Document:

Module and Segment Reference

    

      

       

      AMENDMENT
        NO. 1 TO CREDIT AGREEMENT

       

      THIS
        AMENDMENT NO. 1 TO CREDIT AGREEMENT (the “Amendment”),
        dated
        as of March 30, 2007, is entered into by and between EQUITY
        ONE, INC., a corporation organized under the laws of the State of Maryland
        (the
“Borrower”)
        and
        WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as contractual
        representative of the “Lenders” under and as defined in the Credit Agreement
        referred to below (in such capacity, the “Administrative
        Agent”).

       

      R E C I T A L S

       

      A.  Pursuant
        to the terms of an Amended and Restated Credit
        Agreement, dated as of January 17, 2006 between Borrower and Lenders (as
        amended, restated supplemented or otherwise modified from time to time, the
        “Credit
        Agreement”),
        Lenders extended credit to Borrower in the principal amount of Two Hundred
        Seventy-Five Million Dollars ($275,000,000)
        (the
“Loan”).
        The
        Loan is evidenced by certain promissory notes executed by Borrower in favor
        of
        Lenders, which promissory notes aggregate to the principal amount of the
        Loan
        (collectively, as amended, restated, supplemented or otherwise modified from
        time to time, the “Notes”),
        and
        is further evidenced by the documents described in the Credit Agreement as
        the
“Loan Documents”. All capitalized and herein undefined terms shall have the
        meanings as set forth in the Credit Agreement.

       

      B.  By
        this
        Amendment, Borrower, Lenders and Administrative Agent intend to modify and
        amend
        certain terms and provisions of the Loan Documents.

       

      NOW,
        THEREFORE, Borrower, Lenders and Administrative Agent agree as
        follows:

       

      CONDITIONS
        PRECEDENT.
        The
        following are conditions precedent to Lenders’ obligations under this
        Amendment:

       

      Receipt
        by Administrative Agent of fully executed originals of this Amendment and
        any
        and all other documents which are required by this Amendment or by any other
        Loan Document, each in form and content acceptable to Administrative
        Agent;

       

      Reimbursement
        to Administrative Agent by Borrower of Administrative Agent’s costs and expenses
        incurred in connection with this Amendment and the transactions contemplated
        hereby, including, without limitation, reasonable attorneys’ fees and
        documentation costs and charges, whether such services are furnished by
        Administrative Agent’s employees or agents or by independent
        contractors;

       

      The
        representations and warranties contained in this Amendment are true and
        correct;

       

      Payment
        to Administrative Agent of an amendment fee equal to $1,500 for each Lender
        ($24,000 total); and

       

      All
        payments due and owing to Lenders under the Loan Documents have been paid
        current as of the effective date of this Amendment.

       

      REPRESENTATIONS
        AND WARRANTIES.
        Borrower hereby represents and warrants to Administrative Agent and each
        Lender
        that no Event of Default or Default exists under any of the Loan Documents
        (as
        modified by this Amendment) and that all representations and warranties herein
        and in the other Loan Documents are true and correct, which representations
        and
        warranties shall survive execution of this Amendment. Without limiting the
        foregoing Borrower further represents and warrants to Administrative Agent
        and
        each Lender that (a) Borrower is in full compliance with the requirements
        of
Section 8.14
        of the
        Credit Agreement, (b) each entity required pursuant to the terms of such
        Section
        8.14
        to
        execute and deliver a Guaranty or an Accession Agreement has done so, and
        (c)
        the Guarantor’s Consent appended hereto correctly and accurately lists as
        signatories all entities which are required, pursuant to the terms of such
        Section
        8.14,
        to
        execute a Guaranty or an Accession Agreement in connection with the
        Loan.

       

      MODIFICATION
        OF LOAN DOCUMENTS.
        The
        Loan Documents are hereby supplemented and modified to incorporate the
        following, which shall supersede and prevail over any conflicting provisions
        of
        the Loan Documents and which, following satisfaction of all conditions precedent
        set forth in Section 1
        above,
        shall be deemed effective as of March 30, 2007:

       

      Change
        in Capitalization Rates.

       

      Definition
        of “Asset Value”.
        The
        definition of “Asset Value” set forth in the Credit Agreement is hereby amended
        by changing the reference to “8.0%” in subclauses (a) and (b) thereof to refer
        instead to “7.75%”.

       

      Definition
        of “Operating Property Value”.
        The
        definition of “Operating Property Value” set forth in the Credit Agreement is
        hereby amended by changing the reference to “8.0%” therein to refer instead to
“7.75%”.

       

      Definition
        of “Pool Value”.
        The
        definition of “Pool Value” set forth in the Credit Agreement is hereby amended
        by changing the reference to “8.0%” in subclause (a) thereof to refer instead to
“7.75%”.

       

      Extend
        the Period During Which Newly Acquired Properties are Valued at Purchase
        Price.

       

      Definition
        of “Gross Asset Value”.
        The
        definition of “Gross Asset Value” set forth in the Credit Agreement is hereby
        amended by changing the language “during the immediately preceding fiscal
        quarter of the Borrower” in subclauses (f) and (g) thereof to refer instead to
“during the immediately preceding two fiscal quarters of the
        Borrower”.

       

      Definition
        of “Pool Value”.
        The
        definition of “Pool Value” set forth in the Credit Agreement is hereby amended
        by changing the language “not owned for the entire prior fiscal quarter period”
in subclause (b) thereof to refer instead to “not owned for the entire prior two
        fiscal quarters”.

       

      Modify
        Distribution Limitations.
        Section 10.1(i)
        of the
        Credit Agreement is hereby amended and restated in its entirety as
        follows:

       

      (i)
         Dividends
        and Other Restricted Payments.
        If a
        monetary or other material Default or Event of Default (including, without
        limitation, the occurrence of any of the events specified in subsection (a),
        (e), (f) or (l)(i) of Section
        11.1
        or any
        violation of the covenants set forth in Article X)
        shall
        exist, or if as a result of the occurrence of any other Event of Default
        the
        Obligations have been accelerated, the Borrower shall not, and shall not
        permit
        any Subsidiary to, make any Restricted Payments to any Person whatsoever
        other
        than to the Borrower or any Subsidiary; provided, however, but subject to
        the
        following sentence, the Borrower may declare or make cash distributions to
        its
        shareholders in an aggregate amount not to exceed the minimum amount necessary
        for the Borrower to remain in compliance with Section
        8.12.
        In
        express limitation of the foregoing proviso, if an Event of Default specified
        in
        subsection (a), (e) or (f) of Section
        11.1
        shall
        have occurred and be continuing (as opposed to another material Default or
        Event
        of Default under the Agreement), or if as a result of the occurrence of any
        Event of Default the Obligations have been accelerated, the Borrower shall
        not,
        and shall not permit any Subsidiary to, make any Restricted Payments to any
        Person whatsoever other than to the Borrower or any Subsidiary.

