Document:

StockerYale Exhibit 10.1

EXHIBIT 10.1

 	
 
   EXECUTION COPY

   	
 
 February 3, 2004

  

 SECURITIES PURCHASE AGREEMENT

    This Securities Purchase Agreement (this "Agreement") is dated
  as of February 3, 2004 among StockerYale, Inc., a Massachusetts corporation (the "Company"), and
  the purchasers identified on the signature pages hereto (each, a "Purchaser" and collectively, the
  "Purchasers"). 

    WHEREAS, subject to the terms and conditions set forth in this
  Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Securities
  Act"), the Company desires to issue and sell to the Purchasers, and the Purchasers, severally and
  not jointly, desire to purchase from the Company, securities of the Company as more fully
  described in this Agreement.

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

 

 ARTICLE I

 DEFINITIONS

     1.1 Definitions.  In addition to the terms defined
  elsewhere in this Agreement, the following terms have the meanings indicated:

 
 
"Additional Investment Rights" means, collectively, the Additional Investment Rights issued and
  sold under this Agreement, in the form of Exhibit A.
"Affiliate" means any Person that, directly or indirectly through one or more intermediaries,
  controls or is controlled by or is under common control with another Person, as such terms are used in
  and construed under Rule 144 under the Securities Act.
"Business Day" means any day other than Saturday, Sunday or other day on which commercial banks in
  The City of New York are authorized or required by law to remain closed.
"Change of
  Control" means the occurrence of any of the following in one or a series of related
  transactions: (i) an acquisition after the date hereof by an individual or legal entity or "group"
  (as described in Rule 13d-5(b)(1) under the Exchange Act) of more than one-half of the voting
  rights or equity interests in the Company; (ii) a replacement of more than one-half of the members
  of the Company's board of directors that is not approved by those individuals who are members of
  the board of directors on the date hereof (or other directors previously approved by such
  individuals); (iii) a merger or consolidation of the Company or any significant Subsidiary or a
  sale of more than one-half of the assets of the Company in one or a series of related
  transactions, unless following such transaction or series of transactions, the holders of the
  Company's securities prior to the first such transaction continue to hold at least a majority of
  the voting rights and equity interests in the surviving entity or acquirer of such assets; (iv) a
  recapitalization, reorganization or other transaction involving the Company or any significant
  Subsidiary that constitutes or results in a transfer of more than one-half of the voting rights or
  equity interests in the Company; (v) consummation of a "Rule 13e-3 transaction" as defined in Rule
  13e-3 under the Exchange Act with respect to the Company, or (vi) the execution by the Company or
  its controlling shareholders of a definitive agreement providing for any of the foregoing events.

 

 
 
 "Closing" means the closing of the purchase and sale of the Shares, the Additional Investment
  Rights and the Warrants pursuant to Section 2.1.
"Closing Date" means the date of the Closing.

 

     	
     	
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 "Closing Price" means, for any date, the price determined by the first of
  the following clauses that applies: (a) if the Common Stock is then listed or quoted on an
  Eligible Market or any other national securities exchange, the closing price per share of the
  Common Stock for such date (or the nearest preceding date) on the primary Eligible Market or
  exchange on which the Common Stock is then listed or quoted; (b) if prices for the Common Stock
  are then quoted on the OTC Bulletin Board, the closing bid price per share of the Common Stock for
  such date (or the nearest preceding date) so quoted; (c) if prices for the Common Stock are then
  reported in the "Pink Sheets" published by the National Quotation Bureau Incorporated (or a
  similar organization or agency succeeding to its functions of reporting prices), the most recent
  closing bid price per share of the Common Stock so reported; or (d) in all other cases, the fair
  market value of a share of Common Stock as determined by an independent appraiser selected in good
  faith by Purchasers holding a majority of the Securities.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, par value $0.001 per share.
"Common Stock Equivalents" means, collectively, Options and Convertible Securities. 
"Company
 Counsel" means Goodwin Procter LLP, counsel to the Company.
"Convertible Securities" means any stock or securities (other than Options) convertible into or
  exercisable or exchangeable for Common Stock. 
"Effective Date" means the date that the Registration Statement is first declared effective by the
  Commission.
"Eligible Market" means any of the New York Stock Exchange, the American
  Stock Exchange, the NASDAQ National Market, the NASDAQ SmallCap Market or the Nasdaq OTC Bulletin
  Board.

 

 
 
 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Stock"
 means the issuance of Common Stock (A) upon exercise or conversion of any options or other
 securities described in Schedule 3.1(f) (provided that such exercise or conversion occurs in
 accordance with the terms thereof, without amendment or modification, and that the applicable
 exercise or conversion price or ratio is described in such schedule) or otherwise pursuant to any
 employee benefit plan described in Schedule 3.1(f) or hereafter adopted by the Company and
 approved by its stockholders, or (B) in connection with any issuance of shares or grant of options
 to employees, officers, directors or consultants of the Company pursuant to a stock option plan or
 other incentive stock plan duly adopted by the Company's board of directors or in respect of the
 issuance of Common Stock upon exercise of any such options, (C) pursuant to a bona fide firm
 commitment underwritten public offering with a nationally recognized underwriter (excluding any
 equity line) in an aggregate offering amount greater than $20,000,000, (D) in connection with a
 bona fide joint venture or development agreement or strategic partnership, the primary purpose of
 which is not to raise equity capital or (E) in connection with a financing currently contemplated
 by the Company for the primary purpose of replacing the mortgage on the Company's New Hampshire
 real property, which financing is likely to include convertible debt and warrants and would be
 expected to raise no more than approximately $4 million.
"Filing Date" means March 19,
  2004.
"Lien" means any lien, charge, claim, security interest, encumbrance, right of first refusal or
  other restriction.
"Losses" means any and all losses, claims, damages, liabilities, settlement costs and expenses,
  including, without limitation, costs of preparation and reasonable attorneys' fees.
"Options" means any rights, warrants or options to subscribe for or purchase Common Stock or
  Convertible Securities.

 

     	
     	
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 "Person" means any 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 any court or other federal, state, local or other governmental
  authority or other entity of any kind.
"Per Unit Purchase Price" means $1.15.
"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" means the prospectus included in the Registration Statement (including, without
  limitation, a prospectus that includes any information previously omitted from a prospectus filed
  as part of an effective registration statement in reliance upon Rule 430A promulgated under the
  Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
  terms of the offering of any portion of the Registrable Securities covered by the Registration
  Statement, and all other amendments and supplements to the Prospectus including post effective
  amendments, and all material incorporated by reference or deemed to be incorporated by reference
  in such Prospectus.
"Purchaser Counsel" has the meaning set forth in Section 6.2(a).
"Registrable Securities" means any Common Stock (including the Shares and Underlying Shares)
  issued or issuable pursuant to the Transaction Documents, together with any securities issued or
  issuable upon any stock split, dividend or other distribution, recapitalization or similar event
  with respect to the foregoing.
"Registration Statement" means each registration statement required to be filed under Article VI,
  including (in each case) the Prospectus, amendments and supplements to such registration statement
  or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all
  material incorporated by reference or deemed to be incorporated by reference in such registration
  statement.
"Required Effectiveness Date" means May 4, 2004.
"Rule 144," "Rule 415," and "Rule 424" means Rule 144, Rule 415 and Rule 424, respectively,
  promulgated by the Commission pursuant to the Securities Act, as such Rules 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.
"Securities" means the Shares, the Additional Investment Rights, the Warrants and the Underlying
  Shares.
"Shares" means an aggregate of 1,706,304 shares of Common Stock, which are being issued and sold to
  the Purchasers at the Closing.
"Subsidiary" means any Person in which the Company, directly or indirectly, owns capital stock or
  holds an equity or similar interest.
"Trading Day" means (a) any day on which the Common Stock is listed or quoted and traded on its
  primary Trading Market, (b) if the Common Stock is not then listed or quoted and traded on any
  Eligible Market, then a day on which trading occurs on the NASDAQ National Market (or any
  successor thereto), or (c) if trading ceases to occur on the NASDAQ National Market (or any
  successor thereto), any Business Day.

 

     	
     	
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 "Trading Market" means the Nasdaq National Market or any other Eligible Market, or any national
  securities exchange, market or trading or quotation facility on which the Common Stock is then
  listed or quoted.
"Transaction Documents" means this Agreement, the Additional Investment Rights, the Warrants, the
  Transfer Agent Instructions and any other documents or agreements executed in connection with the
  transactions contemplated hereunder.

 

 
 
 "Transfer Agent Instructions" means the Irrevocable Transfer Agent Instructions, in the form of
  Exhibit E, executed by the Company and delivered to and acknowledged in writing by the Company's
  transfer agent.
"Underlying Shares" means the shares of Common Stock issuable upon exercise of the Additional
  Investment Rights and the Warrants.
"Unit" means one Share and an Additional Investment Right to acquire 0.20 of a share of Common
  Stock. 
"Warrants" means, collectively, the Common Stock purchase warrants issued and sold under this
  Agreement, in the form of Exhibit B, and any warrants or replacement warrants issued upon exercise
  transfer, exchange or partial exercise of such warrants.

 ARTICLE II

 PURCHASE AND SALE

 

        2.1 Closing.  Subject to the
  terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell
  to each Purchaser, and each Purchaser shall, severally and not jointly, purchase from the Company,
  such number of Units indicated below such Purchaser's name on the signature page of this Agreement
  at the Per Unit Purchase Price. The Closing shall take place at the offices of Purchaser Counsel
  immediately following the execution hereof, or at such other location or time as the parties may
  agree. 

        2.2  Closing Deliveries

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

 
   
 (i) one or more stock certificates, free and clear of all restrictive and other
  legends (except as expressly provided in Section 4.1(b) hereof), evidencing such number of Shares
  equal to the number of Units indicated below such Purchaser's name on the signature page of this
  Agreement, registered in the name of such Purchaser;

  (ii) an Additional Investment Right, registered in the name of such Purchaser, pursuant to which
  such Purchaser shall have the right to acquire such number of Underlying Shares indicated below
  such Purchaser's name on the signature page of this Agreement, on the terms set forth therein; 

  (iii) a Warrant, registered in the name of such Purchaser, pursuant to which such Purchaser shall
  have the right to acquire such number of Underlying Shares indicated below such Purchaser's name
  on the signature page of this Agreement, on the terms set forth therein;

  (iv) a legal opinion of Company Counsel, in the form of Exhibit C, executed by such counsel and
  delivered to the Purchasers; and

   

     	
     	
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  (v) duly executed Transfer Agent Instructions acknowledged by the Company's transfer agent.

   

                    (b)
  At the Closing, each Purchaser shall deliver or cause to be delivered to the Company an amount
  equal to the Per Unit Purchase Price multiplied by the number of Units indicated below such
  Purchaser's name on the signature page of this Agreement, in United States dollars and in
  immediately available funds, by wire transfer to an account designated in writing to such
  Purchaser by the Company for such purpose.

 ARTICLE III

 REPRESENTATIONS AND WARRANTIES

    3.1 Representations and Warranties of
 the Company

 
 (a) Subsidiaries. The Company has no direct or indirect
  Subsidiaries other than those listed in Schedule 3.1(a). Except as disclosed in Schedule 3.1(a),
  the Company owns, directly or indirectly, all of the capital stock or comparable equity interests
  of each Subsidiary free and clear of any Lien and all the issued and outstanding shares of capital
  stock or comparable equity interest 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 the Subsidiaries is an entity
  duly 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 the Subsidiaries is duly qualified to do business and is in good standing as a foreign
  corporation or other entity in each jurisdiction in which the nature of the business conducted or
  property owned by it makes such qualification necessary, except where the failure to be so
  qualified or in good standing, as the case may be, could not reasonably be expected to, individually or in the aggregate,
  (i) adversely affect the legality, validity or enforceability of any Transaction Document, (ii)
  have or result in a material adverse effect on the results of operations, assets, prospects,
  business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a
  whole on a consolidated basis, or (iii) adversely impair the Company's ability to perform fully on
  a timely basis its obligations under any of the Transaction Documents (any of (i), (ii) or (iii),
  a "Material Adverse Effect").

  (c) Authorization; Enforcement. The Company has the requisite corporate power and authority
  to enter into and to consummate the transactions contemplated by each of the Transaction Documents
  and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of
  each of the Transaction Documents by the Company and the consummation by it of the transactions
  contemplated hereby and thereby have been duly authorized by all necessary action on the part of
  the Company and no further consent or action is required by the Company, its Board of Directors or
  its stockholders. Each of the Transaction Documents has been (or upon delivery will be) duly
  executed by the Company and is, or 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 enforcement thereof may be limited by bankruptcy, insolvency,
  reorganization, moratorium and similar laws, both state and federal, affecting the enforcement of
  creditors' rights or remedies in general as from time to time in effect and the exercise by courts
  of equity powers).

 

     	
     	
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  (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 hereby and
  thereby do not and will not (i) conflict with or violate any provision of the Company's or any
  Subsidiary's certificate or articles of incorporation, bylaws or other organizational or charter
  documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of
  time or both would become a default) under, or give to others any rights of termination,
  amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any
  agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or
  otherwise) or other understanding to which the Company or any Subsidiary is a party or by which
  any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in a
  violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction
  of any court or governmental authority to which the Company or a Subsidiary is subject (including
  federal and state securities laws and regulations and the rules and regulations of any
  self-regulatory organization to which the Company or its securities are subject), or by which any
  property or asset of the Company or a Subsidiary is bound or affected other than, in the case of
  clauses (ii) and (iii) above, such events as would not reasonably be expected to, individually or
  in the aggregate, have a Material Adverse Effect.

  (e) Issuance of the Securities. The Securities (including the Underlying Shares) are duly
  authorized and, when issued and paid for in accordance with the Transaction Documents, will be
  duly and validly issued, fully paid and nonassessable, free and clear of all Liens and shall not
  be subject to preemptive rights or similar rights of stockholders. The Company has reserved from
  its duly authorized capital stock the maximum number of shares of Common Stock issuable upon
  exercise of the Additional Investment Rights and the Warrants.

  (f) Capitalization. The number of shares and type of all authorized, issued and outstanding
  capital stock, options and other securities of the Company (whether or not presently convertible
  into or exercisable or exchangeable for shares of capital stock of the Company) is set forth in
  Schedule 3.1(f). All outstanding shares of capital stock are duly authorized, validly issued,
  fully paid and nonassessable and have been issued in compliance with all applicable securities
  laws. Except as disclosed in Schedule 3.1(f), 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 exercisable or exchangeable for, or giving
  any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts,
  commitments, understandings or arrangements by which the Company or any Subsidiary is or may
  become bound to issue additional shares of Common Stock, or securities or rights convertible or
  exchangeable into shares of Common Stock. There are no anti-dilution or price adjustment
  provisions contained in any security issued by the Company (or in any agreement providing rights
  to security holders) and the issue and sale of the Securities (including the Underlying Shares)
  will not obligate the Company to issue shares of Common Stock or other securities to any Person
  (other than the Purchasers) and will not result in a right of any holder of Company securities to
  adjust the exercise, conversion, exchange or reset price under such securities. To the knowledge
  of the Company, except as specifically disclosed in Schedule 3.1(f), no Person or group of related
  Persons beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act), or has
  the right to acquire, by agreement with or by obligation binding upon the Company, beneficial
  ownership of in excess of 5% of the outstanding Common Stock, ignoring for such purposes any
  limitation on the number of shares of Common Stock that may be owned at any single time.

 

     	
     	
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  (g) SEC Reports; Financial Statements. The Company has filed all reports required to be
  filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
  one year preceding the date hereof (or such shorter period as the Company was required by law to
  file such material) (the foregoing materials (together with any materials filed by the Company
  under the Exchange Act, whether or not required) being collectively referred to herein as the "SEC
  Reports" and, together with this Agreement and the Schedules to this Agreement, the "Disclosure
  Materials") on a timely basis or has received a valid extension of such time of filing and has
  filed any such SEC Reports prior to the expiration of any such extension. The Company has
  delivered to each Purchaser true, correct and complete copies of all SEC Reports filed within the
  10 days preceding the date hereof. As of their respective dates, the SEC Reports complied in all
  material respects with the requirements of the Securities Act and the Exchange Act and the rules
  and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed,
  contained any untrue statement of a material fact or omitted to state a material fact required to
  be stated therein or necessary in order to make the statements therein, in the light of the
  circumstances under which they were made, not misleading. The financial statements of the Company
  included in the SEC Reports comply in all material respects with applicable accounting
  requirements and the rules and regulations of the Commission with respect thereto as in effect at
  the time of filing. Such financial statements have been prepared in accordance with United States
  generally accepted accounting principles applied on a consistent basis during the periods involved
  ("GAAP"), except as may be otherwise specified in such financial statements or the notes
  thereto (subject to normal year-end adjustments), 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. All material
  agreements to which the Company or any Subsidiary is a party or to which the property or assets of
  the Company or any Subsidiary are subject are included as part of or specifically identified in
  the SEC Reports.

  (h) Material Changes. Since the date of the latest audited financial statements included
  within the SEC Reports, except as specifically disclosed in the SEC Reports or in Schedule 3.1(h),
  (i) there has been no event, occurrence or development that, individually or in the aggregate, has
  had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company
  has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and
  accrued expenses incurred in the ordinary course of business consistent with past practice and (B)
  liabilities not required to be reflected in the Company's financial statements pursuant to GAAP or
  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, except as disclosed in its SEC Reports,
  (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-based plans.
(i) Absence of Litigation. Other than as set forth on Schedule 3.1(i), there is no action,
  suit, claim, proceeding, inquiry or investigation before or by any court, public board, government
  agency, self-regulatory organization or body pending or, to the knowledge of the Company,
  threatened against or affecting the Company or any of its Subsidiaries that could, individually or
  in the aggregate, reasonably be expected to have a Material Adverse Effect.
(j) 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. 

