
        as may be directed by such Registered Holder or the Participant, as the case
        may
        be. Upon receipt of such Ordinary Shares, the Warrant Agent shall, by 5:00
        P.M.,
        New York time, on the fifth Business Day next succeeding such Exercise Date,
        transmit such Ordinary Shares to or upon the order of the Registered Holder
        or
        Participant, as the case may be. 

       

      In
        lieu
        of delivering physical certificates representing the Ordinary Shares issuable
        upon exercise, provided the Company’s transfer agent is participating in the
        Depository Fast Automated Securities Transfer program, the Company shall
        use its
        reasonable best efforts to cause its transfer agent to electronically transmit
        the Ordinary Shares issuable upon exercise to the Registered Holder or
        Participant by crediting the account of Registered Holder’s prime broker with
        Depository or of the Participant through its Deposit Withdrawal Agent Commission
        system. The time periods for delivery described in the immediately preceding
        paragraph shall apply to the electronic transmittals described herein.
        Notwithstanding the foregoing, the Company shall not be obligated to deliver
        any
        securities pursuant to the exercise of a Warrant unless a registration statement
        under the Act with respect to the Ordinary Shares is effective. In no event
        will
        the Company be required to net cash settle the warrant exercise. Warrants
        may
        not be exercised by, or securities issued to, any Registered Holder in any
        state
        in which such exercise would be unlawful. 

       

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

      

       

      (iii) The
        accrual of dividends, if any, on the Ordinary Shares issued upon the valid
        exercise of any Warrant will be governed by the terms generally applicable
        to
        the Ordinary Shares. From and after the issuance of such Ordinary Shares,
        the
        former Holder of the Warrants exercised will be entitled to the benefits
        generally available to other holders of Ordinary Shares and such former Holder’s
        right to receive payments of dividends and any other amounts payable in respect
        of the Ordinary Shares shall be governed by, and shall be subject to, the
        terms
        and provisions generally applicable to such Ordinary Shares. 

       

      (iv) Warrants
        may be exercised only in whole numbers of Ordinary Shares. No fractional
        Ordinary Shares are to be issued upon the exercise of the Warrant, but rather
        the number of Ordinary Shares to be issued shall be rounded up to the nearest
        whole number. If fewer than all of the Warrants evidenced by a Warrant
        Certificate are exercised, a new Warrant Certificate for the number of
        unexercised Warrants remaining shall be executed by the Company and
        countersigned by the Warrant Agent as provided in Section 2 hereof, and
        delivered to the holder of this Warrant Certificate at the address specified
        on
        the books of the Warrant Agent or as otherwise specified by such Registered
        Holder. If fewer than all the Warrants evidenced by a Book-Entry Warrant
        Certificate are exercised, a notation shall be made to the records maintained
        by
        the Depository, its nominee for each Book-Entry Warrant Certificate, or a
        Participant, as appropriate, evidencing the balance of the Warrants remaining
        after such exercise. 

       

      (v) The
        Company shall not be required to pay any stamp or other tax or governmental
        charge required to be paid in connection with any transfer involved in the
        issue
        of the Ordinary Shares upon the exercise of Warrants; and in the event that
        any
        such transfer is involved, the Company shall not be required to issue or
        deliver
        any Ordinary Shares until such tax or other charge shall have been paid or
        it
        has been established to the Company’s satisfaction that no such tax or other
        charge is due. 

       

      3.4 Valid
        Issuance.
        All
        Ordinary Shares issued upon the proper exercise of a Warrant in conformity
        with
        this Agreement shall be validly issued, fully paid and nonassessable.

       

      3.5 Date
        of Issuance.
        Each
        person in whose name any such certificate for Ordinary Shares is issued shall
        for all purposes be deemed to have become the holder of record of such shares
        on
        the date on which the Warrant was surrendered and payment of the Warrant
        Price
        was made, irrespective of the date of delivery of such certificate, except
        that,
        if the date of such surrender and payment is a date when the stock transfer
        books of the Company are closed, such person shall be deemed to have become
        the
        holder of such Ordinary Shares at the close of business on the next succeeding
        date on which the stock transfer books are open. 