       

      FORMATION
        AND ORGANIZATIONAL DOCUMENTS.
        Borrower has previously delivered to Administrative Agent all of the relevant
        formation and organizational documents of Borrower and Guarantor, and all
        such
        formation documents remain in full force and effect and have not been amended
        or
        modified since they were delivered to Administrative Agent. Borrower hereby
        certifies that: (a) the above documents are all of the relevant formation
        and organizational documents of Borrower and Guarantor; (b) they remain in
        full force and effect; and (c) they have not been amended or modified since
        they were previously delivered to Administrative Agent.

       

      NON-IMPAIRMENT.
        Except
        as expressly provided herein, nothing in this Amendment shall alter or affect
        any provision, condition, or covenant contained in the Notes or other Loan
        Documents or affect or impair any rights, powers, or remedies of Lenders,
        it
        being the intent of the parties hereto that the provisions of the Notes and
        other Loan Documents shall continue in full force and effect except as expressly
        modified hereby.

       

      MISCELLANEOUS.
        This
        Amendment and the other Loan Documents shall be governed by and interpreted
        in
        accordance with the laws of the State of California, except if preempted
        by
        federal law. Time is of the essence of each term of the Loan Documents,
        including this Amendment. If any provision of this Amendment or any of the
        other
        Loan Documents shall be determined by a court of competent jurisdiction to
        be
        invalid, illegal or unenforceable, that portion shall be deemed severed from
        this Amendment and the remaining parts shall remain in full force as though
        the
        invalid, illegal, or unenforceable portion had never been a part
        thereof.

       

      INTEGRATION;
        INTERPRETATION.
        The
        Loan Documents, including this Amendment, contain or expressly incorporate
        by
        reference the entire agreement of the parties with respect to the matters
        contemplated therein and supersede all prior negotiations, written or oral.
        The
        Loan Documents shall not be modified except by written instrument executed
        by
        all parties. Any reference to the Loan Documents includes any amendments,
        renewals or extensions now or hereafter approved by Administrative Agent
        and
        Lenders in writing.

       

      EXECUTION
        IN COUNTERPARTS.
        To
        facilitate execution, this document may be executed in as many counterparts
        as
        may be convenient or required. It shall not be necessary that the signature
        of,
        or on behalf of, each party, or that the signature of all persons required
        to
        bind any party, appear on each counterpart. All counterparts shall collectively
        constitute a single document. It shall not be necessary in making proof of
        this
        document to produce or account for more than a single counterpart containing
        the
        respective signatures of, or on behalf of, each of the parties hereto. Any
        signature page to any counterpart may be detached from such counterpart without
        impairing the legal effect of the signatures thereon and thereafter attached
        to
        another counterpart identical thereto except having attached to it additional
        signature pages.

       

      (REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK)

      

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, Borrower and Administrative Agent, on behalf of and for
        the
        benefit of all Lenders, have caused this Amendment to be duly executed as
        of the
        date first above written.

       

      BORROWER:                             EQUITY
        ONE, INC.

       

      
                                              By:      /s/
          Gregory R. Andrews        

                                 
          Name:  Gregory R.
          Andrews             

             Title:    
          Executive Vice Presient and Chief Financial Officer

         

        
 

      

      

      ADMINISTRATIVE
        AGENT:                 WELLS
        FARGO BANK, NATIONAL ASSOCIATION

       

                                        By:    
        /s/
        Edwin
        S. Poole, III _____

      
                                            
Name:  
Edwin
          S. Poole, III

                                         
          Title:      Vice President

      

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      

      GUARANTORS’
        CONSENT

       

      The
        undersigned (each a “Guarantor”)
        consent to the foregoing AMENDMENT NO. 1 TO CREDIT AGREEMENT and the
        transactions contemplated thereby and each Guarantor reaffirms its obligations
        under, as applicable, (a) the Guaranty dated as of January 17, 2006 and any
        Accession Agreements executed in connection therewith (collectively, as amended,
        restated, supplemented or otherwise modified from time to time, the
“Guaranty”),
        and
        its waivers, as set forth in the Guaranty, of each and every one of the possible
        defenses to such obligations. Each Guarantor further reaffirms that its
        obligations under the Guaranty are separate and distinct from Borrower’s
        obligations.

       

      Dated
        as
        of: March
        30,
        2007

       

      GUARANTORS:
         Cashmere
        Developments, Inc.

      Centerfund
        (US), LLC

      Centrefund
        Realty (U.S.) Corporation

      Equity
        One (Commonwealth) Inc.

      Equity
        One (Delta) Inc.

      Equity
        One (Florida Portfolio) Inc.

      Equity
        One (Louisiana Portfolio) LLC

      Equity
        One (North Port) Inc.

      Equity
        One (Northeast Portfolio) Inc.

      Equity
        One (Point Royale) Inc.

      Equity
        One (Sky Lake) Inc.

      Equity
        One (Southeast Portfolio) Inc.

      Equity
        One (Summerlin) Inc.

      Equity
        One (Sunlake) Inc.

      Equity
        One (Walden Woods) Inc.

      Equity
        One Acquisition Corp.

      Equity
        One Realty & Management FL, Inc.

      Equity
        One Realty & Management NE, Inc.

      Equity
        One Realty & Management SE, Inc.

      Equity
        One Realty & Management Texas, Inc.

      EQY
        (Southwest Portfolio) Inc.

      Gazit
        (Meridian) Inc.

      IRT
        Alabama, Inc.

      IRT
        Capital Corporation II

      IRT
        Management Company

      Louisiana
        Holding Corp.

      Parcel
        F,
        LLC

      Prosperity
        Shopping Center Corp.

      Shoppes
        at Jonathan’s Landing, Inc.

      Southeast
        U.S. Holdings Inc.

      The
        Meadows Shopping Center, LLC

      The
        Shoppes of Eastwood, LLC

       

      

      By:         
         /s/ Gregory R. Andrews      

      Name:     
        Gregory R. Andrews      

      Its:          
        Vice President and Treasurer      

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

       

       

      IRT
        Partners, L.P.

      

      By:
         Equity
        One, Inc.

      

      By:    
        /s/ Gregory R. Andrews      

      Name:
        Gregory R. Andrews      

      Its:      
        Executive Vice President and Chief Financial Officer

            

      

      

      Address
        for Notices for all Guarantors: 

       

      c/o
        Equity One, Inc.

      1600
        N.E.
        Miami Gardens Drive

      North
        Miami Beach, Florida 33179

      Attention: 
        Greg Andrews

                         
        Chief Financial OfficerExhibit 4.7

UNDERWRITER’S PURCHASE OPTION

FOR THE PURCHASE OF 350,000 UNITS

OF

SHERMEN WSC ACQUISITION CORP.