 

     	
     	
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  (k) Title to Assets. Except as set forth on Schedule 3.1(k), the Company and the
  Subsidiaries have good and marketable title in fee simple to all real property owned by them that
  is material to the business of the Company and the Subsidiaries and good and marketable title in
  all personal property owned by them that is material to the business of the Company and the
  Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially
  affect the value of such property and do not materially interfere with the use made and proposed
  to be made of such property by the Company and the Subsidiaries. Any real property and facilities
  held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and
  enforceable leases of which, to the Company's knowledge, the Company and the Subsidiaries are in
  compliance.

  (l) Certain Fees. Except for the fees described in Schedule 3.1(l), all of which are payable to
  entities that the Purchasers have represented to be registered broker-dealers, no brokerage or finder's fees or commissions are or will be payable by
  the Company to any broker, financial advisor or consultant, finder, placement agent, investment
  banker, bank or other Person with respect to the transactions contemplated by this Agreement, and
  the Company has not taken any action that would cause any Purchaser to be liable for any such fees
  or commissions.

  (m) Private Placement. Neither the Company nor any Person acting on the Company's behalf has sold
  or offered to sell or solicited any offer to buy the Securities by means of any form of general
  solicitation or advertising. Neither the Company nor any of its Affiliates nor any person acting
  on the Company's behalf has, directly or indirectly, at any time within the past six months, made
  any offer or sale of any security or solicitation of any offer to buy any security under
  circumstances that would (i) eliminate the availability of the exemption from registration under
  Regulation D under the Securities Act in connection with the offer and sale of the Securities as
  contemplated hereby or (ii) cause the offering of the Securities pursuant to the Transaction
  Documents to be integrated with prior offerings by the Company for purposes of any applicable law,
  regulation or stockholder approval provisions, including, without limitation, under the rules and
  regulations of any Trading Market. The Company is not, and is not an Affiliate of, an "investment
  company" within the meaning of the Investment Company Act of 1940, as amended. The Company is not
  a United States real property holding corporation within the meaning of the Foreign Investment in
  Real Property Tax Act of 1980.
(n) Form S-3 Eligibility. The Company is eligible to register its Common Stock for resale by the
  Purchasers using Form S-3 promulgated under the Securities Act.
(o) Listing and Maintenance Requirements. Other than as set forth on Schedule 3.1(o), the  Company has not, in the two years preceding the date
  hereof, received notice (written or oral) from any Trading Market on which the Common Stock is or
  has been listed or quoted to the effect that the Company is not in compliance with the listing or
  maintenance requirements of such Trading Market . The Company is currently in compliance with all such listing and
  maintenance requirements.
(p) Registration Rights. Except as described in Schedule 3.1(p), the Company has not granted or
  agreed to grant to any Person any rights (including "piggy-back" registration rights) to have any
  securities of the Company registered with the Commission or any other governmental authority that
  have not been satisfied.
(q) Application of Takeover Protections. There is no control share acquisition, business
  combination, poison pill (including any distribution under a rights agreement) or other similar
  anti-takeover provision under the Company's charter documents or the laws of its state of
  incorporation that is or could become applicable to any of the Purchasers as a result of the
  Purchasers and the Company fulfilling their obligations or exercising their rights under the
  Transaction Documents, including, without limitation, as a result of the Company's issuance of the
  Securities and the Purchasers' ownership of the Securities.

 

     	
     	
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  (r) Disclosure. The Company confirms that neither it nor any other Person acting on its
  behalf has provided any of the Purchasers or their agents or counsel with any information that
  constitutes or might constitute material, nonpublic information. The Company understands and
  confirms that each of the Purchasers will rely on the foregoing representations in effecting
  transactions in securities of the Company. All disclosure materials provided to the Purchasers
  under this Agreement regarding the Company, its business and the transactions contemplated hereby,
  including the Schedules to this Agreement, furnished by the Company 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 the light of the
  circumstances under which they were made, not misleading. No event or circumstance has occurred or
  information exists with respect to the Company or any of its Subsidiaries or its or their
  business, properties, prospects, operations or financial conditions, which, under applicable law,
  rule or regulation, requires public disclosure or announcement by the Company but which has not
  been so publicly announced or disclosed or will not be so disclosed following the press release
  and Form 8-K required by Section 4.6 hereof. The Company acknowledges and agrees that no Purchaser
  makes or has made any representations or warranties with respect to the transactions contemplated
  hereby other than those specifically set forth in Section 3.2. 

  (s) Acknowledgment Regarding Purchasers' Purchase of Securities. The Company acknowledges and
  agrees that each of the Purchasers is acting solely in the capacity of an arm's length purchaser
  with respect to the Company and to this Agreement and the transactions contemplated hereby. The
  Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
  the Company (or in any similar capacity) with respect to this Agreement and the transactions
  contemplated hereby and any advice given by any Purchaser or any of their respective
  representatives or agents in connection with this Agreement and the transactions contemplated
  hereby is merely incidental to the Purchasers' purchase of the Securities. The Company further
  represents to each Purchaser that the Company's decision to enter into this Agreement has been
  based solely on the independent evaluation of the transactions contemplated hereby by the Company
  and its representatives.
(t) 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 reasonably be expected to have a Material Adverse Effect (collectively, the "Intellectual Property Rights"). Neither
  the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights
  used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the
  knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no
  existing infringement by another Person of any of the Intellectual Property Rights.
(u) 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. Neither the Company nor any
  Subsidiary has any reason to believe that it will not be able to renew its existing insurance
  coverage as and when such coverage expires or to obtain similar coverage from similar insurers as
  may be necessary to continue its business without a significant increase in cost.
(v) 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, reasonably be
  expected to have or result in a
  Material Adverse Effect ("Material Permits"), and neither the Company nor any Subsidiary has
  received any notice of proceedings relating to the revocation or modification of any Material
  Permit.
(w) Transactions With Affiliates and Employees. Except as set forth in SEC Reports filed at least
  ten days prior to the date hereof, none of the officers or directors of the Company and, to the
  knowledge of the Company, none of the employees of the Company is presently a party to any
  transaction with the Company or any Subsidiary (other than for services as employees, officers and
  directors), including any contract, agreement or other arrangement providing for the furnishing of
  services to or by, providing for rental of real or personal property to or from, or otherwise
  requiring payments to or from any officer, director or such employee or, to the knowledge of the
  Company, any entity in which any officer, director, or any such employee has a substantial
  interest or is an officer, director, trustee or partner.

 

     	
     	
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  (x) Solvency. After taking into account the proceeds received by the Company from this
  transaction and the proceeds from planned additional financing transactions and the proposed sale
  of the Company's New Hampshire real estate, based on the financial condition of the Company as of
  the Closing Date, (i) the Company's fair saleable value of its assets (assuming an orderly
  liquidation) exceeds the amount that will be required to be paid on or in respect of the Company's
  existing debts and other liabilities (including known contingent liabilities) as they mature; (ii)
  the Company's assets do not constitute unreasonably small capital to carry on its business for the
  current fiscal year as now conducted taking into account the particular capital requirements of
  the business conducted by the Company, and projected capital requirements and capital availability
  thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company
  would receive, were it to liquidate all of its assets (in an orderly liquidation), after taking
  into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in
  respect of its debt when such amounts are required to be paid. The Company does not intend to
  incur debts beyond its ability to pay such debts as they mature (taking into account the timing
  and amounts of cash to be payable on or in respect of its debt). 
(y) Internal Accounting Controls. The Company and the Subsidiaries maintain a system of internal
  accounting controls sufficient to provide reasonable assurance that (i) transactions are executed
  in accordance with management's general or specific authorizations, (ii) transactions are recorded
  as necessary to permit preparation of financial statements in conformity with generally accepted
  accounting principles and to maintain asset accountability, (iii) access to assets is permitted
  only in accordance with management's general or specific authorization, and (iv) the recorded
  accountability for assets is compared with the existing assets at reasonable intervals and
  appropriate action is taken with respect to any differences.

 

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

 
   (a) Organization; Authority. Such Purchaser is an entity duly organized,
    validly existing and in good standing under the laws of the jurisdiction of its organization
    with the requisite corporate or partnership power and authority to enter into and to consummate
    the transactions contemplated by the Transaction Documents and otherwise to carry out its
    obligations hereunder and thereunder. The purchase by such Purchaser of the Shares, the
    Additional Investment Rights and the Warrants hereunder has been duly authorized by all
    necessary action on the part of such Purchaser. This Agreement has been duly executed and
    delivered by such Purchaser and constitutes the valid and binding obligation of such Purchaser,
    enforceable against it in accordance with its terms.

    (b) Investment Intent. Such Purchaser 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 such Purchaser's right,
    subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or
    any part of such Securities pursuant to an effective registration statement under the Securities
    Act or under an exemption from such registration and in compliance with applicable federal and
    state securities laws. Nothing contained herein shall be deemed a representation or warranty by
    such Purchaser to hold Securities for any specific period of time. 

    (c) Purchaser Status. At the time such Purchaser was offered the Shares, the Additional
    Investment Rights and the Warrants, it was, and at the date hereof it is, an "accredited
    investor" as defined in Rule 501(a) under the Securities Act.

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

    	
     	
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 ARTICLE IV

 OTHER AGREEMENTS OF THE PARTIES

    4.1 Transfer Restrictions.

 
 (a) Securities may only be disposed of pursuant to an effective registration
  statement under the Securities Act or pursuant to an available exemption from the registration
  requirements of the Securities Act, and in compliance with any applicable state securities laws.
  In connection with any transfer of Securities other than pursuant to an effective registration
  statement or to the Company or pursuant to Rule 144(k), except as otherwise set forth herein, the
  Company may require the transferor to provide to the Company an opinion of counsel selected by the
  transferor, the form and substance of which opinion shall be reasonably satisfactory to the
  Company, to the effect that such transfer does not require registration under the Securities Act.
  Notwithstanding the foregoing, the Company hereby consents to and agrees to register on the books
  of the Company and with its transfer agent, without any such legal opinion, any transfer of
  Securities by a Purchaser to an Affiliate of such Purchaser, provided that the transferee
  certifies to the Company that it is an "accredited investor" as defined in Rule 501(a) under the
  Securities Act and such transferee executes a joinder to this Agreement.

 
  (b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1(b), of the
  following legend on any certificate evidencing Securities: 

 
   
  [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE] HAVE
  [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
  ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
  AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
  EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
  FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
  IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE
  FOREGOING, THESE SECURITIES [AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES] MAY BE
  PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
  SECURED BY SUCH SECURITIES.

 

 Certificates evidencing Securities shall not be required to contain such legend or any other
  legend (i) while a Registration Statement covering the resale of such Securities is effective
  under the Securities Act, or (ii) following any sale of such Securities pursuant to Rule 144, or
  (iii) if such Securities are eligible for sale under Rule 144(k). The Company shall cause its
  counsel to issue the legal opinion included in the Transfer Agent Instructions to the Company's
  transfer agent on the Effective Date. Following the Effective Date or at such earlier time as a
  legend is no longer required for certain Securities, the Company will no later than three Trading
  Days following the delivery by a Purchaser to the Company or the Company's transfer agent of a
  legended certificate representing such Securities, deliver or cause to be delivered to such
  Purchaser a certificate representing such Securities that is free from all restrictive and other
  legends. The Company may not make any notation on its records or give instructions to any transfer
  agent of the Company that enlarge the restrictions on transfer set forth in this Section, except
  as required by law, regulation or the requirements of the applicable Trading Market. Each
  Purchaser, individually as to itself only, agrees to indemnify the Company or any of its officers
  or directors from any Losses and any reasonable legal and other expenses (including the costs of
  any investigation, preparation and travel) arising solely out of such Purchaser's failure to (i)
  comply with the prospectus delivery requirements of the Securities Act as applicable to it in
  connection with sales of the Registrable Securities pursuant to the Registration Statement, or
  (ii) sell such Registrable Securities in a manner described in the Registration Statement. The
  indemnification obligations under this paragraph shall be in addition to any liability that the
  Purchaser may otherwise have and shall be binding upon and inure to the benefit of any successors
  or assigns of the Company.

  

    	
     	
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  (c) The Company acknowledges and agrees that a Purchaser may from time to time pledge or grant
   a security interest in some or all of the Securities in connection with a bona fide margin
   agreement or other loan or financing arrangement secured by the Securities and, if required under
   the terms of such agreement, loan or arrangement, such Purchaser may transfer pledged or secured
   Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to
   approval of the Company and no legal opinion of the pledgee, secured party or pledgor shall be
   required in connection therewith. Further, no notice shall be required of such pledge. At the
   appropriate Purchaser's expense, the Company will execute and deliver such reasonable
   documentation as a pledgee or secured party of Securities may reasonably request in connection
   with a pledge or transfer of the Securities, including the preparation and filing of any required
   prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of
   the Securities Act to appropriately amend the list of Selling Stockholders thereunder.

  (d) Certain Trading Limitations. Each Purchaser agrees that beginning on the date hereof until
   the earlier to occur of (a) 120 days from the Closing Date and (b) the Effective Date of the
   Registration Statement, it will not enter into any Short Sales. For purposes of this Section
   4.1(d), a "Short Sale" by a Purchaser means a sale of Common Stock that is marked as a
   short sale and that is executed at a time when such Purchaser has no equivalent offsetting long
   position in the Common Stock. For purposes of determining whether a Purchaser has an equivalent
   offsetting long position in the Common Stock, all Common Stock and all Common Stock that would be
   issuable upon conversion or exercise in full of all Options then held by such Purchaser (assuming
   that such Options were then fully convertible or exercisable, notwithstanding any provisions to
   the contrary, and giving effect to any conversion or exercise price adjustments scheduled to take
   effect in the future) shall be deemed to be held long by such Purchaser.

  

     4.2  Furnishing of Information.  As long as any
   Purchaser owns Securities, the Company covenants to timely file (or obtain extensions in respect
   thereof and file within the applicable grace period) all reports required to be filed by the
   Company after the date hereof pursuant to the Exchange Act. Upon the request of any Purchaser,
   the Company shall deliver to such Purchaser a written certification of a duly authorized officer
   as to whether it has complied with the preceding sentence. As long as any Purchaser owns
   Securities, if the Company is not required to file reports pursuant to such laws, it will prepare
   and furnish to the Purchasers and make publicly available in accordance with paragraph (c) of
   Rule 144 such information as is required for the Purchasers to sell the Securities under Rule
   144. The Company further covenants that it will take such further action as any holder of
   Securities may reasonably request to satisfy the provisions of Rule 144 applicable to the issuer
   of securities relating to transactions for the sale of securities pursuant to Rule 144.

     4.3 Integration. The Company shall not, and shall use commercially
   reasonable efforts to ensure that no
   Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise
   negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would
   be integrated with the offer or sale of the Securities in a manner that would require the
   registration under the Securities Act of the sale of the Securities to the Purchasers or that
   would be integrated with the offer or sale of the Securities for purposes of the rules and
   regulations of any Trading Market.

     4.4 Reservation of Securities. The Company shall maintain a reserve from its duly authorized
   shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may
   be required to fulfill its obligations in full under the Transaction Documents. In the event that
   at any time the then authorized shares of Common Stock are insufficient for the Company to
   satisfy its obligations in full under the Transaction Documents, the Company shall promptly take
   such actions as may be required to increase the number of authorized shares.

     4.5 Subsequent Placements.

 
 (a) From the date hereof until the Effective Date, the Company will not, directly or indirectly,
  offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale,
  grant or any option to purchase or other disposition of) any of its or the Subsidiaries' equity or
  equity equivalent securities, including without limitation any debt, preferred stock or other
  instrument or security that is, at any time during its life and under any circumstances,
  convertible into or exchangeable or exercisable for Common Stock or Common Stock Equivalents (any
  such offer, sale, grant, disposition or announcement being referred to as a "Subsequent
  Placement").

  (b) From the Effective Date until 30 Trading Days after the Effective Date (the "Blockout
  Period"), the Company will not, directly or indirectly, effect any Subsequent Placement except as
  set forth in Section 4.5(e).

 

    	
     	
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     	   2004 Form 8-K 
     	

 

 
 (c) The Blockout Period set forth in Section 4.5(b) above shall be extended for the number of
  Trading Days during such period in which (i) trading in the Common Stock is suspended by any
  Trading Market, (excluding general suspensions of trading in such Trading Market), (ii) the
  Registration Statement is not effective after the Required Effectiveness Date, or (iii) the
  prospectus included in the Registration Statement may not be used by the Purchasers for the resale
  of Registrable Securities thereunder.

  (d) From the end of the Blockout Period until the one year anniversary thereof, the Company will
  not, directly or indirectly, effect any Subsequent Placement unless the Company shall have first
  complied with this Section 4.5(d).

 
   
  (i) The Company shall deliver to each Purchaser a written notice (the "Offer") of any proposed or
  intended issuance or sale or exchange of the securities being offered (the "Offered Securities")
  in a Subsequent Placement, which Offer shall (w) identify and describe the Offered Securities, (x)
  describe the price and other terms upon which they are to be issued, sold or exchanged, and the
  number or amount of the Offered Securities to be issued, sold or exchanged, (y) identify the
  persons or entities to which or with which the Offered Securities are to be offered, issued, sold
  or exchanged and (z) offer to issue and sell to or exchange with each Purchaser (A) a pro rata
  portion of the Offered Securities based on such Purchaser's pro rata portion of the aggregate
  purchase price paid by the Purchasers for all of the Shares purchased hereunder (the "Basic
  Amount"), and (B) with respect to each Purchaser that elects to purchase its Basic Amount, any
  additional portion of the Offered Securities attributable to the Basic Amounts of other Purchasers
  as such Purchaser shall indicate it will purchase or acquire should the other Purchasers subscribe
  for less than their Basic Amounts (the "Undersubscription Amount").

