Document:

Exhibit
4.1

    FORM OF
WARRANT

    COMMON
STOCK PURCHASE WARRANT

    

     AXION
INTERNATIONAL HOLDINGS, INC.

     

    
      	
              Warrant
      Shares: 50,000

            	 
      	
              Initial
      Exercise Date: _____,
      2010            

            

    

     

    THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies
that, for value received, Lincoln Park Capital Fund, LLC (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after ____, 2010 (the “Initial Exercise
Date”) and on or prior to the close of business on the fifth anniversary
of the date hereof (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Axion International
Holdings, Inc., a Colorado corporation (the “Company”), up to
50,000 shares (the “Warrant Shares”) of
Common Stock.  The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in Section
2(b).

     

    Section
1.             Definitions.  Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
that certain Purchase Agreement (the “Purchase Agreement”),
dated February 23, 2010, among the Company and the Holder.

     

    Section
2.             Exercise.

     

    a)           Exercise of
Warrant.  Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto; and, within three (3) Business Days of
the date said Notice of Exercise is delivered to the Company, the Company shall
have received payment of the aggregate Exercise Price of the shares thereby
purchased by wire transfer or cashier’s check drawn on a United States bank or,
if available, pursuant to the cashless exercise procedure specified in Section
2(c) below.  Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and
the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three (3) Business
Days of the date the final Notice of Exercise is delivered to the
Company.  Partial exercises of this Warrant resulting in purchases of
a portion of the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased.  The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such
purchases.  The Company shall deliver any objection to any Notice of
Exercise Form within 1 Business Day of receipt of such notice.  In the
event of any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error. The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face
hereof.

      

    b)           Exercise
Price.  The exercise price per share of the Common Stock under
this Warrant shall be $2.91, subject to adjustment
hereunder (the “Exercise
Price”).

     

    c)           Cashless
Exercise.  This Warrant may also be exercised, in whole or in part,
at such time by means of a “cashless exercise” in which the Holder shall be
entitled to receive a certificate for the number of Warrant Shares equal to the
quotient obtained by dividing [(A-B) (X)] by (A), where:

     

    
      	 
      	
              (A)
      =

            	
              the
      VWAP on the Business Day immediately preceding the date on which Holder
      elects to exercise this Warrant by means of a “cashless exercise,” as set
      forth in the applicable Notice of
Exercise;

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	 
      	
              (B)
      =

            	
              the
      Exercise Price of this Warrant, as adjusted hereunder;
  and

            

    

    

    
      	 
      	
              (X)
      =

            	
              the
      number of Warrant Shares that would be issuable upon exercise of this
      Warrant in accordance with the terms of this Warrant if such exercise were
      by means of a cash exercise rather than a cashless
    exercise.

            

    

    

    “VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on the Principal Market, the
daily volume weighted average price of the Common Stock for such date (or the
nearest preceding date) on the Principal Market as reported by Bloomberg L.P.
(based on a Business Day from 8:30 a.m. (Central Standard Time to 3:02 p.m.
(Central Standard Time), (b)  if the OTC Bulletin Board is not a Principal
Market, the volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the then Principal Market, (c) if the Common
Stock is not then listed or quoted for trading on the OTC Bulletin Board and if
prices for the Common Stock are then reported in the “Pink Sheets” published by
Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) in all other cases, the fair market value
of a share of Common Stock as determined by an independent appraiser selected in
good faith by the Holder and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

     

                Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be
automatically exercised via cashless exercise pursuant to this Section
2(c).

    

    d)           Mechanics of
Exercise.

     

    i.      Delivery of Certificates
Upon Exercise.  Certificates for shares purchased hereunder
shall be transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s prime broker with the Depository Trust Company through
its Deposit Withdrawal Agent Commission (“DWAC”) system if the
Company is then a participant in such system and either (A) there is an
effective Registration Statement permitting the issuance of the Warrant Shares
to or resale of the Warrant Shares by Holder or (B) this Warrant is being
exercised via cashless exercise, and otherwise by physical delivery to the
address specified by the Holder in the Notice of Exercise by the date that is
three (3) Business Days after the latest of (A) the delivery to the Company of
the Notice of Exercise Form, (B) surrender of this Warrant (if required) and (C)
payment of the aggregate Exercise Price as set forth above (including by
cashless exercise, if permitted) (such date, the “Warrant Share Delivery
Date”).  This Warrant shall be deemed to have been exercised on
the first date on which all of the foregoing have been delivered to the
Company.  The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the Warrant has been exercised, with payment to the Company of the Exercise
Price (or by cashless exercise, if permitted) and all taxes required to be paid
by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of
such shares, having been paid. If the Company fails for any reason to deliver to
the Holder certificates evidencing the Warrant Shares subject to a Notice of
Exercise by the Warrant Share Delivery Date, the Company shall pay to the
Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of
Warrant Shares subject to such exercise (based on the VWAP of the Common Stock
on the date of the applicable Notice of Exercise), $10 per Business Day
(increasing to $20 per Business Day on the fifth Business Day after such
liquidated damages begin to accrue) for each Business Day after such Warrant
Share Delivery Date until such certificates are delivered or Holder rescinds
such exercise.

     

    ii.           Delivery of New Warrants
Upon Exercise.  If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.

    
      
         

      

      
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    iii.           Rescission
Rights.  If the Company fails to cause the Transfer Agent to
transmit to the Holder a certificate or the certificates representing the
Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date,
then, the Holder will have the right to rescind such exercise.

     

    iv.           Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.  In
addition to any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to an exercise on or
before the Warrant Share Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (1) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss.  Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

     

    v.           No Fractional Shares or
Scrip.  No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant.  As to any
fraction of a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole
share.

     

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

     

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

    
      
         

      

      
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    e)           Holder’s Exercise
Limitations.  The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any portion of this
Warrant, pursuant to Section 2 or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of
Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s
Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below).  For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which would be issuable
upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other  Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any of its
Affiliates.  Except as set forth in the preceding sentence, for purposes of
this Section 2(e), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith.   To the extent
that the limitation contained in this Section 2(e) applies, the determination of
whether this Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the submission of
a Notice of Exercise shall be deemed to be the Holder’s determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership Limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination.   In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  For purposes of this Section 2(e), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (A) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (B) a
more recent public announcement by the Company or (C) a more recent written
notice by the Company or the Transfer Agent setting forth the number of shares
of Common Stock outstanding.  Upon the written or oral request of a Holder,
the Company shall within two Business Days confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding.  In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported.  The “Beneficial Ownership
Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant.  The Holder, upon not
less than 61 days’ prior notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 2(e), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(e) shall continue to
apply.  Any such increase or decrease will not be effective until the
61st day after such notice is delivered to the Company.  The
provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 2(e) to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.

      

    Section
3.             Certain
Adjustments.

     

    a)           Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding:
(i) pays a stock dividend or otherwise makes a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues by reclassification of shares of the Common Stock any shares of capital
stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding immediately before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event, and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged.  Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.

    
      
         

      

      
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    b)           Subsequent Rights
Offerings.  If the Company, at any time while the Warrant is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to the Holders) entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the VWAP on the record
date mentioned below, then, the Exercise Price shall be multiplied by a
fraction, of which the denominator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of additional shares of Common Stock offered for subscription or
purchase, and of which the numerator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of shares which the aggregate offering price of the total number
of shares so offered (assuming receipt by the Company in full of all
consideration payable upon exercise of such rights, options or warrants) would
purchase at such VWAP.  Such adjustment shall be made whenever such
rights, options or warrants are issued, and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such rights, options or warrants.

     

    c)           Pro Rata
Distributions.  If the Company, at any time while this Warrant
is outstanding, shall distribute to all holders of Common Stock (and not to the
Holders) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security other
than the Common Stock), then in each such case the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the VWAP determined
as of the record date mentioned above, and of which the numerator shall be such
VWAP on such record date less the then per share fair market value at such
record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith.  In either case
the adjustments shall be described in a statement provided to the Holder of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock.  Such
adjustment shall be made whenever any such distribution is made and shall become
effective immediately after the record date mentioned above.