1.             Purchase Option.

THIS CERTIFIES THAT, in consideration of $50 duly paid by CIBC World
Markets Corp. (“CIBC”), as registered owner of this Purchase Option, to Shermen
WSC Acquisition Corp. (“Company”), CIBC is entitled, at any time or from time
to time upon the later of (i) the consummation of a Business Combination and
(ii) [one year from date of prospectus],
2008 (“Commencement Date”), and at or before 5:00 p.m., Eastern Time, [four years from date of prospectus], 2011
(“Expiration Date”), but not thereafter, to subscribe for, purchase and
receive, in whole or in part, up to Three Hundred Fifty Thousand (350,000)
units (“Units”) of the Company, each Unit consisting of one share of common
stock of the Company, par value $0.0001 per share (“Common Stock”), and two
warrants (“Warrant(s)”) expiring four years from the effective date (“Effective
Date”) of the registration statement on Form S-1 (“Registration Statement”)
pursuant to which Units are offered for sale to the public (the “Offering”).  Each Warrant provides for substantially
identical terms as the warrants included in the Units being registered for sale
to the public by way of the Registration Statement (“Public Warrants”), except
that the Warrants have an exercise price of $6.25 per share, subject to
adjustment as provided in Section 6 hereof. 
If the Expiration Date is a day on which banking institutions are
authorized by law to close, then this Purchase Option may be exercised on the
next succeeding day which is not such a day in accordance with the terms
herein.  During the period ending on the
Expiration Date, the Company agrees not to take any action that would terminate
the Purchase Option.  This Purchase
Option is initially exercisable at $7.50 per Unit so purchased; provided,
however, that upon the occurrence of any of the events specified in
Section 6 hereof, the rights granted by this Purchase Option, including the
exercise price per Unit and the number of Units (and shares of Common Stock and
Warrants) to be received upon such exercise, shall be adjusted as therein
specified.  The term “Exercise Price”
shall mean the initial exercise price or the adjusted exercise price, depending
on the context.

The term “Holder” shall mean as of any date, CIBC and/or any transferee
who acquired the Purchase Option(s) in accordance with Section 3.1 hereof.

2.             Exercise.

2.1.          Exercise
Form.  In order to exercise this
Purchase Option, the exercise form attached hereto as Exhibit A must be
duly completed, executed and delivered to the Company, together with this
Purchase Option and payment of the Exercise Price for the Units being purchased
payable in cash or by certified check or official bank check.  If the subscription rights represented hereby
have not been exercised at or before 5:00 p.m., Eastern time, on the Expiration

 

Date, this Purchase Option shall become and be void without further
force or effect, and all rights represented hereby shall cease and expire.

2.2.          Legend.  Each certificate for the securities purchased
under this Purchase Option shall bear a legend as follows unless such
securities have been registered under the Securities Act of 1933, as amended (“Act”):

“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (“ACT”) OR APPLICABLE STATE LAW.  THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE ACT AND APPLICABLE STATE LAW.”

2.3.          Cashless Exercise.

2.3.1.       Determination
of Amount.  In lieu of the payment of
the Exercise Price multiplied by the number of Units for which this Purchase
Option is exercisable (and in lieu of being entitled to receive Common Stock
and Warrants) in the manner required by Section 2.1, the Holder shall have the
right (but not the obligation) to convert any exercisable but unexercised
portion of this Purchase Option into Units (“Conversion Right”) as follows:
upon exercise of the Conversion Right, the Company shall deliver to the Holder
(without payment by the Holder of any of the Exercise Price in cash) that
number of shares of Common Stock and Warrants comprising that number of Units
equal to the quotient obtained by dividing (x) the “Value” (as defined below)
of the portion of the Purchase Option being converted by (y) the Current Market
Value (as defined below).  The “Value” of
the portion of the Purchase Option being converted shall equal the remainder
derived from subtracting (a) (i) the Exercise Price multiplied by (ii) the
number of Units underlying the portion of this Purchase Option being converted
from (b) the Current Market Value of a Unit multiplied by the number of Units
underlying the portion of the Purchase Option being converted.  As used herein, the term “Current Market
Value” per Unit at any date means the remainder derived from subtracting (x)
the exercise price of the Warrants multiplied by the number of shares of Common
Stock issuable upon exercise of the Warrants underlying one Unit from (y) (i)
the Current Market Price of the Common Stock multiplied by (ii) the number of
shares of Common Stock underlying one Unit, which shall include the shares of
Common Stock underlying the Warrants included in such Unit.  The “Current Market Price” of a share of
Common Stock shall mean (i) if the Common Stock is listed on a national
securities exchange or quoted on the Nasdaq National Market, Nasdaq SmallCap
Market or NASD OTC Bulletin Board (or successor such as the Bulletin Board
Exchange), the average of the last sale prices of the Common Stock in the
principal trading market for the Common Stock as reported by the exchange,
Nasdaq or the NASD OTC Bulletin Board, as the case may be, for the five trading
days prior to exercise; (ii) if the Common Stock is not listed on a national
securities exchange or quoted on the Nasdaq National Market, Nasdaq SmallCap
Market or the NASD OTC Bulletin Board (or successor such as the Bulletin Board Exchange),
but is traded in the

 

2

residual over-the-counter market, the average closing bid price for the
Common Stock for the five trading days preceding the date in question for which
such quotations are reported by the Pink Sheets, LLC or a similar publisher of
such quotations; and (iii) if the fair market value of the Common Stock cannot
be determined pursuant to clause (i) or (ii) above, such price as the Board of
Directors of the Company shall determine, in good faith.

2.3.2.       Mechanics
of Conversion.  The Conversion Right
may be exercised by the Holder on any business day on or after the Commencement
Date and not later than the Expiration Date by delivering the Purchase Option
and the duly executed exercise form attached hereto with the conversion section
completed to the Company and specifying the total number of Units the Holder
will purchase pursuant to such Conversion Right.