       

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

      

       

      4. Adjustments.
        

       

      4.1 Stock
        Dividends - Split-Ups.
        If
        after the date hereof, and subject to the provisions of Section 4.6 below,
        the
        number of outstanding Ordinary Shares is increased by a stock dividend payable
        in Ordinary Shares, or by a split-up of Ordinary Shares, or other similar
        event,
        then, on the effective date of such stock dividend, split-up or similar event,
        the number of Ordinary Shares issuable on exercise of each Warrant shall
        be
        increased in proportion to such increase in outstanding Ordinary Shares.
        

       

      4.2 Aggregation
        of Shares.
        If,
        after the date hereof, and subject to the provisions of Section 4.6, the
        number
        of outstanding Ordinary Shares is decreased by a consolidation, combination,
        reverse stock split or reclassification of Ordinary Shares or other similar
        event, then, on the effective date of such consolidation, combination, reverse
        stock split, reclassification or similar event, the number of Ordinary Shares
        issuable on exercise of each Warrant shall be decreased in proportion to
        such
        decrease in outstanding Ordinary Shares. 

       

      4.3 Adjustments
        in Warrant Price.
        Whenever the number of Ordinary Shares purchasable upon the exercise of the
        Warrants is adjusted, as provided in Section 4.1 and 4.2 above, the Warrant
        Price shall be adjusted (to the nearest cent) by multiplying such Warrant
        Price
        immediately prior to such adjustment by a fraction (x) the numerator of which
        shall be the number of Ordinary Shares purchasable upon the exercise of the
        Warrants immediately prior to such adjustment, and (y) the denominator of
        which
        shall be the number of Ordinary Shares so purchasable immediately thereafter.
        

       

      4.4 Replacement
        of Securities upon Reorganization, etc.
        In case
        of any reclassification or reorganization of the outstanding Ordinary Shares
        (other than a change covered by Section 4.1 or 4.2 hereof or that solely
        affects
        the par value of such Ordinary Shares), or in the case of any merger or
        consolidation of the Company with or into another corporation (other than
        a
        consolidation or merger in which the Company is the continuing corporation
        and
        that does not result in any reclassification or reorganization of the
        outstanding Ordinary Shares), or in the case of any sale or conveyance to
        another corporation or entity of the assets or other property of the Company
        as
        an entirety or substantially as an entirety in connection with which the
        Company
        is dissolved, the Warrant holders shall thereafter have the right to purchase
        and receive, upon the basis and upon the terms and conditions specified in
        the
        Warrants and in lieu of the Ordinary Shares of the Company immediately
        theretofore purchasable and receivable upon the exercise of the rights
        represented thereby, the kind and amount of shares of stock or other securities
        or property (including cash) receivable upon such reclassification,
        reorganization, merger or consolidation, or upon a dissolution following
        any
        such sale or transfer, that the Warrant holder would have received if such
        Warrant holder had exercised his, her or its Warrant(s) immediately prior
        to
        such event; and if any reclassification also results in a change in Ordinary
        Shares covered by Section 4.1 or 4.2, then such adjustment shall be made
        pursuant to Sections 4.1, 4.2, 4.3 and this Section 4.4. The provisions of
        this
        Section 4.4 shall similarly apply to successive reclassifications,
        reorganizations, mergers or consolidations, sales or other transfers.

       

      4.5 Notices
        of Changes in Warrant.
        Upon
        every adjustment of the Warrant Price or the number of Ordinary Shares issuable
        upon exercise of a Warrant, the Company shall give written notice thereof
        to the
        Warrant Agent, which notice shall state the Warrant Price resulting from
        such
        adjustment and the increase or decrease, if any, in the number of Ordinary
        Shares purchasable at such price upon the exercise of a Warrant, setting
        forth
        in reasonable detail the method of calculation and the facts upon which such
        calculation is based. Upon the occurrence of any event specified in Sections
        4.1, 4.2, 4.3 or 4.4, then, in any such event, the Company shall give written
        notice to the Warrant holder, at the last address set forth for such holder
        in
        the Warrant Register, of the record date or the effective date of the event.
        Failure to give such notice, or any defect therein, shall not affect the
        legality or validity of such event. 