  (ii) To accept an Offer, in whole or in part, a Purchaser must deliver a written notice to the
  Company prior to the end of the ten (10) Trading Day period of the Offer, setting forth the
  portion of the Purchaser's Basic Amount that such Purchaser elects to purchase and, if such
  Purchaser shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any,
  that such Purchaser elects to purchase (in either case, the "Notice of Acceptance"). If the Basic
  Amounts subscribed for by all Purchasers are less than the total of all of the Basic Amounts, then
  each Purchaser who has set forth an Undersubcription Amount in its Notice of Acceptance shall be
  entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription
  Amount it has subscribed for; provided, however, that if the Undersubscription Amounts subscribed
  for exceed the difference between the total of all the Basic Amounts and the Basic Amounts
  subscribed for (the "Available Undersubscription Amount"), each Purchaser who has subscribed for
  any Undersubscription Amount shall be entitled to purchase on that portion of the Available
  Undersubscription Amount as the Basic Amount of such Purchaser bears to the total Basic Amounts of
  all Purchasers that have subscribed for Undersubscription Amounts, subject to rounding by the
  Board of Directors to the extent its deems reasonably necessary.

    (iii) The Company shall have ten (10) Trading Days from the expiration of the period set forth
    in Section 4.5(d)(ii) above to issue, sell or exchange (or any binding commitments thereto) all
    or any part of such Offered Securities as to which a Notice of Acceptance has not been given by
    the Purchasers (the "Refused Securities"), but only to the offerees described in the
    Offer and only upon terms and conditions (including, without limitation, unit prices and
    interest rates) that are not more favorable to the acquiring person or persons or less favorable
    to the Company than those set forth in the Offer.

 

 

    	
     	
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   (iv) In the event the Company shall propose to sell less than all the Refused Securities (any
    such sale to be in the manner and on the terms specified in Section 4.5(d)(iii) above), then
    each Purchaser may, at its sole option and in its sole discretion, reduce the number or amount
    of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not
    less than the number or amount of the Offered Securities that the Purchaser elected to purchase
    pursuant to Section 4.5(d)(ii) above multiplied by a fraction, (i) the numerator of which shall
    be the number or amount of Offered Securities the Company actually proposes to issue, sell or
    exchange (including Offered Securities to be issued or sold to Purchasers pursuant to Section
    4.5(c)(ii) above prior to such reduction) and (ii) the denominator of which shall be the
    original amount of the Offered Securities. In the event that any Purchaser so elects to reduce
    the number or amount of Offered Securities specified in its Notice of Acceptance, the Company
    may not issue, sell or exchange more than the reduced number or amount of the Offered Securities
    unless and until such securities have again been offered to the Purchasers in accordance with
    Section 4.5(d)(i) above.
(v) Upon the closing of the issuance, sale or exchange of all or
    less than all of the Refused Securities, the Purchasers shall acquire from the Company, and the
    Company shall issue to the Purchasers, the number or amount of Offered Securities specified in
    the Notices of Acceptance, as reduced pursuant to Section 4.5(d)(iv) above if the Purchasers
    have so elected, upon the terms and conditions specified in the Offer. The purchase by the
    Purchasers of any Offered Securities is subject in all cases to the preparation, execution and
    delivery by the Company and the Purchasers of a purchase agreement relating to such Offered
    Securities reasonably satisfactory in form and substance to the Purchasers and their respective
    counsel.

 

 
  (e) The restrictions contained in paragraphs (a), (b) and (d) of this Section 4.5 shall not apply
  to Excluded Stock.

 

    	
     	
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    4.6 Securities Laws Disclosure; Publicity. The Company shall, on or
  before 8:30 a.m., New York City time, on February 4, 2004, issue a press release reasonably
  acceptable to the Purchasers disclosing all material terms of the transactions contemplated
  hereby. On the first Trading Day following the Closing Date, the Company shall file a Current
  Report on Form 8-K with the Commission (the "8-K Filing") describing the terms of the
  transactions contemplated by the Transaction Documents and including as exhibits to such Current
  Report on Form 8-K this Agreement and the form of both the Additional Investment Rights and the
  Warrants, in the form required by the Exchange Act. Thereafter, the Company shall timely file any
  filings and notices required by the Commission or applicable law with respect to the transactions
  contemplated hereby and provide copies thereof to the Purchasers at least two days prior to such
  filing or dissemination. The Company and the Purchasers shall consult with each other in issuing
  any press releases or otherwise making public statements or filings and other communications with
  the Commission or any regulatory agency or Trading Market with respect to the transactions
  contemplated hereby, and neither party shall issue any such press release or otherwise make any
  such public statement, filing or other communication concerning the transaction contemplated
  hereby without the prior consent of the other (which shall not be unreasonably withheld or
  delayed), except if such disclosure is required by law, regulation or requirement of a Trading
  Market, in which case the disclosing party shall use commercially reasonable efforts to promptly
  provide the other party with prior notice of such public statement, filing or other communication.
  Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser,
  or include the name of any Purchaser in any filing with the Commission or any regulatory agency or
  Trading Market, without the prior written consent of such Purchaser (which shall not be
  unreasonably withheld), except to the extent such disclosure (but not any disclosure as to the
  controlling Persons thereof) is required by law or Trading Market regulations or requested by the
  Trading Markets, in which case the Company shall provide the Purchasers with prior notice of such
  disclosure. The Purchasers hereby consent to the inclusion of their names in the registration
  statement filed pursuant to Article VI hereof and acknowledge that the Company's Trading Market
  has requested disclosure of such Purchaser's name and details of their purchase. The Company shall
  not, and shall cause each of its Subsidiaries and its and each of their respective officers,
  directors, employees and agents not to, provide any Purchaser with any material nonpublic
  information regarding the Company or any of its Subsidiaries from and after the filing of the 8-K
  Filing without the express written consent of such Purchaser. In the event of a breach of the
  foregoing covenant by the Company, any of its Subsidiaries, or any of its or their respective
  officers, directors, employees and agents, in addition to any other remedy provided herein or in
  the Transaction Documents, a Purchaser shall have the right to make a public disclosure, in the
  form of a press release, public advertisement or otherwise, of such material nonpublic information
  without the prior approval by the Company, its Subsidiaries, or any of its or their respective
  officers, directors, employees or agents, provided that such Purchaser shall use commercially
  reasonably efforts to notify the Company a reasonable period of time prior to publicly disclosing
  such information. No Purchaser shall have any liability to the Company, its Subsidiaries, or any
  of its or their respective officers, directors, employees, shareholders or agents for any such
  disclosure, except in the case of gross negligence or willful misconduct by the Purchaser. Subject
  to the foregoing, neither the Company nor any Purchaser shall issue any press releases or any
  other public statements with respect to the transactions contemplated hereby; provided, however,
  that the Company shall be entitled, without the prior approval of any Purchaser, to make any press
  release or other public disclosure with respect to such transactions (i) in substantial conformity
  with the 8-K Filing and (ii) as is required by applicable law and regulations (provided that in
  the case of clause (i) each Purchaser shall be consulted by the Company in connection with any
  such press release or other public disclosure prior to its release). 

    4.7 Use of Proceeds. Except as set forth on Schedule 4.7, the Company shall use the net
  proceeds from the sale of the Securities hereunder for working capital purposes and not (i) for
  the satisfaction of any portion of the Company's debt (other than payment of trade payables, and
  accrued expenses in the ordinary course of the Company's business and prior practices), (ii) to
  redeem any Company equity or equity-equivalent securities, or (iii) to settle any outstanding
  litigation. 

    	
     	
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    4.8 Reimbursement. If any Purchaser or any of its Affiliates or any
  officer, director, partner, controlling person, employee or agent of a Purchaser or any of its
  Affiliates (a "Related Person") becomes involved in any capacity in any Proceeding brought
  by or against any Person in connection with or as a result of the transactions contemplated by the
  Transaction Documents, the Company will indemnify and hold harmless such Purchaser or Related
  Person for its reasonable legal and other expenses (including the costs of any investigation,
  preparation and travel) and for any Losses incurred in connection therewith, as such expenses or
  Losses are incurred, excluding only Losses that result directly from such Purchaser's or Related
  Person's gross negligence or willful misconduct. In addition, the Company shall indemnify and hold
  harmless each Purchaser and Related Person from and against any and all Losses, as incurred,
  arising out of or relating to any breach by the Company of any of the representations, warranties
  or covenants made by the Company in this Agreement or any other Transaction Document, or any
  allegation by a third party that, if true, would constitute such a breach. The conduct of any
  Proceedings for which indemnification is available under this paragraph shall be governed by
  Section 6.4(c) below. The indemnification obligations of the Company under this paragraph shall be
  in addition to any liability that the Company may otherwise have and shall be binding upon and
  inure to the benefit of any successors, assigns, heirs and personal representatives of the
  Purchasers and any such Related Persons. The Company also agrees that neither the Purchasers nor
  any Related Persons shall have any liability to the Company or any Person asserting claims on
  behalf of or in right of the Company in connection with or as a result of the transactions
  contemplated by the Transaction Documents, except to the extent that any Losses incurred by the
  Company result from the gross negligence or willful misconduct of the applicable Purchaser or
  Related Person in connection with such transactions. If the Company breaches its obligations under
  any Transaction Document, then, in addition to any other liabilities the Company may have under
  any Transaction Document or applicable law, the Company shall pay or reimburse the Purchasers on
  demand for all costs of collection and enforcement (including reasonable attorneys fees and
  expenses). Without limiting the generality of the foregoing, the Company specifically agrees to
  reimburse the Purchasers on demand for all reasonable costs of enforcing the indemnification
  obligations in this paragraph.

 ARTICLE V

 CONDITIONS

    5.1 Conditions Precedent to the Obligations of the Purchasers. The obligation of each
  Purchaser to acquire Securities at the Closing is subject to the satisfaction or waiver by such
  Purchaser, at or before the Closing, of each of the following conditions:

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

  (b) Performance. The Company and each other Purchaser 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.

 

    5.2 Conditions Precedent to the Obligations of the Company. The obligation of the Company to
  sell Securities at the 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 Purchasers
  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; and

  (b) Performance. The Purchasers 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 the Purchasers at or prior to the Closing.

 

    	
     	
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 ARTICLE VI

 REGISTRATION RIGHTS

    6.1 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. The
  Registration Statement shall be on Form S-3 (except if the Company is not then eligible to
  register for resale the Registrable Securities on Form S-3, in which case such registration shall
  be on another appropriate form in accordance herewith as the Purchasers may consent) and shall
  contain (except if otherwise directed by the Purchasers) the "Plan of Distribution" attached
  hereto as Exhibit D.
(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 fifth
  anniversary of the Effective Date or such earlier date when all Registrable Securities covered by
  such Registration Statement have been sold publicly or may be sold pursuant to paragraph (k) of
  Rule 144 (the "Effectiveness Period").

  (c) The Company shall notify each Purchaser 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. 
 

 

 
 (d) (d) Subject to Section 6.1(e) below, upon the occurrence of any Event (as defined below) and
  on every monthly anniversary thereof until the applicable Event is cured, as partial relief for
  the damages suffered therefrom by the Purchasers (which remedy shall not be exclusive of any other
  remedies available under this Agreement, at law or in equity), the Company shall pay to each
  Purchaser an amount in cash, as liquidated damages and not as a penalty, equal to 1.0% of the
  aggregate purchase price paid by such Purchaser hereunder for the first month and 1.5% for each
  month thereafter, prorated for any partial month. The payments to which a Purchaser shall be
  entitled pursuant to this Section 6.1(d) are referred to herein as "Event Payments".
  Any Event Payments payable pursuant to the terms hereof shall apply on a pro-rata basis for any
  portion of a month prior to the cure of an Event. In the event the Company fails to make Event
  Payments in a timely manner, such Event Payments shall bear interest at the rate of 1.5% per month
  (prorated for partial months) until paid in full.

  
  For such purposes, each of the following shall constitute an "Event":

 
   
    (i) the Registration Statement is not filed on or prior to the Filing Date or is not declared
    effective on or prior to the Required Effectiveness Date; provided, however, that for the
    purposes of the Event Payment under this Section 6.1(d) only, the Company shall have an
    additional 13 days to cure the failure to file on the Filing Date before such Event Payment is
    due to the Purchasers under this Section 6.1(d);

    (ii) after the Effective Date, a Purchaser is not permitted to sell Registrable Securities under
    the Registration Statement (or a subsequent Registration Statement filed in replacement thereof)
    for any reason for five or more Trading Days;

  (iii) the Common Stock is not listed or quoted, or is suspended from trading, on an Eligible
  Market for a period of five Trading Days (which need not be consecutive Trading Days);

  (iv) the Company fails for any reason to deliver a certificate evidencing any Securities to a
  Purchaser within five Trading Days after delivery of such certificate is required pursuant to any
  Transaction Document or the exercise rights of the Purchasers pursuant to the Transaction
  Documents are otherwise suspended for any reason; or

  (v) the Company fails to have available a sufficient number of authorized but unissued and
  otherwise unreserved shares of Common Stock available to issue Underlying Shares upon any exercise
  of the Additional Investment Rights or the Warrants or, at any time following the Effective Date,
  any Shares or Underlying Shares are not listed on an Eligible Market.

 

 

    	
     	
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  (e) Notwithstanding anything in this Agreement to the contrary, the Company may, by written notice
  to the Purchasers, suspend sales under a Registration Statement after the Effective Date thereof
  and/or require that the Purchasers immediately cease the sale of shares of Common Stock pursuant
  thereto and/or defer the filing of any subsequent Registration Statement if at any time the
  Company determines in good faith that such Registration Statement contains 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 the light of the circumstances under which they were made, not
  misleading and cannot be utilized in connection with the sale of shares of Common Stock until it
  has been appropriately amended. Upon receipt of such notice, each Purchaser shall immediately
  discontinue any sales of Registrable Securities pursuant to such registration until such Purchaser
  has received copies of a supplemented or amended Prospectus or until such Purchaser is advised in
  writing by the Company that the then-current Prospectus may be used and has received copies of any
  additional or supplemental filings that are incorporated or deemed incorporated by reference in
  such Prospectus. In no event, however, shall this right be exercised to suspend sales beyond the
  period during which (in the good faith determination of the Company) the failure to require such
  suspension would be materially detrimental to the Company. Furthermore, in no event may the
  Company exercise its rights hereunder more than two times or for a period of more than 30 days in
  any twelve month period. Immediately after the end of any suspension period under this Section
  6.1(e), the Company shall take all necessary actions (including filing any required
  supplemental prospectus) to restore the effectiveness of the applicable Registration Statement and
  the ability of the Purchasers to publicly resell their Registrable Securities pursuant to such
  effective Registration Statement.

  (f) 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. 

 

    6.2 Registration Procedures. In connection with the Company's registration obligations
  hereunder, the Company shall:

 
 (a) (a) Not less than three Trading Days prior to the filing of a Registration Statement or any
  related Prospectus or any amendment, or not less than one Trading Day for any supplement thereto
  (including any document that would be incorporated or deemed to be incorporated therein by
  reference), the Company shall (i) furnish to each Purchaser and any counsel designated by any
  Purchaser (each, a "Purchaser Counsel", and Vertical Ventures, LLC, a Purchaser, has
  initially designated Proskauer Rose LLP as its Purchaser Counsel) copies of all such documents
  proposed to be filed, which documents (other than those incorporated or deemed to be incorporated
  by reference) will be subject to the review of each Purchaser and Purchaser Counsel, and (ii)
  cause its officers and directors, counsel and independent certified public accountants to respond
  to such reasonable inquiries as shall be necessary, in the reasonable opinion of respective
  counsel, to conduct a reasonable investigation within the meaning of the Securities Act. The
  Company shall not file a Registration Statement or any such Prospectus or any amendments or
  supplements thereto to which Purchasers holding a majority of the Registrable Securities shall
  reasonably object in writing within three Trading Days of receiving (or one Trading Day in the
  case of supplements).

  (b) (i) Prepare and file with the Commission such amendments, including post-effective amendments,
  to each Registration Statement and the Prospectus used in connection therewith as may be necessary
  to keep the Registration Statement continuously effective as to the applicable Registrable
  Securities for the Effectiveness Period and prepare and file with the Commission such additional
  Registration Statements in order to register for resale under the Securities Act all of the
  Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any
  required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule
  424; (iii) respond as promptly as reasonably possible, and in any event within ten days, to any
  comments received from the Commission with respect to the Registration Statement or any amendment
  thereto and promptly provide the Purchasers true and complete copies of all correspondence from
  and to the Commission relating to the Registration Statement; and (iv) comply in all material
  respects with the provisions of the Securities Act and the Exchange Act with respect to the
  disposition of all Registrable Securities covered by the Registration Statement during the
  applicable period in accordance with the intended methods of disposition by the Purchasers thereof
  set forth in the Registration Statement as so amended or in such Prospectus as so supplemented

 

    	
     	
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  (c) Notify the Purchasers of Registrable Securities to be sold and each Purchaser Counsel as
  promptly as reasonably possible, and (if requested by any such Person) confirm such notice in
  writing no later than one Trading Day thereafter, of any of the following events: (i) the
  Commission notifies the Company whether there will be a "review" of any Registration Statement;
  (ii) the Commission comments in writing on any Registration Statement (in which case the Company
  shall deliver to each Purchaser a copy of such comments and of all written responses thereto);
  (iii) any Registration Statement or any post-effective amendment is declared effective; (iv) the
  Commission or any other Federal or state governmental authority requests any amendment or
  supplement to any Registration Statement or Prospectus or requests additional information related
  thereto; (v) the Commission issues any stop order suspending the effectiveness of any Registration
  Statement or initiates any Proceedings for that purpose; (vi) the Company receives notice of any
  suspension of the qualification or exemption from qualification of any Registrable Securities for
  sale in any jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (vii)
  the financial statements included in any Registration Statement become ineligible for inclusion
  therein or any statement made in any Registration Statement or Prospectus or any document
  incorporated or deemed to be incorporated therein by reference is untrue in any material respect
  or any revision to a Registration Statement, Prospectus or other document is required so that it
  will not contain any untrue statement of a material fact or omit to state any material fact
  required to be stated therein or necessary to make the statements therein, in the light of the
  circumstances under which they were made, not misleading.