2.3.3.       Warrant
Exercise.  Any warrants underlying
the Units shall be issued pursuant to and subject to the terms set forth in the
Warrant Agreement dated as of [_________ __], 2007 (the "Warrant
Agreement") between the Company and Continental Stock Transfer & Trust
Company (the "Warrant Agent"). Without limiting the generality of the
foregoing, the Company shall not be obligated to deliver any shares of Common
Stock pursuant to the exercise of a Warrant underlying the Units and shall have
no obligation to settle a Warrant exercise unless a registration statement
under the Securities Act of 1933, as amended (the “Act”), with respect to the
shares of Common Stock is effective and a current Prospectus is on file with
the Securities and Exchange Commission (the “SEC”). In the event that a
registration statement with respect to the shares of Common Stock underlying a
Warrant is not effective under the Act or a current Prospectus is not on file
with the SEC, the holder of such Warrant shall not be entitled to exercise such
Warrant.  Notwithstanding anything to the
contrary in this Agreement or the Warrant Agreement, under no circumstances
will the Company be required to net cash settle the Warrant exercise.  Warrants may not be exercised by, or shares
of Common Stock issued to, any registered holder in any state in which such
exercise or issuance would be unlawful. 
For the avoidance of doubt, as a result of this Section 2.3.3, any or
all of the Warrants underlying the Units may expire unexercised.  In no event shall the registered Holder of a
Unit or a Warrant be entitled to receive any monetary damages if the shares of
Common Stock underlying the Warrants have not been registered by the Company
pursuant to an effective registration statement or if a current prospectus is
available for delivery by the Warrant Agent, provided the Company has fulfilled
its obligation to use its best efforts to effect such registration and ensure a
current prospectus is available for delivery by the Warrant Agent, as provided
in the Warrant Agreement.

2.4           Limitation.  In no circumstances will the Company be
required to settle this Purchase Option exercise for cash.

3.             Transfer.

3.1.          General
Restrictions.  The registered Holder
of this Purchase Option, by its acceptance hereof, agrees that it will not
directly or indirectly sell, offer, contract or grant any option to sell
(including without limitation any short sale), transfer, assign, pledge,
hypothecate, establish an open “put equivalent position,” liquidate or decrease
a “call equivalent position” within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934, as amended, or otherwise dispose of, or enter
into any transaction which is designed to, or might reasonably be expected to,
result in the disposition of (“Transfer”) this Purchase Option for a period of
one year following the Effective Date to anyone other than (i) CIBC or a
selected dealer participating in the Offering, or (ii) a bona fide officer or
partner of CIBC or a selected dealer.  On
and after the first anniversary of the Effective Date, Transfers of this
Purchase Option to others may be made subject to compliance with or exemptions
from applicable securities laws.  In
order to make any permitted assignment, the Holder must deliver to the Company
the assignment form attached hereto as Exhibit B, duly executed and
completed, together with the Purchase Option and payment of all transfer taxes,
if any, payable in connection therewith. 
The Company shall, within five business days of its receipt of such
assignment, transfer this Purchase Option on the books of the Company and shall
execute and deliver a new Purchase Option or Purchase Options of like tenor to
the appropriate assignee(s) expressly evidencing the right to purchase the
aggregate number of Units purchasable hereunder or such portion of such number
as shall be contemplated by any such assignment.

3.2.          Restrictions
Imposed by the Act.  The securities
evidenced by this Purchase Option shall not be transferred unless and until (i)
the Company has received either (A) the opinion of counsel for the Holder that
the securities may be transferred pursuant to an exemption from registration
under the Act and applicable state securities laws, the availability of which
is established to the reasonable satisfaction of the Company (the Company
hereby agreeing that the opinion of Bingham McCutchen LLP shall be deemed
satisfactory evidence of the availability of an exemption), or (B) such other
evidence as the Company may request and that the Holder agrees to provide in
lieu of such opinion; or (ii) a registration statement or a post-effective
amendment to the Registration Statement relating to such securities has been
filed by the

 

3

Company and declared effective by the Securities and Exchange
Commission (the “SEC”) and compliance with applicable state securities law has
been established.

4.             New Purchase
Options to be Issued

4.1.          Partial
Exercise or Transfer.  Subject to the
restrictions in Section 3 hereof, this Purchase Option may be exercised or
assigned in whole or in part.  In the
event of the exercise or assignment hereof in part only, upon surrender of this
Purchase Option for cancellation, together with the duly executed exercise or
assignment form and funds sufficient to pay any Exercise Price (except to the
extent the Holder elects to exercise this Purchase Option by means of a
cashless exercise as provided by Section 2.3) and/or transfer tax, the Company
shall cause to be delivered to the Holder without charge a new Purchase Option
of like tenor to this Purchase Option in the name of the Holder evidencing the
right of the Holder to purchase the number of Units purchasable hereunder as to
which this Purchase Option has not been exercised or assigned.

4.2.          Lost
Certificate.  Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Purchase Option and of reasonably satisfactory
indemnification or the posting of a bond, the Company shall execute and deliver
a new Purchase Option of like tenor and date. 
Any such new Purchase Option executed and delivered as a result of such
loss, theft, mutilation or destruction shall constitute a substitute
contractual obligation on the part of the Company.

5.             Registration
Rights.

5.1.          “Piggy-Back”
Registration.

5.1.1.       Grant
of Right.  The Holders of the
Purchase Options shall have the right for a period of seven years commencing on
the Effective Date, to include the Purchase Options, including the Units,
Common Stock, the Warrants and the Common Stock underlying the Warrants (the “Registrable
Securities”) as part of any other registration of securities filed by the
Company, other than in connection with a transaction contemplated by Rule
145(a) promulgated under the Act or pursuant to Form S-8 (a “Piggy-Back
Registration”).  The Company shall cause
such Registrable Securities to be included in such registration and shall use
its commercially reasonable efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration on the same
terms and conditions as any similar securities of the Company and to permit the
sale or other disposition of such Registrable Securities in accordance with the
intended method(s) of distribution thereof. 
All holders of Registrable Securities proposing to distribute their
securities through a Piggy-Back Registration that involves an underwriter or
underwriters shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such Piggy-Back Registration.

5.1.2.       Reduction
of Offering.  If the managing
underwriter or underwriters for a Piggy-Back Registration that is to be an
underwritten offering advises the Company and the Holders in writing that the
dollar amount or number of shares of Common Stock which the Company desires to
sell, taken together with shares of Common Stock, if any, as to which
registration has been demanded pursuant to written contractual arrangements
with persons other than the Holders of Registrable Securities hereunder, the
Registrable Securities as to which registration has been requested under this
Section 5.1, and the shares of Common Stock, if any, as to which

 

4

registration has been requested pursuant to the written contractual
piggy-back registration rights of other shareholders of the Company, exceeds
the maximum dollar amount or maximum number of shares that can be sold in such
offering without adversely affecting the proposed offering price, the timing,
the distribution method, or the probability of success of such offering (such
maximum dollar amount or maximum number of shares, as applicable, the “Maximum
Number of Shares”), then the Company shall include in any such registration:

(a)           If the registration is undertaken for the Company’s
account: (i) first, the shares of Common Stock or other securities that
the Company desires to sell that can be sold without exceeding the Maximum
Number of Shares; (ii) second, to the extent that the Maximum Number of
Shares has not been reached under the foregoing clause (i), the shares of
Common Stock or other securities, if any, comprised of Registrable Securities
and the shares of Common Stock or other securities registrable pursuant to the
terms of the Registration Rights Agreement between the Company and the initial
investors in the Company, dated as of
[               ],
2007 (the “Registration Agreement” and such registrable securities, the “Investor
Securities”), as to which registration has been requested pursuant to the
applicable written contractual piggy-back registration rights of such security
holders (pro  rata in accordance with the number of shares that
each such security holder has requested be included in such registration,
regardless of the number of shares held by each such security holder (such
proportion is referred to herein as “Pro Rata”) that can be sold without
exceeding the Maximum Number of Shares; and (iii) third, to the extent
that the Maximum Number of shares has not been reached under the foregoing
clauses (i) and (ii), the shares of Common Stock or other securities for
the account of other persons that the Company is obligated to register pursuant
to written contractual piggy-back registration rights held by other
shareholders of the Company that can be sold without exceeding the Maximum
Number of Shares;

(b)           If the registration is a “demand” registration undertaken
at the demand of holders of Investor Securities: (i) first, the shares of
Common Stock or other securities for the account of the demanding persons, Pro
Rata, that can be sold without exceeding the Maximum Number of Shares;
(ii) second, to the extent that the Maximum Number of Shares has not been
reached under the foregoing clause (i), the shares of Common Stock or other
securities that the Company desires to sell, that can be sold without exceeding
the Maximum Number of Shares; (iii) third, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clause (i) and (ii),
the Registrable Securities as to which registration has been requested under
this Section 5.2, Pro Rata; and (iv) fourth, to the extent that the
Maximum Number of Shares has not been reached under the foregoing clauses (i),
(ii) and (iii), the shares of Common Stock or other securities for the
account of other persons that the Company is obligated to register pursuant to
written contractual piggy-back registration rights held by other shareholders
of the Company that can be sold without exceeding the Maximum Number of Shares;
and

                (c)           If the registration is a “demand”
registration undertaken at the demand of persons other than the holders of
Investor Securities: (i) first, the shares of Common Stock or

 

5

other securities for the account of the demanding
persons that can be sold without exceeding the Maximum Number of Shares;
(ii) second, to the extent that the Maximum Number of Shares has not been
reached under the foregoing clause (i), the shares of Common Stock or other
securities that the Company desires to sell and the shares of Common Stock or
other securities comprised of Registrable Securities and Investor Securities as
to which registration has been requested pursuant to the terms hereof and of
the Registration Rights Agreement (as applicable), Pro Rata, that can be sold
without exceeding the Maximum Number of Shares; and (iii) third, to the
extent that the Maximum Number of Shares has not been reached under the
foregoing clauses (i) and (ii), the shares of Common Stock or other securities
for the account of other persons that the Company is obligated to register
pursuant to written contractual piggy-back registration rights held by other
shareholders of the Company that can be sold without exceeding the Maximum
Number of Shares.

5.1.3.       Terms.  The Company shall bear all fees and expenses
attendant to registering the Registrable Securities, including the reasonable
expenses of any one legal counsel selected by the Holders to represent them in
connection with the sale of the Registrable Securities, but the Holders shall
pay any and all underwriting commissions related to the Registrable
Securities.  In the event of such a
proposed registration, the Company shall furnish the then Holders of
outstanding Registrable Securities with not less than fifteen days written
notice prior to the proposed date of filing of such registration
statement.  Such notice to the Holders
shall continue to be given for each applicable registration statement filed
(until the fifth anniversary of the Effective Date) by the Company until such
time as all of the Registrable Securities have been registered and sold.  The holders of the Registrable Securities
shall exercise the “piggy-back” rights provided for herein by giving written
notice, within ten days of the receipt of the Company’s notice of its intention
to file a registration statement.  The
Company shall cause any registration statement filed pursuant to the above “piggyback”
rights to remain effective for at least nine months from the date that the
Holders of the Registrable Securities are first given the opportunity to sell
all of such securities.

5.2.          Suspension
of Use of Effective Registration Statement. 
If a registration  statement
relating to the registration of Registrable Securities under this
Section 5 hereof has been declared effective (“Effective Registration
Statement”), subject to the good faith determination by the Board of Directors
of the Company that it is reasonably necessary to suspend the use of such
Effective Registration Statement or sales of Registrable Securities by Holders
under such Effective Registration Statement, the Company may, upon written
notice (the “Suspension Notice”) to the Holders, direct the Holders to suspend
the use of or sales under such Effective Registration Statement for a period
not to exceed thirty (30) days in any three (3) month period or ninety (90)
days in the aggregate in any twelve (12) month period, if any of the following
events (each, a “Suspension Event”) shall occur: negotiations relating to, or
the consummation of, a transaction or the occurrence of an event, in each case,
that (i) would require additional disclosure of material information by
the Company in such Effective Registration Statement or other public filings and
which has not been so disclosed, and (ii) either (x) as to which the
Company has a bona fide business purpose for preserving confidentiality, or
(y) that renders the Company unable to comply with SEC requirements, or
(z) that would make it unduly burdensome to promptly amend or supplement
such Effective Registration Statement on a post-effective basis, as
applicable.  Upon the occurrence of any
such Suspension Event, the Company

 

6

shall use its reasonable best efforts to take or cause to be taken such
action as is necessary to permit resumed use of such Effective Registration
Statement promptly following the cessation of the Suspension Event giving rise
to such suspension so as to permit the Holders to resume use of and sales under
such Effective Registration Statement as soon as practicable thereafter.  Upon cessation of the Suspension Event giving
rise to such suspension, the Company shall provide the Holders with written notice
within two (2) business days that the Suspension Event has ceased (the “End
of Suspension Notice”).  The Holders
shall not effect any sales of the Registrable Securities pursuant to such
Effective Registration Statement at any time after it has received a Suspension
Notice from the Company and prior to the receipt of an End of Suspension Notice
(the “Suspension Period”).  The Company
shall extend the effectiveness period of any registration statement by the
number of days of the Suspension Period, provided there are Registrable
Securities registered thereunder that have not been sold.

5.3.          General
Terms.

5.3.1.       Indemnification.  The Company shall indemnify the Holder(s) of
the Registrable Securities to be sold pursuant to any registration statement
hereunder and each person, if any, who controls such Holders within the meaning
of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of
1934, as amended (“Exchange Act”), against all loss, claim, damage, expense or
liability (including all reasonable attorneys’ fees and other expenses
reasonably incurred in investigating, preparing or defending against
litigation, commenced or threatened, or any claim whatsoever whether arising
out of any action between the underwriter and the Company or between the
underwriter and any third party or otherwise) to which any of them may become
subject under the Act, the Exchange Act or otherwise, arising from such
registration statement but only to the same extent and with the same effect as
the provisions pursuant to which the Company has agreed to indemnify the
underwriters contained in Section 5 of the Underwriting Agreement (the “Underwriting
Agreement”) between the Company, CRT Capital Group LLC and CIBC dated the
Effective Date.  The Holder(s) of the
Registrable Securities to be sold pursuant to such registration statement, and
their successors and assigns, shall severally, and not jointly, indemnify the
Company, its officers and directors and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage, expense or liability (including
all reasonable attorneys’ fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, or their successors
or assigns, in writing, for specific inclusion in such registration statement
to the same extent and with the same effect as the provisions contained in
Section 5 of the Underwriting Agreement.