       

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

      

       

      4.6 No
        Fractional Shares.
        Notwithstanding any provision contained in this Agreement to the contrary,
        the
        Company shall not issue fractional Ordinary Shares upon exercise of Warrants.
        If, by reason of any adjustment made pursuant to this Section 4, the holder
        of
        any Warrant would be entitled, upon the exercise of such Warrant, to receive
        a
        fractional interest in an Ordinary Share, the Company shall, upon such exercise,
        round up to the nearest whole number the number of the Ordinary Shares to
        be
        issued to the Warrant holder. 

       

      4.7 Form
        of Warrant.
        The
        form of Warrant need not be changed because of any adjustment pursuant to
        this
        Section 4, and Warrants issued after such adjustment may state the same Warrant
        Price and the same number of Ordinary Shares as is stated in the Warrants
        initially issued pursuant to this Agreement. However, the Company may at
        any
        time in its sole discretion make any change in the form of Warrant that the
        Company may deem appropriate and that does not affect the substance thereof,
        and
        any Warrant thereafter issued or countersigned, whether in exchange or
        substitution for an outstanding Warrant or otherwise, may be in the form
        as so
        changed. 

       

      5. Transfer
        and Exchange of Warrants.
        

       

      5.1 Transfer
        of Warrants.
        Prior
        to the Detachment Date, the Public Warrants may be transferred or exchanged
        only
        together with the Unit in which such Warrant is included, and only for the
        purpose of effecting, or in conjunction with, a transfer or exchange of such
        Unit. Furthermore, each transfer of a Public Unit or a Private Unit on the
        register relating to such Units shall operate also to transfer the Warrants
        included in such Unit. 

       

      5.2 Registration
        of Transfer.
        The
        Warrant Agent shall register the transfer, from time to time, of any outstanding
        Warrant upon the Warrant Register, upon surrender of such Warrant for transfer,
        properly endorsed with signatures properly guaranteed and accompanied by
        appropriate instructions for transfer. Upon any such transfer, a new Warrant
        representing an equal aggregate number of Warrants shall be issued and the
        old
        Warrant shall be cancelled by the Warrant Agent. The Warrants so cancelled
        shall
        be delivered by the Warrant Agent to the Company from time to time upon request.
        

       

      5.3 Procedure
        for Surrender of Warrants.
        Warrants may be surrendered to the Warrant Agent, together with a written
        request for exchange or transfer, and thereupon the Warrant Agent shall issue
        in
        exchange therefor one or more new Warrants as requested by the Registered
        Holder
        of the Warrants so surrendered, representing an equal aggregate number of
        Warrants; provided,
        however,
        that
        except as otherwise provided herein or in any Book-Entry Warrant Certificate,
        each Book-Entry Warrant Certificate may be transferred only in whole and
        only to
        the Depository, to another nominee of the Depository, to a successor depository,
        or to a nominee of a successor depository; provided
        further,
        however,
        that in
        the event that a Warrant surrendered for transfer bears a restrictive legend,
        the Warrant Agent shall not cancel such Warrant and issue new Warrants in
        exchange therefor until the Warrant Agent has received an opinion of counsel
        for
        the Company stating that such transfer may be made and indicating whether
        the
        new Warrants must also bear a restrictive legend. Upon any such registration
        of
        transfer, the Company shall execute, and the Warrant Agent shall countersign
        and
        deliver, in the name of the designated transferee a new Warrant Certificate
        or
        Warrant Certificates of any authorized denomination evidencing in the aggregate
        a like number of unexercised Warrants. 

       

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

      

       

      5.4 Fractional
        Warrants.
        The
        Warrant Agent shall not be required to effect any registration of transfer
        or
        exchange that will result in the issuance of a Warrant Certificate for a
        fraction of a Warrant. 

       

      5.5 Service
        Charges.
        No
        service charge shall be made for any exchange or registration of transfer
        of
        Warrants. 

       

      5.6 Warrant
        Execution and Countersignature.
        The
        Warrant Agent is hereby authorized to countersign and to deliver, in accordance
        with the terms of this Agreement, the Warrants required to be issued pursuant
        to
        the provisions of this Section 5, and the Company, whenever required by the
        Warrant Agent, will supply the Warrant Agent with Warrants duly executed
        on
        behalf of the Company for such purpose. 