  (d) Use its best efforts to avoid the issuance of or, if issued, obtain the withdrawal of (i) any
  order suspending the effectiveness of any Registration Statement, or (ii) any suspension of the
  qualification (or exemption from qualification) of any of the Registrable Securities for sale in
  any jurisdiction, as soon as possible.

  (e) Furnish to each Purchaser and Purchaser Counsel, without charge, at least one conformed copy
  of each Registration Statement and each amendment thereto, including financial statements and
  schedules, all documents incorporated or deemed to be incorporated therein by reference, and all
  exhibits to the extent requested by such Person (including those previously furnished or
  incorporated by reference) promptly after the filing of such documents with the Commission.

  (f) Promptly deliver to each Purchaser and Purchaser Counsel, without charge, as many copies of
  the Prospectus or Prospectuses (including each form of prospectus) and each amendment or
  supplement thereto as such Persons may reasonably request. The Company hereby consents to the use
  of such Prospectus and each amendment or supplement thereto by each of the selling Purchasers in
  connection with the offering and sale of the Registrable Securities covered by such Prospectus and
  any amendment or supplement thereto.

  (g) (i) In the time and manner required by each Trading Market, prepare and file with such Trading
  Market an additional shares listing application covering all of the Registrable Securities; (ii)
  take all steps necessary to cause such Registrable Securities to be approved for listing on each
  Trading Market as soon as possible thereafter; (iii) provide to the Purchasers evidence of such
  listing (if applicable); and (iv) maintain the listing of such Registrable Securities on each such Trading Market
  or another Eligible Market.

  (h) Prior to any public offering of Registrable Securities, use commercially reasonable efforts to register or
  qualify or cooperate with the selling Purchasers and respective Purchaser Counsel in connection
  with the registration or qualification (or exemption from such registration or qualification) of
  such Registrable Securities for offer and sale under the securities or Blue Sky laws of such
  jurisdictions within the United States as any Purchaser requests in writing, to keep each such
  registration or qualification (or exemption therefrom) effective during the Effectiveness Period
  and to do any and all other acts or things necessary or advisable to enable the disposition in
  such jurisdictions of the Registrable Securities covered by a Registration Statement.

  (i) Cooperate with the Purchasers to facilitate the timely preparation and delivery of
  certificates representing Registrable Securities to be delivered to a transferee pursuant to a
  Registration Statement, which certificates shall be free, to the extent permitted by this
  Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such
  denominations and registered in such names as any such Purchasers may request.

 

    	
     	
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  (j) Upon the occurrence of any event described in Section 6.2(c)(vii), as promptly as reasonably
  possible, prepare a supplement or amendment, including a post-effective amendment, to the
  Registration Statement or a supplement to the related Prospectus or any document incorporated or
  deemed to be incorporated therein by reference, and file any other required document so that, as
  thereafter delivered, neither the Registration Statement nor such Prospectus will contain an
  untrue statement of a material fact or omit to state a material fact required to be stated therein
  or necessary to make the statements therein, in the light of the circumstances under which they
  were made, not misleading.

  (k) Cooperate with any due diligence investigation undertaken by the Purchasers in connection with
  the sale of Registrable Securities, including, without limitation, by making available any
  documents and information; provided that the Company will not deliver or make available to any
  Purchaser material, nonpublic information unless such Purchaser specifically requests in advance
  to receive material, nonpublic information in writing.
(l) Comply with all applicable rules and regulations of the Commission. 

 

    6.3 Registration Expenses. The Company shall pay (or reimburse the Purchasers for)
  all fees and expenses incident to the performance of or compliance with this Agreement by the
  Company, including without limitation (a) all registration and filing fees and expenses, including
  without limitation those related to filings with the Commission, any Trading Market and in
  connection with applicable state securities or Blue Sky laws, (b) printing expenses (including
  without limitation expenses of printing certificates for Registrable Securities and of printing
  prospectuses requested by the Purchasers), (c) messenger, telephone and delivery expenses, (d)
  fees and disbursements of counsel for the Company, (e) fees and expenses of all other Persons retained by the
  Company in connection with the consummation of the transactions contemplated by this Agreement,
  and (f) all listing fees to be paid by the Company to the Trading Market. 

    6.4 Indemnification

 
 (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this
  Agreement, indemnify and hold harmless each Purchaser, the officers, directors, partners, members,
  agents, brokers, investment
  advisors and employees of each of them, each Person who controls any such Purchaser (within the
  meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers,
  directors, partners, members, agents and employees of each such controlling Person, to the fullest
  extent permitted by applicable law, from and against any and all Losses, as incurred, arising out
  of or relating to any untrue or alleged untrue statement of a material fact contained in the
  Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement
  thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged
  omission of a material fact required to be stated therein or necessary to make the statements
  therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light
  of the circumstances under which they were made) not misleading, except to the extent, but only to
  the extent, that (i) such untrue statements, alleged untrue statements, omissions or alleged
  omissions are based solely upon information regarding such Purchaser furnished in writing to the
  Company by such Purchaser expressly for use therein, or to the extent that such information
  relates to such Purchaser or such Purchaser's proposed method of distribution of Registrable
  Securities and was reviewed and expressly approved in writing by such Purchaser expressly for use
  in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or
  supplement thereto or (ii) in the case of an occurrence of an event of the type specified in
  Section 6.2(c)(v)-(vii), the use by such Purchaser of an outdated or defective Prospectus after
  the Company has notified such Purchaser in writing that the Prospectus is outdated or defective
  and prior to the receipt by such Purchaser of the Advice contemplated in Section 6.5. The Company
  shall notify the Purchasers promptly of the institution, threat or assertion of any Proceeding of
  which the Company is aware in connection with the transactions contemplated by this Agreement.

 

    	
     	
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  (b) Indemnification by Purchasers. Each Purchaser shall, severally and not jointly, indemnify and
  hold harmless the Company, its directors, officers, agents and employees, each Person who controls
  the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
  Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest
  extent permitted by applicable law, from and against all Losses (as determined by a court of
  competent jurisdiction in a final judgment not subject to appeal or review) arising solely out of
  any untrue statement of a material fact contained in the Registration Statement, any Prospectus,
  or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of any
  omission of a material fact required to be stated therein or necessary to make the statements
  therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light
  of the circumstances under which they were made) not misleading to the extent, but only to the
  extent, that such untrue statement or omission is contained in any information so furnished in
  writing by such Purchaser to the Company specifically for inclusion in such Registration Statement
  or such Prospectus or to the extent that (i) such untrue statements or omissions are based solely
  upon information regarding such Purchaser furnished in writing to the Company by such Purchaser
  expressly for use therein, or to the extent that such information relates to such Purchaser or
  such Purchaser's proposed method of distribution of Registrable Securities and was reviewed and
  expressly approved in writing by such Purchaser expressly for use in the Registration Statement,
  such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (ii) in
  the case of an occurrence of an event of the type specified in Section 6.2(c)(v)-(vii), the use by
  such Purchaser of an outdated or defective Prospectus after the Company has notified such
  Purchaser in writing that the Prospectus is outdated or defective and prior to the receipt by such
  Purchaser of the Advice contemplated in Section 6.5. In no event shall the liability of any
  selling Purchaser hereunder be greater in amount than the dollar amount of the net proceeds
  received by such Purchaser upon the sale of the Registrable Securities giving rise to such
  indemnification obligation.

  (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against
  any Person entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall
  promptly notify the Person from whom indemnity is sought (the "Indemnifying Party") in writing,
  and the Indemnifying Party shall assume the defense thereof, including the employment of counsel
  reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred
  in connection with defense thereof; provided, that the failure of any Indemnified Party to give
  such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to
  this Agreement, except (and only) to the extent that it shall be finally determined by a court of
  competent jurisdiction (which determination is not subject to appeal or further review) that such
  failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

  An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to
  participate in the defense thereof, but the fees and expenses of such counsel shall be at the
  expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
  writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly
  to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such
  Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding
  (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
  and such Indemnified Party shall have been advised in writing by counsel that a conflict of
  interest is likely to exist if the same counsel were to represent such Indemnified Party and the
  Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in
  writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the
  Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall
  be at the expense of the Indemnifying Party provided that such separate counsel shall be
  reasonably satisfactory to the Indemnifying Party). The Indemnifying Party shall not be liable for
  any settlement of any such Proceeding effected without its written consent, which consent shall
  not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written
  consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed),
  effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a
  party, unless such settlement includes an unconditional release of such Indemnified Party from all
  liability on claims that are the subject matter of such Proceeding.

 

    	
     	
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 All fees and expenses of
  the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection
  with investigating or preparing to defend such Proceeding in a manner not inconsistent with this
  Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written
  notice thereof to the Indemnifying Party, together with reasonable documentation of such expenses,
  (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to
  indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified
  Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially
  determined that such Indemnified Party is not entitled to indemnification hereunder). 

 (d) Contribution. If a claim for indemnification under Section 6.4(a) or (b) is unavailable to an
  Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu
  of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such
  Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the
  relative fault of the Indemnifying Party and Indemnified Party in connection with the actions,
  statements or omissions that resulted in such Losses as well as any other relevant equitable
  considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be
  determined by reference to, among other things, whether any action in question, including any
  untrue or alleged untrue statement of a material fact or omission or alleged omission of a
  material fact, has been taken or made by, or relates to information supplied by, such Indemnifying
  Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and
  opportunity to correct or prevent such action, statement or omission. The amount paid or payable
  by a party as a result of any Losses shall be deemed to include, subject to the limitations set
  forth in Section 6.4(c), any reasonable attorneys' or other reasonable fees or expenses incurred
  by such party in connection with any Proceeding to the extent such party would have been
  indemnified for such fees or expenses if the indemnification provided for in this Section was
  available to such party in accordance with its terms.

  The parties hereto agree that it would not be just and equitable if contribution pursuant to this
  Section 6.4(d) were determined by pro rata allocation or by any other method of allocation that
  does not take into account the equitable considerations referred to in the immediately preceding
  paragraph. Notwithstanding the provisions of this Section 6.4(d), no Purchaser shall be required
  to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually
  received by such Purchaser from the sale of the Registrable Securities subject to the Proceeding
  exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason
  of such untrue or alleged untrue statement or omission or alleged omission. 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.

  The indemnity and contribution agreements contained in this Section are in addition to any
  liability that the Indemnifying Parties may have to the Indemnified Parties. 

 

    6.5 Dispositions. Each Purchaser agrees that it will comply with the prospectus
  delivery requirements of the Securities Act as applicable to it in connection with sales of
  Registrable Securities pursuant to the Registration Statement. Each Purchaser further agrees that,
  upon receipt of a notice from the Company of the occurrence of any event of the kind described in
  Sections 6.2(c)(v), (vi) or (vii), such Purchaser will discontinue disposition of such Registrable
  Securities under the Registration Statement until such Purchaser's receipt of the copies of the
  supplemented Prospectus and/or amended Registration Statement contemplated by Section 6.2(j), or
  until it is advised in writing (the "Advice") by the Company that the use of the applicable
  Prospectus may be resumed, and, in either case, has received copies of any additional or
  supplemental filings that are incorporated or deemed to be incorporated by reference in such
  Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce
  the provisions of this paragraph.

    6.6 No Piggyback on Registrations. Except as set forth in Schedule 6.6,
  neither  the Company nor any of its security
  holders (other than the Purchasers in such capacity pursuant hereto) may include securities of the
  Company in the Registration Statement other than the Registrable Securities, and the Company shall
  not after the date hereof enter into any agreement providing any such right to any of its security
  holders.

    	
     	
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    6.7 Piggy-Back Registrations. If at any time during the Effectiveness Period
  there is not an effective Registration Statement covering all of the Registrable Securities and
  the Company shall determine to prepare and file with the Commission a registration statement
  relating to an offering for its own account or the account of others under the Securities Act of
  any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the
  Securities Act) or their then equivalents relating to equity securities to be issued solely in
  connection with any acquisition of any entity or business or equity securities issuable in
  connection with stock option or other employee benefit plans, then the Company shall send to each
  Purchaser written notice of such determination and if, within fifteen days after receipt of such
  notice, any such Purchaser shall so request in writing, the Company shall include in such
  registration statement all or any part of such Registrable Securities such Purchaser requests to
  be registered.; provided that, if the managing underwriter or underwriters of any such offering
  have informed the company, that it is their opinion that the total number of shares which the
  Company (such shares, "Primary Shares"), holders of Registrable shares and any other Person
  participating in such registration (such shares, "Other Shares") intend to include in such
  offering would interfere with the successful marketing (including pricing) of such offering, then
  the number of Primary Shares, Registrable Shares and Other Shares proposed to be included in such
  registration shall be included in the following order: (i) first, the Primary shares; and (ii)
  second, the Registrable Shares and the Other Shares, pro rata among holders of Registrable Shares
  and the holders of Other Shares that have requested that their Registrable Shares or Other Shares,
  as applicable, be included in such registration based upon the number of Registrable Shares or
  Other Shares, as applicable, that each such holder of Registrable Shares or Other Shares has
  requested to be registered. 

 ARTICLE VII

 MISCELLANEOUS

    7.1 Termination. This Agreement may be terminated by the Company or any Purchaser,
  by written notice to the other parties, if the Closing has not been consummated by the third
  Business Day following the date of this Agreement; provided that no such termination will affect
  the right of any party to sue for any breach by the other party (or parties).

    7.2 Fees and Expenses. At the Closing, the Company shall pay to Vertical Ventures,
  LLC an aggregate of $15,000 for their legal fees and expenses incurred in connection with its due
  diligence and the preparation and negotiation of the Transaction Documents, of which amount $5,000
  has been previously paid by the Company to the Purchaser Counsel. In lieu of the foregoing
  payment, Vertical Ventures, LLC may retain such amount at the Closing or require the Company to
  pay such amount directly to Purchaser Counsel. Except as expressly set forth in the Transaction Documents
  to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants
  and other experts, if any, and all other expenses incurred by such party incident to the
  negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall
  pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the
  issuance of the Securities.

    7.3 Entire Agreement. The Transaction Documents, together with the Exhibits and
  Schedules thereto, contain the entire understanding of the parties with respect to the subject
  matter hereof and supersede all prior agreements and understandings, oral or written, with respect
  to such matters, which the parties acknowledge have been merged into such documents, exhibits and
  schedules. At or after the Closing, and without further consideration, the Company will execute
  and deliver to the Purchasers such further documents as may be reasonably requested in order to
  give practical effect to the intention of the parties under the Transaction Documents.

    7.4 Notices. Any and all notices or other communications or deliveries required or
  permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
  the earliest of (a) the date of transmission, if such notice or communication is delivered via
  facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City
  time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or
  communication is delivered via facsimile at the facsimile number specified in this Section on a
  day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c)
  the Trading Day following the date of deposit with a nationally recognized overnight courier
  service, or (d) upon actual receipt by the party to whom such notice is required to be given. The
  addresses and facsimile numbers for such notices and communications are those set forth on the
  signature pages hereof, or such other address or facsimile number as may be designated in writing
  hereafter, in the same manner, by any such Person.

    	
     	
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     	   2004 Form 8-K 
     	

 

 7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a
  written instrument signed, in the case of an amendment, by the Company and each of the Purchasers
  or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought.
  No waiver of any default with respect to any provision, condition or requirement of this Agreement
  shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a
  waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of
  either party to exercise any right hereunder in any manner impair the exercise of any such right.
  Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with
  respect to a matter that relates exclusively to the rights of Purchasers under Article VI and that
  does not directly or indirectly affect the rights of other Purchasers may be given by Purchasers
  holding at least a majority of the Registrable Securities to which such waiver or consent relates.

    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.

    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. The Company may not assign this
  Agreement or any rights or obligations hereunder without the prior written consent of the
  Purchasers. Any Purchaser may assign its rights under this Agreement to any Person to whom such
  Purchaser assigns or transfers any Securities, provided such transferee agrees in writing to be
  bound, with respect to the transferred Securities, by the provisions hereof that apply to the
  "Purchasers." Notwithstanding anything to the contrary herein, Securities may be assigned to any
  Person in connection with a bona fide margin account or other loan or financing arrangement
  secured by such Securities.

    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 that each Related Person
  is an intended third party beneficiary of Section 4.8 and each Indemnified Party is an intended
  third party beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
  Sections directly against the parties with obligations thereunder.

    7.9 Governing Law; Venue; Waiver Of Jury Trial. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
  VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT. THE COMPANY HEREBY IRREVOCABLY SUBMITS
  TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK,
  BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY ANY PURCHASER HEREUNDER, IN
  CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING
  WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY
  WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY ANY PURCHASER, ANY
  CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT,
  ACTION OR PROCEEDING IS IMPROPER. EACH PURCHASER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
  JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN DELAWARE, FOR THE ADJUDICATION OF ANY
  DISPUTE BROUGHT BY THE COMPANY HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
  CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE
  TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT,
  ACTION OR PROCEEDING BROUGHT BY THE COMPANY, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
  JURISDICTION OF ANY SUCH COURT OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY
  HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY
  SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
  OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
  TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
  SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY
  WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL
  RIGHTS TO A TRIAL BY JURY.

    7.10 Survival. The representations, warranties, agreements and covenants contained
  herein shall survive the Closing and the delivery and/or exercise of the Securities, as
  applicable. 

    	
     	
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     	   2004 Form 8-K 
     	

 

    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.

    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.

    7.13 Rescission and Withdrawal Right. Notwithstanding anything to the
  contrary contained in (and without limiting any similar provisions of) the Transaction Documents,
  whenever any Purchaser exercises a right, election, demand or option under a Transaction Document
  and the Company does not timely perform its related obligations within the periods therein
  provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time
  upon written notice to the Company, any relevant notice, demand or election in whole or in part
  without prejudice to its future actions and rights unless the Company has proceeded and is
  continuing to proceed in a diligent and good faith fashion.

