Document:

f8k021209ex4i_confederate.htm

    Exhibit 4.1

    
 

    SECURITIES
PURCHASE AGREEMENT

     

    This
Securities Purchase Agreement (this “Agreement”) is dated
as of February 12, 2009 between Confederate Motors, Inc., a
Delaware corporation (f/k/a French Peak Resources Inc., the “Company”), and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and
collectively the “Purchasers”).

    

    RECITALS:

    

    WHEREAS,
the Company and Confederate Motor Company, Inc., a Louisiana corporation.
(“Confederate”)
anticipate the entry into an Agreement and Plan of Merger and Reorganization,
pursuant to which Confederate Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of the Company, will merge with and into Confederate,
with Confederate remaining as the surviving entity and a wholly-owned subsidiary
of the Company (the “Merger,” the date
such Merger becomes effective hereinafter referred to as the “Effective
Date”);

    

    WHEREAS,
as a condition to the consummation of the Merger, and to provide the capital
required by Confederate to execute its business strategy as more particularly
set forth in the accompanying Offering Memorandum, the Company is offering
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and
Rule 506 promulgated thereunder, to accredited investors (the “Offering”), a minimum
of 1,050,000 shares (each a “Share”) of the
Company’s common stock, $0.001 par value per share (the “Common Stock”) for an
aggregate purchase price of $1,500,000 (the “Minimum Amount”) up
to a maximum of 1,716,667 Shares, for an aggregate purchase price of $2,500,000
(the “Maximum Amount”).  The subscription by conversion of $225,000
principal amount of Bridge Notes previously sold to investors in connection with
this Offering will count towards the Minimum and Maximum Amounts;

    

    WHEREAS,
the Purchaser desires to subscribe for, purchase and acquire from the Company
and the Company desires to sell and issue to the Purchaser the number of Shares,
set forth on the signature page of this Agreement upon the terms and conditions
and subject to the provisions hereinafter set forth;

    

    WHEREAS,
in connection with the purchase of the Shares, the Company and the Purchaser
will execute a Registration Rights Agreement dated as of the date hereof
pursuant to which the Company will provide certain registration rights to the
Purchaser (the “Registration Rights
Agreement”); and

    

    WHEREAS,
the Company, Confederate, and Anslow & Jaclin, LLP (the “Escrow Agent”) have
entered into an Escrow Agreement (the “Escrow Agreement”) to
provide for the safekeeping of funds received and documents executed in
connection with the Offering.

    

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and

    

    
      
        
           

        

        
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    adequacy
of which are hereby acknowledged, the Company and the Purchaser agree as
follows:

    ARTICLE
I.

    DEFINITIONS

     

    1.1    Definitions.  In
addition to the terms defined elsewhere in this Agreement the following terms
have the meanings set forth in this Section 1.1:

    

    “Action” shall have
the meaning ascribed to such term in Section 3.1(j).

    

    “Advisor” shall mean
CalibraX Capital Advisors, LLC.

    

    “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as such terms are
used in and construed under Rule 405 under the Securities Act.  With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser.

    

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

    

    “Bridge Notes” means
the 5% unsecured convertible promissory notes of the Company issued in
connection with the Transactions contemplated hereby.

     

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

     

     ”Closing” means a
closing of the purchase and sale of the Shares pursuant to Section
2.1.

     

     ”Closing Date” means,
with respect to any purchase of Shares hereunder at a Closing, the Business Day
when all of the Transaction Documents have been executed and delivered by the
applicable parties thereto, and all conditions precedent to (i) the Purchasers’
obligations to pay the Subscription Amount for such Shares at the applicable
Closing and (ii) the Company’s obligations to deliver such Shares at the
applicable Closing have been satisfied or waived, including without limitation
the Company’s written acceptance of the subscriptions for such Shares as set
forth in Section 2.1.

     

    “Commission” means the
Securities and Exchange Commission.

     

    “Common Stock” means
the common stock of the Company, par value $0.001per share, and any other class
of securities into which such securities may hereafter be reclassified or
changed into.

    

    “Common Stock
Equivalents” means any securities of the Company or the
Subsidiaries

    

    
      
        
           

        

        
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    which
would entitle the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

    

    “Company Counsel”
means Anslow & Jaclin, LLP.

    

    “Disclosure Schedules”
shall have the meaning ascribed to such term in Section 3.1.

    

    “Escrow Agent” means
Anslow & Jaclin, LLP

    

    “Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

    

    “Exempt Issuance”
means the issuance of (a) shares of Common Stock (including shares underlying
options) or options to employees, officers, directors or other permitted
grantees (provided that issuances to other permitted grantees shall not exceed
500,000 shares in any 12 month period (subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement))
of the Company pursuant to any existing or future stock or option plan duly
adopted by the Board of Directors (including the affirmative vote of a majority
of the non-employee members of the Board of Directors, if any, or a majority of
the members of a committee of non-employee directors, if any), (b) 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, exchange or
conversion price of such securities, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by the Board of Directors
(including the affirmative vote of a majority of the non-employee members of the
Board of Directors of the Company, if any) provided that any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating
company in a business compatible with the business objectives of the Company and
in which the Company receives benefits in addition to the investment of funds
(or to the stockholders or other owners of such Person), 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.

     

    “GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).

    

    “Indebtedness” shall
have the meaning ascribed to such term in Section 3.1(y).

    

    “Initial Closing”
shall have the meaning ascribed to such term in Section 2.1.

     

    “Intellectual Property
Rights” shall have the meaning ascribed to such term in Section
3.1(o).

     

    

    
      
        
           

        

        
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    “Liens” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.

    

    “Majority in Interest”
means more than 50% of the Shares held by the Purchasers at any given
time.

    

    “Material Adverse
Effect” shall have the meaning assigned to such term in Section
3.1(b).

     

    “Material Permits”
shall have the meaning ascribed to such term in Section 3.1(m).

    

    “Merger” has the
meaning set forth in the Recitals.

     

    “Merger Agreement”
means the Agreement and Plan of Merger and Reorganization
among the Company, Confederate, and the Acquisition Sub for the merger of the
Acquisition Sub with and into Confederate, pursuant to which the stockholders of
Confederate will exchange all of their outstanding shares of capital stock of
Confederate for shares of Common Stock.

    

    “Non-Affiliate”, as of
particular date, means a Person who is not then an “affiliate” of the Company,
as such term is used in Rule 144, and who has not been such an affiliate during
the then immediately preceding 90 days.

    

    “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.

    

    “Per Share Purchase
Price” equals $1.50, subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock that occur after the date of this Agreement and on or before
the Closing.

    

    “Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an informal investigation or partial proceeding, such as a deposition), whether
commenced or threatened.

    

    “Purchaser Party”
shall have the meaning ascribed to such term in Section 4.8.

    

    "Qualified Equity
Financing" means any transaction undertaken by the Company to raise funds
for general working capital purposes in exchange for the sale of its equity
securities or any other securities that may be converted into or exchanged for
its equity securities or on the exercise of which its equity securities may be
purchased, with or without additional consideration. For the avoidance of doubt,
a Qualified Equity Financing shall not include any issuance of shares by the
Company where such issuance either (i) constitutes an Exempt Issuance or an
issuance under the Company’s equity incentive plans, (ii) is made in exchange
for services provided to the Company or its Subsidiaries, so long as the value
of the shares issued do not exceed $500,000 for any one service provider or
$2,000,000 in the aggregate, (iii) to any underwriter or financial advisor
to

    

    
      
        
           

        

        
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    the
Company or its Subsidiaries or (iv) in any transaction the purpose of which
shall be for the Company or any Subsidiary to acquire the business of another
entity.

    

    “Registration Rights
Agreement” means the Registration Rights Agreement, dated the date
hereof, among the Company and the Purchasers, in the form of Exhibit A attached
hereto.

    

    “Registration
Statement” means a registration statement meeting the requirements set
forth in the Registration Rights Agreement and covering the resale of the Shares
by each Purchaser as provided for in the Registration Rights
Agreement.

    

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

    

    “Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

    

    “Shares” means the
shares of Common Stock issued or issuable to each Purchaser pursuant to this
Agreement.

    

    “Shoe Period” shall
have the meaning ascribed to such term in Section 2.1.

    

    “Short Sales” means
all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
Act (but shall not be deemed to include the location and/or reservation of
borrowable shares of Common Stock).

     

    ÒSplit-OffÓ means the
split-off of the Company’s pre-existing business (as it exists immediately prior
to the Merger) by the sale to Robert Waters of all of the outstanding capital
stock of a wholly owned subsidiary of the Company; such sale to be effected
substantially contemporaneously with the closing of the Merger.

    

    “Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for Shares
purchased hereunder as specified below such Purchaser’s name on the signature
page of this Agreement and next to the heading “Subscription Amount,” in United
States dollars and in immediately available funds.

    

    “Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1(a) and
shall, where applicable, include any direct or indirect subsidiary of the
Company formed or acquired after the date hereof.

    

    “Trading Day” means a
day on which the New York Stock Exchange is open for trading.

    

    “Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the American Stock Exchange, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global

    

    
      
        
           

        

        
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    Select
Market, the New York Stock Exchange or the OTC Bulletin Board.

     

    “Transaction
Documents” means this Agreement, the Registration Rights Agreement, and
all exhibits and schedules thereto and hereto and any other documents or
agreements executed in connection with the transactions contemplated
hereunder.

    

    “Transfer Agent” means
American Registrar & Transfer Co., or such other transfer agent as the
Company may from time to time employ.

    

    “VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from
9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the OTC
Bulletin Board is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the OTC Bulletin
Board; (c) if the Common Stock is not then 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 Sheets, LLC (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 a Majority in Interest and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the
Company.

     

    ARTICLE
II.

    PURCHASE
AND SALE

     

    2.1    Closing.  On
each Closing Date, upon the terms and subject to the conditions set forth
herein, substantially concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to sell, and the Purchasers,
severally and not jointly, agree to purchase, a minimum of $1,500,000 (the
Minimum Amount) and up to an aggregate of $2,500,000 (the Maximum Amount) of
shares of Common Stock.  Each Purchaser shall deliver to the Escrow
Agent, via wire transfer or a certified check, immediately available funds equal
to its Subscription Amount and the Company shall cause its transfer agent to
deliver to each Purchaser the Shares purchased hereunder, as determined pursuant
to Section 2.2(a), and the Company and each Purchaser shall deliver the other
items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of
the conditions set forth in Sections 2.2 and 2.3, and receipt of subscriptions
for the Minimum Amount, an initial Closing shall occur at the offices of the
Company or such other location as the parties shall mutually agree. Provided the
Minimum Amount has been subscribed for at the Closing of the Merger (the “Initial Closing”),
additional Closings of this Offering shall be held thereafter at the discretion
of the Company for the thirty (30) days thereafter (the “Shoe Period”) as
additional subscription proceeds are received and cleared up to the Maximum
Amount.  To the extent that principal under the Bridge Notes converts
into Shares at the Closing, the

    

    
      
        
           

        

        
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    Shares
resulting from such conversion will count toward the Minimum Amount and Maximum
Amount.

     

    2.2    Deliveries.

     

    (a)  On
or promptly after each Closing Date the Company shall deliver or cause to be
delivered to each Purchaser purchasing at that Closing the
following:

     

    (i)  this
Agreement duly executed by the Company;

     

    (ii) a
certificate evidencing a number of Shares equal to such Purchaser’s Subscription
Amount divided by the Per Share Purchase Price; and

    

    (iv) a
legal opinion of Company Counsel, substantially in the form of Exhibit B attached
hereto.

      

    (b)  On
or before each Closing Date, each Purchaser purchasing at that Closing shall
deliver or cause to be delivered to the Company the following:

     

    (i)  this
Agreement duly executed by the Purchaser; and

     

    (ii)  the
Subscription Amount by wire transfer to the Escrow Agent to the account
specified in Exhibit
C attached hereto, or by cancellation of indebtedness under the Bridge
Notes (in such case the Bridge Note shall be delivered to the
Company).

     

    2.3    Closing
Conditions.

     

    (a)  The
obligations of the Company hereunder in connection with each Closing are subject
to the following conditions being met:

     

    (i)  the
Merger shall close concurrently with the Initial Closing;

    

    (ii) the
accuracy in all material respects on the applicable Closing Date of the
representations and warranties of the Purchasers contained herein;

     

    (iii)  all
obligations, covenants and agreements of the Purchaser required to be performed
at or prior to the applicable Closing Date shall have been
performed;

    

    (iv)
Company’s written acceptance of subscriptions referenced in Section 2.1, which
acceptance shall be at the sole discretion of the Company; and

     

    (v)  the
delivery by the Purchaser of the items set forth in Section 2.2(b) of this
Agreement.

     

    (b)  The
respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:

    

    
      
        
           

        

        
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    (i)  the
Merger shall close concurrently with the Initial Closing;

    

    (ii)  the
accuracy in all material respects when made and on the applicable Closing Date
of the representations and warranties of the Company contained
herein;

     

    (iii)  all
obligations, covenants and agreements of the Company required to be performed at
or prior to the applicable Closing Date shall have been performed;

     

    (iv)  the
delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;

     

    (v)  there
shall have been no Material Adverse Effect with respect to the Company since the
date hereof; and

     

    (vi)  from
the date hereof to the applicable Closing Date, a banking moratorium shall not
have been declared either by the United States or New York State authorities nor
shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or
any material adverse change in, any financial market which, in each case, in the
reasonable judgment of the Purchaser, makes it impracticable or inadvisable to
purchase the Shares at the Closing.

     

    ARTICLE
III.

    REPRESENTATIONS
AND WARRANTIES

     

    3.1    Representations and
Warranties of the Company and Confederate.  As used in this
Article III, the Company shall mean the Company immediately following the
closing of the Merger and Confederate shall mean Confederate immediately
preceding the closing of the Merger.  Except as set forth in the
disclosure schedules attached hereto (the “Disclosure
Schedules”), which Disclosure Schedules shall be deemed a part hereof and
shall qualify any representation or warranty made herein to the extent of the
disclosure contained in the corresponding section of the Disclosure Schedules,
provided the disclosures in any section or subsection of the Disclosure
Schedules shall qualify only the corresponding section or subsection in this
Article III, the Company hereby makes the following representations and
warranties to the Purchaser:

     

    (a)  Subsidiaries.  All
of the direct and indirect subsidiaries of the Company are set forth on Schedule
3.1(a).  The Company owns, directly or indirectly, all of the
capital stock or other equity interests of each Subsidiary free and clear of any
Liens, and all of the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase
securities.  If the Company has no subsidiaries, all other references
to the Subsidiaries or any of them in the Transaction Documents shall be
disregarded.