    
      
         

      

      
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    d)           Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the
Company, directly or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person (other than a
migratory merger where the sole purpose is to effect incorporation in another
jurisdiction), (ii) the Company, directly or indirectly, effects any sale,
lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions,
(iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to sell, tender or exchange their shares
for other securities, cash or property and has been accepted by the holders of
50% or more of the outstanding Common Stock, (iv) the Company, directly or
indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property, (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the “Alternate
Consideration”) receivable as a result of such Fundamental Transaction by
a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction (without regard to
any limitation in Section 2(e) on the exercise of this Warrant).  For
purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction.  Notwithstanding anything to the contrary, in the event
of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule
13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a
Fundamental Transaction involving a person or entity not traded on a national
securities exchange, including, but not limited to, the Nasdaq Global Select
Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or the NYSE
Amex,or the OTC Bulletin Board, the Company or any Successor Entity (as defined
below) shall, at the Holder’s option, exercisable at any time concurrently with,
or within 30 days after, the consummation of the Fundamental Transaction,
purchase this Warrant from the Holder by paying to the Holder an amount of cash
equal to the Black Scholes Value of the remaining unexercised portion of this
Warrant on the date of the consummation of such Fundamental
Transaction.  “Black Scholes Value”
means the value of this Warrant based on the Black and Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”)
determined as of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the time between
the date of the public announcement of the applicable Fundamental Transaction
and the Termination Date, (B) an expected volatility equal to the greater of
100% and the 100 day volatility obtained from the HVT function on Bloomberg as
of the Business Day immediately following the public announcement of the
applicable Fundamental Transaction, (C) the underlying price per share used in
such calculation shall be the sum of the price per share being offered in cash,
if any, plus the value of any non-cash consideration, if any, being offered in
such Fundamental Transaction and (D) a remaining option time equal to the time
between the date of the public announcement of the applicable Fundamental
Transaction and the Termination Date.  The Company shall cause any
successor entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this Warrant and
the other Transaction Documents in accordance with the provisions of this
Section 3(d) pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without unreasonable
delay) prior to such Fundamental Transaction and shall, at the option of the
holder of this Warrant, deliver to the Holder in exchange for this Warrant a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant which is exercisable for a
corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such
exercise price being for the purpose of protecting the economic value of this
Warrant immediately prior to the consummation of such Fundamental Transaction),
and which is reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Warrant and the other
Transaction Documents referring to the “Company” shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and
shall assume all of the obligations of the Company under this Warrant and the
other Transaction Documents with the same effect as if such Successor Entity had
been named as the Company herein.

     

    e)           Calculations. All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.

    

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

     

    g)           Notice to
Holder.

     

    i.            Adjustment to Exercise
Price. Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly mail to the Holder a notice
setting forth the Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. If the Company enters into a
Variable Rate Transaction despite the prohibition thereon in the Purchase
Agreement, the Company shall be deemed to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion or exercise price at which
such securities may be converted or exercised.

    
      
         

      

      
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    ii.           Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.  To the extent that
any notice provided hereunder constitutes, or contains, material, non-public
information regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K.  The Holder shall remain entitled to exercise this
Warrant during the period commencing on the date of such notice to the effective
date of the event triggering such notice except as may otherwise be expressly
set forth herein.

     

    Section
4.             Transfer of
Warrant.

     

    a)           Transferability.  Subject
to compliance with applicable securities laws, this Warrant and all rights
hereunder (including, without limitation, any registration rights) are
transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer.  Upon such
surrender and, if required, such payment, the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees, as
applicable, and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled.  The Warrant, if properly assigned in
accordance herewith, may be exercised by a new holder for the purchase of
Warrant Shares without having a new Warrant issued.

     

    b)           New Warrants. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney.  Subject to compliance
with Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated
the initial issuance date set forth on the first page of this Warrant and shall
be identical with this Warrant except as to the number of Warrant Shares
issuable pursuant thereto.

     

    c)           Warrant Register. The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    

    d)           Representation by the
Holder.  The Holder, by the acceptance hereof, represents and
warrants that it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own account and
not with a view to or for distributing or reselling such Warrant Shares or any
part thereof in violation of the Securities Act or any applicable state
securities law, except pursuant to sales registered or exempted under the
Securities Act.

     

    Section
5.             Miscellaneous.

     

    a)           No Rights as Stockholder
Until Exercise.  This Warrant does not entitle the Holder to
any voting rights, dividends or other rights as a stockholder of the Company
prior to the exercise hereof as set forth in Section 2(d)(i).

     

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

     

    c)           Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then, such action may be taken or such right may be exercised
on the next succeeding Business Day.

     

    d)           Authorized
Shares.

     

    The
Company covenants that, during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant.  The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant.  The Company will
take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of the Trading Market upon which the
Common Stock may be listed.  The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant and payment for such Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).

     

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

     

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

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    

    e)           Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.

     

    f)           Restrictions.  The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, and the Holder does not utilize cashless exercise,
will have restrictions upon resale imposed by state and federal securities
laws.

     

    g)           Nonwaiver and
Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or
remedies.  Without limiting any other provision of this Warrant or the
Purchase Agreement, if the Company willfully and knowingly fails to comply with
any provision of this Warrant, which results in any material damages to the
Holder, the Company shall pay to Holder such amounts as shall be sufficient to
cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.

     

    h)           Notices.  Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.

     

    i)           Limitation of
Liability.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

     

    j)           Remedies.  The
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law
would be adequate.

     

    k)           Successors and
Assigns.  Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors and permitted assigns of the Company and the
successors and permitted assigns of Holder.  The provisions of this
Warrant are intended to be for the benefit of any Holder from time to time of
this Warrant and shall be enforceable by the Holder or holder of Warrant
Shares.

     

    l)           Severability.  Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.

     

    m)        
Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

    

    ********************

    

    (Signature
Pages Follow)

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above
indicated.

    

    
      
        
          	
                  AXION
      INTERNATIONAL HOLDINGS, INC.

                
	 
      
	
                  By: 

                	 
      
	 
      	
                  Name:

                  Title:

                

        

      

    

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    NOTICE
OF EXERCISE

    

    TO:           AXION
INTERNATIONAL HOLDINGS, INC.

    

    (1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.

     

    (2) Payment
shall take the form of (check applicable box):

     

    o in lawful money of the
United States; or

     

    o the cancellation of
such number of Warrant Shares as is necessary, in accordance with the formula
set forth in subsection 2(c), to exercise this Warrant with respect to the
maximum number of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).

     

    (3) Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

     

    
      
        	
                 

              	 
      

      

    

    

    The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

     

    
      
        	
                 

              	 
      

      

    

    

    
      
        	
                 

              	 
      

      

    

    

    
      
        	
                 

              	 
      

      

    

    

    [SIGNATURE
OF HOLDER]

    

    
      
        
          	
                  Name of Investing Entity: 

                	  

        

      

    

    
      
        
          	
                  Signature of Authorized Signatory of Investing Entity: 

                	  

        

      

    

    
      
        
          	
                  Name of Authorized Signatory: 

                	  

        

      

    

    
      
        
          	
                  Title of Authorized Signatory: 

                	  

        

      

    

    
      
        
          
            	
                    Date: 

                  	  

          

        

      

    

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    
      

    

     

    ASSIGNMENT
FORM

    

    (To
assign the foregoing warrant, execute

    this form
and supply required information.

    Do not
use this form to exercise the warrant.)

    FOR VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to

    

    _______________________________________________
whose address is

    

    _______________________________________________________________.

    

    _______________________________________________________________

    

    Dated:  ______________,
_______

     

    Holder’s
Signature:             _____________________________

    

    Holder’s
Address:               _____________________________

    

    _____________

    ________________

     

    Signature
Guaranteed:  ___________________________________________

     

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

    
      
         

      

      
        -12-Exhibit
10.1

    PURCHASE
AGREEMENT

    

    PURCHASE AGREEMENT (the
“Agreement”), dated as of February 23, 2010, by and between AXION INTERNATIONAL HOLDINGS,
INC., a Colorado corporation (the “Company”), and LINCOLN PARK CAPITAL FUND,
LLC, an Illinois limited liability company (the “Investor”).

    

    WHEREAS:

     

    Subject
to the terms and conditions set forth in this Agreement, the Company wishes to
sell to the Investor, and the Investor wishes to buy from the Company, up to one
million five hundred thousand shares of the Company's common stock, no par value
(the "Common Stock"). The shares of Common Stock to be purchased hereunder are
referred to herein as the "Purchase Shares."