       

      6. Redemption.
        

       

      6.1 Redemption.
        Subject
        to Section 6.4 hereof, not less than all of the outstanding Warrants may
        be
        redeemed, at the option of the Company, at any time after they become
        exercisable and so long as an effective registration statement covering the
        Ordinary Shares issuable upon exercise of the Warrants is current and available
        throughout the 30-day notice of redemption period and prior to their expiration,
        at the office of the Warrant Agent, upon the notice referred to in Section
        6.2,
        at the price of $0.01 per Warrant (“Redemption
        Price”),
        provided that the last sales price of the Ordinary Shares has been at least
        $14.25 per Ordinary Share for any twenty (20) trading days within a thirty
        (30)
        trading-day period ending on the third business day prior to the date on
        which
        notice of redemption is given. 

       

      6.2 Date
        Fixed for, and Notice of, Redemption.
        In the
        event the Company shall elect to redeem all of the Warrants, the Company
        shall
        fix a date for the redemption (the “Redemption
        Date”).
        Notice of redemption shall be mailed by first class mail, postage prepaid,
        by
        the Company not less than 30 days prior to the date fixed for redemption
        to the
        Registered Holders of the Warrants to be redeemed at their last addresses
        as
        they shall appear on the Warrant Register (the “Redemption
        Notice”).
        Any
        notice mailed in the manner herein provided shall be conclusively presumed
        to
        have been duly given on the date sent whether or not the Registered Holder
        received such notice. 

       

      6.3 Exercise
        After Notice of Redemption.
        The
        Warrants may be exercised in accordance with Section 3 of this Agreement
        at any
        time after the Redemption Notice shall have been given by the Company pursuant
        to Section 6.2 hereof and prior to the time and date fixed for redemption.
        On
        and after the Redemption Date, the record holder of the Warrants shall have
        no
        further rights except to receive, upon surrender of the Warrants, the Redemption
        Price. 

       

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

      

       

      6.4 Exclusion
        of Certain Warrants.
        The Company understands that the redemption rights provided for by this Section
        6 apply only to outstanding Warrants. To the extent a person holds rights
        to
        purchase Warrants, such purchase rights shall not be extinguished by redemption.
        However, once such purchase rights are exercised, the Company may redeem
        the
        Warrants issued upon such exercise provided that the criteria for redemption
        is
        met. Additionally, any of the Private Warrants shall not be redeemable by
        the
        Company as long as such Private Warrants continue to be held by Sang-Chul
        Kim or
        his permitted transferees. However, once such individuals or their permitted
        transferee otherwise transfer such Private Warrants, such Private Warrants
        shall
        then be redeemable by the Company pursuant to Section 6 hereof.

      

      7. Other
        Provisions Relating to Rights of Holders of Warrants.
        

       

      7.1 No
        Rights as Shareholder.
        A
        Warrant does not entitle the Registered Holder thereof to any of the rights
        of a
        shareholder of the Company, including, without limitation, the right to receive
        dividends, or other distributions, exercise any preemptive rights to vote
        or to
        consent or to receive notice as shareholders in respect of the meetings of
        shareholders or the election of directors of the Company or any other matter.
        

       

      7.2 Lost,
        Stolen, Mutilated, or Destroyed Warrants.
        If any
        Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant
        Agent may on such terms as to indemnity or otherwise as they may in their
        discretion impose (which shall, in the case of a mutilated Warrant, include
        the
        surrender thereof), issue a new Warrant of like denomination, tenor, and
        date as
        the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant
        shall
        constitute a substitute contractual obligation of the Company, whether or
        not
        the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any
        time
        enforceable by anyone. 

       

      7.3 Reservation
        of Ordinary Shares.
        The
        Company shall at all times reserve and keep available a number of its authorized
        but unissued Ordinary Shares that will be sufficient to permit the exercise
        in
        full of all outstanding Warrants issued pursuant to this Agreement.

       

      7.4 Registration
        of Ordinary Shares.
        The
        Company agrees that prior to the commencement of the Exercise Period, it
        shall
        use its best efforts to file with the Securities and Exchange Commission
        a
        post-effective amendment to the Registration Statement, or a new registration
        statement, for the registration under the Act of, and it shall take such
        action
        as is necessary to qualify for sale in those states in which the Warrants
        were
        initially offered by the Company, the Ordinary Shares issuable upon exercise
        of
        the Warrants. In either case, the Company will use its reasonable best efforts
        to cause the same to become effective and to maintain the effectiveness of
        such
        registration statement until the expiration of the Warrants in accordance
        with
        the provisions of this Agreement. The provisions of this Section 7.4 may
        not be
        modified, amended or deleted without the prior written consent of the
        Representative. 