     

    (b)  Organization and
Qualification.  The Company and each of the Subsidiaries
is

    

    
      
        
           

        

        
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    an entity
duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation or
default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter
documents.  Each of the Company and the Subsidiaries is duly qualified
to 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, does not
have and would not 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,
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.

     

    (c)  Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company, the Board of Directors or the Company’s stockholders in connection
therewith.  Each Transaction Document has been (or upon delivery will
have been) duly executed by the Company and, when delivered in accordance with
the terms hereof and thereof, will constitute the valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.

      

     

    (d)  No
Conflicts.  Except as set forth on Schedule 2.1(d), the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the other transactions contemplated
hereby and thereby do not and will not: (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with or result in a violation of any law, rule, regulation, rder,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is

    

    
      
        
           

        

        
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    bound or
affected; except in the case of clause (ii), such as does not have and would not
reasonably be expected to result in a Material Adverse Effect.

     

    (e)  Filings, Consents and
Approvals.  The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other than the filing
of Form D with the Commission and such filings as are required to be made under
applicable state securities laws.

     

    (f)  Issuance of the
Shares.  The Shares are duly authorized and, when issued and
paid for in accordance with the applicable Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents.  

     

                (g)  Capitalization.  The
capitalization of the Company is as set forth on Schedule
3.1(g).  No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents.  Except as set
forth in Schedule
3.1(g), as a result of the purchase and sale of the Shares, there are no
outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any Common Stock or Common Stock
Equivalents, or contracts, commitments, understandings or arrangements by which
the Company or any Subsidiary is or may become bound to issue additional Common
Stock or Common Stock Equivalents. The issuance and sale of the Shares will not
obligate the Company to issue Common Stock or Common Stock Equivalents or other
securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. All of the outstanding
Common Stock or Common Stock Equivalents are validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase
securities.  No further approval or authorization of any stockholder,
the Board of Directors or other Person is required for the issuance and sale of
the Shares.  There are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company’s Common Stock or Common
Stock Equivalents to which the Company is a party or, to the knowledge of the
Company, between or among any of the Company’s stockholders.

     

    (h)  Financial
Statements.  Schedule 3.1(h)
attached hereto contains the audited consolidated balance sheet and related
statements of operations and cash flows of Confederate and its subsidiaries at
and for the year ending December 31, 2007 (the “Company Financial Statements”).
The Company Financial Statements have been prepared in accordance with United
States generally accepted accounting principles (“GAAP”) applied on a consistent
basis throughout the periods covered thereby, fairly present the financial
condition, results of operations and cash flows of Confederate and

    

    
      
        
           

        

        
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    its
subsidiaries as of the date thereof and for the period referred to therein and
are consistent with the books and records of Confederate and its subsidiaries,
except as may be otherwise specified in such financial statements or the notes
thereto and except that the Company Financial Statements may not contain all
footnotes required by GAAP.

      

    (i)  Material
Changes.  Since December 31, 2007, (i) there has been no event,
occurrence or development that has had or that would reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any
material liabilities (contingent or otherwise) other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent with
past practice, (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP, and (C) except as set forth in Schedule 3.1(i),
(iii) the Company has not altered its method of accounting, (iv) the Company has
not declared or made any dividend or distribution of cash or other property to
its stockholders or purchased, redeemed or made any agreements to purchase or
redeem any Common Stock or Common Stock Equivalents and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans.

     

    (j)  Litigation.  Other
than as set forth on Schedule 3.1(j),
there is no action, suit, inquiry, notice of violation, or investigation pending
or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) or
Proceeding which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Shares or (ii) would,
if there were an unfavorable decision, reasonably be expected to result in, a
Material Adverse Effect.  Neither the Company nor any Subsidiary, nor
any manager, director or officer thereof, is or has been the subject of any
Action or Proceeding involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary
duty.  There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation or Proceeding by the
Commission involving the Company or any current or former director or officer of
the Company.  

     

    (k)  Labor
Relations.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which does have or would reasonably be expected to result in a
Material Adverse Effect.  None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship
with the Company or such Subsidiary, and neither the Company nor any of its
Subsidiaries is a party to a collective bargaining agreement, and the Company
and its Subsidiaries believe that their relationships with their employees are
good.  No executive officer, to the knowledge of the Company, is, or
is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing
matters.  The

    

    
      
        
           

        

        
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    Company
and its Subsidiaries are in compliance with all U.S. federal, state, local and
foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure
to be in compliance would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

      

    (l)  Compliance.  Neither
the Company nor any Subsidiary (i) is in violation of any order of any court,
arbitrator or governmental body, or (ii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its business
and all such laws that affect the environment, except in each case as would not
reasonably be expected to result in a Material Adverse Effect.

     

    (m)  Regulatory
Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such permits would
not reasonably be expected to result in a Material Adverse Effect (“Material Permits”),
and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material
Permit.

     

    (n)  Title to
Assets.  The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties.  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, except in each case as would not reasonably be expected to
result in a Material Adverse Effect.

     

    (o)  Patents and
Trademarks.  The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights necessary or
material for use in connection with their respective businesses and which the
failure to so have could have a Material Adverse Effect (collectively, the
“Intellectual Property
Rights”).  Neither the Company nor any Subsidiary has received
a notice (written or otherwise) that any of the Intellectual Property Rights
used by the Company or any Subsidiary violates or infringes upon the rights of
any Person. To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights.  The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where
failure to do so would not, individually or in

    

    
      
        
           

        

        
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    the
aggregate, reasonably be expected to have a Material Adverse
Effect.

     

    (p)  Insurance.  Except
as disclosed in Schedule 3.1(p), the
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance
coverage at least equal to the Subscription Amount.  Neither the
Company nor any Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.

     

    (q)  Transactions with Affiliates
and Employees.  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 $60,000
other than for (i) payment of salary, consulting fees or bonuses in connection
with services rendered or to be rendered, (ii) reimbursement for expenses
incurred on behalf of the Company, (iii) other employee benefits, including
stock option agreements under any stock option plan of the Company, and (iv)
agreements in connection with the make-whole referred to in Section
2.3.

     

    (r)  Internal Accounting
Controls.  The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.  

     

    (s)  Certain
Fees.  Except as set forth in Schedule 3.1(s), no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents.  The Purchasers shall have
no obligation with respect to any fees or with respect to any claims made by or
on behalf of other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by the Transaction
Documents.

     

    

    
      
        
           

        

        
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(t)  Private
Placement.  Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Shares by the
Company to the Purchasers as contemplated hereby.

     

    (u)  Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Shares, will not be or be an Affiliate required to file as, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended within a period of one year from the date hereof.

     

    (v)  Registration
Rights.  Other than the Purchasers, no Person has any right to
cause the Company to effect the registration under the Securities Act of any
securities of the Company.

     

    (w)  Disclosure.  All
disclosure furnished by or on behalf of the Company to the Purchasers 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
Company acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2
hereof.

     

    (x)  No Integrated
Offering. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, except as set forth in Schedule 3.1(x),
neither the Company, nor any of its Affiliates, nor any Person acting on its or
their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would cause this offering of the Shares to be integrated with prior offerings by
the Company for purposes of the Securities Act which would require the
registration of any such securities under the Securities Act.

     

    (y)  Solvency.  Based
on the consolidated financial condition of the Company as of the Closing Date
after giving effect to the receipt by the Company of the proceeds from the sale
of the Shares hereunder (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature, (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof, and (iii) the
anticipated cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its liabilities when such amounts are required to be
paid.  The Company does not intend to incur debts

    

    
      
        
           

        

        
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    beyond
its ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).  The
Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing
Date.  Schedule 3.1(y) sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments.  For the purposes of this Agreement, “Indebtedness” means
(a) any liabilities for borrowed money or amounts owed in excess of $25,000
(other than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $25,000 due under leases required to be
capitalized in accordance with GAAP.  Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness.

     

    (z)  Tax
Status. Except for matters that do not have (and would not
reasonably be expected to result in), individually or in the aggregate, a
Material Adverse Effect, the Company and each Subsidiary has filed all necessary
federal, state and foreign income and franchise tax returns and has paid or
accrued all taxes shown as due thereon, and the Company has no knowledge of a
tax deficiency which has been asserted or threatened against the Company or any
Subsidiary.

     

    (aa)  No General
Solicitation. Neither the Company nor any person acting on behalf of the
Company has offered or sold any of the Shares by any form of general
solicitation or general advertising.  The Company has offered the
Shares for sale only to the Purchasers and certain other “accredited investors”
within the meaning of Rule 501 under the Securities Act.

     

    (bb)  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.

     

    (cc)
Acknowledgement
Regarding Purchaser’s Trading Activity.   Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(f) and 4.16 hereof), it is understood and acknowledged by the
Company (i) that other than with respect to the Advisor, none of the Purchasers
have been asked by the Company to agree, nor has any Purchaser agreed, to desist
from purchasing or selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by

    

    
      
        
           

        

        
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    the
Company or to hold the Shares for any specified term; (ii) that past or future
open market or other transactions by any Purchaser, specifically including,
without limitation, Short Sales or “derivative” transactions, before or after
the closing of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded securities; (iii) that
any Purchaser, and counter-parties in “derivative” transactions to which any
such Purchaser is a party, directly or indirectly, presently may have a “short”
position in the Common Stock, and (iv) that each Purchaser shall not be deemed
to have any affiliation with or control over any arm’s length counter-party in
any “derivative” transaction. The Company further understands and acknowledges
that (a) one or more Purchasers may engage in hedging activities at various
times during the period that the Shares are outstanding, including, without
limitation, during the periods that the value of the Warrant Shares deliverable
with respect to Shares are being determined and (b) such hedging activities (if
any) could reduce the value of the existing stockholders’ equity interests in
the Company at and after the time that the hedging activities are being
conducted. The Company acknowledges that such aforementioned hedging activities
within the bounds of applicable law or regulation do not constitute a breach of
any of the Transaction Documents. 

     

    (dd)
No Disagreements with
Accountants and Lawyers.  There are no disagreements of any
kind presently existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants and lawyers formerly or presently
employed by the Company and the Company is current with respect to any fees owed
to its accountants and lawyers which could affect the Company’s ability to
perform any of its obligations under any of the Transaction
Documents.

     

    (ee) 
Acknowledgment
Regarding Purchasers’ Purchase of Shares.  The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby.  The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the Shares.  The
Company further represents to the Purchaser that the Company’s decision to enter
into this Agreement and the other Transaction Documents has been based solely on
the independent evaluation of the transactions contemplated hereby by the
Company and its representatives.

    

    (ff)           Regulation M
Compliance. The Company has not, and to its knowledge no one acting on
its behalf has, (i) taken, directly or indirectly, any action designed to cause
or to result in the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Shares, (ii) sold,
bid for, purchased, or, paid any compensation for soliciting purchases of, any
of the Shares, or (iii) paid or agreed to pay to any Person any compensation for
soliciting another to purchase any other securities of the Company, other than,
in the case of clauses (ii) and (iii), compensation paid to the Company’s
placement agent in connection with the placement

    

    
      
        
           

        

        
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    of the
Shares.

    

    3.2    Representations and
Warranties of the Purchaser.  Each of the Purchasers severally,
and not jointly, represents and warrants, with respect to such Purchaser, as of
the date hereof and as of the applicable Closing Date to the Company as
follows:

     

    (a)  Organization;
Authority.  The Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by the
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate or similar action on the part of
the Purchaser.  Each Transaction Document to which it is a party has
been duly executed by the Purchaser, and when delivered by the Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of the Purchaser, enforceable against it in accordance with its
terms, except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

     

    (b)  Own
Account.  The Purchaser understands that the Shares are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Shares as principal for
its own account and not with a view to or for distributing or reselling such
Shares or any part thereof, has no present intention of distributing any of such
Shares and has no direct or indirect arrangement or understandings with any
other persons to distribute or regarding the distribution of such Shares (this
representation and warranty not limiting the Purchaser’s right to sell the
Shares pursuant to the Registration Statement or otherwise in compliance with
applicable federal and state securities laws).  The Purchaser is
acquiring the Shares hereunder in the ordinary course of its
business.  The undersigned acknowledges that (i) the Shares will be
issued pursuant to applicable exemptions from registration under the Act and any
applicable state securities laws, and (ii) the Shares have not been registered
under the Act, in reliance on the exemption from registration provided by
Section 4(2) thereof.  In connection therewith, the undersigned hereby
covenants and agrees that it will not offer, sell, or otherwise transfer the
Shares unless and until it obtains the consent of the Company and such Shares
are registered pursuant to the Act and the laws of all jurisdictions which in
the opinion of the Company may be applicable or unless such
Shares  are, in the opinion of the Company, otherwise exempt from
registration thereunder.

    

    (c)  Purchaser
Status.  At the time the Purchaser was offered the Shares, it
was, and at the date hereof it is, and on each date on which it exercises any
Warrants it will be either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or

    

    
      
        
           

        

        
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    (a)(8)
under the Securities Act or (ii) a “qualified institutional buyer” as defined in
Rule 144A(a) under the Securities Act.  The Purchaser is not required
to be registered as a broker-dealer under Section 15 of the Exchange
Act.

     

    (d)  Experience of The
Purchaser.  The Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Shares, and has so evaluated the merits and
risks of such investment.  The Purchaser has had the opportunity to
ask questions and obtain information necessary to make an investment
decision.  To the extent the undersigned has taken advantage of such
opportunity, they have received satisfactory answers concerning the purchase of
the Shares.  Purchaser understands that the offer and sale of the
Shares is being made only by means of this Agreement.  Purchaser
understands that the Company has not authorized the use of, and Purchaser
confirms that Purchaser is not relying upon any other information, written or
oral, other than material contained in this Agreement, the Offering Memorandum
accompanying this Agreement and the Transaction Documents.  The
Purchaser is able to bear the economic risk of an investment in the Shares and,
at the present time, is able to afford a complete loss of such investment and
its financial condition is such that it has no need for liquidity with respect
to its investment in the Shares to satisfy any existing or contemplated
undertaking or indebtedness.  The Purchaser has discussed with its
professional, legal, tax and financial advisers the suitability of an investment
in the Company by the undersigned for its particular tax and financial
situation.  All information that the undersigned has provided to the
Company concerning itself and its financial position is correct and complete as
of the date set forth below, and if there should be any material change in such
information, the undersigned will immediately provide such information to the
Company.