     

    NOW
THEREFORE, the Company and the Investor hereby agree as follows:

     

    1.      
     CERTAIN DEFINITIONS.

    

    For
purposes of this Agreement, the following terms shall have the following
meanings:

    

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

    

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

    

    (c)           “Accelerated
Purchase Notice” shall mean an irrevocable written notice from the Company to
the Investor directing the Investor to buy such Accelerated Purchase Amount in
Purchase Shares as specified by the Company therein at the applicable Purchase
Price on the Purchase Date.

    

    (d)           
“Available Amount” means initially One Million Five Hundred Thousand Purchase
Shares in the aggregate which amount shall be reduced by the Purchase Amount
each time the Investor purchases shares of Common Stock pursuant to Section 2
hereof.

    

    (e)           “Bankruptcy
Law” means Title 11, U.S. Code, or any similar federal or state law for the
relief of debtors.

    

    (d)           “Business
Day” means any day on which the Principal Market is open for trading including
any day on which the Principal Market is open for trading for a period of time
less than the customary time.

    

    (e)           “Closing
Sale Price” means, for any security as of any date, the last closing trade price
for such security on the Principal Market as reported by the Principal Market,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing trade price of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by the Principal Market.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (f)           “Confidential
Information” means any information disclosed by either party to the other party,
either directly or indirectly, in writing, orally or by inspection of tangible
objects (including, without limitation, documents, prototypes, samples, plant
and equipment), which is designated as "Confidential," "Proprietary" or some
similar designation. Information communicated orally shall be considered
Confidential Information if such information is confirmed in writing as being
Confidential Information within ten (10) Business Days after the initial
disclosure. Confidential Information may also include information disclosed to a
disclosing party by third parties. Confidential Information shall not, however,
include any information which (i) was publicly known and made generally
available in the public domain prior to the time of disclosure by the disclosing
party; (ii) becomes publicly known and made generally available after disclosure
by the disclosing party to the receiving party through no action or inaction of
the receiving party; (iii) is already in the possession of the receiving party
at the time of disclosure by the disclosing party as shown by the receiving
party’s files and records immediately prior to the time of disclosure; (iv) is
obtained by the receiving party from a third party without a breach of such
third party’s obligations of confidentiality; (v) is independently developed by
the receiving party without use of or reference to the disclosing party’s
Confidential Information, as shown by documents and other competent evidence in
the receiving party’s possession; or (vi) is required by law to be disclosed by
the receiving party, provided that the receiving party gives the disclosing
party prompt written notice of such requirement prior to such disclosure and
assistance in obtaining an order protecting the information from public
disclosure.

    

    (g)           “Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.

    

    (h)           “Maturity
Date” means the date that is 360 Business Days (18 Monthly Periods) from the
Commencement Date.

    

    (i)           “Monthly
Period” means each successive 20 Business Day period commencing with the
Commencement Date.

    

    (j)           “Person”
means an individual or entity including but not limited to any limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

    

    (k)           “Principal
Market” means the OTC Bulletin Board; provided however, that in the event the
Company’s Common Stock is ever listed or traded on the Nasdaq Global Market, the
Nasdaq Global Select Market, the Nasdaq Capital Market, , the New York Stock
Exchange or the NYSE Amex, than the “Principal Market” shall mean such other
market or exchange on which the Company’s Common Stock is then listed or
traded.

    

    (l)           “Purchase
Amount” means, with respect to any particular purchase made hereunder, the
portion of the Available Amount to be purchased by the Investor pursuant to
Section 2 hereof.

    

    (m)           “Purchase
Date” means with respect to any Accelerated Purchase made hereunder, the
Business Day after receipt by the Investor of a valid Accelerated Purchase
Notice or the Business Day the Investor otherwise is to purchase Purchase Shares
pursuant to Section 2 hereof.

    

    (n)           
“Purchase Price” means the lower of the (A) the lowest Sale Price of the Common
Stock on the Purchase Date and (B) the arithmetic average of the three (3)
lowest Closing Sale Prices for the Common Stock during the ten (10) consecutive
Business Days ending on the Business Day immediately preceding such Purchase
Date (to be appropriately adjusted for any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction).

    

    (o)           “Sale
Price” means any trade price for the shares of Common Stock on the Principal
Market as reported by the Principal Market.

    

    (p)           “SEC”
means the United States Securities and Exchange Commission.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (q)         “Transfer
Agent” means the transfer agent of the Company as set forth in Section 11(f)
hereof or such other person who is then serving as the transfer agent for the
Company in respect of the Common Stock.

    

    2.  PURCHASE OF COMMON
STOCK.

     

    Subject
to the terms and conditions set forth in this Agreement, the Company has the
right to sell to the Investor, and the Investor has the obligation to purchase
from the Company, Purchase Shares as follows:

     

    (a)              Initial Purchase;
Commencement of Regular Purchases of Common Stock. Within one (1)
Business Day following the satisfaction of the conditions (the "Commencement")
as set forth in Sections 7 and 8 below (the date of satisfaction of such
conditions, the "Commencement Date"), the Investor shall purchase from the
Company 100,000 Purchase Shares (such purchase the "Initial Purchase" and such
Purchase Shares are referred to herein as "Initial Purchase Shares”) and 50,000
common stock purchase warrants (the "Warrants" and the shares of Common Stock
underlying such Warrants, the "Warrant Shares") in the form of Exhibit
F attached hereto, and upon receipt of such Purchase Shares and Warrants
pay to the Company as the purchase price for such Initial Purchase Shares and
Warrants, the sum of $205,000, via wire transfer.  The Warrants shall
have a term of five (5) years and an exercise price equal to $2.91.

    

    Thereafter, subject to the Company's
right to suspend purchases under Section 2(c) hereof, the Investor shall
purchase 20,000 Purchase Shares every fifth (5th)
Business Day (such purchases “Regular Purchases” and the amount so purchased the
“Regular Purchase Amount”) during each Monthly Period until the Maturity Date,
at the Purchase Price.

     

    (b)              Accelerated
Purchases.   In addition to the Regular Purchases, the
Company shall have the right at any time on or after the Commencement Date to
direct the Investor to purchase up to 30,000 Purchase Shares (such purchases
“Accelerated Purchases” and the amount so purchased “Accelerated Purchase
Amount”) at the Purchase Price on the Purchase Date, by delivery to the Investor
of an Accelerated Purchase Notice which notice shall state the Accelerated
Purchase Amount. The Company may direct the Investor to make multiple
Accelerated Purchases so long as at least two (2) Business Days have passed
since the most recent Accelerated Purchase was completed.

     

     

    (c)              The Company's Right to
Suspend Purchases.   The Company may, at any time, give
written notice (a "Purchase Suspension Notice") to the Investor suspending
purchases of Purchase Shares by the Investor under this Agreement. The Purchase
Suspension Notice shall be effective only for purchases that have a Purchase
Date later than five (5) Business Days after receipt of the Purchase Suspension
Notice by the Investor. Any purchase by the Investor that has a Purchase Date on
or prior to the fifth (5th) Business Day after receipt by the Investor of a
Purchase Suspension Notice from the Company must be honored by the Company as
otherwise provided herein. Such purchase suspension shall continue in effect
until a revocation in writing by the Company, at its sole discretion. So long as
a Purchase Suspension Notice is in effect, the Investor shall not be obligated
or have the right to purchase any Purchase Shares from the Company under Section
2 of this Agreement.  Upon revocation of a Purchase Suspension Notice
(“Revocation Notice”), the Investor shall again resume Regular Purchases every
five (5) Business
Days pursuant to Section 2(a), commencing five (5) Business Days subsequent to
the date of the Revocation Notice.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (d)               Payment for Purchase
Shares.   The Investor shall pay to the Company an amount
equal to the Purchase Amount multiplied by the Purchase Price with respect to
such Purchase Shares as full payment for such Purchase Shares via wire transfer
of immediately available funds on the same Business Day that the Investor
receives such Purchase Shares if they are received by the Investor before 11:00
a.m. eastern time or if received by the Investor after 11:00 a.m. eastern time,
the next Business Day. The Company shall not issue any fraction of a share of
Common Stock upon any purchase. If the issuance would result in the issuance of
a fraction of a share of Common Stock, the Company shall round such fraction of
a share of Common Stock up or down to the nearest whole share. All payments made
under this Agreement shall be made in lawful money of the United States of
America or wire transfer of immediately available funds to such account as the
Company may from time to time designate by written notice in accordance with the
provisions of this Agreement. Whenever any amount expressed to be due by the
terms of this Agreement is due on any day that is not a Business Day, the same
shall instead be due on the next succeeding day that is a Business
Day.