       

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

      

       

      8. Concerning
        the Warrant Agent and Other Matters.
        

       

      8.1 Payment
        of Taxes.
        The
        Company will from time to time promptly pay all taxes and charges that may
        be
        imposed upon the Company or the Warrant Agent in respect of the issuance
        or
        delivery of Ordinary Shares upon the exercise of Warrants, but the Company
        shall
        not be obligated to pay any transfer taxes in respect of the Warrants or
        such
        Ordinary Shares. 

       

      8.2 Resignation,
        Consolidation, or Merger of Warrant Agent.
        

       

      8.2.1 Appointment
        of Successor Warrant Agent.
        The
        Warrant Agent, or any successor to it hereafter appointed, may resign its
        duties
        and be discharged from all further duties and liabilities hereunder after
        giving
        sixty (60) days’ prior written notice to the Company. If the office of the
        Warrant Agent becomes vacant by resignation or incapacity to act or otherwise,
        the Company shall appoint in writing a successor warrant agent in place of
        the
        Warrant Agent. If the Company shall fail to make such appointment within
        a
        period of 30 days after it has been notified in writing of such resignation
        or
        incapacity by the Warrant Agent or by the holder of the Warrant (who shall,
        with
        such notice, submit his Warrant for inspection by the Company), then the
        holder
        of any Warrant may apply to the Supreme Court of the State of New York for
        the
        County of New York for the appointment of a successor Warrant Agent at the
        Company’s cost. Any successor warrant agent, whether appointed by the Company or
        by such court, shall be a corporation organized and existing under the laws
        of
        the State of New York, in good standing and having its principal office in
        the
        Borough of Manhattan, City and State of New York, and authorized under such
        laws
        to exercise corporate trust powers and subject to supervision or examination
        by
        federal or state authority. After appointment, any successor warrant agent
        shall
        be vested with all the authority, powers, rights, immunities, duties, and
        obligations of its predecessor warrant agent with like effect as if originally
        named as warrant agent hereunder, without any further act or deed; but if
        for
        any reason it becomes necessary or appropriate, the predecessor warrant agent
        shall execute and deliver, at the expense of the Company, an instrument
        transferring to such successor warrant agent all the authority, powers, and
        rights of such predecessor warrant agent hereunder; and upon request of any
        successor warrant agent the Company shall make, execute, acknowledge, and
        deliver any and all instruments in writing for more fully and effectually
        vesting in and confirming to such successor warrant agent all such authority,
        powers, rights, immunities, duties, and obligations. 

       

      8.2.2 Notice
        of Successor Warrant Agent.
        In the
        event a successor warrant agent shall be appointed, the Company shall give
        notice thereof to the predecessor warrant agent and the transfer agent for
        the
        Ordinary Shares not later than the effective date of any such appointment.
        

       

      8.2.3 Merger
        or Consolidation of Warrant Agent.
        Any
        corporation into which the Warrant Agent may be merged or with which it may
        be
        consolidated or any corporation resulting from any merger or consolidation
        to
        which the Warrant Agent shall be a party shall be the successor warrant agent
        under this Agreement without any further act. 

       

      
        
           

        

        
          -11-

          
            

          

        

        
           

        

      

      

       

      8.3 Fees
        and Expenses of Warrant Agent.
        

       

      8.3.1 Remuneration.
        The
        Company agrees to pay the Warrant Agent reasonable remuneration for its services
        as Warrant Agent hereunder and will reimburse the Warrant Agent upon demand
        for
        all expenditures that the Warrant Agent may reasonably incur in the execution
        of
        its duties hereunder. 

       

      8.3.2 Further
        Assurances.
        The
        Company agrees to perform, execute, acknowledge, and deliver or cause to
        be
        performed, executed, acknowledged, and delivered all such further acts,
        instruments, and assurances as may reasonably be required by the Warrant
        Agent
        for the carrying out or performing of the provisions of this Agreement.