     

    (e)  General
Solicitation.  The Purchaser is not purchasing the Shares as a
result of any advertisement, article, notice or other communication regarding
the Shares published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
solicitation or general advertisement.  The Purchaser did not enter
into any discussions or initiate any contacts (in each case, regarding the offer
or sale of the Shares) as a result of any General Solicitation, including the
Registration Statement, nor did the Purchaser decide to enter into this
Agreement as a result of any General Solicitation. As used herein, “General
Solicitation” means any general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act.

    

    (f) Short Sales and
Confidentiality Prior To The Date Hereof. Other than consummating the
transactions contemplated hereunder, such Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with such Purchaser,
directly or indirectly executed any purchases or sales, including Short Sales,
of the securities of the Company during the period starting at the time (“Discussion Time”)
that such Purchaser first received a term sheet (written or oral) from the
Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending on the date hereof.
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate

    

    
      
        
           

        

        
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    portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Shares covered by this Agreement. Other than to other Persons party
to this Agreement, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).

    

    ARTICLE
IV.

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1     Transfer
Restrictions.

     

    (a)  The
Shares may only be disposed of in compliance with state and federal securities
laws.  In connection with any transfer of Shares other than pursuant
to an effective registration statement or Rule 144, to the Company or to an
Affiliate of the Purchaser, in connection with the Merger, or in connection with
a pledge as contemplated in Section 4.1(b), the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor and reasonably acceptable to the Company, the form and substance
of which opinion shall be reasonably satisfactory to the Company and the
Transfer Agent, to the effect that such transfer does not require registration
of such transferred Shares under the Securities Act.  As a condition
of transfer, any such transferee shall agree in writing to be bound by the terms
of this Agreement and shall have the rights of a Purchaser under this
Agreement.

     

    (b)  The
Purchasers agree to the imprinting, so long as is required by this Section 4.1,
of a legend on any of the Shares purchased hereunder in the following
form:

     

    THIS
SECURITY HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

     

    The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a

    

    
      
        
           

        

        
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    security
interest in some or all of the Shares to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and who
agrees to be bound by the provisions of this Agreement and, if required under
the terms of such arrangement, the Purchaser may transfer pledged or secured
Shares to the pledgees or secured parties.  Such a pledge or transfer
would not be subject to approval of the Company and no legal opinion of legal
counsel of the pledgee, secured party or pledgor shall be required in connection
therewith.  Further, no notice shall be required of such pledge,
provided that the Purchaser acknowledges and agrees that a legal opinion
reasonably satisfactory to the Company and the Transfer Agent shall be required
in order to effect the transfer of pledged Shares to a pledgee or secured party
in the event of a foreclosure on such pledged Shares.  At the
Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Shares may reasonably request in
connection with a pledge or transfer of the Shares.

     

    4.2      Intentionally
Omitted.

    

    4.3      Integration.  From
and after the applicable Closing Date, the Company shall not sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated with
the offer or sale of the Shares to the Purchasers in a manner that would require
the registration under the Securities Act of the sale of the Shares to the
Purchasers.

     

    4.4     Shareholder Rights
Plan. No claim will be made or enforced by the Company or, with the
consent of the Company, any other Person, that any Purchaser is an “Acquiring
Person” under any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company, or that any
Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Shares under the Transaction Documents or
under any other agreement between the Company and the Purchasers.

     

    4.5     Securities Laws Disclosure;
Publicity. The Company shall, by 8:30 a.m. (New York City time) on the
fourth Trading Day immediately following the date hereof, issue a Current Report
on Form 8-K, disclosing the material terms of the transactions contemplated
hereby, and filing the Transaction Documents (but not the Disclosure Schedule)
as exhibits thereto. No Purchaser shall issue any press release or otherwise
make any public statement regarding the transactions contemplated hereby without
the prior consent of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law, in which case
the Purchaser shall promptly provide the Company with prior notice of such
public statement or communication.  Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except
as required by law or Trading Market regulations.

    

     4.6     Non-Public
Information.  Except with respect to the Offering
Memorandum

    

    
      
        
           

        

        
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    provided
to the Purchaser on a confidential basis in connection with this Agreement and
the material terms and conditions of the transactions contemplated by the
Transaction Documents and the Merger Agreement, the Company covenants and agrees
that neither it nor any other Person acting on its behalf will provide any
Purchaser or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior thereto the
Purchaser shall have executed a written agreement regarding the confidentiality
and use of such information.  The Company understands and confirms
that the Purchaser shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.

     

    4.7     Use of
Proceeds.  Except as set forth on Schedule 4.7 attached
hereto, the Company shall use the net proceeds from the sale of the Shares
hereunder for working capital purposes, and shall not use such proceeds for (a)
the satisfaction of any portion of the Company’s debt (other than payment of
trade payables in the ordinary course of the Company’s business and prior
practices), (b) the redemption of any Common Stock or Common Stock Equivalents
or (c) the settlement of any outstanding litigation.

     

    4.8     Indemnification of
Purchasers.   Subject to the provisions of this Section
4.8, the Company will indemnify and hold the Purchaser and its directors,
officers, stockholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls the Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling person (each, a
“Purchaser
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a Purchaser
in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of the Purchaser, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of the Purchaser’s representations,
warranties or covenants under the Transaction Documents or any agreements or
understandings the Purchaser may have with any such stockholder or any
violations by the Purchaser of state or federal securities laws or any conduct
by the Purchaser which constitutes fraud, negligence, willful misconduct or
malfeasance).  If any action shall be brought against any Purchaser
Party in respect of which indemnity may be sought pursuant to this Agreement,
such Purchaser Party shall promptly notify the Company in writing, and the
Company shall have the right to assume the defense thereof with counsel of its
own choosing reasonably acceptable to the Purchaser Party.  Any
Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the

    

    
      
        
           

        

        
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    employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time (not less than 30 days) to
assume such defense and to employ counsel or (iii) in such action there is, in
the reasonable opinion of such separate counsel, a material conflict on any
material issue between the position of the Company and the position of such
Purchaser Party, in which case the Company shall be responsible for the
reasonable fees and expenses of no more than one such separate counsel for all
of the Purchasers.  The Company will not be liable to any Purchaser
Party under this Agreement (i) for any settlement by a Purchaser Party effected
without the Company’s prior written consent, which shall not be unreasonably
withheld or delayed; or (ii) to the extent, but only to the extent that a loss,
claim, damage or liability is attributable to any Purchaser Party’s breach of
any of the representations, warranties, covenants or agreements made by such
Purchaser Party in this Agreement or in the other Transaction
Documents.

    

    4.9      Equal Treatment of
Purchasers.  No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any
of the Transaction Documents unless the same consideration is also offered to
all of the parties to the Transaction Documents.  For clarification
purposes, this provision constitutes a separate right granted to the Purchaser
by the Company and negotiated separately by the Purchaser, and is intended for
the Company to treat the Purchasers as a class and shall not in any way be
construed as the Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Shares  or otherwise.

     

    4.10     Form D; Blue Sky
Filings.  The Company agrees to timely file a Form D with
respect to the Shares as required under Regulation D and to provide a copy
thereof to Purchaser promptly upon request of the Purchaser. The Company shall
take such action as the Company shall reasonably determine is necessary in order
to obtain an exemption for, or to qualify the Shares for, sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of
the United States, and shall provide evidence of such actions promptly upon
request of the Purchaser.

    

    4.11     Furnishing of
Information.  The Company shall comply with Section 8.1 of the
Registration Rights Agreement, which Section 8.1 is incorporated by reference
herein.

    

    4.12.           Accountants.  Until
the time the Company becomes subject to the reporting provisions of the Exchange
Act, or in the event the Company has not filed one or more reports with the
Commission under the Exchange Act as provided in Section 4.11 above, the Company
shall promptly give the Purchaser notice of any change in the firm of
independent certified public accountants utilized by the Company.

    

    4.13           Access to Records.
Until the time the Company becomes subject to the reporting requirements of
section 13 or 15(d) of the Exchange Act, and only if the Company has not filed
one or more reports with the Commission thereunder as provided in Section 4.11
above, the Company shall furnish to each Purchaser that holds Shares , or any of
its duly authorized representatives, attorneys or accountants reasonable access
to any and all records at the premises of the Company where such records are
kept, such access being

    

    
      
        
           

        

        
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    afforded
without charge, but only upon reasonable request stating the purpose of such
request and during normal business hours.  Each such Purchaser making
such request agrees to request to execute a confidentiality agreement or similar
document reasonably requested by the Company.

    

    4.15           Preservation of Corporate
Existence.  During the period that the Company is required to
file reports  under Section 4.11, the Company shall preserve and
maintain its corporate existence, rights, privileges and franchises in the
jurisdiction of its incorporation, and qualify and remain qualified, as a
foreign corporation in each jurisdiction in which such qualification is
necessary in view of its business or operations and where the failure to qualify
or remain qualified might reasonably have a Material Adverse Effect upon the
financial condition, business or operations of the Company and its Subsidiaries
taken as a whole.  Nothing in Sections 4.11 or 4.15 shall restrict the
Company from engaging in a sale of the Company, however effected, including by
merger, sale or exchange of stock, or sale of assets.

    

    4.16           Short Sales and
Confidentiality After The Date Hereof. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that neither it nor any Affiliate
acting on its behalf or pursuant to any understanding with it will execute any
Short Sales during the period commencing at the Discussion Time and ending at
the time that the transactions contemplated by this Agreement are first publicly
announced as described in Section 4.5. Each Purchaser, severally and not jointly
with the other Purchasers, covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company as
described in Section 4.5, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information included in the
Disclosure Schedules. Each Purchaser severally and not jointly with any other
Purchaser, understands and acknowledges, and agrees, to act in a manner that
will not violate the positions of the Commission as set forth in Item 65,
Section A, of the Manual of Publicly Available Telephone Interpretations, dated
July 1997, compiled by the Office of Chief Counsel, Division of Corporation
Finance. Notwithstanding the foregoing, no Purchaser makes any representation,
warranty or covenant hereby that it will not engage in Short Sales in the
securities of the Company after the time that the transactions contemplated by
this Agreement are first publicly announced as described in Section 4.5.
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Shares covered by this
Agreement.

    

    4.17           Subsequent Equity
Sales. From the date hereof until such time as no Purchaser holds any of
the Shares, the Company shall be prohibited from effecting or entering into an
agreement to effect any subsequent financing involving a Variable Rate
Transaction. “Variable
Rate Transaction” means a transaction in which the Company issues or
sells (i) any debt or equity securities that are convertible into, exchangeable
or exercisable for, or

    

    
      
        
           

        

        
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    include
the right to receive additional shares of Common Stock either (A) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of Common Stock
at any time after the initial issuance of such debt or equity securities, or (B)
with a conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market 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.
Any Purchaser shall be entitled to obtain injunctive relief against the Company
to preclude any such issuance, which remedy shall be in addition to any right to
collect damages. For purposes of clarity, a Variable Rate Transaction shall not
include (i) the issuance of securities that adjust pursuant to anti-dilution
provisions therein in the event of certain subsequent issuances of Common Stock
and Common Stock Equivalents, (ii) any merger in which the consideration paid
for shares of the Company’s capital stock depends in whole or part on the
trading price or quotations for the shares of Common Stock, if such merger is
not done primarily for capital-raising purposes, and (iii) any other transaction
not done primarily for capital-raising purposes. Notwithstanding the foregoing,
Section 4.16 shall not apply in respect of an Exempt Issuance, except that no
Variable Rate Transaction shall be an Exempt Issuance.

    

    4.18           Reservation of Common
Stock. As of the date hereof, the Company has reserved and the Company
shall continue to reserve and keep available at all times, free of preemptive
rights, a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue Common Stock pursuant to this Agreement and
Warrant Shares pursuant to any exercise of the Warrants.

    

    4.19           Shareholder Rights
Plan. No claim will be made or enforced by the Company or, with the
consent of the Company, any other Person, that any Purchaser is an “Acquiring
Person” under any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company, or that any
Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Shares under the Transaction Documents or
under any other agreement between the Company and the Purchasers.

    

    4.20           Capital Changes and
Repayment of Certain Indebtedness. Until the one (1) year anniversary of
the Closing Date, the Company shall not undertake a reverse or forward stock
split or reclassification of the Common Stock without the prior written consent
of a Majority in Interest.  Notwithstanding the foregoing, this
Section 4.20 shall not apply to any such split or reclassification done by the
Company in good faith in order to facilitate (A) any public offering of
securities of the Company, (B) any other bona fide capital-raising
transaction or sale of the Company (however effected, including by merger, sale
or exchange of securities or sale of assets), or (C) obtaining or maintaining
any listing of the Company’s common stock on any stock exchange, including
NASDAQ.

    

    
      
        
           

        

        
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    4.21           Participation in Subsequent
Qualified Equity Financings. From the date of the final Closing until the
Purchaser shall have sold all of the Shares and Warrant Shares acquired upon
conversion of the Shares purchased hereunder, upon any Qualified Equity
Financing by the Company or any of its Subsidiaries (a “Subsequent
Financing”), each Purchaser shall have the right to participate in such
financing up to the greater of (i) 100% of the Issue Amount and (ii) 100% of the
Subscription Amount paid for the Shares by the initial Purchaser thereof for the
Shares held by such Purchaser (the “Participation
Maximum”), all on the same terms and conditions as the participant or
participants in such Qualified Equity Financing whose terms and conditions are
least favorable to the Company. Unless the Company is specifically instructed in
writing by an individual Purchaser to suspend such notices, at least five (5)
Trading Days prior to the closing of the Subsequent Financing, the Company shall
deliver to each Purchaser a written notice of its intention to effect a
Subsequent Financing (“Pre-Notice”), which
Pre-Notice shall ask such Purchaser if it wants to review the details of such
financing (such additional notice, a “Subsequent Financing
Notice”). Upon the request of a Purchaser, and only upon a request by
such Purchaser, for a Subsequent Financing Notice, the Company shall promptly,
but no later than one Trading Day after such request, deliver a Subsequent
Financing Notice to such Purchaser. The Subsequent Financing Notice shall
describe in reasonable detail the proposed terms of such Subsequent Financing,
the amount of proceeds intended to be raised thereunder, the Person with whom
such Subsequent Financing is proposed to be effected, and attached to which
shall be a term sheet or similar document relating thereto. If by 5:30 p.m. (New
York City time) on the fifth (5th) Trading Day after all of the Purchasers have
received the Pre-Notice, notifications by the Purchasers of their willingness to
participate in the Subsequent Financing (or to cause their designees to
participate) is, in the aggregate, less than the total amount of the
Participation Maximum, then the Company may effect the remaining portion of such
Subsequent Financing on the terms and to the Persons set forth in the Subsequent
Financing Notice. If the Company receives no notice from a Purchaser as of such
fifth (5th) Trading Day, such Purchaser shall be deemed to have notified the
Company that it does not elect to participate. The Company must provide the
Purchasers with a second Subsequent Financing Notice, and the Purchasers will
again have the right of participation set forth above in this Section 4.15, if
the Subsequent Financing subject to the initial Subsequent Financing Notice is
not consummated for any reason on the terms set forth in such Subsequent
Financing Notice within 60 Trading Days after the date of the initial Subsequent
Financing Notice. If the Company receives responses to Subsequent Financing
Notices from Purchasers seeking to purchase more than the aggregate amount of
the Participation Maximum, each such Purchaser shall have the right to purchase
their Pro Rata Portion (as defined below) of the Participation Maximum. “Pro
Rata Portion” is the ratio of (x) the Subscription Amount of Shares purchased by
a participating Purchaser and (y) the sum of the aggregate Subscription Amount
of all participating Purchasers.