     

    (e)              Purchase Price
Floor.   The Company and the Investor shall not effect any
sales and purchases under this Agreement on any Purchase Date where the Purchase
Price for any purchases of Purchase Shares would be less than the Floor Price.
"Floor Price" means $1.50, which shall be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction.

     

    (f)              Records of Purchases.
The Investor and the Company shall each maintain records showing the remaining
Available Amount at any given time and the dates and Purchase Amounts for each
purchase or shall use such other method, reasonably satisfactory to the Investor
and the Company.

     

    (g)            Taxes.  The Company
shall pay any and all transfer, stamp or similar taxes that may be payable with
respect to the issuance and delivery of any shares of Common Stock to the
Investor made under this Agreement.

     

    3.     
      INVESTOR'S REPRESENTATIONS AND
WARRANTIES.

    

    The
Investor represents and warrants to the Company that as of the date hereof and
as of the Commencement Date:

    

    (a)           Investment
Purpose.   The Investor is acquiring the Purchase Shares,
Commitment Shares (as defined in Section 5 of this Agreement), Warrants and
Warrant Shares (“Securities”) as principal for its own account and not with a
view to or for distributing or reselling such Securities or any part thereof in
violation of the Securities Act or any applicable state securities law, has no
present intention of distributing any of such Securities in violation of the
Securities Act or any applicable state securities law and has no direct or
indirect arrangement or understandings with any other persons to distribute or
regarding the distribution of such Securities in violation of the Securities Act
or any applicable state securities law (this representation and warranty not
limiting the Investor’s right to sell the Securities pursuant to the
registration statement described herein or otherwise in compliance with
applicable federal and state securities laws).  The Investor is
acquiring the Securities hereunder in the ordinary course of its
business.

    

    (b)           Accredited Investor
Status.  The Investor is an "accredited investor" as that term
is defined in Rule 501(a)(3) of Regulation D.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    (c)           Reliance on
Exemptions.  The Investor understands that the Securities may
be offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.

    

    (d)           Information.  The
Investor understands that its investment in the Securities involves a high
degree of risk.  The Investor (i) is able to bear the economic risk of
an investment in the Securities including a total loss, (ii) has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of the proposed investment in the Securities and
(iii) has had an opportunity to ask questions of and receive answers from the
officers of the Company concerning the financial condition and business of the
Company and others matters related to an investment in the
Securities.  Neither such inquiries nor any other due diligence
investigations conducted by the Investor or its representatives shall modify,
amend or affect the Investor's right to rely on the Company's representations
and warranties contained in Section 4 below.  The Investor has sought
such accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the
Securities.

    

    (e)           No Governmental
Review.  The Investor understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.

    

    (f)           Transfer or
Sale.  The Investor understands that(i) the Securities may not
be offered for sale, sold, assigned or transferred unless (A) registered
pursuant to the Securities Act or (B) an exemption exists permitting such
Securities to be sold, assigned or transferred without such registration; (ii)
any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the  Securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder.

    

    (g)           Validity;
Enforcement.  This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Investor and is a valid and
binding agreement of the Investor enforceable against the Investor in accordance
with its terms, subject as to enforceability to general principles of equity and
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.

    

    (h)           Residency.  The
Investor is a resident of the State of Illinois.

    

    (i)           No Prior Short
Selling.  The Investor represents and warrants to the Company
that at no time prior to the date of this Agreement has any of the Investor, its
agents, representatives or affiliates engaged in or effected, in any manner
whatsoever, directly or indirectly, any (i) "short sale" (as such term is
defined in Section 242.200 of Regulation SHO of the Exchange Act) of the Common
Stock or (ii) hedging transaction, which establishes a net short position with
respect to the Common Stock.

     

    
      
         

      

      
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    4.     
      REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.

    

    The
Company represents and warrants to the Investor that as of the date hereof and
as of the Commencement Date:

    

    (a)           Organization and
Qualification. The Company and each of the Subsidiaries (which for
purposes of this Agreement means any entity in which the Company, directly or
indirectly, owns 50% or more of the voting stock or capital stock or other
similar equity interests) is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation nor
default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter
documents.  Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in: (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.  The Company has no Subsidiaries
except as set forth on Schedule
4(a).

    

    (b)           Authorization; Enforcement;
Validity.  (i) The Company has the requisite corporate power
and authority to enter into and perform its obligations under this Agreement,
the Registration Rights Agreement  and each of the other agreements
entered into by the parties on the Commencement Date and attached hereto as
exhibits to this Agreement (collectively, the "Transaction Documents"), and to
issue the Securities in accordance with the terms hereof and thereof, (ii) the
execution and delivery of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation, the issuance of the Commitment Shares and the
reservation for issuance and the issuance of the Purchase Shares issuable under
this Agreement, have been duly authorized by the Company's Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its shareholders, (iii) this Agreement has been, and each other
Transaction Document shall be on the Commencement Date, duly executed and
delivered by the Company and (iv) this Agreement constitutes, and each other
Transaction Document upon its execution on behalf of the Company, shall
constitute, the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and
remedies.  The Board of Directors of the Company has approved the
resolutions (the “Signing Resolutions”) substantially in the form as set forth
as Exhibit C
attached hereto to authorize this Agreement and the transactions contemplated
hereby.  The Signing Resolutions are valid, in full force and effect
and have not been modified or supplemented in any respect.  The
Company has delivered to the Investor a true and correct copy of a unanimous
written consent adopting the Signing Resolutions executed by all of the members
of the Board of Directors of the Company.  No other approvals or
consents of the Company’s Board of Directors and/or shareholders is necessary
under applicable laws and the Company’s Certificate of Incorporation and/or
Bylaws to authorize the execution and delivery of this Agreement or any of the
transactions contemplated hereby, including, but not limited to, the issuance of
the Commitment Shares and the issuance of the Purchase Shares.

    
      
         

      

      
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    (c)           Capitalization.  As
of the date hereof, the authorized capital stock of the Company is set forth on
Schedule
4(c).  Except as disclosed in Schedule 4(c), (i) no
shares of the Company's capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company, (ii) there are no outstanding debt securities, (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iv) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the Securities Act (except the Registration Rights Agreement), (v) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement and (vii) the Company does not
have any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement.  The Company has furnished to the Investor
true and correct copies of the Company's Certificate of Incorporation, as
amended and as in effect on the date hereof (the "Certificate of
Incorporation"), and the Company's By-laws, as amended and as in effect on the
date hereof (the "By-laws"), and summaries of the terms of all securities
convertible into or exercisable for Common Stock, if any, and to the extent
requested by Investor, copies of any documents containing the material rights of
the holders thereof in respect thereto.

    

    (d)           Issuance of
Securities.  Upon issuance and payment therefor in accordance
with the terms and conditions of this Agreement, the Purchase Shares shall be
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock.  The Commitment
Shares have been duly authorized and, upon issuance in accordance with the terms
hereof, the Commitment Shares shall be (i) validly issued, fully paid and
non-assessable and (ii) free from all taxes, liens and charges with respect to
the issue thereof. 1,500,000 shares of Common Stock have been duly authorized
and reserved for issuance upon purchase under this Agreement as Purchase
Shares.  50,000 shares of Common Stock have been duly authorized and
reserved for issuance as Warrant Shares.