5.3.2.       Exercise
of Purchase Options.  Nothing
contained in this Purchase Option shall be construed as requiring the Holder(s)
to exercise their Purchase Options or Warrants underlying such Purchase Options
prior to or after the initial filing of any registration statement or the
effectiveness thereof.

5.3.3.       Documents
Delivered to Holders.  The Company
shall furnish CIBC, as representative of the Holders participating in any of
the foregoing offerings, a signed

 

7

counterpart, addressed to the participating Holders, of (i) an opinion
of counsel to the Company, dated the effective date of such registration
statement (and, if such registration includes an underwritten public offering,
an opinion dated the date of the closing under any underwriting agreement
related thereto), and (ii) a “cold comfort” letter dated the effective date of
such registration statement (and, if such registration includes an underwritten
public offering, a letter dated the date of the closing under the underwriting
agreement) signed by the independent public accountants who have issued a
report on the Company’s financial statements included in such registration
statement, in each case covering substantially the same matters with respect to
such registration statement (and the prospectus included therein) and, in the
case of such accountants’ letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of issuer’s
counsel and in accountants’ letters delivered to underwriters in underwritten
public offerings of securities.  The
Company shall also deliver promptly to CIBC, as representative of the Holders
participating in the offering, the correspondence and memoranda described below
and copies of all correspondence between the SEC or its staff and the Company,
its counsel or auditors and permit CIBC, as representative of the Holders, to
do such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement as it deems
reasonably necessary to comply with applicable securities laws or rules of the
NASD.  Such investigation shall include
access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times as CIBC, as representative of
the Holders, shall reasonably request. 
The Company shall not be required to disclose any confidential
information or other records to CIBC, as representative of the Holders, or to
any other person, unless and until such persons shall have entered into
reasonable confidentiality agreements (in form and substance reasonably
satisfactory to the Company), with the Company with respect thereto.

5.3.4.       Underwriting
Agreement.  The Company shall enter
into an underwriting agreement with the managing underwriter(s), if any,
selected by any Holders whose Registrable Securities are being registered
pursuant to this Section 5, which managing underwriter shall be reasonably
acceptable to the Company.  Such
agreement shall be reasonably satisfactory in form and substance to the
Company, each Holder and such managing underwriters, and shall contain such
representations, warranties and covenants by the Company and such other terms
as are customarily contained in agreements of that type used by the managing
underwriter.  The Holders shall be
parties to any underwriting agreement relating to an underwritten sale of their
Registrable Securities and may, at their option, require that any or all of the
representations, warranties and covenants of the Company to or for the benefit
of such underwriters shall also be made to and for the benefit of such
Holders.  Such Holders shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters except as they may relate to such Holders,
information regarding such Holders and their intended methods of
distribution.  Such Holders, however,
shall agree to such covenants and indemnification and contribution obligations
for selling shareholders as are customarily contained in agreements of that
type used by the managing underwriter. 
Further, such Holders shall execute appropriate powers of attorney and
custody agreements as the underwriters shall reasonably determine are necessary
in connection with the offering and otherwise cooperate fully in the
preparation of the registration statement and other documents relating to any
offering in which they include securities pursuant to this Section 5.  Each Holder shall also furnish to the Company
such

 

8

information regarding itself, the Registrable Securities held by it,
and the intended method of disposition of such securities as shall be
reasonably required to effect the registration of the Registrable Securities.

5.3.5.       Rule
144 Sale.  Notwithstanding anything
contained in this Section 5 to the contrary, the Company shall have no
obligation pursuant to Section 5.1 for the registration of Registrable
Securities held by any Holder (i) where such Holder would then be entitled to
sell under Rule 144 promulgated under the Act (“Rule 144”) within any
three-month period (or such other period prescribed under Rule 144 as may be
provided by amendment thereof) all of the Registrable Securities then held by
such Holder, and (ii) where the number of Registrable Securities held by such
Holder is within the volume limitations under paragraph (e) of Rule 144
(calculated as if such Holder were an affiliate within the meaning of Rule
144).

5.3.6.       Supplemental
Prospectus.  Each Holder agrees, that
upon receipt of any notice from the Company of the happening of any event as a
result of which the prospectus included in the Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, such Holder
will immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement covering such Registrable Securities until such
Holder’s receipt of the copies of a supplemental or amended prospectus, and, if
so desired by the Company, such Holder shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
such destruction) all copies, other than permanent file copies then in such
Holder’s possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.

5.3.7.       Holder
Obligations.  No Holder may
participate in any underwritten offering pursuant to this Section 5 unless such
Holder (i) agrees to sell only the Holder’s Registrable Securities on the basis
reasonably provided in any underwriting agreement, and (ii) completes, executes
and delivers any and all questionnaires, powers of attorney, custody
agreements, indemnities, underwriting agreements and other documents reasonably
and customarily required by or under the terms of any underwriting agreement.

6.             Adjustments.

6.1.          Adjustments
to Exercise Price and Number of Securities. 
The Exercise Price and the number of Units underlying the Purchase
Option shall be subject to adjustment from time to time as hereinafter set
forth:

6.1.1.       Stock
Dividends - Split-Ups.  If after the
date hereof, and subject to the provisions of Section 6.4 below, the number of
outstanding shares of Common Stock is increased by a stock dividend payable in
shares of Common Stock or by a split-up of shares of Common Stock or other
similar event, then, on the effective date thereof, the number of shares of
Common Stock underlying each of the Units purchasable hereunder shall be
increased in proportion to such increase in outstanding shares.  In such case, the number of shares of Common
Stock, and the exercise price applicable thereto, underlying the Warrants
underlying each of the Units purchasable hereunder shall be adjusted in
accordance with the terms of the Warrants. 
For

 

9

example, if the Company declares a two-for-one stock dividend and at
the time of such dividend this Purchase Option is for the purchase of one Unit
at $7.50 per whole Unit (the Warrants underlying the Units are exercisable for
$6.25 per share), upon effectiveness of the dividend, this Purchase Option will
be adjusted to allow for the purchase of one Unit at $7.50 per Unit, each Unit
entitling the holder to receive two shares of Common Stock and two Warrants
(each Warrant exercisable for two shares of Common Stock at $3.13 per share).