    7.14 Replacement of Securities. If any certificate or instrument evidencing any
  Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued
  in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution
  therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
  satisfactory to the Company of such loss, theft or destruction and customary and reasonable
  indemnity, if requested. 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.

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

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

    7.17 Adjustments in Share Numbers and Prices. In the event of any stock split,
  subdivision, dividend or distribution payable in shares of Common Stock (or other securities or
  rights convertible into, or entitling the holder thereof to receive directly or indirectly shares
  of Common Stock), combination or other similar recapitalization or event occurring after the date
  hereof, each reference in any Transaction Document to a number of shares or a price per share
  shall be amended to appropriately account for such event.

    	
     	
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     	   2004 Form 8-K 
     	

 

    7.18 Independent Nature of Purchasers' Obligations and Rights. The obligations of
  each Purchaser under any Transaction Document are several and not joint with the obligations of
  any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the
  obligations of any other Purchaser under any Transaction Document. The decision of each Purchaser
  to purchase Shares pursuant to this Agreement has been made by such Purchaser independently of any
  other Purchaser and independently of any information, materials, statements or opinions as to the
  business, affairs, operations, assets, properties, liabilities, results of operations, condition
  (financial or otherwise) or prospects of the Company or of the Subsidiary which may have been made
  or given by any other Purchaser or by any agent or employee of any other Purchaser, and no
  Purchaser or any of its agents or employees shall have any liability to any other Purchaser (or
  any other person) relating to or arising from any such information, materials, statements or
  opinions. Nothing contained herein or in any Transaction Document, and no action taken by any
  Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an
  association, a joint venture or any other kind of entity, or create a presumption that the
  Purchasers are in any way acting in concert or as a group with respect to such obligations or the
  transactions contemplated by the Transaction Document. Each Purchaser acknowledges that no other
  Purchaser has acted as agent for such Purchaser in connection with making its investment hereunder
  and that no other Purchaser will be acting as agent of such Purchaser in connection with
  monitoring its investment hereunder. Each Purchaser shall be entitled to independently protect and
  enforce its rights, including without limitation the rights arising out of this Agreement or out
  of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be
  joined as an additional party in any proceeding for such purpose.

 [SIGNATURE PAGES TO FOLLOW]   

    	
     	
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     	   2004 Form 8-K 
     	

             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.

  
    
      
STOCKERYALE, INC..

 By: /s/ Mark W. Blodgett

 Name: Mark W. Blodgett

 Title: Chief Executive Officer

 Address for Notice:
32 Hampshire Road
Salem, NH 03079

 Phone: 603-893-8778

 Fax: 603-898-8851

 Attn: Mark W. Blodgett

 

 With a copy to: Goodwin Procter LLP
Exchange Place
Boston, MA 02109

 Facsimile No.: 617-523-1231

 Telephone No.: 617-570-1000

 Attn: John Haggerty

      

    

  

 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]

    	
     	
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     	   2004 Form 8-K 
     	

  
    
      
            

VERTICAL VENTURES, LLC

 By: /s/ Joshua Silverman

 Name: Joshua Silverman

 Title: Partner
Number of Units: 626,087
Underlying Shares subject to

  Additional Investment Rights: 156,522

  Underlying Shares 
subject to Warrants: 156,522

 
 

 Address for Notice:

 
 Vertical Ventures, LLC

 6641 Lexington Ave, 26th Floor

 New York, NY 10022

 Facsimile No.: (212) 207-3452

 Telephone No.: (212) 974-3070

 Attn: Joshua Silverman

 
 

 With a copy to: Proskauer Rose LLP

 1585 Broadway

 New York, New York 10036-8299

 Facsimile No.: (212) 969-2900

 Telephone No.: (212) 969-3000

 Attn: Adam J. Kansler, Esq.

      

    

  

 

     	
     	
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     	   2004 Form 8-K 
     	

 
   
     
       
 Purchaser: SMITHFIELD FIDUCIARY LLC

  By: /s/ Adam J. Chill

  Name: Adam J. Chill

  Title: Authorized Signatory

  Number of Units: 217,391

  Underlying Shares subject to

  Additional Investment Rights: 54,348

  
  Underlying Shares 
subject to Warrants: 54,348

  

         
  Address for Notice:

         c/o Highbridge Capital Management, LLC
9 West 57th Street, 27th Floor
New
 York, NY 10019

  Facsimile No.: (212) 751-0755

  Telephone No.: (212) 287-4720

  Attn: Ari J. Storch / Adam J. Chill

       

     

   

  

    	
     	
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     	   2004 Form 8-K 
     	

 

 
   
     
       
 Purchaser: OMICRON MASTER TRUST
By: /s/ Bruce Bernstein
Name: Bruce
 Bernstein
Title: Managing Partner
Number of Units: 173,913
Underlying Shares subject to

  Additional Investment Rights: 43,478

  Underlying Shares 
subject to Warrants: 43,478
 

         Address for Notice:

         810 7th Avenue, 39th Floor
New York, NY 10019
Facsimile No.: (212) 803-5269

 Telephone No.: (212) 803-5263
Attn: Brian Daly

       

     

   

 

    	
     	
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     	   2004 Form 8-K 
     	

 

 

 
   
     
       
 Purchaser: OTAPE INVESTMENTS LLC
By: /s/ Richard M. Cayne
Name: Richard M. Cayne
Title:
 General Counsel

 Number of Units: 173,913
Underlying Shares subject to

  Additional Investment Rights: 43,478

  Underlying Shares 
subject to Warrants: 43,478
 

         Address for Notice:

         One Manhattanville Road
Purchase, NY 10577
Facsimile No.: (914) 694-6335

 Telephone No.: (914) 694-5887
Attn: Rick Bourdon / Paul Masters

       

     

   

  

   	
     	
     	   Exhibit 10.1   /  STKR 
     	
	
     	
     	   END
	
     	
     	   2004 Form 8-KExhibit 10.1

                          SECURITIES PURCHASE AGREEMENT

         THIS SECURITIES PURCHASE AGREEMENT, dated as of December 15, 2003 (the
"Agreement"), is by and among NOXSO CORPORATION, a Virginia corporation (the
"Company"), and Cheong Tat Corporation, a Nevada Corporation (the "Investor").
The parties agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         1.1 Definitions. Certain capitalized terms are used in this Agreement
as specifically defined in this Section 1.1 as follows:

         "Affiliate" means any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Company (or
other specified Person) and shall include (a) any Person who is an officer,
director or beneficial holder of at least 10% of the outstanding capital stock
of the Company (or other specified Person), (b) any Person of which the Company
(or other specified Person) or any officer or director of the Company (or other
specified Person) shall, directly or indirectly, either beneficially own at
least 10% of the outstanding equity securities or constitute at least a 10%
participant, and (c) in the case of a specified Person who is an individual,
Members of the Immediate Family of such Person; provided, however, that the
Investor shall not be Affiliates of the Company for purposes of this Agreement.

         "Agreement" is defined in the Preamble.

         "Articles of Restatement" is defined in Section 2.4(c).

         "Balance Sheet Date" is defined in Section 3.4.

         "By-Laws" means all written rules, regulations, procedures and bylaws
and all other similar documents, relating to the management, governance or
internal regulation of a Person other than an individual, each as from time to
time amended or modified.

         "CD" is defined in Section 2.2.

         "Charter" means the articles or certificate of incorporation, statute,
constitution, joint venture or partnership agreement or articles or other
charter of any Person other than an individual, each as from time to time
amended or modified.

         "Code" means the federal Internal Revenue Code of 1986 or any successor
statute, and the rules and regulations thereunder, as from time to time amended
and in effect.

         "Commission" means the Securities and Exchange Commission.

         "Common Stock" means the Company's common stock.

         "Company" is defined in the Preamble.

         "Contractual Obligation" means, with respect to any Person, any
contracts, agreements, deeds, mortgages, leases, licenses, other instruments,
commitments, undertakings, arrangements or understandings, written or oral, or
other documents, including any document or instrument evidencing indebtedness,
to which any such Person is a party or otherwise subject to or bound by or to
which any asset of any such Person is subject.

         "Convertible Note" is defined in Section 2.4(d).

         "Financial Statements" is defined in Section 3.4.

<PAGE>

         "Closing" is defined in Section 2.3.

         "Closing Date" is defined in Section 2.3.

         "GAAP" means United States generally accepted accounting principles, as
in effect from time to time, consistently applied.

         "Investor Securities" is defined in Section 2.1.

         "Investor" is defined in the Preamble.

         "Liens" shall mean any and all liens, mortgages, claims, options,
conditional sales agreements, rights of refusal, security interests, pledges,
deeds of trust or other charges or encumbrances, restrictions, legal or
equitable claims or rights of any Person pursuant to the laws of the
jurisdiction, including, but not limited to the United States, any state,
municipality or territory thereof.

         "Material Adverse Effect" means a material adverse effect upon the
business, assets, financial condition, income or prospects of the Company.

         "Members of the Immediate Family," as applied to any individual, means
each parent, spouse, child, brother, sister or the spouse of a child, brother or
sister of the individual, and each trust created for the benefit of one or more
of such persons and each custodian of a property of one or more such persons.

         "Person" means an individual, partnership, corporation, company,
association, trust, joint venture, unincorporated organization and any
governmental department or agency or political subdivision.

         "Preferred Stock" means the preferred stock of the Company that is
issuable upon conversion of the Convertible Note.

         "Proxy Statement" is defined in Section 5.1(b).

         "Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be from time to time amended and in effect.

                                   ARTICLE II
                         SALE AND PURCHASE OF SECURITIES

         2.1 Investor Securities. The Common Stock and Convertible Notes are
being purchased by the Investor are collectively referred to as the "Investor
Securities."

         2.2 Agreement to Sell and Purchase. Subject to the terms and conditions
hereof and in reliance on the Investor's representations, warranties and
agreements contained or referred to herein, the Company agrees to issue and sell
to the Investor and, subject to the terms and conditions hereof and in reliance
on the representations, warranties and agreements of the Company contained or
referred to herein, the Investor agrees to purchase at the Closing, Six Million
(6,000,000) shares of Common Stock at $1.25 per share and two Convertible Notes
as described at Section 2.4(d) in the aggregate principal amount of Forty Two
Million Five Hundred Thousand USD ($42,500,000 USD) in consideration for the
assignment of all right, title and interest in the principal amount of a
certificate of deposit issued by Barclays Bank PLC - Isle of Man identified as
N.12387897643189-028 and CUSIP No. UK6592317239-ISIN-00000000-UK0090151 in the
principal amount of Fifty Million Dollars ($50,000,000 USD) and as more fully
described on Exhibit 2.2, attached hereto and incorporated herein by reference.
The principal amount of the CD shall be free and clear of any and all Liens and
which assignment shall be complete at Closing (the "CD").

<PAGE>

         2.3 Closings. The Closing of the purchase and sale of the Investor
Securities (the "Closing") shall take place in Utah at the offices of NOXSO
Corporation. The Closing shall take place on a date no later than 18th of
December, 2003 (the "Closing Date") or at such other place and time as the
Company and the Investor may otherwise agree. At the Closing, the Company will
deliver to the Investor certificates evidencing the 6,000,000 shares of Common
Stock that Investor is acquiring and the Convertible Notes in the aggregate
principal amount of $42,500,000 and Investor shall deliver to the Company all
documents and approvals required to transfer all right, title and interest to
the CD from the Investor to the Company free and clear of any and all Liens.

         2.4 Conditions to Closing for the Investor. The Investor's obligation
to purchase the Investor Securities pursuant to this Agreement on the Closing
Date is subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:

                   (a) Representations and Warranties Correct. The
         representations and warranties made by the Company herein shall have
         been true and correct when made and shall be true and correct on and as
         of the applicable closing date with the same force and effect as though
         made on and as of such closing date, except for representations and
         warranties that are made as of a specific date which shall only be
         required to be true and correct as of such date.

                   (b) Performance. All covenants, agreements and conditions
         contained in this Agreement to be performed or complied with by the
         Company on or prior to the Closing Date shall have been performed or
         complied with and the Company shall not be in default in the
         performance of or compliance with any provisions of this Agreement.

                   (c) Articles of Restatement. The Company's Board of Directors
         shall have approved, subject to shareholder approval, the form of the
         Articles of Restatement in substantially the same form as attached
         hereto as Exhibit 2.4(c) (the "Articles of Restatement").

                   (d) Convertible Notes. The Company's Board of Directors shall
         have approved the issuance of the Convertible Notes in substantially
         the same form as attached hereto as Exhibit 2.4(d)(i) and Exhibit
         2.4(d)(ii) (the "Convertible Notes").

                   (e) Secretary's Certificate. The Company shall have delivered
         to the Investor copies of each of the following:

                           (i) the Charter as of the Closing Date;

                           (ii) the By-Laws of the Company as of the Closing
                  Date; and

                           (iii) resolutions of the Board of Directors of the
                  Company, the form and substance of which are reasonably
                  satisfactory to the Investor, authorizing the execution,
                  delivery and performance of this Agreement, including, subject
                  to shareholder approval, the execution and filing of the
                  Articles of Restatement and the issuance and sale of the
                  Investor Securities.

<PAGE>

                  (f) Election of Directors. As of the Closing Date, the Board
         of Directors of the Company shall consist of three directors, including
         one person selected by the Investor who is reasonably satisfactory to
         the Company.

                  (g) Consents. All consents and approvals to the transactions
         contemplated by this Agreement required to be obtained by the Company
         from any third party shall have been obtained by the Company.

                  (h) Legality. Except as otherwise set forth herein, all
         authorizations, approvals or permits of any governmental authority or
         regulatory body that are required in connection with the lawful
         issuance and sale of the Investor Securities pursuant to this Agreement
         shall have been duly obtained and shall be in full force and effect.
         2.5 Conditions to Closing for the Company. The Company's obligation to
         issue and sell the Investor Securities pursuant to this Agreement on
         the Closing Date is subject to the satisfaction, on or prior to the
         Closing Date, of the following conditions:

                           (a) Representations and Warranties Correct. The
                  representations and warranties made by the Investor herein
                  shall have been true and correct when made and shall be true
                  and correct on and as of the Closing Date with the same force
                  and effect as though made on the Closing Date.

                           (b) Performance. All covenants, agreements and
                  conditions contained in this Agreement to be performed or
                  complied with by the Investor on or prior to the Closing Date
                  shall have been performed or complied with and the Investor
                  shall not be in default in the performance of or compliance
                  with any provisions of this Agreement.

                           (c) Assignment of the CD. The Investor shall have
                  made arrangements that are acceptable to the Company, in its
                  sole discretion, for the transfer of all right, title and
                  interest in and to the principal amount of the CD from the
                  Investor to the Company free and clear of any and all Liens on
                  the Closing Date.

                           (d) Secretary's Certificate. The Investor shall have
                  delivered to the Company copies of the resolutions of the
                  Board of Directors of the Investor, the form and substance of
                  which are reasonably satisfactory to the Company, authorizing
                  the execution, delivery and performance of this Agreement,
                  including the assignment of the CD.

                           (e) Legality. All authorizations, approvals or
                  permits of any governmental authority or regulatory body that
                  are required in connection with the lawful issuance and sale
                  of the Investor Securities pursuant to this Agreement shall
                  have been duly obtained and shall be in full force and effect.

                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company hereby represents and warrants to the Investor as of the
Closing Date that:

         3.1 Organization. The Company is a duly organized and validly existing
corporation in good standing under the laws of Virginia. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which it does business, except where the failure to be so
qualified would not have a Material Adverse Effect.

<PAGE>

         3.2 Corporate Power. The Company has all necessary corporate power and
authority to enter into and perform this Agreement, to issue and sell the
Investor Securities hereunder, to own all the properties owned by it and to
carry on the businesses now conducted or presently proposed to be conducted by
it. The Company has taken all corporate action necessary to authorize this
Agreement and the issuance of the Investor Securities to be issued and sold
hereunder.

         3.3 Capitalization. The authorized capital stock of the Company as of
the date of the Agreement is set forth in Schedule 3.3. Schedule 3.3 contains a
true and correct list of all outstanding capital stock. The Company has no
outstanding warrants or options as of the date of the Agreement. All of the
outstanding shares of capital stock of the Company, including the Common Stock
to be issued pursuant to this Agreement, will be, upon consummation of the
transactions contemplated by this Agreement, validly issued, fully paid,
nonassessable and subject to no lien or restriction on transfer, except
restrictions on transfer imposed by the securities laws. Other than as set forth
in Schedule 3.3, the Company has no outstanding (i) rights (either preemptive or
otherwise) or options to subscribe for or purchase, or any warrants or other
agreements providing for or requiring the issuance of, any capital stock or any
securities convertible into or exchangeable for its capital stock, (ii)
obligation to repurchase or otherwise acquire or retire any of its capital
stock, any securities convertible into or exchangeable for its capital stock or
any rights, options or warrants with respect thereto, (iii) rights that require
it to register the offering of any of its securities under the Securities Act or
(iv) any restrictions on voting any of its securities.

         3.4 Financial Statements. The Investor has been furnished with complete
and correct copies of the following financial statements of the Company (the
"Financial Statements"): (a) the audited balance sheet of the Company as of
March 31, 2003 and the respective related statements of income, retained
earnings and cash flows for the twelve-month period then ended and (b) the
unaudited balance sheet of the Company as of September 30, 2003 (the "Balance
Sheet Date") together with the related consolidated statements of operations and
cash flows for the six-month period then ended. The Financial Statements have
been prepared in accordance with GAAP consistently applied, except that the
September 30, 2003 financial statements do not contain the notes required by
generally accepted accounting principles, and fairly and accurately present the
financial condition of the Company at the date thereof and the results of its
operations for the period covered thereby. All the books, records and accounts
of the Company are accurate and complete, are in accordance with good business
practice and all laws, regulations and rules applicable to the Company and the
conduct of their business and accurately present and reflect all of the
transactions described therein.