    

    
      
         

      

      
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    (e)           No
Conflicts.  Except as disclosed in Schedule 4(e), 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 (including, without limitation, the reservation for issuance and
issuance of the Purchase Shares) will not (i) result in a violation of the
Certificate of Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company or the
By-laws or (ii) conflict with, or constitute a default (or an event which 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 of, any
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the Principal Market applicable to
the Company or any of its Subsidiaries) or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected, except in the case of
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations under clause (ii), which could not reasonably be expected to result
in a Material Adverse Effect.  Except as disclosed in Schedule 4(e),
neither the Company nor its Subsidiaries is in violation of any term of or in
default under its Certificate of Incorporation, any Certificate of Designation,
Preferences and Rights of any outstanding series of preferred stock of the
Company or By-laws or their organizational charter or by-laws,
respectively.  Except as disclosed in Schedule 4(e),
neither the Company nor any of its Subsidiaries is in violation of any term of
or is in default under any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its Subsidiaries, except for possible
conflicts, defaults, terminations or amendments which could not reasonably be
expected to have a Material Adverse Effect.  The business of the
Company and its Subsidiaries is not being conducted, and shall not be conducted,
in violation of any law, ordinance, regulation of any governmental entity,
except for possible violations, the sanctions for which either individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect.  Except as specifically contemplated by this Agreement and as
required under the Securities Act or applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by the Transaction
Documents in accordance with the terms hereof or thereof.  Except as
disclosed in Schedule
4(e), all consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence shall
be obtained or effected on or prior to the Commencement Date.  Except
as listed in Schedule
4(e), since one year prior to the date hereof, the Company has not
received nor delivered any notices or correspondence from or to the Principal
Market.  The Principal Market has not commenced any delisting
proceedings against the Company.

    

    (f)           SEC Documents; Financial
Statements. Except as disclosed in Schedule 4(f) the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the one year
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Documents”) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Documents prior to the expiration of any such extension.  Except as
disclosed in Schedule 4(f), as of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Securities Act
and the Exchange Act, as applicable, and none of the SEC Documents, 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. Except as disclosed in Schedule 4(f), the financial statements of
the Company included in the SEC Documents 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.  
Except as disclosed in Schedule 4(f) such financial statements have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated Subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.  Except as listed in Schedule 4(f), the
Company has received no notices or correspondence from the SEC for the one year
preceding the date hereof.  The SEC has not
commenced any enforcement proceedings against the Company or any of its
subsidiaries.

    
      
         

      

      
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    (g)           Absence of Certain
Changes.  Except as disclosed in Schedule 4(g), since
September 30, 2009, there has been no material adverse change in the business,
properties, operations, financial condition or results of operations of the
Company or its Subsidiaries.  The Company has not taken any steps, and
does not currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or
insolvency proceedings.  The Company is financially solvent and is
generally able to pay its debts as they become due.

    

    (h)           Absence of
Litigation. There is no action, suit, 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
or any of its Subsidiaries, threatened against or affecting the Company, the
Common Stock or any of the Company's Subsidiaries or any of the Company's or the
Company's Subsidiaries' officers or directors in their capacities as such, which
could reasonably be expected to have a Material Adverse
Effect.   A description of each action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body which, as of the date of this Agreement, is
pending or threatened in writing against or affecting the Company, the Common
Stock or any of the Company's Subsidiaries or any of the Company's or the
Company's Subsidiaries' officers or directors in their capacities as such, is
set forth in Schedule
4(h).

    

    (i)           Acknowledgment Regarding
Investor's Status.  The Company acknowledges and agrees that
the Investor is acting solely in the capacity of arm's length purchaser with
respect to the Transaction Documents and the transactions contemplated hereby
and thereby.  The Company further acknowledges that the Investor is
not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by the Investor or any of
its representatives or agents in connection with the Transaction Documents and
the transactions contemplated hereby and thereby is merely incidental to the
Investor's purchase of the Securities.  The Company further represents
to the Investor that the Company's decision to enter into the Transaction
Documents has been based solely on the independent evaluation by the Company and
its representatives and advisors.

    

    (j)           No General
Solicitation.  Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the
Securities.

    

     (k)           Intellectual Property
Rights.  The Company and its Subsidiaries own or possess
adequate rights or licenses to use all material trademarks, trade names, service
marks, service mark registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted.  Except as set forth on Schedule 4(k), none
of the Company's material trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets or other
intellectual property rights have expired or terminated, or, by the terms and
conditions thereof, could expire or terminate within two years from the date of
this Agreement.  The Company and its Subsidiaries do not have any
knowledge of any infringement by the Company or its Subsidiaries of any material
trademark, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations, trade secret
or other similar rights of others, or of any such development of similar or
identical trade secrets or technical information by others and, except as set
forth on Schedule
4(k), there is no claim, action or proceeding being made or brought
against, or to the Company's knowledge, being threatened against, the Company or
its Subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service mark
registrations, trade secret or other infringement, which could reasonably be
expected to have a Material Adverse Effect.

    
      
         

      

      
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    (l)           Environmental
Laws.  The Company and its Subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where, in each of the
three foregoing clauses, the failure to so comply could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.

    

    (m)           Title.  The
Company and the Subsidiaries have good and marketable title in fee simple to all
real property owned by them and good and marketable title in all personal
property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
(“Liens”) and , except for Liens as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by the Company and the Subsidiaries and Liens for the
payment of federal, state or other taxes, the payment of which is neither
delinquent nor subject to penalties or except as set forth on Schedule 4(m)
hereto.  Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in compliance
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
Subsidiaries.

    

    (n)           Insurance.  The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged.  Neither the
Company nor any such Subsidiary has been refused any insurance coverage sought
or applied for and neither the Company nor any such 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 at a cost that would not materially
and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its Subsidiaries, taken as a
whole.

    

    (o)           Regulatory
Permits.  The Company and its Subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.

    

    (p)           Tax
Status.  The Company and each of its Subsidiaries has made or
filed all federal and state income and all other material tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply or except as set forth on Schedule 4(p)
hereto.  There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.

    
      
         

      

      
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    (q)           Transactions With
Affiliates.   Except
as set forth in the SEC Documents, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $100,000
other than for (i) payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company and (iii)
other employee benefits, including stock option agreements under any stock
option plan of the Company.

    

    (r)           Application of Takeover
Protections.  The Company and its board of directors have taken
or will take prior to the Commencement Date all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
or the laws of the state of its incorporation which is or could become
applicable to the Investor as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company's issuance of the
Securities and the Commitment Shares and the Investor's ownership of the
Securities and the Commitment Shares.

    

    (s)            Disclosure.  Except
with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither it
nor any other Person acting on its behalf has provided the Investor or its
agents or counsel with any information that it believes constitutes or might
constitute material, non-public information which is not otherwise disclosed in
the Registration Statement or prospectus supplements
thereto.   The Company understands and confirms that the Investor
will rely on the foregoing representation in effecting purchases and sales of
securities of the Company.  All of the disclosure furnished by or on
behalf of the Company to the Investor regarding the Company, its business and
the transactions contemplated hereby, including the disclosure schedules to this
Agreement, is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The press releases disseminated by the Company during the
twelve months preceding the date of this Agreement taken as a whole do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made,
not misleading.  The Company acknowledges and agrees that the Investor
neither makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3 hereof.

    

    (t)           Foreign Corrupt
Practices.   Neither
the Company, nor to the knowledge of the Company, any agent or other person
acting on behalf of the Company, has (i) directly or indirectly, used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate funds, (iii)
failed to disclose fully any contribution made by the Company (or made by any
person acting on its behalf of which the Company is aware) which is in violation
of law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.

     

    
      
         

      

      
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    5.     
      COVENANTS.

    

    (a)           Filing of Form 8-K and
Registration Statement.  The Company agrees that it shall,
within the time required under the Exchange Act file a Report on Form 8-K
disclosing this Agreement and the transaction contemplated hereby. The Company
shall also file within fifteen (15) Business Days from the date hereof a new
registration statement covering only the sale of the Purchase Shares, 50% of the
Commitment Shares and the Warrant Shares in accordance with the terms of the
Registration Rights Agreement between the Company and the Investor, dated as of
the date hereof (“Registration Rights Agreement”).

    

    (b)           Blue Sky. The Company
shall take such action, if any, as is reasonably necessary in order to obtain an
exemption for or to qualify (i) the initial sale of the Commitment Shares and
any Purchase Shares to the Investor under this Agreement and (ii) any subsequent
resale of the Commitment Shares and any Purchase Shares by the Investor, in each
case, under applicable securities or "Blue Sky" laws of the states of the United
States in such states as is reasonably requested by the Investor from time to
time, and shall provide evidence of any such action so taken to the
Investor.