       

      8.4 Liability
        of Warrant Agent.
        

       

      8.4.1 Reliance
        on Company Statement.
        Whenever in the performance of its duties under this Warrant Agreement, the
        Warrant Agent shall deem it necessary or desirable that any fact or matter
        be
        proved or established by the Company prior to taking or suffering any action
        hereunder, such fact or matter (unless other evidence in respect thereof
        be
        herein specifically prescribed) may be deemed to be conclusively proved and
        established by a statement signed by the Chief Executive Officer, President
        or
        Chairman of the Board of the Company and delivered to the Warrant Agent.
        The
        Warrant Agent may rely upon such statement for any action taken or suffered
        in
        good faith by it pursuant to the provisions of this Agreement. 

       

      8.4.2 Indemnity.
        The
        Warrant Agent shall be liable hereunder only for its own negligence, willful
        misconduct or bad faith. The Company agrees to indemnify the Warrant Agent
        and
        save it harmless against any and all liabilities, including judgments, costs
        and
        reasonable counsel fees, for anything done or omitted by the Warrant Agent
        in
        the execution of this Agreement except as a result of the Warrant Agent’s
        negligence, willful misconduct, or bad faith. 

       

      8.4.3 Exclusions.
        The
        Warrant Agent shall have no responsibility with respect to the validity of
        this
        Agreement or with respect to the validity or execution of any Warrant (except
        its countersignature thereof); nor shall it be responsible for any breach
        by the
        Company of any covenant or condition contained in this Agreement or in any
        Warrant; nor shall it be responsible to make any adjustments required under
        the
        provisions of Section 4 hereof or responsible for the manner, method, or
        amount
        of any such adjustment or the ascertaining of the existence of facts that
        would
        require any such adjustment; nor shall it by any act hereunder be deemed
        to make
        any representation or warranty as to the authorization or reservation of
        any
        Ordinary Shares to be issued pursuant to this Agreement or any Warrant or
        as to
        whether any Ordinary Shares will when issued be valid and fully paid and
        nonassessable. 

       

      8.5 Acceptance
        of Agency.
        The
        Warrant Agent hereby accepts the agency established by this Agreement and
        agrees
        to perform the same upon the terms and conditions herein set forth and among
        other things, shall account promptly to the Company with respect to Warrants
        exercised and concurrently account for, and pay to the Company, all moneys
        received by the Warrant Agent for the purchase of shares of the Company’s
        Ordinary Shares through the exercise of Warrants. 

       

      
        
           

        

        
          -12-

          
            

          

        

        
           

        

      

      

       

      8.6 Waiver.
        The
        Warrant Agent hereby waives any and all right, title, interest or claim of
        any
        kind (“Claim”)
        in or
        to any distribution of the Trust Account (as defined in that certain Investment
        Management Trust Agreement, dated as of the date hereof, by and between the
        Company and the Warrant Agent as trustee thereunder), and hereby agrees not
        to
        seek recourse, reimbursement, payment or satisfaction for any Claim against
        the
        Trust Fund for any reason whatsoever. 

       

      9. Miscellaneous
        Provisions.
        

       

      9.1 Successors.
        All the
        covenants and provisions of this Agreement by or for the benefit of the Company
        or the Warrant Agent shall bind and inure to the benefit of their respective
        successors and assigns. 

       

      9.2 Notices.
        Any
        notice, statement or demand authorized by this Warrant Agreement to be given
        or
        made by the Warrant Agent or by the holder of any Warrant to or on the Company
        shall be sufficiently given when so delivered if by hand or overnight delivery
        or if sent by certified mail or private courier service within five days
        after
        deposit of such notice, postage prepaid, addressed (until another address
        is
        filed in writing by the Company with the Warrant Agent), as follows:

      

      Korea
        Milestone Acquisition Corporation

      SoftForum
        Building

      8th
        Floor

      545-7
        Dogokdong

      Gangnam,
        Seoul, Korea 135-170

      Attn:
        Sang-Chul Kim, Chairman and Chief Executive Officer

      

       

      with
        a
        copy in each case (which shall not constitute notice) to: 

       

      Mintz
        Levin Cohn Ferris Glovsky and Popeo, P.C.

      666
        Third
        Avenue

      New
        York,
        New York 10017

      Attn:
        Kenneth R. Koch, Esq.