    

    ARTICLE
V.

    MISCELLANEOUS

     

    5.1   Termination. 
This Agreement may be terminated by any Purchaser, as to such

    

    
      
        
           

        

        
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    Purchaser’s
obligations hereunder only and without any effect whatsoever on the obligations
between the Company and the other Purchasers, by written notice to the other
parties, if the Closing has not been consummated on or before 5:30 p.m. (New
York City time) on October 31, 2008; provided, however, that such
termination will not affect the right of any party to sue for any breach by the
other party (or parties).

     

    5.2   Fees and
Expenses.  Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.  The Company shall pay all
transfer agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Shares to the Purchasers.

     

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

     

    5.4           Notices.  Any
and all notices or other communications or deliveries to be provided by the
Purchaser hereunder, shall be in writing and delivered personally, by facsimile,
pdf or other electronic delivery, or sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth below, or
such other email address, facsimile number or address as the Company may specify
for such purpose by notice to the Purchaser delivered in accordance with this
Section 5.4.  Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, pdf or other electronic delivery,or sent by
a nationally recognized overnight courier service addressed to the Purchaser at
the address set forth below.  Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered via
facsimile or electronic delivery at the facsimile number or email address
specified in this Section 5.4 prior to 5:30 p.m. (New York City time), (ii) the
Business Day immediately following the date of transmission, if such notice or
communication is delivered via facsimile or electronic delivery at the facsimile
number or email address specified in this Section 5.4 between 5:30 p.m. (New
York City time) and 11:59 p.m. (New York City time) on any date, (iii) the
second Business Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given.

    

    If to the
Company (before the Initial Closing), to:

    

    

    Confederate
Motors, Inc.

    (formerly,
French Peak Resources Inc.)

    300 Park
Avenue, Suite 1700

    New York,
NY 10022

    

    
      
        
           

        

        
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    (917)
693-7561 - Phone

    (732)
577-1188 - Fax

    Attention:
Ruth Shepley, CEO

    

    with a
copy to:

    

    Gregg E.
Jaclin, Esq.

    Anslow
& Jaclin, LLP

    195 Route
9 South, Suite 204

    Manalapan,
NJ 07726

    (732)
409-1212 - Phone

    (732)
577-1188 - Fax

    gJaclin@anslowlaw.com

     

    If to the
Company (after the Initial Closing), to:

    

    Confederate
Motors, Inc.

    2222 5th
Avenue South

    Birmingham,
Alabama 35233

    (205)
324-9888- Phone

    (205)
449-9747 - Fax

    matt@confederate.com

    Attention:
H. Matthew Chambers

    

    with a
copy to:

    

    G. Chance
Turner, Esq.

    2 North
20th Street

    Suite
1150

    Birmingham,
AL 35203

    (205)
986-3729 - Phone

    (205)
986-3725 - Fax

    

    If to the
Purchaser, as set forth on the signature pages attached hereto.

    

    5.5           Amendments;
Waivers.  No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Purchasers of at least 75% in
interest of the Shares and Warrant Shares still held by Purchasers or, in the
case of a waiver, by the party against whom enforcement of any such waived
provision is sought.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

     

    

    
      
        
           

        

        
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    5.6           Headings.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

     

    5.7           Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchaser (other
than by merger).  Any Purchaser may assign any or all of its rights
under this Agreement to any Person to whom such Purchaser assigns or transfers
any Shares, provided that such transferee agrees in writing to be bound, with
respect to the transferred Shares, by the provisions of the Transaction
Documents that apply to the “Purchasers.”

      

    5.8             No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.10.

     

    5.9           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflict of laws
thereof.  Each party agrees that all legal proceedings concerning the
interpretation, enforcement and defense of the transactions contemplated by any
of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents)
shall be commenced in the state and federal courts sitting in the City of New
York, County of New York (the “New York
Courts”).  Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under the Transaction
Documents 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 other manner
permitted by applicable law. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to the Transaction Documents
or the transactions contemplated hereby or thereby. If either party shall
commence an action or proceeding to enforce any provisions of the Transaction
Documents, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys’ fees and other
reasonable costs and expenses incurred in the investigation, preparation and
prosecution of such action or proceeding.

    

    
      
        
           

        

        
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    5.10           Survival.  The
representations and warranties shall survive the Closing and the delivery of the
Shares for the applicable statue of limitations.

     

    5.11           Execution.  This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.

     

    5.12           Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

     

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

     

    5.14           Replacement of
Shares.  If any certificate or instrument evidencing any Shares
is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation thereof (in the
case of mutilation), or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction.  The applicant for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs (including customary indemnity) associated with the issuance
of such replacement Shares.

     

    5.15           Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will
be entitled to specific performance under the Transaction
Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by

    

    
      
        
           

        

        
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    reason of
any breach of obligations contained in the Transaction Documents and hereby
agrees to waive and not to assert in any action for specific performance of any
such obligation the defense that a remedy at law would be adequate.

     

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

     

    5.17           Usury.  To
the extent it may lawfully do so, the Company hereby agrees not to insist upon
or plead or in any manner whatsoever claim, and will resist any and all efforts
to be compelled to take the benefit or advantage of, usury laws wherever
enacted, now or at any time hereafter in force, in connection with any claim,
action or proceeding that may be brought by any Purchaser in order to enforce
any right or remedy under any Transaction Document.  Notwithstanding
any provision to the contrary contained in any Transaction Document, it is
expressly agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and,
without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate.  It is agreed that if
the maximum contract rate of interest allowed by law and applicable to the
Transaction Documents is increased or decreased by statute or any official
governmental action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to the
Transaction Documents from the effective date forward, unless such application
is precluded by applicable law.  If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by such Purchaser to the unpaid principal balance
of any such indebtedness or be refunded to the Company, the manner of handling
such excess to be at such Purchaser’s election.

     

    5.18           Independent Nature of
Purchasers’ Obligations and Rights.  The obligations of the
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document.  Nothing contained herein or
in any other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or

    

    
      
        
           

        

        
          30

          
            

          

        

        
           

        

      

    

    

    create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents.  The Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.  The Purchaser
has been represented by its own separate legal counsel in their review and
negotiation of the Transaction Documents.  The Company has elected to
provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so
by the Purchasers.

     

    5.19           Liquidated
Damages.  The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been
canceled.

     

    5.20           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.

     

    5.21           Construction. The
parties agree that each of them and/or their respective counsel has reviewed and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.  As used
herein, unless the context indicates otherwise, the phrase “the Purchaser”
refers to each of the Purchasers, respectively.  Any reference to any
federal, state, local, or foreign law will be deemed also to refer to law as
amended and all rules and regulations promulgated thereunder, unless the context
requires otherwise. The words “include,” “includes,” and “including” will be
deemed to be followed by “without limitation.” The words “this Agreement,”
“herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to
this Agreement as a whole and not to any particular subdivision unless expressly
so limited.

     

    5.22           WAIVER OF JURY
TRIAL.  IN ANY ACTION, SUIT OR PROCEEDING IN ANY JURISDICTION
BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND
INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY
JURY.

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

    

    
      
        
           

        

        
          31

          
            

          

        

        
           

        

      

    

    

    

    

    CONFEDERATE
MOTORS, INC.

     

    By:__________________

     

    Name: Mr.
H. Matthew Chambers

     

    Title: CEO

    

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGE FOR PURCHASERS FOLLOW]

     

    

    
      
        
           

        

        
          32

          
            

          

        

        
           

        

      

    

    

    PURCHASER
SIGNATURE PAGES TO CONFEDERATE MOTOR COMPANY SECURITIES PURCHASE
AGREEMENT

     

    IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    

    Name of
Purchaser:                                                                           

    

    Signature
of Authorized Signatory of Purchaser:

    

    Name of
Authorized
Signatory:                                                                           

    

    Title of
Authorized
Signatory:                                                                           

    

    Email
Address of
Purchaser:                                                                                     

    

    Facsimile
Number of
Purchaser:                                                                                     

    

    Address
for Notice of Purchaser:

    

    Address
for Delivery of Shares for Purchaser (if not same as address for
notice):

    

    ___________________________________________

    

    Subscription
Amount:                                                                           

    

    SSN / EIN
Number:  [provide this under separate cover]

    

    

    
      
        
           

        

        
          33

          
            

          

        

        
           

        

      

    

    

    

    APPENDIX
A

    TO
CONFEDERATE MOTOR COMPANY SECURITIES PURCHASE AGREEMENT

    

    CONFIDENTIAL
INVESTOR QUESTIONNAIRE

    

    Purchaser
represents and warrants that Purchaser is an “accredited investor” because
Purchaser is (initial applicable box(es):

    

    
      	
               
      

            	
              [   ]

            	
              an
      individual whose individual net worth, or joint net worth with his or her
      spouse (if any), at the time of purchase exceeds
    $1,000,000;

            

    

     

    
      	
               
      

            	
              [   ]

            	
              an
      individual who had an individual income in excess of $200,000 in each of
      the two most recent calendar years, or joint income with his or her spouse
      (if any) in excess of $300,000 in each of those years, and has a
      reasonable expectation of reaching the same income level in the current
      calendar year;

            

    

     

    
      	
               
      

            	
              [   ]

            	
              a
      director or an executive officer of the
Company;

            

    

     

    
      	
               
      

            	
              [   ]

            	
              a
      trust or a person acting on behalf of a trust (i) with total assets in
      excess of $5,000,000, (ii) which was not formed for the specific
      purpose of acquiring the Shares, and (iii) whose purchase is directed
      by a person who has such knowledge and experience in financial and
      business matters that he or she is capable of evaluating the merits and
      risks of the prospective
investment;

            

    

     

    
      	
               
      

            	
              [   ]

            	
              any
      organization described in Section 501(c)(3) of the Internal Revenue
      Code, as amended, corporation, Massachusetts or similar business trust, or
      partnership (i) not formed for the specific purpose of acquiring the
      Shares, and (ii) with total assets in excess of $5,000,000;
      or

            

    

     

    
      	
               
      

            	
              [   ]

            	
              any
      entity in which all of the equity owners are accredited
      investors.

            

    

    

    Indicate
whether you are you a broker or dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934 or an affiliate of such broker or
dealer.

    

    [   ]
Yes                      [   ]  No

    

    If yes,
please provide the following information:

    

    Name of
Broker/Dealer ____________________________________

    

    Address
of Broker/Dealer __________________________________

    

    Position
held with or relationship to
Broker/Dealer  ______________________________

    

    
      
        
           

        

        
          34

          
            

          

        

        
           

        

      

    

    

    The
foregoing statements are true and accurate to the best of my information and
belief and I will promptly notify Confederate, Inc. if any of the responses to
the foregoing questions should be changed.

    

    Name of
Purchaser:                                                                           

    

    Signature
of Authorized Signatory of Purchaser:

    

    Name of
Authorized
Signatory:                                                                           

    

    Title of
Authorized
Signatory:                                                                           

    

    

    
      
        
           

        

        
          35

          
            

          

        

        
           

        

      

    

    

    Exhibit
A

    

    Form of Registration Rights
Agreement

     

     

     

     

     

     

     

    

    
      
        
           

        

        
          36

          
            

          

        

        
           

        

      

    

    

    Exhibit
B

    

    Form of Legal
Opinion

    

    1.           The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to enter into and perform its obligations under the Transaction
Documents, and to carry out the transactions contemplated by the Transaction
Documents and each other document or instrument executed by it in connection
therewith or pursuant thereto, including the sale, issuance and delivery of the
Shares and the issuance and delivery of the Warrant Shares upon exercise of the
Warrants.

     

    2.           The
execution and delivery of the Transaction Documents by the Company, the
performance of the Company’s obligations thereunder and the sale, issuance and
delivery of the Shares, have been duly and validly authorized by all necessary
actions on the part of the Company, its directors and its stockholders and each
of the Transaction Documents constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms.  Assuming a sufficient number of authorized but unissued shares
of common stock of the Company, par value $0.001 per share, are available for
issuance when the Warrants are exercised for Warrant Shares, the Warrant Shares,
when issued and delivered upon exercise of the Warrants in accordance with the
Warrants, will be validly issued, fully paid and nonassessable.

     

    3.           The
execution and delivery by the Company of the Transaction Documents, and the
consummation by the Company of the transactions contemplated thereby, do not (a)
to our knowledge, violate the provisions of any U.S. federal law, rule or
regulation applicable to the Company or the Delaware General Corporations Law;
(b) to our knowledge, violate the provisions of the Charter or By-laws; (c) to
our knowledge, violate any judgment, decree, order or award of any court,
governmental body or arbitrator specifically naming the Company; or (d) with or
without notice and/or the passage of time, conflict with or result in the breach
or termination of any term or provision of, or constitute a default under, or
cause any acceleration under, or cause the creation of any lien, charge or
encumbrance upon the properties or assets of the Company pursuant to, any
agreement to which the Company is a party.

     

    4.           The
issuance and sale of the Shares is not subject to any statutory preemptive
rights under the Delaware General Corporations Law, or similar rights under the
Charter or By-laws.

     

    5.           To
our knowledge, there are no legal or governmental proceedings pending to which
the Company or any of its Subsidiaries is a party or of which any property of
the Company or any of its Subsidiaries is the subject which, if determined
adversely to the Company or any of its Subsidiaries, would individually or in
the aggregate have a Material Adverse Effect; and, to our knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.