         3.5 Outstanding Debt: Absence of Liabilities. The Company does not (i)
have any outstanding indebtedness for borrowed money except as reflected in the
Financial Statements and (ii) except as reflected, is not a guarantor or
otherwise contingently liable on such indebtedness of any other Person. The
Company does not have any material liabilities or obligations, contingent or
otherwise, which are not reflected or provided for in the Financial Statements.

         3.6 Filings with the Commission. The Company has made available to
Investor its annual report on Form 10-KSB for the period ended March 31, 2003
and its subsequent filings with the Commission.

         3.7 Consents. No consent, approval, qualification, order or
authorization of, or filing with any governmental authority is required in
connection with the Company's valid execution, delivery or performance of the
Agreements, or the offer, issue or sale of the Investor Securities by the
Company, the conversion of the Debentures, or the issuance of Common Stock upon
conversion of the Preferred Stock, or the consummation of any other transaction
pursuant to this Agreement on the part of the Company, except the approval and
filing of the Articles of Restatement and filings under applicable federal
securities or blue sky laws.

<PAGE>

                                   ARTICLE IV
                 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

         The Investor represents and warrants to the Company as of the Closing
Date that:

         4.1 Organization. The Investor is a duly organized and validly existing
corporation in good standing under the laws of Nevada.

         4.2 Corporate Power. The Investor has all necessary corporate power and
authority to enter into and perform this Agreement and to assign, transfer and
convey the CD to the Company hereunder. The Investor has taken all corporate
action necessary to authorize this Agreement and, at the Closing Date, will have
taken all corporate action necessary to authorize the assignment, transfer and
conveyance of the CD from the Investor to the Company.

         4.3 The CD. Immediately prior to the transfer of the CD from Investor
to the Company, Investor shall own all right, title and interest in and to the
CD free and clean or all Liens.

         4.4 Investor Status.

                  (a) Investor is an "accredited investor" for purposes of
         Regulation D under the Securities Act and has sufficient knowledge and
         experience in evaluating and investing in companies similar to the
         Company in terms of the Company's stage of development so as to be able
         to evaluate the risks and merits of its investment in the Company and
         is able financially to bear the risks thereof. Investor was not
         organized for the purpose of acquiring the Investor Securities.

                  (b) Investor is acquiring the Investor Securities for
         investment for its own account and not with a view to, or for resale in
         connection with, any distribution thereof, and Investor has no present
         intention of selling, granting any participation in, or otherwise
         distributing the same; provided, however, that the disposition of the
         Investor's property shall at all times remain in the Investor's
         control. By executing this Agreement, Investor further represents and
         warrants that such Investor does not have any contract, undertaking,
         agreement or arrangement with any person to sell, transfer or grant
         participations to such person or to any third person, with respect to
         any of the Investor Securities.

                  (c) Investor has had an opportunity to discuss the terms and
         conditions of the offering of the Investor Securities and the business,
         management and financial affairs with the Company's management and has
         received (or had made available to it) any financial and business
         documents requested by it.

                  (d) Investor understands that the Investor Securities to be
         purchased hereunder have not been registered under the Securities Act
         and must be held indefinitely unless a subsequent disposition thereof
         is registered under the Securities Act or is exempt from such
         registration.

                  (e) Investor has no contract, arrangement or understanding
         with any broker, finder or similar agent with respect to the
         transactions contemplated by this Agreement.

         4.5 Legend. Each certificate representing shares of Investor Securities
shall bear a legend in substantially the following form:

<PAGE>

         "The securities represented by this certificate have not been
         registered under the Securities Act of 1933, as amended, or under the
         securities laws of any state, and may not be sold, or otherwise
         transferred, in the absence of such registration or unless the issuer
         has been furnished with an opinion of counsel satisfactory to the
         issuer that such registration is not required."

         4.6 Consents. No consent, approval, qualification, order or
authorization of, or filing with any governmental authority is required in
connection with the Investor's valid execution, delivery or performance of the
Agreement, or the assignment, transfer and conveyance of the CD from the
Investor to the Company, or the consummation of any other transaction pursuant
to this Agreement on the part of the Investor.

                                    ARTICLE V
                    COVENANTS OF THE COMPANY AND THE INVESTOR

         5.1 Shareholder Meeting. In an expeditious manner and as soon as
practicable after the execution of this Agreement, the Company shall take all
action necessary in accordance with Virginia law and its Charter and By-Laws to
call, give notice of and convene a meeting of the Company's shareholders to
consider and vote upon the approval of the Articles of Restatement and the
transactions contemplated by this Agreement.

         The Company shall, as promptly as practicable, prepare and file with
the Commission a proxy statement (the "Proxy Statement") with respect to the
approval of the transactions contemplated by this Agreement. The Company shall
use reasonable commercial efforts to cause the Proxy Statement to be mailed to
the shareholders of the Company at the earliest practicable date and shall use
reasonable commercial efforts to hold the annual meeting as soon as practicable
after the date hereof. The Proxy Statement will contain a recommendation of the
Board of Directors of the Company that the shareholders of the Company vote in
favor of the issuance of the Investor Securities, approval of the Articles of
Restatement and the transactions contemplated by this Agreement.

         5.2 Transfer of the CD. Investor shall take all reasonable commercial
action required to transfer the CD to the Company on the Closing Date. After the
Closing Date, Investor will execute and deliver from time to time at the request
of the Company all such further instruments or power as, in the reasonable
opinion of Company counsel, may be required in order to vest in the Company the
full right, title and interest in and to the CD.

                                   ARTICLE VI
                                  MISCELLANEOUS

         6.1 Termination. This Agreement may be terminated, whether before or
after approval by the shareholders of the Company by either the Company or the
Investor, if (i) the conditions to its obligations under Sections 2.4 and 2.5,
as applicable, shall not have been complied with or performed in any material
respect and such noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) by the other party
on or before January 15, 2004 or such later date as agreed to by the Company and
the Investor or (ii) the Closing shall not have occurred prior to the close of
business on January 15, 2004, or such later date as agreed to by the Company and
the Investor; unless in the case of either (i) or (ii), such event has been
caused by the breach of this Agreement by the party seeking such termination.

<PAGE>

         6.2 Notices. Any notice or other communication in connection with this
Agreement or the Investor Securities shall be deemed to be delivered if in
writing addressed as provided below and if either (a) actually delivered at said
address, (b) in the case of a letter, seven business days shall have elapsed
after the same shall have been deposited in the United States mails, postage
prepaid and registered or certified, return receipt requested or (c) transmitted
to any address outside of the United States, by telecopy and confirmed by
overnight or two-day courier:

         If to the Company, to it at 1065 South 500 West, Bountiful, Utah 84010,
attention: Richard Anderson, telephone: (801) 296-6976, telecopy: (801)
296-6977, with a copy to Blackburn & Stoll, 77 West 200 South, Suite 400, Salt
Lake City, Utah 84101, attention: Eric Robinson, Esq., telecopy (801) 521-7965,
telephone (801) 578-3553 or at such other address as the Company shall have
specified by notice to the Investor.

         If to the Investor, to it at 6130 West Flamingo Road Suite 149, Las
Vegas, NV 89103 attention: LD Fong, telephone: (702) 732-1500 ext 1033,
telecopy: (831) 618-3246 or at such other address as the Investor shall have
specified by notice to the Company.

         6.3 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of the Company and the Investor.

         6.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. One or more counterparts of this
Agreement or schedule hereto may be delivered via facsimile and such facsimile
counterpart shall have the same effect as an original counterpart hereof.

         6.5 Governing Law. This Agreement shall be construed according to the
laws of the State of Utah, without regard to any conflicts of laws provision.

         6.6 Assignment. Any rights under this Agreement may be assigned and any
duties under this Agreement may be delegated only with the written consent of
the other party.

         The undersigned have executed this Agreement as of the date first above
written.

                                                 NOXSO CORPORATION

                                                 By: /s/ Richard J. Anderson
                                                    ----------------------------
                                                     Richard J Anderson
                                                     President & CEO

                                                 CHEONG TAT CORPORATION

                                                 By: /s/ L.D. Fong
                                                    ----------------------------
                                                     L.D. Fong
                                                     President & CEO

<PAGE>

Exhibit 2.2

                          CONFIRMATION OF OWNERSHIP OF
                             CERTIFICATE OF DEPOSIT

                                                                      {SECURITY}
                                                                    {GUARANTEED}

                                                                     11:40:31 AM

                                                     Cheang Tat Corporation
                                                     6130 W. Flamingo Rd. 149
                                                     Las Vega NV 89103
                                                     U.S.A. 4KU456784359LK974545
                                                     Blocked Mail 0089546

                                   May 2, 2003

Confirmation: Certificate of Deposit N.12387897643189-028

We have booked to following transaction:        Credit
--------------------------------------------------------------------------------
Credit:                                         USD 50.000.000,00
--------------------------------------------------------------------------------
Transaction Date:                               3.10.2003
--------------------------------------------------------------------------------
Cusip Number:                                   UK6592317239-ISIN-00000000-UK00
Euroclear:                                      90151
ISIN:                                           UK8970230895
Transaction Number:
--------------------------------------------------------------------------------
Details of Transaction:                         Interest
--------------------------------------------------------------------------------
Account to be Credited:

Swift:
--------------------------------------------------------------------------------
Booking Details:

--------------------------------------------------------------------------------
Value Date(C):                                    3.10.2004
--------------------------------------------------------------------------------

Sincerely yours,

                               BARCLAYS BANK PLC
Eagle Court
25 Circular Road, Douglas
Isle of Man  IM99 1RH

Form without Signature
S.E.
                                     [BANK]
                            BARCLAYS [LOGO] BANK PLC

<PAGE>

EXHIBIT 2.4(c)

                       RESTATED ARTICLES OF INCORPORATION

         NOXSO CORPORATION, a corporation organized and existing under the laws
of the State of Virginia, hereby certifies as follows:

         1. The name of the Corporation is NOXSO CORPORATION.

         2. These Restated Articles of Incorporation were duly adopted by the
Corporation's Board of Directors on December 11, 2003.

         3. These Restated Articles of Incorporation were proposed by the Board
of Directors and submitted to the Shareholders at the meeting of Shareholders
held on ______ (following proper notice given to the shareholders in accordance
with the provision of Section 13.1-658 of the Virginia Stock Corporation Act),
at which meeting the holders of ______ shares (more than two-thirds) of the
_______ total number of outstanding shares of Common Stock of the Corporation
entitled to vote thereon, voted in favor of adoption of these Restated Articles
of Incorporation, which amount was sufficient for the adoption thereof.

         4. Pursuant to Sections 13.1-710 and 13.1-711 of the Virginia Stock
Corporation Act, these Restated Articles of Incorporation restate and integrate
and further amend the provisions of the original Articles of Incorporation and
all amendments thereto and the Articles of Incorporation are hereby amended to
read in their entirety as follows:

         FIRST: The name of the Corporation (which is herein sometimes called
the Corporation) is: NOXSO CORPORATION.

         SECOND. The nature of the business, and the objects and purposes to be
transacted, promoted, or carried on, are as follows:

         To purchase or otherwise acquire and to sell or otherwise dispose of
         real and personal property of any kind; To render services of all
         kinds; and to engage in any lawful act or activity for which
         corporations may be organized under the general corporate law of the
         Commonwealth of Virginia and to do everything necessary, suitable, or
         proper for the accomplishment of any of these purposes or of any object
         incidental to or connected with any of these purposes.

         This Corporation shall be authorized to exercise and enjoy all other
powers, rights and privileges granted by the Virginia Stock Corporation Act, to
corporations organized thereunder, and all the powers conferred by all acts
heretofore or hereafter amendatory of or supplemental to that Act, and the
enumeration of certain powers, rights or privileges granted or conferred by that
Act now or hereafter in force; provided, however, that nothing herein contained
shall be deemed to authorize or permit this Corporation to carry on any
business, to exercise any power, or to do any act which a corporation formed
under that Act may not at the time lawfully carry on or do.

         THIRD: The total number of shares of all classes which the Corporation
is authorized to have outstanding is One Hundred Million (100,000,000) shares of
which stock Eighty Million (80,000,000) shares in the par value of $.01 each,
amounting in the aggregate to Eight Hundred Thousand Dollars ($800,000.00) shall
be voting common stock ("Common Stock") and of which Twenty Million (20,000,000)
shares in the par value of $.01 each, amounting in the aggregate to Two Hundred
Thousand Dollars ($200,000.00), shall be preferred stock.

<PAGE>

                  (a) Designation. Of the authorized preferred stock, (a) Two
         Million Seven Hundred Fifty Thousand (2,750,000) shares, $.01 par value
         per share, shall be of the class designated as "Series A Preferred
         Stock" (the "Series A Preferred") and (b) One Million Five Hundred
         Thousand (1,500,000) shares, $.01 par value per share, shall be of the
         class designated as "Series B Preferred Stock" (the "Series B
         Preferred"). The Series A Preferred and Series B Preferred are
         sometimes jointly referred to hereafter at the "Preferred Shares").

                  (b) Rights, Preferences and Restrictions of Stock. The rights,
         preferences, privileges and restrictions granted to and imposed upon
         the Series A Preferred, the Series B Preferred and the Common Stock are
         set forth below.

                  (c) Dividends.

                           (i) Dividends on the Series A Preferred. The holders
                  of Series A Preferred shall be entitled to receive dividends
                  at the rate of three percent (3%) per share per annum payable
                  semi-annually, when, if and as declared by the Board of
                  Directors out of any assets legally available therefor. The
                  right to such dividends on the Series A Preferred shall be
                  cumulative. No dividend shall be declared and paid on the
                  Common Stock or Series B Preferred of the Corporation unless
                  all current and accrued dividends have been paid on the Series
                  A Preferred. At the option of the Corporation, dividends are
                  payable in cash or Series A Preferred stock. The Board of
                  Directors shall value any Series A Preferred stock distributed
                  as a dividend.

                           (ii) Dividends on the Series B Preferred. Each holder
                  of Series B Preferred shall be entitled to receive dividends
                  when, as and if declared by the Board of Directors out of
                  funds legally available therefor, at a rate equal to 1.35
                  times the rate of dividend declared per share on Common Stock;
                  provided, however, that no dividend shall be declared or paid
                  on the Common Stock unless the per share dividend as described
                  herein is first declared or paid, as the case may be, on the
                  Series B Preferred.

                           (iii) Dividends on the Common Stock. Each holder of
                  Common Stock shall be entitled to receive dividends when, as
                  and if declared by the Board of Directors out of funds legally
                  available therefor; provided, however, (a) no dividend shall
                  be declared or paid on the Common Stock unless the per share
                  dividend as declared or paid, as the case may be, has first
                  been declared or paid, as the case may be, on the Series B
                  Preferred.

                  (d) Liquidation, Dissolution or Winding Up. In the event of
         any liquidation, dissolution or winding up of the Corporation, either
         voluntary or involuntary, distributions to the shareholders of the
         Corporation shall be made in the following manner:

                           (i) Each holder of Preferred Shares shall receive,
                  prior and in preference to any distribution of any of the
                  assets of the Corporation to the holders of Common Stock by
                  reason of their ownership of Common Stock, an amount equal to
                  the sum of (i) $10.00 per Preferred Shares (which amount shall
                  be subject to equitable adjustment whenever a stock split,
                  combination, reclassification or other similar event involving
                  the Preferred Shares shall occur) held by such holder plus
                  (ii) all declared but unpaid dividends on the Preferred

<PAGE>

                  Shares, if any, to and including the date full payment of such
                  preferential amount shall be tendered with respect to such
                  shares to the holder of such shares in connection with such
                  liquidation, dissolution or winding up. If the assets of the
                  Corporation legally available for distribution shall be
                  insufficient to permit the payment in full to all such holders
                  of Preferred Shares of the full aforesaid preferential
                  amounts, then the entire assets of the Corporation legally
                  available for distribution shall be distributed ratably among
                  the holders of Preferred Shares in accordance with the
                  aggregate liquidation preference of the shares of Series A
                  Preferred and Series B Preferred held by each of them.

                           (ii) If payment has been made to each holder of
                  Preferred Shares of the full amount to which such holder is
                  entitled pursuant to paragraph (d)(i) of this Article Third,
                  the holders of Common Stock shall then be entitled to share
                  ratably in the Corporation's remaining assets.

                  (e) Treatment of Reorganizations, Consolidations, Mergers, and
         Sales of Assets. Each of (a) a consolidation or merger of the
         Corporation with or into any other corporation or entity in which the
         shareholders of the Corporation do not own more than 50% of the
         outstanding voting power of the surviving corporation or entity
         immediately after such consolidation or merger and (b) a sale of 50% or
         more of the assets of the Corporation, shall be regarded as a
         liquidation, dissolution or winding up of the affairs of the
         Corporation within the meaning of Section (d) of this Article Third
         unless the holders of a majority of the shares of the Preferred Shares
         then outstanding, voting as a single class, elect not to treat any such
         event as a liquidation, dissolution or winding up by giving written
         notice thereof to the Corporation.

                  (f) Distribution Other Than Cash. Whenever the distribution
         provided for in this Article Third shall be payable in property other
         than cash, the value of such distribution shall be the fair market
         value of such property as determined in good faith by the Board of
         Directors; provided, however, that if the holders of a majority of the
         then outstanding shares of Series A Preferred or a majority of the then
         outstanding shares of Series B Preferred (the "Contesting Holders")
         notify the Board of Directors within five business days after receiving
         written notification of such determination of fair market value that
         they disagree with such determination, then the Board of Directors and
         the Contesting Holders shall have 30 days to agree upon a fair market
         value of the relevant property. If, by the end of such 30-day period,
         they are unable to agree on a fair market value, the fair market value
         shall be determined by an appraisal to be paid for by the Corporation.
         All appraisals shall be undertaken by two appraisers, one selected by
         the Corporation and one selected by the Contesting Holders, which
         selections must be made within 10 days after the expiration of the
         30-day period described above. If one selecting party fails to timely
         select its appraiser, the other selecting party shall select both
         appraisers. The fair market value shall be the fair market value
         arrived at by those appraisers within 60 days following the appointment
         of the last appraiser to be appointed. In the event that the two
         appraisers cannot agree on such fair market value within such a period
         of time, (a) if the appraisers' valuations are within 10% of each
         other, the fair market value shall be the average of the two
         valuations, and (b) if the differences in the valuations are greater,
         the appraisers shall elect a third appraiser who will calculate fair
         market value independently, and, except as provided in the next
         sentence, the fair market value of the property shall in each case be
         the average of the two fair market values arrived at by the appraisers
         who are closest in amount. If one appraiser's valuation is the average
         of the other two valuations, the average valuation shall be the fair
         market value. In the event that the two original appraisers cannot
         agree upon a third appraiser within 30 days following the end of the
         60-day period referred to above, the third appraiser shall be appointed
         by the American Arbitration Association.