    

    (c)           Listing.  The
Company shall promptly secure the listing of all of the Purchase Shares and
Commitment Shares upon each national securities exchange and automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to
official notice of issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all such securities from time
to time issuable under the terms of the Transaction Documents.  The
Company shall maintain the Common Stock's authorization for quotation on the
Principal Market.  Neither the Company nor any of its Subsidiaries
shall take any action that would be reasonably expected to result in the
delisting or suspension of the Common Stock on the Principal
Market.  The Company shall promptly, and in no event later than the
following Business Day, provide to the Investor copies of any notices it
receives from the Principal Market regarding the continued eligibility of the
Common Stock for listing on such automated quotation system or securities
exchange.  The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section.

    

    (d)           Limitation on Short Sales
and Hedging Transactions.  The Investor agrees that beginning
on the date of this Agreement and ending on the date of termination of this
Agreement as provided in Section 11(k), the Investor and its agents,
representatives and affiliates shall not in any manner whatsoever enter into or
effect, directly or indirectly, any (i) "short sale" (as such term is defined in
Section 242.200 of Regulation SHO of the Exchange Act) of the Common Stock or
(ii) hedging transaction, which establishes a net short position with respect to
the Common Stock.

    

    (e)           Issuance of Commitment
Shares.  Immediately upon the execution of this Agreement, the
Company shall issue to the Investor as consideration for the Investor entering
into this Agreement 85,000 shares of Common Stock (the "Commitment
Shares").  The Commitment Shares shall be issued in certificated form
and shall bear the following restrictive legend:

    

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S COUNSEL,
IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    (f)           Due
Diligence.  The Investor shall have the right, from time to
time as the Investor may reasonably deem appropriate, to perform reasonable due
diligence on the Company during normal business hours.  The Company
and its officers and employees shall provide information and reasonably
cooperate with the Investor in connection with any reasonable request by the
Investor related to the Investor's due diligence of the Company.  Each
party hereto agrees not to disclose any Confidential Information of the other
party to any third party and shall not use the Confidential Information for any
purpose other than in connection with, or in furtherance of, the transactions
contemplated hereby.  Each party hereto acknowledges that the
Confidential Information shall remain the property of the disclosing party and
agrees that it shall take all reasonable measures to protect the secrecy of any
Confidential Information disclosed by the other party.  The Company
confirms that neither it nor any other Person acting on its behalf shall provide
the Investor or its agents or counsel with any information that it believes
constitutes or might constitute material, non-public information which is not
otherwise disclosed in the Registration Statement or prospectus supplements
thereto.

    

                  (g)          
No Variable Rate
Transactions.  From the date hereof until the Maturity Date,
the Company shall be prohibited from effecting or entering into an agreement to
effect any issuance by the Company or any of its Subsidiaries of Common Stock or
Common Stock Equivalents for cash consideration (or a combination of units
thereof) involving a Variable Rate Transaction other than in connection with an
“Exempt Issuance.”  “Variable Rate Transaction” means a transaction in
which the Company (i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the right to
receive additional shares of Common Stock either (A) at a conversion price,
exercise price or exchange rate or other price that is based upon and/or varies
with the trading prices of or quotations for the shares of Common Stock at any
time after the initial issuance of such debt or equity securities, or (B) with a
conversion, exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such debt or equity security or upon
the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Common Stock or (ii) enters
into any agreement, including, but not limited to, an equity line of credit,
whereby the Company may sell securities at a future determined price. “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers, directors or vendors of the Company pursuant to any stock or option
plan duly adopted for such purpose, by a majority of the non-employee members of
the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) Securities or
securities upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of
this Agreement, provided that such securities have not been amended since the
date of this Agreement to increase the number of such securities or to decrease
the exercise price, exchange price or conversion price of such securities, and
(c) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, which
acquisitions or strategic transactions can have a Variable Rate Transaction
component,  provided that any such issuance shall only be to a Person
(or to the equityholders of a Person) which is, itself or through its
subsidiaries, an operating company or an asset in a business synergistic with
the business of the Company and shall provide to the Company additional benefits
in addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in
securities.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    6.           TRANSFER
AGENT INSTRUCTIONS.

    

    Immediately
upon the execution of this Agreement, the Company shall deliver to the Transfer
Agent a letter in the form as set forth as Exhibit E attached
hereto with respect to the issuance of the Commitment Shares. On the Commencement
Date, the Company shall cause any of the Purchase Shares and Warrant
Shares  to be issued under this Agreement to be issued without any
restrictive legend unless the Investor expressly consents otherwise and shall
cause the restrictive legend on 50% of the Commitment Shares to be
removed.  The Company shall issue irrevocable instructions to the
Transfer Agent, and any subsequent transfer agent, to issue Purchase Shares in
the name of the Investor for the Purchase Shares (the "Irrevocable Transfer
Agent Instructions").  The Company warrants to the Investor that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 6, will be given by the Company to the Transfer Agent with
respect to the Purchase Shares and that 50% of the Commitment Shares for which
the restrictive legend shall have been removed, Warrant Shares and the Purchase
Shares shall otherwise be freely transferable on the books and records of the
Company as and to the extent provided in this Agreement.

    

    

    
      	
               
      

            	
              7.

            	
              CONDITIONS TO THE
      COMPANY'S RIGHT TO COMMENCE SALES
      OF SHARES OF COMMON
STOCK.

            

    

    
 

    The right
of the Company hereunder to commence sales of the Purchase Shares is subject to
the satisfaction of each of the following conditions on or before the
Commencement Date (the date that the Company may begin sales):

    

    (a)           The
Investor shall have executed each of the Transaction Documents and delivered the
same to the Company; and

    

    (b)           A
registration statement covering the sale of all of the Purchase Shares, Warrant
Shares and 50% of the Commitment Shares shall have been declared effective under
the Securities Act by the SEC and no stop order with respect to the registration
statement shall be pending or threatened by the SEC.

     

    
      	
               
      

            	
              8.

            	
              CONDITIONS TO THE
      INVESTOR'S OBLIGATION TO MAKE PURCHASES
      OF SHARES OF COMMON
STOCK.

            

    

     

    The
obligation of the Investor to buy Purchase Shares under this Agreement is
subject to the satisfaction of each of the following conditions on or before the
Commencement Date (the date that the Company may begin sales) and once such
conditions have been initially satisfied, there shall not be any ongoing
obligation to satisfy such conditions after the Commencement has
occurred:

    

    (a)           The
Company shall have executed each of the Transaction Documents and delivered the
same to the Investor;

    

    (b)           The
Company shall have issued to the Investor the Commitment Shares;

    

    (c)           The
Common Stock shall be authorized for quotation on the Principal Market, trading
in the Common Stock shall not have been within the last 365 days suspended by
the SEC or the Principal Market and the Purchase Shares, Warrant Shares and 50% of the
Commitment Shares shall be approved for listing upon the Principal
Market;

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

    (d)           The
Investor shall have received the opinions of the Company's legal counsel dated
as of the Commencement Date substantially in the form of Exhibit
A attached hereto;

    

    (e)           The
representations and warranties of the Company shall be true and correct in all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 4 above, in which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Commencement Date
as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Commencement Date.  The Investor shall have
received a certificate, executed by the CEO, President or CFO of the Company,
dated as of the Commencement Date, to the foregoing effect in the form attached
hereto as Exhibit
B;

    

    (f)           The
Board of Directors of the Company shall have adopted resolutions in the form
attached hereto as Exhibit
C which shall be in full force and effect without any amendment or
supplement thereto as of the Commencement Date;

    

    (g)           As
of the Commencement Date, the Company shall have reserved out of its authorized
and unissued Common Stock, (A) solely for the purpose of effecting purchases of
Purchase Shares hereunder, 1,500,000 shares of Common Stock and (B) as Warrant
Shares, 50,000 shares of Common Stock;

    

    (h)           The
Irrevocable Transfer Agent Instructions, in form acceptable to the Investor
shall have been delivered to and acknowledged in writing by the Company and the
Company's Transfer Agent;

    

    (i)           The
Company shall have delivered to the Investor a certificate evidencing the
incorporation and good standing of the Company in the State of Colorado issued
by the Secretary of State of the State of Colorado as of a date within ten (10)
Business Days of the Commencement Date;

    

    (j)           The
Company shall have delivered to the Investor a certified copy of the Certificate
of Incorporation as certified by the Secretary of State of the State of Colorado
within ten (10) Business Days of the Commencement Date;

    

    (k)           The
Company shall have delivered to the Investor a secretary's certificate executed
by the Secretary of the Company, dated as of the Commencement Date, in the form
attached hereto as Exhibit
D;