     

    

    
      
        
           

        

        
          37

          
            

          

        

        
           

        

      

    

    

    Exhibit
C

     

    

    Subscription
Instructions

    

    (a)           Transaction
Documents

    

    Prior to
5:00 p.m. Eastern time on the Closing Date, the Purchaser shall review, complete
and execute this Agreement, the Confidential Investor Questionnaire attached
hereto as Appendix A, and the Registration Rights Agreement (collectively, the
“Transaction Documents”), and deliver such Transaction Documents to the address
provided below. (Executed agreements and questionnaires may be delivered by
facsimile or via electronic mail with an attached “.pdf” using the facsimile
number or email address provided below if the Purchaser immediately thereafter
confirms receipt of such transmission and delivers the original copies of the
agreements and questionnaire as soon as practicable thereafter.)

    

    Confederate
Motor Company, Inc.

    2222 5th
Avenue South

    Birmingham,
Alabama 35233

    (205)
324-9888- Phone

    (205)
449-9747 - Fax

    matt@confederate.com

    Attention:
H. Matthew Chambers

    

    (b)           Subscription
Amount

    

    Simultaneously
with the delivery of the Transaction Documents to Confederate as provided
herein, and in any event on or before 5:00 p.m. Eastern time on the Closing
Date, each Purchaser that is purchasing Shares for cash shall deliver to the
Escrow Agent the full Purchase Price for the Purchaser’s Shares by wire transfer
of immediately available funds pursuant to wire transfer instructions provided
below:

    

    ANSLOW
& JACLIN, LLP - ATTORNEY TRUST ACCOUNT

    As Agent
for Confederate Motors, Inc.,

    formerly
known as French Peak Resources Inc.

    

    ACCOUNT
NO.: 2 0 0 0 0 1 3 2 9 2 9 6 8

    ABA
ROUTING NO.: 0 3 1 2 0 1 4 6 7

    

    BANK:
WACHOVIA BANK NA

                 800
WEST MAIN STREET

                 FREEHOLD,
NEW JERSEY 07728

    

    Any
Purchaser that proposes to purchase Shares with Confederate Debentures shall
tender the original executed Debentures to Confederate Motors, Inc. to be used
in payment for the Shares subscribed for by such Purchaser and hereby
authorizes

    

    
      
        
           

        

        
          38

          
            

          

        

        
           

        

      

    

    

    Confederate, Inc. to mark “CANCELLED”
any Confederate Debentures that the Company accepts in payment for
Shares.

    

    
      
        
           

        

        
          39

          
            

          

        

        
           

        

      

    

    

    DISCLOSURE
SCHEDULES

    

    Reference
is made to the Securities Purchase Agreement (“Purchase Agreement”) of even date
herewith by and among Confederate Motor Company, Inc. (the “Company”) and the
other signatories thereto, regarding the issuance of the Shares of the Company
as defined in the Purchase Agreement.

    

    These
Disclosure Schedules are being furnished pursuant to the Purchase
Agreement.

    

    Capitalized
terms used in these Disclosure Schedules and not otherwise defined herein have
the meaning given to them in the Purchase Agreement.

    

    The fact
that an item is disclosed in these Disclosure Schedules does not mean that such
item is required to be disclosed or that it is material.

    

    Dated as
of November 1, 2008.

    

    Schedule 3.1
(a)   Direct and Indirect Subsidiaries of the
Company

    

    The
Company has no direct or indirect subsidiaries.

    

    Schedule 3.1
(f)  Issuance of the Shares

    

    The
Securities are subject to restrictions under applicable securities
laws.

    

    Schedule 3.1
(g)  Capitalization of the Company

    

    This
Schedule 3.1(g) describes the capitalization of Confederate Motor Company, Inc.
immediately prior to the consummation of the Transactions.  Please
refer to the Private Placement Memorandum for this Offering and the Transaction
Documents for a description of the post-transaction capitalization of the
Company.

    

    The
Transaction Documents contemplate the issuance of certain
securities.

    

    There are
stockholder agreements between the Company and the following stockholders,
respectively:

    

    Schedule 3.1
(h)  Company Financial Statements

    

    The
Company Financial Statements follow.

    

    Schedule 3.1
(i)  Material Changes

    

    None.

    

    Schedule 3.1
(n)  Title to Assets

    

    
      
        
           

        

        
          40

          
            

          

        

        
           

        

      

    

    

    

    None.

    

    Schedule 3.1 (q)
Transactions With Affiliates and Employees

    

    None.

    

    Schedule 3.1
(s)  Certain Fees

    

    Section 5
of the letter of intent between CalibraX Capital Advisors, LLC and the Company
contemplates that broker-dealers will receive a cash commission equal to 7% of
the funds raised in the PIPE and warrant coverage for 7% of the Shares placed in
the PIPE.

    

    Schedule 3.1
(y)  Solvency

    

    Indebtedness

    

    As of
November 1, 2008, immediately prior to the consummation of the Transactions,
Confederate has the following Indebtedness:

    

    
      
        
          
            
              	 
      	 	
                      Balance

                    	 
	
                      Government
      agency note (SBA)

                    	 	$	96,962	 
	
                      Bank
      note payable

                    	 	 	6,744	 
	
                      Bank
      note payable

                    	 	 	28,784	 
	
                      Customer
      note payable

                    	 	 	84,101	 

            

          

        

      

    

    

    

    Schedule 3.1
(dd)  No Disagreements With Accountants and
Lawyers

    

    None.

     

    41f8k021209ex4ii_confederate.htm

    Exhibit 4.2

    
 

    REGISTRATION
RIGHTS AGREEMENT

    

    This
Securities Purchase Agreement (this “Agreement”) is dated
as of February 12, 2009 between Confederate Motors, Inc., a Delaware corporation
(f/k/a French Peak Resources Inc., the “Company”), and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and
collectively the “Purchasers”).

    

    RECITALS:

    

    WHEREAS,
in connection with the Purchase Agreement by and among the parties hereto of
even date herewith (the “Purchase Agreement”),
the Company has agreed, upon the terms and subject to the conditions set forth
in the Purchase Agreement, to issue and sell to each Purchaser shares of the
Company’s common stock, $0.001 par value per share (the “Common
Stock”);

    

    WHEREAS,
to induce the Purchasers to execute and deliver the Purchase Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the “Securities Act”), and
applicable state securities laws;

    

    NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and each of the Purchasers hereby
agree as follows:

    

    ARTICLE
I.

    DEFINITIONS

    

    1.1    Definitions.  Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:

    

    “Additional Effective
Date” means each date any Additional Registration Statement is declared
effective by the Commission.

    

    “Additional Effectiveness
Deadline” means the earlier of the date which is (i) in the event
that such Additional Registration Statement is not subject to a review by the
Commission, one hundred twenty (120) calendar days after such Additional
Filing Date or (ii) in the event that such Additional Registration
Statement is subject to a review by the Commission, one-hundred and fifty
(150) calendar days after such Additional Filing Date.

    

     

    “Additional Filing
Date” means the date on which any Additional Registration Statement is
filed with the Commission.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    “Additional Filing
Deadline” means if Cutback Shares are required to be included in any
Additional Registration Statement, the date that is the later of (i) the
date ninety (90) days after the date substantially all of the Registrable
Securities registered under the immediately preceding Registration Statement are
sold and (ii) the date six (6) months from the Initial Effective Date
or the immediately preceding Additional Effective Date, as applicable, or, if
earlier than the date determined pursuant to clauses (i) or
(ii) above, ninety (90) days from the date the Commission first
expressly permits the Company to file the Additional Registration Statement for
the applicable Cutback Securities.  If an Additional Filing Deadline
would otherwise occur during an Allowable Grace Period, it shall be extended to
the first Trading Day after the end of that Allowable Grace Period.

    

    “Additional Registrable
Securities” means (i) any Cutback Shares not previously included on
a Registration Statement and (ii) any capital stock of the Company issued
or issuable with respect to securities that are then Registrable Securities, as
a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise.

    

    “Additional Registration
Statement” means a registration statement or registration statements of
the Company filed under the Securities Act covering any Additional Registrable
Securities.

    

    “Additional Required
Registration Amount” means any Cutback Shares not previously included on
a Registration Statement, all subject to adjustment as provided in
Section 2(f).

    

    “Agent Warrants” means
the warrant issued to CalibraX Capital Advisors, LLC as placement agent or other
registered broker-dealers with respect to Common Stock placed in connection with
the Offering.

    

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

    

    “Closing Date” shall
have the meaning set forth in the Purchase Agreement.

    

    “Common Stock” shall
mean common stock, par value $0.001 per share, of the Company.

    

    “Cutback Shares” means
any of the Initial Required Registration Amount (without regard to clause (II)
in the definition thereof) of Registrable Securities not included in all
Registration Statements previously declared effective hereunder as a result of a
limitation on the maximum number of shares of Common Stock of the Company
permitted to be registered by the staff of the Commission pursuant to Rule
415.

    

    “Debentures” means the
5% Convertible Debentures of the Company.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Effective Date” means
the Initial Effective Date and any Additional Effective Date, as
applicable.

    

    “Effectiveness
Deadline” means the Initial Effectiveness Deadline and any Additional
Effectiveness Deadline, as applicable.

     

    “Filing Date” means
the Initial Filing Date and any Additional Filing Date, as
applicable.

    

    “Filing Deadline”
means the Initial Filing Deadline and any Additional Filing Deadline, as
applicable.

    

    “Filing Requirement”
shall mean that the Company has filed all required reports under Section 13
or 15(d) of the Exchange Act during the preceding 12 months period, other than
Form 8-K reports.

    

    “Initial Effective
Date” means the date the Initial Registration Statement has been declared
effective by the Commission.

    

    “Initial Effectiveness
Deadline” means the earlier of the date which is (i) in the event
that the Initial Registration Statement is not subject to a review by the
Commission, one-hundred and twenty (120) calendar days after the Initial
Filing Deadline or (ii) in the event that the Initial Registration
Statement is subject to a review by the Commission, one-hundred and fifty
(150) calendar days after the Initial Filing Deadline.

    

    “Initial Filing Date”
means the date the Initial Registration Statement has been filed with the
Commission.

    

    “Initial Filing
Deadline” means the date that is 45 days after the Initial
Closing.

    

    “Initial Registrable
Securities” means (i) the shares of Common Stock sold under the
Purchase Agreement to Purchasers, (ii) the shares of Common Stock issued
upon conversion of the Debentures (but only to the extent that such conversion
occurs at the Initial Closing), (iii) shares of Common Stock underlying the
Agent Warrants, and (iv) any capital stock of the Company issued or
issuable with respect to the Common Stock referred to in clauses (i), (ii), or
(iii) of this definition (to the extent that such shares of Common Stock are
then Registrable Securities).

    

    “Initial Registration
Statement” means a registration statement or registration statements of
the Company filed under the Securities Act covering the Initial Registrable
Securities.

    

    “Initial Required
Registration Amount” means the lesser of (I) the sum, without
duplication, of (a), (b) and (c), where (a) is the number of shares of
Common Stock sold under the Purchase Agreement to Purchasers, (b) is the
number of shares of Common Stock issued upon conversion of the Debentures (to
the extent that such conversion occurs at the Initial Closing), and (c) is the
number of shares of Common Stock underlying the Agent Warrants, and (II) such
other amount as may be required by the

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    staff of
the Commission pursuant to Rule 415 with any cutback applied pro rata to all
holders of Registrable Securities.

    

    “Non-Affiliate”, as of
particular date, means a Person who is not then an "affiliate" of the Company,
as such term is used in Rule 144, and who has not been such an affiliate during
the then immediately preceding 90 days.

    

    “Purchaser” means a
Purchaser or any transferee or assignee thereof to whom a Purchaser assigns its
rights as a holder of Registrable Securities under this Agreement and who agrees
to become bound by the provisions of this Agreement in accordance with Section
9.1 and any transferee or assignee thereof to whom a transferee or assignee
assigns its rights as a holder of Registrable Securities under this Agreement
and who agrees to become bound by the provisions of this Agreement in accordance
with Section 9.1.  For purposes of this Agreement each holder of a
Debenture that converts into shares of Common Stock at the Initial Closing shall
be treated as a “Purchaser”.

    

    “register,” “registered,” and
“registration”
refer to a registration effected by preparing and filing one or more
Registration Statements (as defined below) in compliance with the Securities Act
and pursuant to Rule 415 and the declaration or ordering of effectiveness of
such Registration Statement(s) by the Commission.

    

    “Registration Period”
shall have the meaning ascribed to such term in Section 3.1(a).

    

    “Registrable
Securities” means the Initial Registrable Securities and the Additional
Registrable Securities; provided, however, that a Security shall cease to be a
Registrable Security upon the earliest to occur of the following: (i) a
Registration Statement registering such Security under the Securities Act has
been declared or becomes effective and such security has been sold or otherwise
transferred by the holder thereof pursuant to and in a manner contemplated by
such effective Registration Statement, (ii) such Security is sold pursuant
to Rule 144 under circumstances in which any legend borne by such Security
relating to restrictions on transferability thereof, under the Securities Act or
otherwise, is removed by the Company, (iii) such Security is eligible to be
sold pursuant to Rule 144 without condition or restriction, or (iv) such
Security shall cease to be outstanding.

    

    “Registration
Statement” means the Initial Registration Statement and any Additional
Registration Statement, as applicable.

    

    “Required Purchasers”
means Purchasers that hold at least 66.67% of the Registrable
Securities.

    

    “Rule 144” means Rule
144 promulgated under the Securities Act or any successor rule.

    

    “Rule 144 Period”
shall mean the period from the six-month anniversary of the Closing Date until
the one-year anniversary of the Closing Date.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    “Rule 415” means Rule
415 promulgated under the Securities Act or any successor rule providing for
offering securities on a continuous or delayed basis.

    

    “Shares” means the
shares of Common Stock that are Initial Registrable Securities.

    

    

    ARTICLE
II.