<PAGE>

                  (g) Voting Power.

                           (i) Series A Preferred. Except as otherwise expressly
                  provided in Section (g) of this Article Third or as required
                  by law, each holder of Series A Preferred shall be entitled to
                  vote on all matters and shall be entitled to one vote for
                  every five shares of Series A Preferred standing in such
                  holder's name on the books of the Corporation. In addition,
                  each holder of Series A Preferred shall be entitled to notice
                  of each shareholder's meeting in accordance with the By-Laws
                  of the Corporation, as amended and in effect from time to
                  time, as if such holder were a holder of Common Stock.

                           (ii) Series B Preferred. Except as otherwise
                  expressly provided in Section (g) of this Article Third or as
                  required by law, no holder of Series B Preferred shall be
                  entitled to vote on any matter by virtue of such holder's
                  ownership of Series B Preferred, but such holder shall be
                  entitled to notice of each shareholder's meeting in accordance
                  with the By-Laws of the Corporation, as amended and in effect
                  from time to time, as if such holder were a holder of Common
                  Stock.

                           (iii) Common Stock. Except as otherwise expressly
                  provided in Section (g) of this Article Third or as required
                  by law, each holder of Common Stock shall be entitled to vote
                  on all matters and shall be entitled to one vote for each
                  share of Common Stock standing in such holder's name on the
                  books of the Corporation.

                           (iv) Record Date; Single Class. The number of shares
                  of Series A Preferred, Series B Preferred or Common Stock, as
                  the case may be, entitled to vote on any matter shall be
                  determined in each case as of the record date for the
                  determination of shareholders entitled to vote on such matter
                  or, if no such record date is established, at the date such
                  vote is taken or any written consent of shareholders is
                  solicited. Except as otherwise expressly provided for herein
                  or as required by law, the holders of Series A Preferred, the
                  holders of the Series B Preferred and the holders of the
                  Common Stock shall vote together as a single class on all
                  matters.

                  (h) Redemption.

                           (i) Mandatory Redemption. The Corporation shall have
                  the right to redeem each share of Series B Preferred then
                  outstanding at a price per share equal to the sum of (a) Ten
                  Dollars ($10.00) plus (b) an amount equal to all declared but
                  unpaid dividends, if any, in respect of such share (the
                  "Redemption Price").

<PAGE>

                           (ii) Payment of Redemption Price. On the date of
                  redemption of the shares of Series B Preferred (the
                  "Redemption Date"), the Corporation will pay to each holder of
                  Series B Preferred an amount equal to the Redemption Price
                  with respect to each share of Series B Preferred held by such
                  holder and redeemed on such date. If on the Redemption Date
                  the funds of the Corporation legally available for redemption
                  of shares of Series B Preferred are insufficient to redeem the
                  number of shares of Series B Preferred to be redeemed on such
                  date, those funds which are legally available will be used to
                  redeem, at the Redemption Price, the maximum possible number
                  of such shares of Series B Preferred. At any time thereafter
                  when additional funds of the Corporation become legally
                  available for the redemption of Series B Preferred, such funds
                  will immediately be used to redeem the balance of such shares
                  of Series B Preferred to be redeemed (or such portion thereof
                  for which funds are then legally available) which the
                  Corporation has not so redeemed. In addition, any redemption
                  of Series B Preferred shall be made out of any surplus or any
                  capital whether or not a reduction of capital is thereby
                  involved, and the Corporation shall take all necessary action
                  to effect a reduction of capital if such reduction is
                  necessary to provide funds legally available for any required
                  redemption of Series B Preferred.

                           (iii) Equitable Adjustment of Redemption Price. The
                  Redemption Price set forth in Section (h)(i) of this Article
                  Third shall be subject to equitable adjustment whenever there
                  shall occur a stock split, combination, reclassification or
                  other similar event involving the Series B Preferred.

                           (iv) Surrender of Certificates. Not more than 50 days
                  and not less than 20 days prior to the Redemption Date, the
                  Corporation shall mail written notice (the "Redemption
                  Notice"), postage prepaid, to each holder of record of Series
                  B Preferred, at such holder's address as shown on the records
                  of the Corporation; provided, however, that the Corporation's
                  failure to give any such Redemption Notice shall in no way
                  affect its obligation to redeem the Series B Preferred as
                  provided in Section (h) of this Article Third. The Redemption
                  Notice to each holder of Series B Preferred shall contain the
                  following information:

                           -- the number of shares of Series B Preferred held by
                           such holder which shall be redeemed by the
                           Corporation on the Redemption Date pursuant to the
                           provisions of Section (g) of this Article Third;

                           -- the Redemption Date; and

                           -- the address at which the holder may surrender to
                           the Corporation its certificate or certificates
                           representing shares of Series B Preferred to be
                           redeemed.

                           Each holder of shares of Series B Preferred to be
                  redeemed shall surrender the certificate or certificates
                  representing such shares to the Corporation at the place
                  specified in the Redemption Notice on or prior to the
                  Redemption Date designated in the Redemption Notice, and
                  thereupon an amount equal to the Redemption Price shall be
                  paid to the order of the person whose name appears on such
                  certificate or certificates. Each surrendered certificate
                  shall be canceled and retired.

<PAGE>

                           (v) Dividends After Redemption. From and after the
                  date on which the Corporation shall have paid in full the
                  Redemption Price with respect to any share of Series B
                  Preferred, such share of Series B Preferred thereby redeemed
                  shall not be entitled to any further dividends pursuant to
                  Section (c) of this Article Third.

                           (vi) No Reissuance of Series B Preferred. No share of
                  Series B Preferred acquired by the Corporation by reason of
                  redemption, purchase, conversion or otherwise shall be
                  reissued, and all such shares shall be canceled, retired and
                  eliminated from the shares which the Corporation shall be
                  authorized to issue. The Corporation may from time to time
                  take such appropriate corporate action as may be necessary to
                  reduce the authorized number of shares of Series B Preferred
                  accordingly.

                  (i) Conversion.

                           (i) Right to Convert. Each Preferred Share shall be
                  convertible, at the option of the holder thereof, at any time
                  after the date of issuance of such share, into five shares of
                  fully paid and non-assessable shares of Common Stock.

                           (ii) Corporation's Right for Conversion. In addition,
                  each Preferred Share may be convertible, solely at the option
                  of the Corporation, into five shares of Common Stock at any
                  time twenty-five percent (25%) of the same Series of Preferred
                  Shares issued by the Corporation shall have been converted by
                  the holders thereof into Common Stock.

                           (iii) Mechanics of Conversion. Before any shares of
                  Preferred Shares shall be converted pursuant to Section (i)(i)
                  or (i)(2) of this Article Third into shares of Common Stock,
                  the holder thereof shall surrender the certificate or
                  certificates therefor, duly endorsed, at the office of the
                  Corporation or of any transfer agent for the Preferred Shares,
                  and (a) if being converted at the election of the holder
                  pursuant to Section (i)(i) of this Article Third, such holder
                  must give written notice by mail, postage prepaid, to the
                  Corporation at its principal corporate office, of the election
                  to convert the same and shall state therein the name or names
                  in which the certificate or certificates for shares of Common
                  Stock are to be issued, or (b) if being converted
                  automatically pursuant to Section (i)(ii) of this Article
                  Third, the Corporation must give written notice by mail,
                  postage prepaid, to the holder at the last known address as
                  reflected on the Corporation's records of such conversion and
                  requesting the name or names in which the certificate or
                  certificates for shares of Common Stock are to be issued. The
                  Corporation shall, as soon as practicable thereafter, issue
                  and deliver to such holder of Preferred Shares, or to the
                  nominee or nominees of such holder if so directed, a
                  certificate or certificates for the number of shares of Common
                  Stock to which such holder shall be entitled as aforesaid.
                  Such conversion shall be deemed to have been made immediately
                  before the close of business on the date of such surrender of
                  the shares of Preferred Shares to be converted, and the person
                  or persons entitled to receive the shares of Common Stock
                  issuable upon such conversion shall be treated for all
                  purposes as the record holder or holders of such shares of
                  Common Stock as of such date.

<PAGE>

                           (iv) Equitable Adjustment of Conversion Rate. The
                  conversion rate set forth in this Section (i) of this Article
                  Third shall be subject to equitable adjustment whenever there
                  shall occur a stock split, combination, reclassification or
                  other similar event involving the Preferred Shares.

                  (j) Notices of Record Date. In the event of:

                           (i) Any taking by the Corporation of a record of the
                  holders of any class of securities for the purpose of
                  determining the holders thereof who are entitled to receive
                  any dividend or other distribution, or any right to subscribe
                  for, purchase or otherwise acquire any shares of stock of any
                  class or any other securities or property, or to receive any
                  other right; or

                           (ii) any capital reorganization of the Corporation,
                  any reclassification or recapitalization of the capital stock
                  of the Corporation (other than a change in par value or from
                  par value to no par value or from no par value to par value or
                  as a result of a stock dividend or subdivision, split up or
                  combination of shares), any merger or consolidation of the
                  Corporation (other than a merger or consolidation with a
                  wholly-owned subsidiary in which the Corporation is the
                  surviving corporation), or any transfer of all or
                  substantially all of the assets of the Corporation to any
                  other corporation, or any other entity or person (other than a
                  wholly-owned Subsidiary); or

                           (iii) any voluntary or involuntary dissolution,
                  liquidation or winding up of the Corporation; then and in each
                  such event the Corporation shall mail or cause to be mailed to
                  each holder of Preferred Shares a notice specifying (i) the
                  date on which any such record is to be taken for the purpose
                  of such dividend, distribution or right and a description of
                  such dividend, distribution or right, (ii) the date on which
                  any such reorganization, reclassification, recapitalization,
                  transfer, consolidation, merger, dissolution, liquidation or
                  winding up is expected to become effective and (iii) the time,
                  if any, that is to be fixed, as to when the holders of record
                  of Common Stock (or other securities) shall be entitled to
                  exchange their shares of Common Stock (or other securities)
                  for securities or other property deliverable upon such
                  reorganization, reclassification, recapitalization, transfer,
                  consolidation, merger, dissolution, liquidation or winding up.
                  Such notice shall be mailed at least 20 days prior to the date
                  specified in such notice on which such action is to be taken.

                  (j) Common Stock. Each share of Common Stock issued and
         outstanding shall be identical in all respects one with the other.
         Except for, and subject to, those rights expressly granted to the
         holders of the Preferred Shares, or except as may be provided by the
         laws of the State of Virginia, the holders of Common Stock shall have
         exclusively all other rights of shareholders, including, but not by way
         of limitation, (a) the right to receive dividends, when and as declared
         by the Board of Directors out of assets lawfully available therefor,
         and (b) in the event of any distribution of assets upon liquidation,
         dissolution or winding up of the Corporation or otherwise, the right to
         receive ratably and equally all the assets and funds of the Corporation
         remaining after the payment to the holders of the Preferred Shares of
         the specific amounts which they are entitled to receive upon such
         liquidation, dissolution or winding up of the Corporation as herein
         provided.

<PAGE>

         FOURTH: No holder of stock of the Corporation of any class shall have
any preemptive or preferential right to subscribe to, purchase, or receive any
shares of any class of stock of the Corporation, whether now or hereafter
authorized, or any notes, debentures, bonds, or other securities convertible
into or carrying options or warrants to purchase shares of any class of stock of
the Corporation, issued or sold or proposed to be issued or sold or with respect
to which options or warrants shall be granted, but all such shares of stock of
any class, or notes, debentures, bonds, or other securities convertible into or
carrying options or warrants to purchase shares of stock of any class, may be
issued and disposed of or sold by the Board of Directors on such terms and for
such consideration, so far as may be permitted by law, and to such person or
persons, as the Board of Directors may determine.

         FIFTH: The Corporation, by resolution or resolutions of the Board of
Directors, shall have the power to create and issue, whether or not in
connection with the issue and sale of any shares of stock or any other
securities of the Corporation, warrants, rights, or options entitling the holder
thereof to purchase from the Corporation any shares of its capital stock of any
class or classes or any other securities of the Corporation, such warrants,
rights, or options to be evidenced by or in such instrument or instruments as
shall be approved by the Board of Directors. The Board of Directors is hereby
authorized to create and issue any such warrants, rights, or options from time
to time for such consideration, upon such terms, and to such persons, firm or
corporations as the board of Directors may determine.

         SIXTH: The Board of Directors is authorized, subject to limitations
prescribed by law, to provide for the issuance of the authorized shares of
preferred stock in series, and by filing a certificate pursuant to the
applicable law of the State of Virginia, to establish from time to time the
number of shares to be included in each such series and the qualifications,
limitations or restrictions thereof. The authority of the board with respect to
each series includes, but is not limited to, determination of the following:

         (1)      The number of shares constituting that series and the
                  distinctive designation of that series;

         (2)      The dividend rate on the shares of that series, whether
                  dividends shall be cumulative, and, if so, from which date or
                  dates, and the relative rights of priority, if any, of payment
                  of dividends on shares of that series;

         (3)      Whether that series shall have voting rights, in addition to
                  the voting rights provided by law, and, if so, the terms of
                  such voting rights;

         (4)      Whether that series shall have conversion privileges, and, if
                  so, the terms and conditions of such conversion, including
                  provision for adjustment of the conversion rate in such events
                  as the Board of Directors shall determine;

         (5)      Whether or not the shares of that series shall be redeemable,
                  and, if so, the terms and conditions of such redemption,
                  including the date or date upon or after which they shall be
                  redeemable, and the amount per share payable in case of
                  redemption, which amount may vary under different conditions,
                  and at different redemption rates;

         (6)      Whether that series shall have a sinking fund for the
                  redemption or purchase of shares of that series, and, if so,
                  the terms and amount of such sinking fund;

         (7)      The rights of the shares of that series in the event of
                  voluntary or involuntary liquidation, dissolution or winding
                  up of the Corporation, and the relative rights of priority, if
                  any, of payment of shares of that series; and

         (8)      Any other relative rights, preferences and limitations of that
                  series.

<PAGE>

         SEVENTH: The number of directors which shall constitute the full Board
of Directors shall be such as from time to time shall be fixed by, or, in the
manner provided in the By-Laws, and in the absence of a By-Law fixing the number
of directors, the number shall be two (2).

         EIGHTH: In furtherance and not in limitation of the powers otherwise
conferred, the Board of Directors of the Corporation is expressly authorized:

              1. To exercise on behalf of the Corporation all powers held by it
except as otherwise provided herein, or by amendments hereto, or by the laws of
Virginia or by the By-Laws of the Corporation.

              2. To make, amend or repeal the By-Laws of the Corporation,
including By-Laws fixing or changing the number of directors, subject however,
to the power vested in and reserved to the shareholders having general voting
power, to modify or rescind any such action by affirmative vote or written
order, direction, or consent of the holders of a majority of the outstanding
stock of the Corporation having general voting power, which power of
modification and rescission is vested in and reserved to such shareholders.

         NINTH: Each director and officer (and his heirs, executors and
administrators) shall be indemnified by the Corporation against reasonable costs
and expenses incurred by him in connection with any action, suit, or proceeding
to which be may be made a party by reason of his being or having been a director
or officer of the Corporation, except in relation to any action, suits or
proceedings in which he has been adjudged liable because of negligence or
misconduct, which shall be deemed to mean willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office. In the absence of an adjudication which expressly absolves the director
or officer of liability to the Corporation or its shareholders for negligence
and misconduct, within the meaning thereof as used herein, or in the event of a
settlement each director and officer (and his heirs, executors and
administrators) shall be indemnified by the Corporation against payments made,
including reasonable costs and expenses, provided that such indemnity shall be
conditioned upon the prior determination by a resolution of two-thirds of those
members of the Board of Directors of the Corporation who are not involved in the
action, suit or proceeding that the director or officer has no liability by
reason of negligence or misconduct, within the meaning thereof as used herein,
and provided further that if a majority of the members of the Board of Directors
of the Corporation are involved in the action, suit or proceeding, such
determination shall have been made by a written opinion of independent counsel.
Amounts paid in settlement shall not exceed costs, fees, and expenses which
would have been reasonably incurred if the action, suit or proceeding had been
litigated to a conclusion. Such a determination by the Board of Directors or by
independent counsel, and the payments of amounts by the Corporation on the basis
thereof shall not prevent a shareholder from challenging such indemnification by
appropriate legal proceedings on the grounds that the person indemnified was
liable to the Corporation or its security holders by reason of negligence or
misconduct, within the meaning thereof as used herein. The foregoing rights and
indemnification shall not be exclusive of any other rights to which the officers
and directors may be entitled according to law.

         Dated this ______ day of ___________, 2004.

                                            NOXSO CORPORATION

                                            By:
                                               --------------------------------
                                               Richard J Anderson
                                               President & CEO

<PAGE>

EXHIBIT 2.4(d)(i)

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED OR
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE ACT, UNLESS THE COMPANY HAS RECEIVED THE WRITTEN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE, ASSIGNMENT OR TRANSFER
DOES NOT INVOLVE A TRANSACTION REQUIRING REGISTRATION OF THE ACT.