    

    (l)           A
registration statement covering the sale of all of the Purchase Shares, Warrant
Shares and 50% of the Commitment Shares shall have been declared effective under
the Securities Act by the SEC and no stop order with respect to the registration
statement shall be pending or threatened by the SEC.  The Company
shall have prepared and delivered to the Investor a final and complete form of
prospectus, dated and current as of the Commencement Date, to be used by the
Investor in connection with any sales of 50% of the Commitment Shares, any
Warrant Shares or any Purchase Shares, and to be filed by the Company one
Business Day after the Commencement Date. The Company shall have made all
filings under all applicable federal and state securities laws necessary to
consummate the issuance of the Commitment Shares, Warrant Shares and Purchase
Shares pursuant to this Agreement in compliance with such laws;

    

    (m)           No
Event of Default has occurred, or any event which, after notice and/or lapse of
time, would become an Event of Default has occurred;

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    (n)           On
or prior to the Commencement Date, the Company shall take all necessary action,
if any, and such actions as reasonably requested by the Investor, in order to
render inapplicable any control share acquisition, business combination,
shareholder rights plan or poison pill (including any distribution under a
rights agreement) or other similar anti-takeover provision under the Certificate
of Incorporation or the laws of the state of its incorporation which is or could
become applicable to the Investor as a result of the transactions contemplated
by this Agreement, including, without limitation, the Company's issuance of the
Securities and the Commitment Shares and the Investor's ownership of the
Securities and the Commitment Shares; and

    

    (o)           The
Company shall have provided the Investor with the information requested by the
Investor in connection with its due diligence requests made prior to, or in
connection with, the Commencement, in accordance with the terms of Section 5(f)
hereof.

    

    
      	
               
      

            	
              9.

            	
              INDEMNIFICATION.

            

    

    

    In
consideration of the Investor's execution and delivery of the Transaction
Documents and acquiring the Securities hereunder and in addition to all of the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Investor and all of its
affiliates, shareholders, officers, directors, employees and direct or indirect
investors and any of the foregoing person's agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument
or  document contemplated hereby or thereby, other than with respect
to Indemnified Liabilities which directly and primarily result from the gross
negligence or willful misconduct of the Indemnitee.  To the extent
that the foregoing undertaking by the Company may be unenforceable for any
reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    10.           EVENTS
OF DEFAULT.

    

    An "Event
of Default" shall be deemed to have occurred at any time as any of the following
events occurs:

    

    (a)           the
effectiveness of a registration statement registering the Purchase Shares, 50%
of the Commitment Shares or Warrant Shares lapses for any reason (including,
without limitation, the issuance of a stop order) or is unavailable to the
Investor for sale of any or all of the Purchase Shares, Commitment Shares or
Warrant Shares (“Registrable Securities”), and such lapse or unavailability
continues for a period of ten (10) consecutive Business Days or for more than an
aggregate of thirty (30) Business Days in any 365-day period;

    

    (b)           the
suspension from trading or failure of the Common Stock to be listed on the
Principal Market for a period of three (3) consecutive Business
Days;

    

    (c)           the
delisting of the Company’s Common Stock from the Principal Market, provided,
however, that the Common Stock is not immediately thereafter trading on the New
York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market,
the Nasdaq Capital Market or the NYSE Amex;

    

    (d)           the
failure for any reason by the Transfer Agent to issue Purchase Shares to the
Investor within five (5) Business Days after the applicable Purchase Date which
the Investor is entitled to receive;

    

    (e)           the
Company breaches any representation, warranty, covenant or other term or
condition under any Transaction Document if such breach could have a Material
Adverse Change (as defined in subsection (i) below) and except, in the case of a
breach of a covenant which is reasonably curable, only if such breach continues
for a period of at least five (5) Business Days;

    

    (f)           if
any Person commences a proceeding against the Company pursuant to or within the
meaning of any Bankruptcy Law and such proceeding shall not be dismissed within
sixty 60 days of such commencement or the Company shall by any action or
inaction or answer approve of, or consent to, or acquiesce in any such
proceeding or admit to any material allegations of or default in answering a
petition filed in any such proceeding;

    

    (g)           if
the Company pursuant to or within the meaning of any Bankruptcy Law; (A)
commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, or (D) makes a
general assignment for the benefit of its creditors;

    

    (h)           a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (A) is for relief against the Company in an involuntary case, (B)
appoints a Custodian of the Company or for all or substantially all of its
property, or (C) orders the liquidation of the Company or any
Subsidiary;  or

    

    (i)           a
material adverse change occurs in (a) the business, properties, operations,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole, (b) the validity or enforceability of  the Purchase
Agreement, or (c) the ability of the Company to perform its obligations under
the Purchase Agreement (a “Material Adverse Change”).  Notwithstanding
the foregoing, a Material Adverse Change shall not include a change (a) in the
market price or trading volume of the Common Stock, (b) a change that results
solely from conditions affecting the U.S. economy or world economy generally and
(c) a change that results from conditions affecting the Company’s industry so
long as such conditions do not affect the Company in a disproportionate manner
as compared with other companies in the industry of similar
size.).

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    In
addition to any other rights and remedies under applicable law and this
Agreement, including the Investor termination rights under Section 11(k) hereof,
so long as an Event of Default has occurred and is continuing, or if any event
which, after notice and/or lapse of time, would become an Event of Default, has
occurred and is continuing, or so long as the Purchase Price is below the Floor
Price, the Investor shall not be  permitted to purchase any shares of
Common Stock under this Agreement.  If any event which would be an
Event of Default as described in Sections 10(f), 10(g) and 10(h) hereof occurs, this
Agreement shall automatically terminate without any liability or payment to the
Company without further action or notice by any Person.  No such
termination of this Agreement under Section 11(k)(i) or 11(k)(iv) shall affect
the Company's or the Investor's obligations under this Agreement with respect to
pending purchases and the Company and the Investor shall complete their
respective obligations with respect to any pending purchases under this
Agreement.

    

    11.           MISCELLANEOUS.

    

    (a)           Governing Law; Jurisdiction;
Jury Trial.  The corporate laws of the State of Colorado shall
govern all issues concerning the relative rights of the Company and its
shareholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the other Transaction
Documents shall be governed by the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of
Illinois.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or under the other Transaction
Documents or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper.  Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

    

    (b)           Counterparts.  This
Agreement may be executed in two or more identical counterparts, all of which
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;
provided that a facsimile signature or signature delivered by e-mail in a “.pdf”
format data file shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an
original, not a facsimile signature or a signature in a “.pdf” format data
file.

    

    (c)           Headings.  The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.

    

    (d)           Severability.  If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    (e)           Entire
Agreement.  With the exception of the Mutual Nondisclosure
Agreement between the parties dated as of February 2, 2010, this Agreement
supersedes all other prior oral or written agreements between the Investor, the
Company, their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement, the other Transaction Documents
and the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Investor
makes any representation, warranty, covenant or undertaking with respect to such
matters.  The Company acknowledges and agrees that is has not relied
on, in any manner whatsoever, any representations or statements, written or
oral, other than as expressly set forth in this Agreement.

    

    (f)           Notices.  Any
notices, consents or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have
been delivered: (i) upon receipt when delivered personally; (ii) upon receipt
when sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
Business Day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:

    

    If to the
Company:

    Axion
International Holdings, Inc.

    180 South
Street, Suite F

    New
Providence, NJ 07974

    
      	 	
              Telephone:

            	
              908-542-0888

            

    

    
      	 	
              Facsimile:

            	
              908-542-0999

            

    

    
      	 	
              Attention:

            	
              Chief
      Executive Officer

            

    

     

    With a
copy to:

    Silverman
Sclar Shin & Byrne PLLC

    381 Park
Avenue South, 16th
Floor

    New York,
NY 10016

    
      	 	
              Telephone:

            	
              212-779-8600

            

    

    
      	 	
              Facsimile:

            	
              212-779-8858

            

    

    
      	 	
              Attention:

            	
              John
      Shin, Esq.