    REGISTRATION

    

    2.1   Registration.

    

    (a)  Initial Mandatory
Registration. The Company shall prepare, and, as soon as practicable but
in no event later than the Initial Filing Deadline, file with the Commission the
Initial Registration Statement on Form S-3 covering the resale of at least the
number of shares of Common Stock equal to the Initial Required Registration
Amount determined as of date the Registration Statement is initially filed with
the Commission. In the event that Form S-3 is unavailable for such a
registration, the Company shall use such other form as is available for such a
registration on another form reasonably acceptable to the Required Purchasers,
subject to the provisions of Section 2(e). Form S-1 shall be treated as
reasonably acceptable to the Required Purchasers, subject to the provisions of
Section 2(e). The Initial Registration Statement prepared pursuant hereto shall
register for resale that number of shares of Common Stock equal to the Initial
Required Registration Amount determined as of the date such Initial Registration
Statement is initially filed with the Commission. The Initial Registration
Statement shall contain (except if otherwise directed by the Required
Purchasers) the “Plan
of Distribution” sections for the Purchasers in substantially the form
attached hereto as Exhibit B and any
information provided by the Purchasers in a completed selling stockholder
questionnaire in substantially the form attached hereto as Exhibit C. The
Company shall use its reasonable best efforts to have the Initial Registration
Statement declared effective by the Commission as soon as practicable, but in no
event later than the Initial Effectiveness Deadline. To the extent the staff of
the Commission requires that the number of Registrable Securities registered for
resale on the Initial Registration Statement be reduced, the Company shall
reduce the number of Registrable Securities so registered on such Registration
Statement to one-third (1/3) of the Company’s non-affiliate public float on
the Initial Closing Date (or such lesser number as required by the staff of the
Commission), and will file one or more Additional Registration Statements
covering the excess shares, as described in Section 2.1(b). By 9:30 a.m.
New York time on the Business Day following the Initial Effective Date, the
Company shall file with the Commission in accordance with Rule 424 under the
Securities Act the final prospectus to be used in connection with sales pursuant
to such Initial Registration Statement.

    

    (b)  Additional Mandatory
Registrations. The Company shall prepare, and, as soon as practicable but
in no event later than the Additional Filing Deadline, file with the Commission
a Registration Statement on Form S-3 covering the resale of all of the
Additional Registrable Securities not previously registered on a Registration
Statement hereunder. To the extent the staff of the Commission does not permit
the Additional

    
      
         

      

      
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    Required
Registration Amount to be registered on an Additional Registration Statement,
the Company shall file Additional Registration Statements successively trying to
register on each such Additional Registration Statement the maximum number of
remaining Additional Registrable Securities until the Additional Required
Registration Amount has been registered with the Commission. In the event that
Form S-3 is unavailable for such a registration, the Company shall use such
other form as is available for such a registration on a form reasonably
acceptable to the Required Purchasers, subject to the provisions of
Section 2(e). Form S-1 shall be treated as reasonably acceptable to the
Required Purchasers, subject to the provisions of Section 2(e). Each Additional
Registration Statement prepared pursuant hereto shall register for resale that
number of shares of Common Stock equal to the Additional Required Registration
Amount determined as of the date such Additional Registration Statement is
initially filed with the Commission (subject to reductions to the extent the
staff of the Commission requires that the number of Additional Registrable
Securities registered for resale on such Additional Registration Statement be
reduced).  Each Additional Registration Statement shall contain
(except if otherwise directed by the Required Purchasers) the “Plan of Distribution”
section in substantially the form attached hereto as Exhibit B. The
Company shall use its reasonable best efforts to have each Additional
Registration Statement declared effective by the Commission as soon as
practicable, but in no event later than the Additional Effectiveness Deadline
for such Additional Registration Statement. By 9:30 am on the Business Day
following the Additional Effective Date for each Additional Registration
Statement, the Company shall file with the Commission in accordance with Rule
424 under the Securities Act the final prospectus to be used in connection with
sales pursuant to such Additional Registration Statement.

    

    (c)  Allocation of Registrable
Securities. The initial number of Registrable Securities included in any
Registration Statement and any increase or decrease in the number of Registrable
Securities included therein shall be allocated pro rata among the Purchasers
based on the number of Registrable Securities held by each Purchaser at the time
the Registration Statement covering such initial number of Registrable
Securities or increase or decrease thereof is declared effective by the
Commission. In the event that an Purchaser sells or otherwise transfers any of
such Purchaser’s Registrable Securities, each transferee shall be allocated a
pro rata portion of the then remaining number of Registrable Securities included
in such Registration Statement for such transferor. Any shares of Common Stock
included in a Registration Statement and which remain allocated to any Person
which ceases to hold any Registrable Securities covered by such Registration
Statement shall be allocated to the remaining Purchasers, pro rata based on the
number of Registrable Securities then held by such Purchasers which are covered
by such Registration Statement.  In no event shall the Company include
any securities other than Registrable Securities on any Registration Statement
without the prior written consent of the Required Purchasers.

    

    (d)  Legal Counsel.
Subject to Section 5 hereof, the Required Purchasers shall have the right
to designate one legal counsel to review and oversee any registration pursuant
to this Section 2.1 (“Legal Counsel”), by
giving written notice of such designation to the Company.  The Company
and Legal Counsel shall reasonably cooperate with each other

    
      
         

      

      
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    in
performing the Company’s obligations under this Agreement.

    

    (e)  Ineligibility for Form
S-3. In the event that Form S-3 is not available for the registration of
the resale of Registrable Securities hereunder, the Company shall
(i) register the resale of the Registrable Securities on a form reasonably
acceptable to the Required Purchasers (it being understood that Form S-1 shall
be treated as reasonably acceptable) and (ii) undertake to register the
Registrable Securities on Form S-3 as soon as the use of such form for such
purpose is permitted, provided that the Company shall maintain the effectiveness
of the Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the Commission. Notwithstanding any provision to the contrary
herein, the Company shall have no obligation to register any securities on any
form (or file or maintain the effectiveness of any registration statement) after
the end of the Registration Period, as defined in Section 3.1(a).

    

    (f)  Sufficient Number of Shares
Registered. In the event the number of shares available under a
Registration Statement filed pursuant to Section 2.1(a) or 2.1(b) is
insufficient to cover all of the Registrable Securities required to be covered
by such Registration Statement or an Purchaser’s allocated portion of the
Registrable Securities pursuant to Section 2.1(c), the Company shall, if
the Registration Statement has not been declared effective, amend the applicable
Registration Statement, or, in all other cases, file a new Registration
Statement (on the short form available therefor, if applicable), so as to cover
at least the Initial Required Registration Amount or the Additional Required
Registration Amount, as applicable to the applicable Registration Statement, as
of the Trading Day immediately preceding the date of the filing of such
amendment or new Registration Statement, in each case, as soon as practicable,
but in any event not later than thirty (30) days after the necessity
therefor arises. The Company shall use its reasonable best efforts to cause such
amendment or new Registration Statement to become effective as soon as
practicable following the filing thereof. For purposes of the foregoing
provision, the number of shares available under a Registration Statement shall
be treated as “insufficient to cover all of the Registrable Securities” if at
any time the number of shares of Common Stock available for resale under the
Registration Statement is (A) less than the product determined by multiplying
(i) the Initial Required Registration Amount or Additional Required
Registration Amount, as applicable to the applicable Registration Statement, as
of such time by (ii) 0.90.  For greater certainty, the number of
shares available under a Registration Statement shall not be treated as
“insufficient to cover all of the Registrable Securities” to the extent that the
staff of the Commission requires that the number of Registrable Securities
registered for resale on such Registration Statement be equal or less to such
number.

    

    (g)  Effect of Failure to File
and Obtain and Maintain Effectiveness of Registration Statement. If
(i) a Registration Statement covering all of the Registrable Securities
required to be covered thereby and required to be filed by the Company pursuant
to this Agreement is (A) not filed with the Commission on or before the
respective Filing Deadline (a “Filing Failure”) or
(B) not declared effective by the Commission on or before the respective
Effectiveness Deadline (an “Effectiveness Failure”) or (ii) on
any

    
      
         

      

      
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    day
during the Registration Period sales of all of the Registrable Securities
required to be covered by such Registration Statement cannot be made (other than
during an Allowable Grace Period (as defined in Section 3.1(r)) pursuant to
such Registration Statement or otherwise (including, without limitation, because
of a failure to keep such Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to such Registration
Statement or to register a sufficient number of shares of Common Stock or to
maintain the listing of the shares of Common Stock) (a “Maintenance Failure”)
then, as liquidated damages (which remedy shall not be exclusive of any other
remedies available in equity), the Company shall pay to each Purchaser whose
Shares are required to be included in such Registration Statement an amount in
cash equal to one percent (1.0%) of the aggregate Purchase Price (as such
term is defined in the Purchase Agreement) of such Purchaser’s Registrable
Securities included in such Registration Statement on the day of the respective
Filing Failure, Effectiveness Failure or Maintenance Failure for the first
thirty (30) days during which such Filing Failure, Effectiveness Failure or
Maintenance Failure continues (pro rated for any period totaling less than
thirty (30) days), and thereafter one percent (1.0%) of the aggregate
Purchase Price (as such term is defined in the Purchase Agreement) of such
Purchaser’s Registrable Securities included in such Registration Statement for
each ensuing thirty (30) day period during which such Filing Failure,
Effectiveness Failure or Maintenance Failure continues (pro rated for any period
totaling less than thirty (30) days), subject to a maximum penalty of ten
percent (10%) of the aggregate Purchase Price (as such term is defined in
the Purchase Agreement) paid by such Purchaser pursuant to the Purchase
Agreement for all Registration Delay Payments (as defined below) payable to an
Purchaser under this Agreement. The payments to which an Purchaser shall be
entitled pursuant to this Section 2.1(f) are referred to herein as
“Registration Delay Payments.” Registration Delay Payments shall be paid by the
tenth day following the calendar month during which such Registration Delay
Payments are incurred. In the event the Company fails to make Registration Delay
Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of one percent (1.0%) per month (prorated for partial
months) until paid in full.

     

    (h)  Effect
of Failure to Timely File Required Reports. If at any time
prior to the date on which the Purchasers shall have sold all of the Registrable
Securities (a) the Company does not meet the Filing Requirement as of the
determination date and (b) all of such Purchaser’s Registrable Securities are
not registered pursuant to an effective Registration Statement, it shall pay to
each Purchaser an amount in cash equal to one percent (1.0%) of the
aggregate Purchase Price (as such term is defined in the Purchase Agreement) of
such Purchaser’s Registrable Securities on the date of such failure for the
first thirty (30) days during which such failure continues (prorated for
any period totaling less than thirty (30) days) and thereafter an
additional (1.0%) of the aggregate Purchase Price (as such term is defined
in the Purchase Agreement) of such Purchaser’s Registrable Securities for each
ensuing thirty (30) day period (prorated for any period totaling less than
thirty (30) days) until the date that Purchasers that are then
Non-Affiliates may sell all of their Registrable Securities without volume or
holding period restrictions pursuant to Rule 144.

    
      
         

      

      
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    (i)  Neither
the Company nor any Subsidiary (as defined in the Purchase Agreement) nor
affiliate thereof shall identify any Purchaser as an underwriter in any public
disclosure or filing with the Commission or any Trading Market without the prior
written consent of such Purchaser and any Purchaser being deemed an underwriter
by the Commission shall not relieve the Company of any obligations it has under
this Agreement or any other Transaction Document provided, however, that the
foregoing shall not prohibit the Company from including the disclosure found in
the “Plan of Distribution” section attached hereto as Exhibit B in the
Registration Statement.

    

    ARTICLE
III.

    RELATED
COMPANY OBLIGATIONS

    

    3.1.
   Related
Obligations.  At such time as the Company is obligated to file
a Registration Statement with the Commission pursuant to Sections 2.1(a),
(b), (e) or (f), the Company will use its reasonable best efforts to effect the
registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the
following obligations:

    

    

    (a)  The
Company shall submit to the Commission, within three (3) Business Days
after the Company learns that no review of a particular Registration Statement
will be made by the staff of the Commission or that the staff has no further
comments on a particular Registration Statement, as the case may be, a request
for acceleration of effectiveness of such Registration Statement to a time and
date not later than 48 hours after the submission of such request. The Company
shall keep each Registration Statement effective pursuant to Rule 415 at all
times until the earlier of (i) two years after the last Closing Date under the
Purchase Agreement; (ii) the date that Purchasers that are then Non-Affiliates
may sell all of their Registrable Securities covered by such Registration
Statement without volume or holding period restrictions pursuant to Rule 144 (or
if a holding period restriction then applies, enough time has passed since the
Closing to satisfy such holding period restriction), (iii) the date on
which the Purchasers shall have sold all of the Registrable Securities covered
by such Registration Statement, or (iv) the date when the securities
covered by the Registration Statement are no longer Registrable Securities as
defined herein (the “Registration
Period”). The Company shall ensure that each Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading.

    

    (b)  The
Company shall prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may
be necessary to keep such Registration Statement effective at all times during
the Registration Period, and, during such period, comply with the provisions of
the Securities

    
      
         

      

      
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    Act with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof as set forth in such
Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3.1(b)) by reason of the Company filing
a report on Form 10-Q, Form 10-K or any analogous report under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), the Company shall have
incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the Commission
within two Trading Days after the Exchange Act report is filed which created the
requirement for the Company to amend or supplement such Registration
Statement.

    

    (c)  The
Company shall (A) permit Legal Counsel to review and comment upon (i) a
Registration Statement at least five (5) Business Days prior to its filing
with the Commission and (ii) all amendments and supplements to all
Registration Statements (except for any reports filed under the Exchange Act
which may be deemed to supplement or amend the Registration Statement, so long
as such report was not filed solely for such purpose) within a reasonable number
of days prior to their filing with the Commission, and (B) not file any
Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel reasonably and timely objects.  The Company shall
furnish to Legal Counsel, without charge, (i) copies of any correspondence
from the Commission or the staff of the Commission to the Company or its
representatives relating to any Registration Statement, (ii) promptly after
the same is prepared and filed with the Commission, one copy of any Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by an
Purchaser, and all exhibits (unless such Registration Statement is available on
EDGAR) and (iii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto (unless such Registration Statement is
available on EDGAR). The Company shall reasonably cooperate with Legal Counsel
in performing the Company’s obligations pursuant to this
Section 3.1.

    

    (d)  The
Company shall furnish each Purchaser whose Registrable Securities are included
in any Registration Statement, without charge, (i) promptly after the same
is prepared and filed with the Commission, at least one copy of such
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, if
requested by an Purchaser, all exhibits and each preliminary prospectus (unless
such Registration Statement is available on EDGAR), (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the
prospectus included in such Registration Statement and all amendments and
supplements thereto (unless such amendments and supplements are available on
EDGAR) and (iii) such other documents, including copies of the foregoing
(regardless of whether such documents are available upon EDGAR) and any
preliminary or final prospectus, as such Purchaser may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Purchaser.