6.1.2.       Aggregation
of Shares.  If after the date hereof,
and subject to the provisions of Section 6.4, the number of outstanding shares
of Common Stock is decreased by a consolidation, combination or
reclassification of shares of Common Stock or other similar event, then, on the
effective date thereof, the number of shares of Common Stock underlying each of
the Units purchasable hereunder shall be decreased in proportion to such
decrease in outstanding shares.  In such
case, the number of shares of Common Stock, and the exercise price applicable
thereto, underlying the Warrants underlying each of the Units purchasable
hereunder shall be adjusted in accordance with the terms of the Warrants.

6.1.3.       Replacement
of Securities upon Reorganization, etc. 
In case of any reclassification or reorganization of the outstanding
shares of Common Stock other than a change covered by Section 6.1.1 or 6.1.2
hereof or that solely affects the par value of such shares of Common Stock, or
in the case of any merger or consolidation of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification or
reorganization of the outstanding shares of Common Stock), or in the case of
any sale or conveyance to another corporation or entity of the property of the
Company as an entirety or substantially as an entirety in connection with which
the Company is dissolved, the Holder of this Purchase Option shall have the
right thereafter (until the expiration of the right of exercise of this
Purchase Option) to receive upon the exercise hereof, for the same aggregate
Exercise Price payable hereunder immediately prior to such event, the kind and
amount of shares of stock or other securities or property (including cash)
receivable upon such reclassification, reorganization, merger or consolidation,
or upon a dissolution following any such sale or transfer, by a Holder of the
number of shares of Common Stock of the Company obtainable upon exercise of
this Purchase Option and the underlying Warrants immediately prior to such
event; and if any reclassification also results in a change in shares of Common
Stock covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made
pursuant to Sections 6.1.1, 6.1.2 and this Section 6.1.3.  The provisions of this Section 6.1.3 shall
similarly apply to successive reclassifications, reorganizations, mergers or
consolidations, sales or other transfers.

6.1.4.       Changes
in Form of Purchase Option.  This
form of Purchase Option need not be changed because of any change pursuant to
this Section, and Purchase Options issued after such change may state the same
Exercise Price and the same number of Units as are stated in the Purchase
Options initially issued pursuant to this Agreement.  The acceptance by any Holder of the issuance
of new Purchase Options reflecting a required or permissive change shall not be
deemed to waive any rights to an adjustment occurring after the Commencement
Date or the computation thereof.

 

10

6.2.          Substitute
Purchase Option.  In case of any
consolidation of the Company with, or merger of the Company with, or merger of
the Company into, another corporation (other than a consolidation or merger
which does not result in any reclassification or change of the outstanding
Common Stock), the corporation formed by such consolidation or merger shall
execute and deliver to the Holder a supplemental Purchase Option providing that
the holder of each Purchase Option then outstanding or to be outstanding shall
have the right thereafter (until the stated expiration of such Purchase Option)
to receive, upon exercise of such Purchase Option, the kind and amount of
shares of stock and other securities and property receivable upon such
consolidation or merger, by a holder of the number of shares of Common Stock of
the Company for which such Purchase Option might have been exercised
immediately prior to such consolidation, merger, sale or transfer.  Such supplemental Purchase Option shall
provide for adjustments which shall be identical to the adjustments provided in
Section 6.  The above provision of this
Section shall similarly apply to successive consolidations or mergers.

6.3.          Elimination
of Fractional Interests.  The Company
shall not be required to issue certificates representing fractions of shares of
Common Stock or Warrants upon the exercise of the Purchase Option, nor shall it
be required to issue scrip or pay cash in lieu of any fractional interests, it
being the intent of the parties that all fractional interests shall be
eliminated by rounding any fraction up to the nearest whole number of Warrants,
shares of Common Stock or other securities, properties or rights.

7.             Reservation and
Listing.

The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon
exercise of the Purchase Option or the Warrants underlying the Purchase Option,
such number of shares of Common Stock or other securities, properties or rights
as shall be issuable upon the exercise thereof. 
The Company covenants and agrees that, upon exercise of the Purchase
Option and payment of the Exercise Price therefor, all shares of Common Stock
and other securities issuable upon such exercise shall be duly and validly
issued, fully paid and non-assessable and not subject to preemptive rights of
any shareholder.  The Company further
covenants and agrees that upon exercise of the Warrants underlying the Purchase
Option and payment of the respective Warrant exercise price therefor, all
shares of Common Stock and other securities issuable upon such exercise shall
be duly and validly issued, fully paid and non-assessable and not subject to
preemptive rights of any shareholder.  As
long as the Purchase Option shall be outstanding, the Company shall use its
commercially reasonable efforts to cause all (i) Units and shares of Common
Stock issuable upon exercise of the Purchase Option, (ii) Warrants issuable
upon exercise of the Purchase Option and (iii) shares of Common Stock issuable
upon exercise of the Warrants included in the Units issuable upon exercise of
the Purchase Option to be listed (subject to official notice of issuance) on
the securities exchanges (or, if applicable on the Nasdaq National Market,
SmallCap Market, OTC Bulletin Board or any successor trading market) on which
the Units, the Common Stock or the Public Warrants issued to the public in
connection with the Offering may then be listed and/or quoted.

 

11

8.             Certain Notice Requirements.

8.1.          Holder’s
Right to Receive Notice.  Nothing
herein shall be construed as conferring upon the Holders the right to vote or
consent as a shareholder for the election of directors or any other matter, or
as having any rights whatsoever as a shareholder of the Company.  If, however, at any time prior to the
expiration of the Purchase Option and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the
Company shall give written notice of such event at least fifteen days prior to
the date fixed as a record date or the date of closing the transfer books for
the determination of the shareholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to
vote on such proposed dissolution, liquidation, winding up or sale.  Such notice shall specify such record date or
the date of the closing of the transfer books, as the case may be.  Notwithstanding the foregoing, the Company
shall deliver to each Holder a copy of each notice given to the other
shareholders of the Company at the same time and in the same manner that such
notice is given to the shareholders.

8.2.          Events
Requiring Notice.  The Company shall
be required to give the notice described in this Section 8 upon one or more of
the following events: (i) if the Company shall take a record of the holders of
its shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of retained earnings, as indicated by
the accounting treatment of such dividend or distribution on the books of the
Company, or (ii) the Company shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any option,
right or warrant to subscribe therefor, or (iii) a dissolution, liquidation or
winding up of the Company (other than in connection with a consolidation or
merger) or a sale of all or substantially all of its property, assets and
business shall be proposed.