                   CONVERTIBLE NOTE -SERIES A PREFERRED STOCK

                                                               December __, 2003
$27,500,000.00 USD                                               Bountiful, Utah

         FOR VALUE RECEIVED, NOXSO Corporation, a Virginia corporation (the
"Borrower"), with a principal business address at 1065 South 500 West,
Bountiful, Utah 84010, hereby promises to pay to the order of Cheong Tat
Corporation (the "Lender") with a principal business address at 6130 West
Flamingo Road Suite 149 Las Vegas, NV 89103, or such other place as the holder
hereof shall designate, the principal amount of Twenty-Five Million Dollars
($25,000,000) or such lesser amount as may be outstanding from time to time, in
lawful money of the United States in immediately available funds and provided
that no interest shall accrue on the unpaid principal hereof from the date
hereof until June 15, 2004; thereafter, if this note has not been converted by
Borrower, a rate of Five Percent (5.0%) per annum compounded annually, shall
begin to accrue thereon. Principal plus interest accrued thereon shall be due
and payable in a single installment upon the earlier of (i) December 15, 2008,
or (ii) the occurrence of an Event of Default as defined in Section 3 hereof. In
the event of an Event of Default or after December 16, 2008, if the Lender shall
have made demand of the Note and the Borrower shall not have paid the
outstanding principal balance and accrued interest, then interest shall accrue
from and after the date of such demand at the lower of (i) Eighteen Percent
(18.0%) per annum, or (ii) the highest interest rate acceptable under applicable
usury laws, compounded monthly (the "Default Rate"). Interest shall be
calculated on the basis of actual days elapsed and a 360-day year. In the
absence of demonstrable error, the books and records of the Lender shall
constitute conclusive evidence of the unpaid principal balance hereof from time
to time.

         1. Prepayment. The Borrower may at any time prepay all or part of the
principal balance of this Note without the prior written consent or notice to
the holder.

         2. Conversion.

                  (a) The Borrower of this Note shall have the right,
exercisable at any time after the date hereof, as soon as Borrower is able so to
do, to convert the outstanding principal balance on this Note into Two Million
Seven Hundred Fifty Thousand (2,750,000) shares of the Borrower's duly
authorized Series A Preferred Stock at the rate of one share of Series A
Preferred Stock for each Ten Dollars USD ($10.00 USD) owing hereunder. In order
to exercise the foregoing conversion option, the Borrower shall present written
notice (the "Conversion Notice") to the holder of this Note, that the Borrower
elects to convert the entire principal balance of this Note into Borrower's
Series A Preferred Stock, under the terms contained herein. Upon receipt by
holder of the Conversion Notice, the holder of this Note shall tender this
original Note to Borrower, and, within ten (10) business days of receipt by
Borrower of the original Note, the holder of this Note shall receive in
exchange, a certificate or certificates for Two Million Seven Hundred Fifty
Thousand (2,750,000) shares of Borrower's Series A Preferred Stock and the
Borrower shall mark this Note "Paid in Full."

<PAGE>

                  (b) Reservation of Shares. The Borrower, as soon as such
shares are approved and available, will at all times reserve and keep available,
solely for the purpose of issuance upon conversion of this Note as herein
provided, such number of shares of Borrower's Series A Preferred Stock as shall
then be issuable upon the conversion of this Note pursuant to the terms hereof.
The Borrower covenants that all Series A Preferred Stock which shall be so
issuable shall, upon the conversion of this Note as provided herein, be duly and
validly issued and fully paid and nonassessable by the Borrower.

         3. Events of Default. The entire outstanding principal amount of, and
all accrued unpaid interest on, this Note shall become forthwith due and
payable, without presentment, demand, protest, or notice of any kind, upon the
happening of any of the following events (each, an "Event of Default"):

                  (a) The failure by the Borrower to make a payment, when due,
of any principal or interest due on this Note.

                  (b) The entry of any decree or order by a court having
jurisdiction adjudging the Borrower a debtor or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Borrower under the United States Bankruptcy
Code or any other applicable federal or state law, the appointment of a
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Borrower, or of any substantial part of the property of the Borrower, and
the continuance of any such decree or order unstayed, undischarged, or
undismissed and in effect for more than ninety (90) consecutive days.

                  (c) Institution by the Borrower of proceedings, under the
Bankruptcy Code or any other applicable federal or state law, seeking an order
for relief, or the consent of the Borrower to the institution of bankruptcy or
insolvency proceedings against the Borrower, or the consent by the Borrower to
the filing of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator or other similar official of or for the Borrower
or any substantial part of the property of the Borrower, or the making by the
Borrower of any assignment for the benefit of creditors, or the admission by the
Borrower of the Borrower's inability to pay its debts generally as they become
due, or the taking of any action by the Borrower in furtherance of any such
action.

                  (d) Any declared default of the Borrower under any other
indebtedness of the Borrower that gives the creditor a right to accelerate such
indebtedness.

         Upon the occurrence of any Event of Default, the Lender may take all
actions available to it, at law or in equity, to collect and otherwise enforce
this Note.

         4. Costs and Expenses of Enforcement and Collection. The Borrower will
pay on demand all costs and expenses, including reasonable attorneys' fees,
incurred or paid by the Lender in enforcing or collecting any of the obligations
of the Borrower hereunder. The Borrower agrees that all such costs and expenses
and all other expenditures by the Lender on account hereof, other than advances
of principal, which are not reimbursed by the Borrower immediately upon demand,
all amounts due under this Note after maturity, and any amounts due hereunder if
an Event of Default shall occur hereunder, shall bear interest at the Default
Rate until such expenditures are repaid or this Note and such amounts as are due
are paid to the Lender.

<PAGE>

         5. Miscellaneous.

                  (a) The Borrower (i) waives presentment, demand, notice of
demand, protest, notice of protest, and notice of nonpayment and any other
notice required to be given under the law to the Borrower, in connection with
the delivery, acceptance, performance, default or enforcement of this Note,
except for notice and presentment upon conversion or at maturity of this Note
and notice or proposed transfer of this Note in accordance with the terms
hereof; and (ii) agrees that any failure to act or failure to exercise any right
or remedy on the part of the registered owner shall not in any way affect or
impair the obligations of the Borrower or be construed as a waiver by the owner
of, or otherwise affect, any of its rights under this Note.

                  (b) No act, omission or delay by the Lender or course of
dealing between the Lender and the Borrower shall constitute a waiver of the
rights and remedies of the Lender hereunder. No single or partial waiver by the
Lender of any default or right or remedy which it may have shall operate as a
waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion.

                  (c) No provision hereof shall be modified, altered or limited
except by a written instrument expressly referring to this Note and to such
provision, and executed by the Borrower and the Lender.

                  (d) This Note shall be governed by and construed in accordance
with the laws of the State of Utah, without giving effect to the choice or
conflict of laws principles of that or any other jurisdiction.

                  (e) Any notice or demand which is required or provided to be
given under this Agreement shall be deemed to have been sufficiently given and
received for all purposes when delivered by hand or by telecopy, e-mail or other
method of electronic transmission (provided such transmission generates evidence
of delivery), or five days after being sent by certified or registered mail,
postage and charges prepaid, return receipt requested, or two days after being
sent by overnight delivery providing receipt of delivery, to the following
addresses:

         If to Borrower:

                  NOXSO Corporation
                  Attention: Richard Anderson
                  1065 South 500 West
                  Bountiful, Utah 84010
                  Telephone: (801) 296-6976
                  Telecopy: (801) 296-6977

                  with a copy  to:

                  Blackburn & Stoll, LC
                  Attention: Eric Robinson
                  77 West 200 South, Suite 400
                  Salt Lake City, Utah 84101
                  Telecopy (801) 521-7965
                  Telephone (801) 578-3553

         If to Lender:

                  Cheong Tat Corporation
                  Attention: LD Fong
                  6130 West Flamingo Road  Suite 149
                  Las Vegas, NV  89103
                  Telecopy: (831) 618-3246

<PAGE>

         Notices provided in accordance with the foregoing shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.

                  (f) In the event that any court of competent jurisdiction
shall determine that any provision, or any portion thereof, contained in this
Note shall be unreasonable or unenforceable in any respect, then such provision
shall be deemed limited to the extent that such court deems it reasonable and
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Note shall nevertheless remain
in full force and effect.

                  (g) This Note and all obligations evidenced hereby shall be
binding upon the successors and assigns of the Borrower and shall, together with
the rights and remedies of the Lender hereunder, inure to the benefit of the
Lender, its successors, endorsees and assigns.

         IN WITNESS WHEREOF, this Note has been duly executed and delivered by
the Borrower as of the date first written above.

                                                     BORROWER:
                                                     NOXSO CORPORATION

                                                     By:
                                                        ------------------------
                                                         Richard J Anderson
                                                         President & CEO

AGREED AND APPROVED:
LENDER:
CHEONG TAT CORPORATION

By: /s/
   ----------------------------------
    L.D. Fong
    President & CEO

<PAGE>

Exhibit 2.4(d)(ii)

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED OR
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE ACT, UNLESS THE COMPANY HAS RECEIVED THE WRITTEN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE, ASSIGNMENT OR TRANSFER
DOES NOT INVOLVE A TRANSACTION REQUIRING REGISTRATION OF THE ACT.

                   CONVERTIBLE NOTE -SERIES B PREFERRED STOCK

                                                               December __, 2003
$15,000,000.00 USD                                               Bountiful, Utah

         FOR VALUE RECEIVED, NOXSO Corporation, a Virginia corporation (the
"Borrower"), with a principal business address at 1065 South 500 West,
Bountiful, Utah 84010, hereby promises to pay to the order of Cheong Tat
Corporation (the "Lender") with a principal business address at 6130 West
Flamingo Road Suite 149 Las Vegas, NV 89103, or such other place as the holder
hereof shall designate, the principal amount of Fifteen Million Dollars
($15,000,000) or such lesser amount as may be outstanding from time to time, in
lawful money of the United States in immediately available funds and provided
that no interest shall accrue on the unpaid principal hereof from the date
hereof until June 15, 2004; thereafter, if this note has not been converted by
Borrower, a rate of Five Percent (5.0%) per annum compounded annually, shall
begin to accrue thereon. Principal plus interest accrued thereon shall be due
and payable in a single installment upon the earlier of (i) December 15, 2008,
or (ii) the occurrence of an Event of Default as defined in Section 3 hereof. In
the event of an Event of Default or after December 16, 2008, if the Lender shall
have made demand of the Note and the Borrower shall not have paid the
outstanding principal balance and accrued interest, then interest shall accrue
from and after the date of such demand at the lower of (i) Eighteen Percent
(18.0%) per annum, or (ii) the highest interest rate acceptable under applicable
usury laws, compounded monthly (the "Default Rate"). Interest shall be
calculated on the basis of actual days elapsed and a 360-day year. In the
absence of demonstrable error, the books and records of the Lender shall
constitute conclusive evidence of the unpaid principal balance hereof from time
to time.

         1. Prepayment. The Borrower may at any time prepay all or part of the
principal balance of this Note without the prior written consent or notice to
the holder.

         2. Conversion.

                  (a) The Borrower of this Note shall have the right,
exercisable at any time after the date hereof, as soon as Borrower is able so to
do, to convert the outstanding principal balance on this Note into One Million
Five Hundred Thousand (1,500,000) shares of the Borrower's duly authorized
Series B Preferred Stock at the rate of one share of Series B Preferred Stock
for each Ten Dollars USD ($10.00 USD) owing hereunder. In order to exercise the
foregoing conversion option, the Borrower shall present written notice (the
"Conversion Notice") to the holder of this Note, that the Borrower elects to
convert this entire principal balance of this Note into Borrower's Series B
Preferred Stock, under the terms contained herein. Upon receipt by holder of the
Conversion Notice, the holder of this Note shall tender this original Note to
Borrower, and, within ten (10) business days of receipt by Borrower of the
original Note, the holder of this Note shall receive in exchange, a certificate
or certificates for One Million Five Hundred Thousand (1,500,000) shares of
Borrower's Series B Preferred Stock and the Borrower shall mark this Note "Paid
in Full."

<PAGE>

                  (b) Reservation of Shares. The Borrower, as soon as such
shares are approved and available, will at all times reserve and keep available,
solely for the purpose of issuance upon conversion of this Note as herein
provided, such number of shares of Borrower's Series B Preferred Stock as shall
then be issuable upon the conversion of this Note pursuant to the terms hereof.
The Borrower covenants that all Series B Preferred Stock which shall be so
issuable shall, upon the conversion of this Note as provided herein, be duly and
validly issued and fully paid and nonassessable by the Borrower.

         3. Events of Default. The entire outstanding principal amount of, and
all accrued unpaid interest on, this Note shall become forthwith due and
payable, without presentment, demand, protest, or notice of any kind, upon the
happening of any of the following events (each, an "Event of Default"):

                  (a) The failure by the Borrower to make a payment, when due,
of any principal or interest due on this Note.

                  (b) The entry of any decree or order by a court having
jurisdiction adjudging the Borrower a debtor or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Borrower under the United States Bankruptcy
Code or any other applicable federal or state law, the appointment of a
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Borrower, or of any substantial part of the property of the Borrower, and
the continuance of any such decree or order unstayed, undischarged, or
undismissed and in effect for more than ninety (90) consecutive days.

                  (c) Institution by the Borrower of proceedings, under the
Bankruptcy Code or any other applicable federal or state law, seeking an order
for relief, or the consent of the Borrower to the institution of bankruptcy or
insolvency proceedings against the Borrower, or the consent by the Borrower to
the filing of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator or other similar official of or for the Borrower
or any substantial part of the property of the Borrower, or the making by the
Borrower of any assignment for the benefit of creditors, or the admission by the
Borrower of the Borrower's inability to pay its debts generally as they become
due, or the taking of any action by the Borrower in furtherance of any such
action.

                  (d) Any declared default of the Borrower under any other
indebtedness of the Borrower that gives the creditor a right to accelerate such
indebtedness.

         Upon the occurrence of any Event of Default, the Lender may take all
actions available to it, at law or in equity, to collect and otherwise enforce
this Note.

         4. Costs and Expenses of Enforcement and Collection. The Borrower will
pay on demand all costs and expenses, including reasonable attorneys' fees,
incurred or paid by the Lender in enforcing or collecting any of the obligations
of the Borrower hereunder. The Borrower agrees that all such costs and expenses
and all other expenditures by the Lender on account hereof, other than advances
of principal, which are not reimbursed by the Borrower immediately upon demand,
all amounts due under this Note after maturity, and any amounts due hereunder if
an Event of Default shall occur hereunder, shall bear interest at the Default
Rate until such expenditures are repaid or this Note and such amounts as are due
are paid to the Lender.

<PAGE>

         5. Miscellaneous.

                  (a) The Borrower (i) waives presentment, demand, notice of
demand, protest, notice of protest, and notice of nonpayment and any other
notice required to be given under the law to the Borrower, in connection with
the delivery, acceptance, performance, default or enforcement of this Note,
except for notice and presentment upon conversion or at maturity of this Note
and notice or proposed transfer of this Note in accordance with the terms
hereof; and (ii) agrees that any failure to act or failure to exercise any right
or remedy on the part of the registered owner shall not in any way affect or
impair the obligations of the Borrower or be construed as a waiver by the owner
of, or otherwise affect, any of its rights under this Note.

                  (b) No act, omission or delay by the Lender or course of
dealing between the Lender and the Borrower shall constitute a waiver of the
rights and remedies of the Lender hereunder. No single or partial waiver by the
Lender of any default or right or remedy which it may have shall operate as a
waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion.

                  (c) No provision hereof shall be modified, altered or limited
except by a written instrument expressly referring to this Note and to such
provision, and executed by the Borrower and the Lender.

                  (d) This Note shall be governed by and construed in accordance
with the laws of the State of Utah, without giving effect to the choice or
conflict of laws principles of that or any other jurisdiction.

                  (e) Any notice or demand which is required or provided to be
given under this Agreement shall be deemed to have been sufficiently given and
received for all purposes when delivered by hand or by telecopy, e-mail or other
method of electronic transmission (provided such transmission generates evidence
of delivery), or five days after being sent by certified or registered mail,
postage and charges prepaid, return receipt requested, or two days after being
sent by overnight delivery providing receipt of delivery, to the following
addresses:

         If to Borrower:

                  NOXSO Corporation
                  Attention: Richard Anderson
                  1065 South 500 West
                  Bountiful, Utah 84010
                  Telephone: (801) 296-6976
                  Telecopy: (801) 296-6977

         with a copy  to:

                  Blackburn & Stoll, LC
                  Attention: Eric Robinson
                  77 West 200 South, Suite 400
                  Salt Lake City, Utah 84101
                  Telecopy (801) 521-7965
                  Telephone (801) 578-3553

         If to Lender:

                  Cheong Tat Corporation
                  Attention: LD Fong
                  6130 West Flamingo Road  Suite 149
                  Las Vegas, NV  89103
                  Telecopy: (831) 618-3246

         Notices provided in accordance with the foregoing shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.

                  (f) In the event that any court of competent jurisdiction
shall determine that any provision, or any portion thereof, contained in this
Note shall be unreasonable or unenforceable in any respect, then such provision
shall be deemed limited to the extent that such court deems it reasonable and
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Note shall nevertheless remain
in full force and effect.

<PAGE>

                  (g) This Note and all obligations evidenced hereby shall be
binding upon the successors and assigns of the Borrower and shall, together with
the rights and remedies of the Lender hereunder, inure to the benefit of the
Lender, its successors, endorsees and assigns.

         IN WITNESS WHEREOF, this Note has been duly executed and delivered by
the Borrower as of the date first written above.

                                                     BORROWER:
                                                     NOXSO CORPORATION

                                                     By:
                                                        ------------------------
                                                         Richard J Anderson
                                                         President & CEO

AGREED AND APPROVED:

LENDER:
CHEONG TAT CORPORATION

By: /s/
   -----------------------------
   L.D. Fong
   President & CEO

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