    
      
         

      

      
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    (e)  The
Company shall use its reasonable best efforts to (i) register and qualify,
unless an exemption from registration and qualification applies, the resale by
Purchasers of the Registrable Securities covered by a Registration Statement
under such other securities or “blue sky” laws of all applicable jurisdictions
in the United States, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be reasonably necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and
(iv) take all other actions reasonably necessary or advisable to qualify
the Registrable Securities for sale in such jurisdictions during the
Registration Period; provided, however, that the
Company shall not be required in connection therewith or as a condition thereto
to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3.1(e),
(y) subject itself to general taxation in any such jurisdiction, or
(z) file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify Legal Counsel and each Purchaser who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of notice of the initiation or
threatening of any proceeding for such purpose.

    

    (f)  The
Company shall notify Legal Counsel and each Purchaser in writing of the
happening of any event, as promptly as practicable after becoming aware of such
event, as a result of which the prospectus included in a Registration Statement,
as then in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and, subject to Section 3.1(r), promptly
prepare a supplement or amendment to such Registration Statement to correct such
untrue statement or omission, and deliver ten (10) copies of such
supplement or amendment to Legal Counsel and each Purchaser (or such other
number of copies as Legal Counsel or such Purchaser may reasonably request)
(unless such supplements or amendments are available on EDGAR). The Company
shall also promptly notify Legal Counsel and each Purchaser in writing
(i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when a Registration Statement or any
post-effective amendment has become effective (notification of such
effectiveness shall be delivered to Legal Counsel and each Purchaser by
facsimile no later than the next Business Day of such effectiveness and by
overnight mail), (ii) of any request by the Commission for amendments or
supplements to a Registration Statement or related prospectus or related
information, and (iii) of the Company’s reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate.

    

    (g)  The
Company shall use its reasonable best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement, or
the suspension

    
      
         

      

      
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    of the
qualification of any of the Registrable Securities for sale in any jurisdiction
and, if such an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and to notify Legal Counsel
and each Purchaser who holds Registrable Securities being sold of the issuance
of such order and the resolution thereof or its receipt of notice of the
initiation or threat of any proceeding for such purpose.

    

    (h)  If
any Purchaser is deemed to be, alleged to be or reasonably believes it may be
deemed or alleged to be, an underwriter or is required under applicable
securities law to be described in the Registration Statement as an underwriter
of Registrable Securities, at the reasonable request of such Purchaser, the
Company shall furnish to such Purchaser, on the date of the effectiveness of the
Registration Statement and thereafter from time to time on such dates as an
Purchaser may reasonably request (i) a letter, dated such date, from the
Company’s independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the applicable Purchasers, and
(ii) an opinion, dated as of such date, of counsel representing the Company
for purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
applicable Purchasers.

    

    (i)  If
any Purchaser is deemed to be, alleged to be or reasonably believes it may be
deemed or alleged to be, an underwriter or is required under applicable
securities law to be described in the Registration Statement as an underwriter
of Registrable Securities, upon the request of such Purchaser, the Company shall
make available for inspection by (i) such Purchaser, (ii) Legal
Counsel and (iii) one firm of accountants or other agents retained by the
Purchasers (collectively, the “Inspectors”), all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall
be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Purchaser shall hold (and
shall cause its other Inspectors to hold) in strict confidence and shall not
(and shall cause its other Inspectors not to) make any disclosure (except to the
other Inspectors) or use of any Record or other confidential information
regarding the Company, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the Securities Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or
(c) the information in such Records has been made generally available to
the public other than by disclosure in violation of this or any other
Transaction Document. Each Purchaser agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement between
the Company and any Purchaser) shall be deemed to limit the Purchasers’ ability
to sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and

    
      
         

      

      
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    regulations.

    

    (j)  The
Company shall hold in confidence and not make any disclosure of information
(other than information provided to the Company by an Purchaser pursuant to
Section 4.1(a)) concerning an Purchaser provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or
state securities laws or the rules of any exchange or other market in which the
Company’s securities are then traded, listed or quoted, (ii) the disclosure
of such information is necessary to avoid or correct a misstatement or omission
in any Registration Statement, (iii) the release of such information is
ordered pursuant to a subpoena or other final, non-appealable order from a court
or governmental body of competent jurisdiction or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this Agreement, any other agreement to which the Company is a
party, or, to the Company’s knowledge, any other agreement. The Company agrees
that it shall, upon learning that disclosure of such information concerning an
Purchaser is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt written notice to such
Purchaser and allow such Purchaser, at the Purchaser’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.

    

    (k)  The
Company shall use its reasonable best efforts to cause all of the
Registrable Securities covered by a Registration Statement to be listed on each
Trading Market. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3.1(k).

    

    (l)  The
Company shall cooperate with the Purchasers who hold Registrable Securities
being offered and, to the extent applicable, facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legend) representing
the Registrable Securities to be offered pursuant to a Registration Statement
and enable such certificates to be in such denominations or amounts, as the case
may be, as the Purchasers may reasonably request and registered in such names as
the Purchasers may request.

    

    (m)  If
requested by an Purchaser, the Company shall (i) as soon as practicable
incorporate in a prospectus supplement or post-effective amendment such
information as an Purchaser reasonably requests to be included in the Plan of
Distribution or Selling Stockholder sections relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; (ii) as
soon as practicable make all required filings of such prospectus supplement or
post-effective amendment after being notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment; and (iii) as
soon as practicable, supplement or make amendments to any Registration Statement
if reasonably requested by an Purchaser holding any Registrable
Securities.

    

    (n)  The
Company shall use its reasonable best efforts to cause the Registrable
Securities

    
      
         

      

      
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    covered
by a Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities by the Purchasers.

    

    (o)  [intentionally
omitted]

    

    (p)  The
Company shall otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission in connection with any
registration hereunder.

    

    (q)  Within
five (5) Business Days after a Registration Statement which covers
Registrable Securities is ordered effective by the Commission, the Company shall
deliver to the Transfer Agent for such Registrable Securities (with copies to
the Purchasers whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the Commission in the form attached hereto as Exhibit
A.

    

    (r)  Notwithstanding
anything to the contrary herein, at any time after any Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company, in the best interest of the
Company otherwise required or otherwise render the Registration Statement
unavailable for sales to be effected thereunder (a “Grace Period”);
provided, that the Company shall promptly (i) notify the Purchasers in
writing of the existence of material, non-public information giving rise to a
Grace Period (provided that in each notice the Company will not disclose the
content of such material, non-public information to the Purchasers) and the date
on which the Grace Period will begin on the first day that the effectiveness of
the Registration Statement is suspended, and (ii) notify the Purchasers in
writing of the date on which the Grace Period ends; and, provided further, that
no Grace Period shall exceed twenty-five (25) consecutive days and during
any three hundred sixty five (365) day period such Grace Periods shall not
exceed an aggregate of sixty (60) days and the first day of any Grace
Period must be at least five (5) Trading Days after the last day of any
prior Grace Period (each, an “Allowable Grace Period”). For purposes of
determining the length of a Grace Period above, the Grace Period shall begin on
and include the date the Purchasers receive the notice referred to in clause
(i) and shall end on and include the later of the date the Purchasers
receive the notice referred to in clause (ii) and the date referred to in
such notice. The provisions of Section 3.1(g) hereof shall not be
applicable during the period of any Allowable Grace Period. Upon expiration of
the Grace Period, the Company shall again be bound by the first sentence of
Section 3.1(f) with respect to the information giving rise thereto unless
such material, non-public information is no longer applicable. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Purchaser in accordance
with the terms of the Purchase Agreement in connection with any sale of
Registrable Securities with respect to which an Purchaser has entered into a
contract for sale, and delivered a copy of the prospectus included as part of
the applicable Registration Statement (unless an exemption from such prospectus
delivery requirement

    
      
         

      

      
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    exists),
prior to the Purchaser’s receipt of the notice of a Grace Period and for which
the Purchaser has not yet settled.

    

     

    (s)  If
NASDR Rule 2710 requires any broker-dealer to make a filing prior to executing a
sale by a Purchaser, the Company shall (i) make an Issuer Filing with the
NASDR, Inc. Corporate Financing Department pursuant to proposed NASDR Rule
2710(b)(10)(A)(i), (ii) respond within five Trading Days to any comments
received from NASDR in connection therewith, and (iii) pay the filing fee
required in connection therewith.

    

    ARTICLE
IV

    PURCHASER
OBLIGATIONS

    

    4.1  Obligations of the
Purchasers.

    

    (a)  At
least five (5) Business Days prior to the first anticipated filing date of
a Registration Statement, the Company shall send each Purchaser a selling
stockholder questionnaire in substantially the form attached hereto as Exhibit C. It shall
be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Purchaser that such Purchaser shall furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it
as shall be reasonably required to effect and maintain the effectiveness of the
registration of such Registrable Securities within five (5) Business Days
and such Purchaser shall execute such documents in connection with such
registration as the Company may reasonably request.

    

    (b)  Each
Purchaser, by such Purchaser’s acceptance of the Registrable Securities, agrees
to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of any Registration Statement
hereunder, unless such Purchaser has notified the Company in writing of such
Purchaser’s election to exclude all of such Purchaser’s Registrable Securities
from such Registration Statement.

    

    (c) Each
Purchaser agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3.1(g) or the first
sentence of Section 3.1(f), such Purchaser will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Purchaser’s receipt of the
copies of the supplemented or amended prospectus contemplated by
Section 3.1(g) or the first sentence of Section 3.1(f) or receipt of
notice that no supplement or amendment is required. Notwithstanding anything to
the contrary, the Company shall cause its transfer agent to deliver unlegended
shares of Common Stock to a transferee of an Purchaser in accordance with the
terms of the Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Purchaser has entered into a contract for
sale prior to the Purchaser’s receipt of a notice from the Company of the
happening of any event of the kind described in Section 3.1(g) or the first
sentence of Section 3.1(f) and for which the Purchaser has not yet
settled.

    
      
         

      

      
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    (d)  Each
Purchaser covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it or an exemption therefrom
in connection with sales of Registrable Securities pursuant to the Registration
Statement.

    

     

    ARTICLE
V

    EXPENSES
OF REGISTRATION

    

     

    5.1. Expenses of
Registration. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses of the Company’s counsel and auditors) (A)
with respect to filings made with the Commission, (B) with respect to filings
required to be made with any Trading Market on which the Common Stock is then
listed for trading, (C) in compliance with applicable state securities or Blue
Sky laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities) and (D) if
not previously paid by the Company in connection with an issuer filing, with
respect to any filing that may be required to be made by any broker through
which a Purchaser intends to make sales of Registrable Securities with the FINRA
pursuant to NASD Rule 2710, so long as the broker is receiving no more than a
customary brokerage commission in connection with such sale, (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder. In no
event shall the Company be responsible for any broker or similar commissions of
any Purchaser or, except to the extent provided for in the Transaction
Documents, any legal fees or other costs of the Purchasers.

    

    ARTICLE
VI

    INDEMNIFICATION

    

    6.1. Indemnification.  In
the event any Registrable Securities are included in a Registration Statement
under this Agreement:

    

    (a)  To
the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend each Purchaser, the directors, officers,
members,

    
      
         

      

      
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    partners,
employees, agents, representatives of, and each Person, if any, who controls any
Purchaser within the meaning of the Securities Act or the Exchange Act (each, an
“Indemnified Person”), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts
paid in settlement or expenses, joint or several (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the Commission, whether pending or threatened, whether or not an
indemnified party is or may be a party thereto (“Indemnified Damages”), to which
any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of
a material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the
Commission) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading,
(iii) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities pursuant to a Registration Statement or
(iv) any breach by the Company of a representation, warranty or covenant
contained in this Agreement (the matters in the foregoing clauses
(i) through (iv) being, collectively, “Violations”). Subject to
Section 6.1(d), the Company shall reimburse the Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim.

    

    (b)  Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in Section 6.1(a): (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs
(A) in reliance upon and in conformity with information furnished in
writing to the Company by such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement (including any
amendment thereto, any related prospectus, or any prospectus supplement) (which
information provided by the Purchasers includes Exhibits B and C to this
Agreement), (B) failure by the Purchaser to comply with prospectus delivery
requirements, if such prospectus, or any such amendment thereof or supplement
thereto, was timely made available by the Company pursuant to
Section 3.1(d), or (C) the use by such Purchaser of an outdated or
defective prospectus after the Company has notified such Purchaser in writing
that the prospectus is outdated or defective and prior to the

    
      
         

      

      
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    receipt
by such Purchaser of an amended or supplemented prospectus, and (ii) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld or delayed. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Purchasers pursuant to Section 9.1.

    

    (c)  In
connection with any Registration Statement in which an Purchaser is
participating, each such Purchaser agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6.1(a), the Company, each of its directors, each
of its officers who signs the Registration Statement and each Person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act (each, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or are based upon any Violation, in each case to the extent, and only to
the extent, that such Violation arises from the circumstances described in
clauses (A) through (C) of Section 6.1(b) above; and, subject to
Section 6.1(d), such Purchaser shall reimburse the Indemnified Party,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by it in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6.1(c) and the agreement with respect
to contribution contained in Section 7.1 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Purchaser, which consent shall not be unreasonably withheld or
delayed; provided, further, however, that the Purchaser shall be liable under
this Section 6.1(c) for only that amount of a Claim or Indemnified Damages
as does not exceed the net proceeds to such Purchaser as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Purchasers pursuant to Section 9.1.

    

    (d)  Promptly
after receipt by an Indemnified Person or Indemnified Party under this
Section 6.1 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6.1, deliver
to the indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
reasonably satisfactory to the Indemnified Person or the Indemnified Party, who
shall not, except with the consent of the indemnifying party, be counsel to the
Indemnified Person or the Indemnified Party as the case may be; and after notice
from the indemnifying party of its election to assume the defense thereof, the
indemnifying party shall not be liable to the Indemnified Party or Indemnified
Person for any legal expenses of other counsel or other expenses incurred in
connection with the defense

    
      
         

      

      
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    thereof;
provided, however, that the
Indemnified Persons or Indemnified Parties shall have the right to retain their
own counsel with the reasonable fees and expenses of not more than one counsel
for all Indemnified Persons or Indemnified Parties to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified Person
or Indemnified Party and the indemnifying party would likely represent a
conflict of interest that would legally preclude such representation. In the
case of an Indemnified Person, legal counsel referred to in the immediately
preceding sentence shall be selected by the Purchasers holding at least 80%
interest of the Registrable Securities included in the Registration Statement to
which the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or Claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or Claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent; provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim or litigation, and such settlement shall not include any
admission as to fault on the part of the Indemnified Party or Indemnified
Person. Following indemnification as provided for hereunder, the indemnifying
party shall be subrogated to all rights of the Indemnified Party or Indemnified
Person with respect to all third parties, firms or corporations relating to the
matter for which indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any liability to
the Indemnified Person or Indemnified Party under this Section 6.1, except
to the extent that the indemnifying party is prejudiced in its ability to defend
such action.