8.3.          Notice
of Change in Exercise Price.  The
Company shall, promptly after an event requiring a change in the Exercise Price
pursuant to Section 6 hereof, send notice to the Holders of such event and
change (“Price Notice”).  The Price
Notice shall describe the event causing the change and the method of
calculating same and shall be certified as being true and accurate by the
Company’s Chief Executive Officer and Chief Financial Officer.

8.4.          Transmittal
of Notices.  All notices, requests,
consents and other communications under this Purchase Option shall be in
writing and shall be deemed to have been duly made when hand delivered, or
mailed by express mail or private courier service: (i) If to the registered
Holder of the Purchase Option, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, to the following address or to
such other address as the Company may designate by notice to the Holders:

 

12

Sherman WSC Acquisition
Corp.

c/o The Sherman Group

1251 Avenue of the Americas

Suite 900

New York, NY 10020

Attn:  Francis P. Jenkins, Jr.

Fax No.:  (212) 300-0200

9.             Miscellaneous.

9.1.          Amendments.  The Company and CIBC may from time to time
supplement or amend this Purchase Option without the approval of any of the
Holders in order to cure any ambiguity, to correct or supplement any provision
contained herein that may be defective or inconsistent with any other
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder that the Company and CIBC may deem necessary or
desirable and that the Company and CIBC deem shall not adversely affect the
interest of the Holders.  All other
modifications or amendments shall require the written consent of and be signed
by the party against whom enforcement of the modification or amendment is
sought.

9.2.          Headings.  The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of this
Purchase Option.

10.           Entire Agreement.

This Purchase Option (together with the other agreements and documents
being delivered pursuant to or in connection with this Purchase Option)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings
of the parties, oral and written, with respect to the subject matter hereof.

10.1.        Binding
Effect.  This Purchase Option shall
inure solely to the benefit of and shall be binding upon, the Holder and the
Company and their permitted assignees, respective successors, legal
representative and assigns, and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Purchase Option or any provisions herein contained.

10.2.        Governing
Law; Submission to Jurisdiction. 
This Purchase Option shall be governed by and construed and enforced in
accordance with the laws of the State of New York without giving effect to
conflict of laws.  The Company hereby
agrees that any action, proceeding or claim against it arising out of, or
relating in any way to this Purchase Option shall be brought and enforced in
the courts of the State of New York or of the United States of America for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. 
The Company hereby waives any objection to such exclusive jurisdiction
and that such courts represent an inconvenient forum.  Any process or summons to be served upon the
Company may be served by transmitting a copy thereof by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
set forth in Section 8 hereof.  Such mailing
shall be deemed personal service and shall be

 

13

legal and binding upon the Company in any action, proceeding or
claim.  The Company and the Holder agree
that the prevailing party(ies) in any such action shall be entitled to recover
from the other party(ies) all of its reasonable attorneys’ fees and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.

10.3.        Waiver.  The failure of the Company or the Holder to
at any time enforce any of the provisions of this Purchase Option shall not be
deemed or construed to be a waiver of any such provision, nor to in any way
affect the validity of this Purchase Option or any provision hereof or the
right of the Company or any Holder to thereafter enforce each and every
provision of this Purchase Option.  No
waiver of any breach, non-compliance or non-fulfillment of any of the
provisions of this Purchase Option shall be effective unless set forth in a
written instrument executed by the party or parties against whom or which
enforcement of such waiver is sought; and no waiver of any such breach,
non-compliance or non-fulfillment shall be construed or deemed to be a waiver
of any other or subsequent breach, non-compliance or non-fulfillment.

10.4.        Execution
in Counterparts.  This Purchase
Option may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been
signed by each of the parties hereto and delivered to each of the other parties
hereto.

10.5.        Exchange
Agreement.  As a condition of the
Holder’s receipt and acceptance of this Purchase Option, Holder agrees that, at
any time prior to the complete exercise of this Purchase Option by Holder, if
the Company and CIBC enter into an agreement (“Exchange Agreement”) pursuant to
which they agree that all outstanding Purchase Options will be exchanged for
securities or cash or a combination of both, then Holder shall agree to such
exchange and become a party to the Exchange Agreement.

[Signature page follows]

 

14

IN WITNESS WHEREOF, the Company has caused this Purchase Option to be
signed by its duly authorized officer as of the ___ day of ________, 2007.

	
   

  	
  SHERMEN WSC ACQUISITION CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  

Exhibit A

Form
to be used to exercise Purchase Option:

Shermen
WSC Acquisition Corp.

c/o The Sherman Group

1251 Avenue of the Americas,

Suite 900

New York, NY 10020

Date:
_________________

The undersigned hereby elects irrevocably to exercise all or a portion
of the within Purchase Option and to purchase ___ Units of Shermen WSC
Acquisition Corp. and hereby makes payment of $____________ (at the rate of
$_________ per Unit) in payment of the Exercise Price pursuant thereto.  Please issue the Common Stock and Warrants as
to which this Purchase Option is exercised in accordance with the instructions
given below.

or

The undersigned hereby elects irrevocably to convert its right to
purchase _________ Units purchasable under the within Purchase Option by
surrender of the unexercised portion of the attached Purchase Option (with a “Value”
based of $_______ based on a “Market Price” of $_______).  Please issue the securities comprising the
Units as to which this Purchase Option is exercised in accordance with the
instructions given below.

	
   

  	
   

  
	
   

  	
  Signature

  

 

 

 

	
   

  	
   

  
	
   

  	
  Signature Guaranteed

  

 

INSTRUCTIONS
FOR REGISTRATION OF SECURITIES

 

 

 

	
  Name

  	
   

  	
   

  
	
  (Print in Block Letters)

  	
   

  
	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  
	
   

  
				

 

 

 

Ex. A-1

 

NOTICE: THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WITHIN PURCHASE OPTION IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A
BANK, OTHER THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A FIRM HAVING
MEMBERSHIP ON A REGISTERED NATIONAL SECURITIES EXCHANGE.

 

Ex. A-2

Exhibit B

Form
to be used to assign Purchase Option:

ASSIGNMENT

(To
be executed by the registered Holder to effect a transfer of the within
Purchase Option):

FOR VALUE RECEIVED,______________________________________________ does
hereby sell, assign and transfer unto________________________________________________
the right to purchase __________ Units of Shermen WSC Acquisition Corp. (“Company”)
evidenced by the within Purchase Option and does hereby authorize the Company
to transfer such right on the books of the Company.

Dated:
, 20___ ____________________

	
   

  	
   

  
	
   

  	
  Signature

  

 

 

 

	
   

  	
   

  
	
   

  	
  Signature Guaranteed

  
	
   

  	
   

  

 

NOTICE: THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WITHIN PURCHASE OPTION IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A
BANK, OTHER THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A FIRM HAVING
MEMBERSHIP ON A REGISTERED NATIONAL SECURITIES EXCHANGE.

Ex. B-1

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