            

    

     

    If to the
Investor:

    Lincoln
Park Capital Fund, LLC

    440 North
Wells, Suite 620

    Chicago,
IL 60654

    
      	 	
              Telephone:

            	
              312-822-9300

            

    

    
      	 	
              Facsimile:

            	
              312-822-9301

            

    

    
      	 	
              Attention:

            	
              Josh
      Scheinfeld/Jonathan Cope

            

    

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    If to the
Transfer Agent:

    Computershare

    350
Indiana Street, Suite 750

    Golden,
CO 80401

    
      	 	
              Telephone:

            	
              303-262-0600

            

    

    
      	 	
              Facsimile:

            	
              303-262-0632

            

    

    Attention:

    

    or at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party three (3) Business Days prior to the effectiveness of such
change.  Written confirmation of receipt (A) given by the recipient of
such notice, consent or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, and
recipient facsimile number or (C) provided by a nationally recognized overnight
delivery service, shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

    

    (g)           Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and
assigns.  The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investor,
including by merger or consolidation.  The Investor may not assign its
rights or obligations under this Agreement.

    

    (h)           No Third Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.

    

    (i)           Publicity.  The
Investor shall have the right to approve before issuance any press release, SEC
filing or any other public disclosure made by or on behalf of the Company
whatsoever with respect to, in any manner, the Investor, its purchases hereunder
or any aspect of this Agreement or the transactions contemplated hereby, provided, however, that
the Company shall be entitled, without the prior approval of the Investor, to
make any press release or other public disclosure (including any filings with
the SEC) with respect to such transactions as is required by applicable law and
regulations so long as the Company and its counsel consult with the Investor in
connection with any such press release or other public disclosure at least two
(2) Business Days prior to its release.  The Investor must be provided
with a copy thereof at least two (2) Business Days prior to any release or use
by the Company thereof. The Company agrees and acknowledges that its failure to
fully comply with this provision constitutes a Material Adverse Change on its
ability to perform its obligations under this Agreement.

    

    (j)           Further
Assurances.  Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

    

    (k)           Termination.  This
Agreement may be terminated only as follows:

    

    (i)           By
the Investor any time an Event of Default exists without any liability or
payment to the Company.  However, if any event which would be an Event
of Default as described in Sections 10(f), 10(g) and 10(h) hereof occurs this
Agreement shall automatically terminate without any liability or payment to the
Company without further action or notice by any Person.  No such
termination of this Agreement under this Section 11(k)(i) shall affect the
Company's or the Investor's obligations under this Agreement with respect to
pending purchases and the Company and the Investor shall complete their
respective obligations with respect to any pending purchases under this
Agreement.

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    (ii)           In
the event that the Commencement shall not have occurred, the Company shall have
the option to terminate this Agreement for any reason or for no reason without
any liability whatsoever of any party to any other party under this
Agreement.

    

    (iii)           In
the event that the Commencement shall not have occurred on or before May 31,
2010, due to the failure to satisfy the conditions set forth in Sections 7 and 8
above with respect to the Commencement, the non-breaching party shall have the
option to terminate this Agreement at the close of business on such date or
thereafter without liability of any party to any other party.

    

    (iv)           
At any time after the Commencement Date, the Company shall have the option to
terminate this Agreement for any reason or for no reason by delivering notice (a
“Company Termination Notice”) to the Investor electing to terminate this
Agreement without any liability whatsoever of any party to any other party under
this Agreement.  The Company Termination Notice shall not be effective
until five (5) Business Days after it has been received by the Investor. No such
termination of this Agreement under this Section 11(k)(iv) shall affect the
Company's or the Investor's obligations under this Agreement with respect to
pending purchases  and the Company and the Investor shall complete
their respective obligations with respect to any pending purchases under this
Agreement.

    

    (v)           This
Agreement shall automatically terminate on the date that the Company sells and
the Investor purchases the full Available Amount as provided herein, without any
action or notice on the part of any party and without any liability whatsoever
of any party to any other party under this Agreement.

    

    (vi)           If
by the Maturity Date for any reason or for no reason the full Available Amount
under this Agreement has not been purchased as provided for in Section 2 of this
Agreement, this Agreement shall automatically terminate on the Maturity Date,
without any action or notice on the part of any party and without any liability
whatsoever of any party to any other party under this Agreement.

    

    Except as
set forth in Sections 11(k)(i) (in respect of an Event of Default under Sections
10(f), 10(g) and 10(h)) and 11(k)(vi), any termination of this Agreement
pursuant to this Section 11(k) shall be effected by written notice from the
Company to the Investor, or the Investor to the Company, as the case may be,
setting forth the basis for the termination hereof.  The
representations and warranties of the Company and the Investor contained in
Sections 3, 4 and 6 hereof, the indemnification provisions set forth in Section
9 hereof and the agreements and covenants set forth in Section 11, shall survive the
Commencement and any termination of this Agreement.  No termination of
this Agreement shall affect the Company's or the Investor's rights or
obligations (i) under the Registration Rights Agreement which shall survive any
such termination or (ii) under this Agreement with respect to pending purchases
and the Company and the Investor shall complete their respective obligations
with respect to any pending purchases under this Agreement.

     

    
      
         

      

      
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    (l)           No Financial Advisor,
Placement Agent, Broker or Finder.    The Company
represents and warrants to the Investor that it has not engaged any financial
advisor, placement agent, broker or finder in connection with the transactions
contemplated hereby.  The Investor represents and warrants to the
Company that it has not engaged any financial advisor, placement agent, broker
or finder in connection with the transactions contemplated
hereby.  The Company shall be responsible for the payment of any fees
or commissions, if any, of any financial advisor, placement agent, broker or
finder relating to or arising out of the transactions contemplated
hereby.  The Company shall pay, and hold the Investor harmless
against, any liability, loss or expense (including, without limitation,
attorneys' fees and out of pocket expenses) arising in connection with any such
claim.

    

    (m)           No Strict
Construction.  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.

    

    (n)           Remedies, Other Obligations,
Breaches and Injunctive Relief.  The Investor’s remedies
provided in this Agreement shall be cumulative and in addition to all other
remedies available to the Investor under this Agreement, at law or in equity
(including a decree of specific performance and/or other injunctive relief), no
remedy of the Investor contained herein shall be deemed a waiver of compliance
with the provisions giving rise to such remedy and nothing herein shall limit
the Investor's right to pursue actual damages for any failure by the Company to
comply with the terms of this Agreement.  The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Investor and that the remedy at law for any such breach may be
inadequate.  The Company therefore agrees that, in the event of any
such breach or threatened breach, the Investor shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without
the necessity of showing economic loss and without any bond or other security
being required.

    

    (0)           Enforcement
Costs.  If: (i) this Agreement is placed by the Investor in the
hands of an attorney for enforcement or is enforced by the Investor through any
legal proceeding; or (ii) an attorney is retained to represent the Investor in
any bankruptcy, reorganization, receivership or other proceedings affecting
creditors' rights and involving a claim under this Agreement; or (iii) an
attorney is retained to represent the Investor in any other proceedings
whatsoever in connection with this Agreement, then the Company shall pay to the
Investor, as incurred by the Investor, all reasonable costs and expenses
including attorneys' fees incurred in connection therewith, in addition to all
other amounts due hereunder.

    

    (p)           Failure or Indulgence Not
Waiver.  No failure or delay in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or
privilege.

     

    *     *     *     *     *
 

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
Investor and the Company have caused this Purchase Agreement to be duly executed
as of the date first written above.

    

    
      
        
          
            	 
      	
                    THE COMPANY:

                  
	 
      	 
      
	 
      	
                    AXION
      INTERNATIONAL HOLDINGS, INC.

                  
	 
      	 
      
	 
      	
                    By:

                  	
                    s/ Marc Y. Green

                  
	 
      	
                    Name:

                  	
                    Marc
      Y. Green

                  
	 
      	
                    Title:

                  	
                    President

                  
	 
      	 
      
	 
      	
                    INVESTOR:

                  
	 
      	 
      
	 
      	
                    LINCOLN
      PARK CAPITAL FUND, LLC

                  
	 
      	
                    BY:
      LINCOLN PARK CAPITAL PARTNERS, LLC

                  
	 
      	
                    BY:
      ROCKLEDGE CAPITAL CORPORATION

                  
	 
      	 
      
	 
      	
                    By:

                  	
                    s/Josh Scheinfeld

                  
	 
      	
                    Name:

                  	
                    Josh
      Scheinfeld

                  
	 
      	
                    Title:

                  	
                    President

                  

          

        

      

    

     

    
      
         

      

      
        23

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