    

    (e) The
indemnification required by this Section 6.1 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are
incurred.

    

    (f)  The
indemnity agreements contained herein shall be in addition to (i) any cause
of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

    
      
         

      

      
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    ARTICLE
VII

    CONTRIBUTION

    

    7.1. Contribution.  To
the extent any indemnification by an indemnifying party is prohibited or limited
by law, the indemnifying party agrees, in lieu of providing such
indemnification, to contribute to the amount paid or payable by such Indemnified
Party or Indemnifying Person as a result of such Claims or Indemnified Damages,
in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and the Purchasers, on the other hand, in connection
with the statements or omissions which resulted in such Claims or Indemnified
Damages, as well as any other relevant equitable considerations; provided, however, that
(i) no Person involved in the sale of Registrable Securities which is
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) in connection with such sale shall be entitled to
contribution from any Person who was not guilty of fraudulent misrepresentation
and (ii) contribution by any seller of Registrable Securities shall be
limited in amount of net proceeds received by such seller from the sale of such
Registrable Securities subject to the Claim. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, on the one hand,
or the Purchasers, on the other hand, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 7.1 were determined
by pro rata allocation (even if the Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7.1. The
amount paid or payable by an Indemnified Party or Indemnified Person as a result
of the Claims or Indemnified Damages referred to above in this Section 7.1 shall
be deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. The Purchasers’ obligations in this Section 7.1 to contribute are
several in proportion to their respective underwriting obligations and not
joint.

    

    ARTICLE
VIII

    REPORTING
REQUIREMENTS

    

    8.1. Reports Under the Exchange
Act.  With a view to making available to the Purchasers the
benefits of Rule 144 promulgated under the Securities Act or any other similar
rule or regulation of the Commission that may at any time permit the Purchasers
to sell securities of the Company to the public without registration (“Rule
144”), the Company agrees to, during the two years after the last Closing Date:
(i)  make and keep public information available, as those terms are
understood and defined in Rule 144; (ii)  file with the Commission in
a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act so long as the Company remains subject
to such requirements and the filing of such reports and other documents is
required for the applicable provisions of Rule 144; and (iii) furnish to each
Purchaser

    
      
         

      

      
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    that then
owns Registrable Securities, promptly upon request (a) a written statement
by the Company, if true, that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, (b) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company and (c) such other information as may be
reasonably requested to permit the Purchasers to sell such securities pursuant
to Rule 144 without registration.

    

    ARTICLE
IX

    MISCELLANEOUS

    

    9.1. Assignment of Registration
Rights.  The rights under this Agreement shall be automatically
assignable by the Purchasers to any transferee of all or any portion of such
Purchaser’s Registrable Securities if: (i) the Purchaser agrees in writing
with the transferee or assignee to assign such rights and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee and (b) the securities with respect
to which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act or applicable state securities laws; (iv) at or before
the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement.

    

    9.2. Amendments and
Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and the Purchasers holding at
least 75% of the then outstanding Registrable Securities (including, for this
purpose any Registrable Securities issuable upon exercise or conversion of any
Agent Warrants). If a Registration Statement does not register all of the
Registrable Securities pursuant to a waiver or amendment done in compliance with
the previous sentence, then the number of Registrable Securities to be
registered for each Purchaser shall be reduced pro rata among all Purchasers and
each Purchaser shall have the right to designate which of its Registrable
Securities shall be omitted from such Registration Statement. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of a Purchaser or
some Purchasers and that does not directly or indirectly affect the rights of
other Purchasers may be given by such Purchaser or Purchasers of all of the
Registrable Securities to which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the first sentence of this Section 9.2.
Failure of any party
to exercise any right or remedy under this Agreement or otherwise, or delay by a
party in exercising such right or remedy, shall not operate as a waiver
thereof.

    
      
         

      

      
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    9.3. Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be delivered as set forth in the Purchase
Agreement.

    

    9.4. Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties and shall inure to
the benefit of each Purchaser. The Company may not assign (except by merger) its
rights or obligations hereunder without the prior written consent of all of the
Purchasers of the then outstanding Registrable Securities. Each Purchaser may
assign their respective rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.

    

    9.5 Governing Law. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be determined in accordance with the provisions of the
Purchase Agreement.

    

    9.6. Cumulative Remedies.
The remedies provided herein are cumulative and not exclusive of any other
remedies provided by law.

    

    9.7. Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

    

     

    9.8. Headings. The
headings in this Agreement are for convenience only, do not constitute a part of
the Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

    

    9.10 Independent Nature of
Purchaser’s Obligations and Rights. The obligations of each Purchaser
hereunder are several and not joint with the obligations of any other Purchaser
hereunder, and no Purchaser shall be responsible in any way for the performance
of the obligations of any other Purchaser hereunder. Nothing contained herein or
in any other agreement or document delivered at any closing, and no action taken
by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to protect and enforce its
rights, including without limitation the rights

    
      
         

      

      
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    arising
out of this Agreement, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such
purpose.

    

    9.10 Construction. The parties
agree that each of them and/or their respective counsel has reviewed and had an
opportunity to revise this Agreement and, therefore, the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments hereto.  The words “include,” “includes,” and
“including” will be deemed to be followed by “without limitation.” The words
“this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited.

    

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGES FOLLOW]

    

    
      
         

      

      
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    IN
WITNESS WHEREOF, each Purchaser and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

     

    CONFEDERATE
MOTORS, INC.

     

    By:__________________

     

    Name: Mr.
H. Matthew Chambers

     

    Title: CEO

    

    

    

    

    

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGE FOR PURCHASERS FOLLOW]

    
      
         

      

      
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    IN
WITNESS WHEREOF, the undersigned have caused this Registration Rights Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    

    Name of
Purchaser:                                                                           

    

    Signature
of Authorized Signatory of Purchaser:

    

    Name of
Authorized
Signatory:                                                                           

    

    Title of
Authorized
Signatory:                                                                           

    

    

    [SIGNATURE
PAGES CONTINUE]

    

    
      
         

      

      
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    Exhibit
A

    

    American
Registrar & Transfer Co.

    342 East
900 South

    Salt Lake
City, UT 8411

    

    Re:
Confederate Motors, Inc.

    

    Ladies
and Gentlemen:

    

    Reference
is made to that certain Securities Purchase Agreement (the ÒSecurities
Purchase AgreementÓ) entered into by and among Confederate Motors, Inc.,
a Delaware corporation (the ÒCompany,Ó Òwe,Ó or ÒusÓ), and the
purchasers named therein (collectively, the ÒPurchasersÓ)
pursuant to which the Company sold to the Purchasers shares (the “Shares”) of the Company’s common
stock, $0.001par value per share (the “Common
Stock”).  Pursuant
to the Securities Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Purchasers (the ÒRegistration
Rights AgreementÓ) pursuant to which the Company agreed, among other
things, to register the Registrable Securities (as defined in the Registration
Rights Agreement) under the Securities Act of 1933, as amended (the ÒSecurities
ActÓ).

    

    In
connection with the Company’s obligations under the Registration Rights
Agreement, on             ,
2008, the Company filed a Registration Statement on Form ____ (File
No. 333-            )
(the ÒRegistration
StatementÓ) with the Securities and Exchange Commission (the ÒCommissionÓ)
relating to the Registrable Securities which names each of the Purchasers as a
selling stockholder thereunder (the ÒSelling
ShareholdersÓ).

    

    In
connection with the foregoing, we advise you that a member of the Commission’s
staff has advised us by telephone that the Commission has entered an order
declaring the Registration Statement effective under the Securities Act at [TIME OF
EFFECTIVENESS] on [DATE OF
EFFECTIVENESS] and we have no
knowledge, after telephonic inquiry of a member of the Commission’s staff, that
any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the
Commission. Based on the foregoing, the Registrable Securities are available for
resale under the Securities Act pursuant to the Registration
Statement.

    

    Each
Selling Stockholder has agreed (i) pursuant to the Securities Purchase
Agreement, that the Shares may not be offered for sale, sold, assigned or
transferred except in compliance with the Securities Act and (ii) pursuant
to the Registration Rights Agreement, to comply with the prospectus delivery
requirements of the Securities Act applicable to such Selling Stockholder in
connection with sales of Shares pursuant to the Registration Statement or the
applicable requirements of any exemption from the Securities Act. In reliance
upon such representation, this letter shall serve as our standing instruction to
you that the Shares covered by the Registration Statement [optional (which are listed on
Exhibit ___ hereto] are freely transferable by the Holders pursuant to
the

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    Registration
Statement subject to any stock transfer instructions that we may issue to you
from time to time. You need not require further letters from us to effect any
future legend-free issuance or reissuance of such Shares, provided at the time
of such issuance or reissuance, the Company has not otherwise notified you that
the Registration Statement is unavailable for the resale of the Registrable
Securities.

     

     

    CONFEDERATE
MOTORS, INC.

     

    By:__________________

     

    Name: Mr.
H. Matthew Chambers

     

    Title: CEO

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

     

    

    Exhibit
B

    

    Plan of
Distribution

    

    Each
Selling Stockholder (the ÒSelling
StockholdersÓ) of the common stock and any of their pledgees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of Common Stock on the [principal Trading Market] or any other stock
exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed or negotiated prices. A
Selling Stockholder may use any one or more of the following methods when
selling shares:

    

    
      	
              ·  

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

            

    

    

    
      	
              ·  

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

            

    

    

    
      	
              ·  

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

            

    

    
      	
              ·  

            	
              an
      exchange distribution in accordance with the rules of the applicable
      exchange;

            

    

    

    
      	
              ·  

            	
              privately
      negotiated transactions;

            

    

    

    
      	
              ·  

            	
              settlement
      of short sales entered into after the effective date of the registration
      statement of which this prospectus is a
part;

            

    

    

    
      	
              ·  

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

            

    

    

    
      	
              ·  

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

            

    

    

    
      	
              ·  

            	
              a
      combination of any such methods of sale;
or

            

    

    

    
      	
              ·  

            	
              any
      other method permitted pursuant to applicable
  law.

            

    

    

    The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act of

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    1933, as
amended (the ÒSecurities ActÓ), if available, rather than under this
prospectus.

    

    Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this Prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in compliance with
FINRA NASD Rule 2440; and in the case of a principal transaction a markup or
markdown in compliance with NASD IM-2440.

    

    In
connection with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).

    

    The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be ÒunderwritersÓ within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In no
event shall any broker-dealer receive fees, commissions and markups which, in
the aggregate, would exceed eight percent (8%).

    

    The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

    

    Because
Selling Stockholders may be deemed to be ÒunderwritersÓ within the meaning
of

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    the
Securities Act, they will be subject to the prospectus delivery requirements of
the Securities Act including Rule 172 thereunder. In addition, any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this prospectus.
There is no underwriter or coordinating broker acting in connection with the
proposed sale of the resale shares by the Selling Stockholders.

    

    We agreed
to keep this prospectus effective until the earlier of (i) ____[insert date that is two
years after the last Closing Date under the Purchase
Agreement]   (ii) the date that Selling Shareholders (if they
are not affiliates of the Company and have not been such an affiliate during the
then immediately preceding 90 days) may sell all of their shares covered by this
prospectus without volume or holding period restrictions pursuant to Rule 144,
and (ii) the date on which the Selling Shareholders shall have sold all of
the shares covered by this prospectus. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

    

    Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).

    

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    Exhibit
C

    

    Confederate
Motors, Inc.

    Selling
Securityholder Notice and Questionnaire

    

    The
undersigned beneficial owner of common stock (the “Registrable
Securities”) of Confederate Motors, Inc., a Delaware corporation (the
“Company”),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”) a
registration statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of
the Registrable Securities, in accordance with the terms of the Registration
Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy of the Registration
Rights Agreement is available from the Company upon request at the address set
forth below. All capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Registration Rights Agreement.

    

    Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus.

    

    NOTICE

    

    The
undersigned beneficial owner (the “Selling
Securityholder”) of Registrable Securities hereby elects to include the
Registrable Securities owned by it in the Registration Statement.

    

    The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

    

    QUESTIONNAIRE

    

    1.           Name.                      

    

    (a)           Full
Legal Name of Selling Securityholder

    
 

    
 

    
 

    
 

    (b)           Full
Legal Name of Registered Holder (if not the same as (a) above) through which
Registrable Securities are held:

    

    

    

    2.           Address
for Notices to Selling Securityholder:

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    

    

    

    Telephone:                                

    Fax:           

    Contact
Person:                                           

    

    

    

    3.           Broker-Dealer
Status:                                                      

    
 

               (a)           Are
you a
broker-dealer?                                                      

    
 

                          Yes
___                      No___

    
 

               (b)           If
“yes” to Section 3(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company?

    
 

                          Yes
___                      No
___

    
 

               Note:                      If
“no” to Section 3(b), the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration Statement.

    

               (c)           Are
you an affiliate of a
broker-dealer?                                                                                     

    
 

                          Yes
___                      No
___

    
 

               (d)           If
you are an affiliate of a broker-dealer, do you certify that you purchased the
Registrable Securities in the ordinary course of business, and at the time of
the purchase of the Registrable Securities to be resold, you had no agreements
or understandings, directly or indirectly, with any person to distribute the
Registrable Securities?

    
 

                          Yes
___                      No
___

    
 

               Note:                      If
“no” to Section 3(d), the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration Statement.

    
 

    4.           Beneficial
Ownership of Securities of the Company Owned by the Selling
Securityholder.

    
 

               Except
as set forth below in this Item 4, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.

    
 

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

               (a)           Type
and Amount of other securities beneficially owned by the Selling
Securityholder:

    

 

    5.           Relationships
with the Company:

    
 

                          Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.

    
 

                          State
any exceptions here:

    
 

    

    The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective.

    

    By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto. The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.

    

    IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

    

    Date:                        Beneficial
Owner:         

     

                                      

    

                     _____________________________

                                     By:                                 

                                     Name:                                 

                                     Title:                                 

     

     

     

     

     

     

    
 

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:

    

    H.
Matthew Chambers, Founder

    Confederate
Motors, Inc.

    2222 5th
Avenue South

    Birmingham,
Alabama 35233

    (205)
324-9888 - Phone

    (205)
324-8047 - Fax

    matt@confederate.com

    Attention:
H. Matthew Chambers, CEO

    

    

    
34

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