      

      And

      

      Broadband
        Capital Management, LLC

      712
        Fifth
        Avenue, 49th
        Floor

      New
        York,
        New York 10019

      Attn:
        Michael Rapoport

      

      with
        a
        copy in each case (which shall not constitute notice) to:

      

      Ellenoff
        Grossman & Schole LLP

      150
        E.
        42nd
        Street

      New
        York,
        NY 10017

      Attn:
        Douglass S. Ellenoff, Esq.

      
        
           

        

        
          -13-

          
            

          

        

        
           

        

      

      

      Any
        notice, statement or demand authorized by this Agreement to be given or made
        by
        the holder of any Warrant or by the Company to or on the Warrant Agent shall
        be
        sufficiently given when so delivered if by hand or overnight delivery or
        if sent
        by certified mail or private courier service within five days after deposit
        of
        such notice, postage prepaid, addressed (until another address is filed in
        writing by the Warrant Agent with the Company), as follows: 

      

      Continental
        Stock Transfer & Trust Company

      17
        Battery Place

      New
        York,
        New York 10004

      Attn
        :
        Compliance Department 

       

      9.3 Applicable
        Law.
        The
        validity, interpretation, and performance of this Agreement and of the Warrants
        shall be governed in all respects by the laws of the State of New York, without
        giving effect to conflict of laws. The Company hereby agrees that any action,
        proceeding or claim against it arising out of or relating in any way to this
        Agreement shall be brought and enforced in the courts of the State of New
        York
        or the United States District Court for the Southern District of New York,
        and
        irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.
        The Company hereby waives any objection to such exclusive jurisdiction and
        that
        such courts represent an inconvenience forum. Any such process or summons
        to be
        served upon the Company may be served by transmitting a copy thereof by
        registered or certified mail, return receipt requested, postage prepaid,
        addressed to it at the address set forth in Section 9.2 hereof. Such mailing
        shall be deemed personal service and shall be legal and binding upon the
        Company
        in any action, proceeding or claim. 

       

      9.4 Persons
        Having Rights under this Agreement.
        Nothing
        in this Agreement expressed and nothing that may be implied from any of the
        provisions hereof is intended, or shall be construed, to confer upon, or
        give
        to, any person or corporation other than the parties hereto and the Registered
        Holders and, for the purposes of Sections 6.4 and 7.4 hereof, the
        Representative, any right, remedy, or claim under or by reason of this Warrant
        Agreement or of any covenant, condition, stipulation, promise, or agreement
        hereof. The Representative shall be deemed to be a third-party beneficiary
        of
        this Agreement with respect to Sections 6.4 and 7.4 hereof. All covenants,
        conditions, stipulations, promises, and agreements contained in this Warrant
        Agreement shall be for the sole and exclusive benefit of the parties hereto
        (and
        the Representative with respect to the Sections 6.4 and 7.4 hereof) and their
        successors and assigns and of the Registered Holders of the Warrants.

       

      9.5 Examination
        of the Warrant Agreement.
        A copy
        of this Agreement shall be available at all reasonable times at the office
        of
        the Warrant Agent in the Borough of Manhattan, City and State of New York,
        for
        inspection by the Registered Holder of any Warrant. The Warrant Agent may
        require any such holder to submit his Warrant for inspection by it.

       

      9.6 Counterparts.
        This
        Agreement may be executed in any number of counterparts and each of such
        counterparts shall for all purposes be deemed to be an original, and all
        such
        counterparts shall together constitute but one and the same instrument.

       

      
        
           

        

        
          -14-

          
            

          

        

        
           

        

      

      

       

      9.7 Effect
        of Headings.
        The
        Section headings herein are for convenience only and are not part of this
        Warrant Agreement and shall not affect the interpretation thereof. 

       

      IN
        WITNESS WHEREOF,
        this
        Agreement has been duly executed by the parties hereto as of the day and
        year
        first above written. 

      
        	 	 	 
	 	 	 
	 	KOREA
                MILESTONE ACQUISITION CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                Name: 
                  Sang-Chul Kim

                Title: Chairman
                  and Chief Executive Officer

              
	 	 

      

       

      
        	 	 	 
	 	CONTINENTAL
                STOCK TRANSFER & TRUST COMPANY
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                Name: Steven
                  Nelson

                Title: Chairman

              
	 	 

      

       

       

      
        
           

        

        
          -15-

          
            

          

        

        
           

        

      

      

       

      EXHIBIT
        A

      

      Form
        of Warrant

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]