Document:

FORM
        OF WARRANT

       

      NEITHER
        THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
        THE
        SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
        LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
        (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
        (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A FORM REASONABLY ACCEPTABLE
        TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)
        UNLESS
        SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
        FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
        ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
        SECURITIES.

      

      AKEENA
        SOLAR, INC.

      

      Warrant
        To Purchase Common Stock

      

      Warrant
        No.: ___________

      Number
        of
        Shares of Common Stock:_______________

      Date
        of
        Issuance: November [ ], 2007 (“Issuance
        Date”)

      

      Akeena
        Solar, Inc., a corporation organized under the laws of Delaware (the
“Company”),
        hereby certifies that, for good and valuable consideration, the receipt and
        sufficiency of which are hereby acknowledged, _______________, the registered
        holder hereof or its permitted assigns (the “Holder”),
        is
        entitled, subject to the terms set forth below, to purchase from the Company,
        at
        the Exercise Price (as defined below) then in effect, upon surrender of this
        Warrant to Purchase Common Stock (including any Warrants to Purchase Common
        Stock issued in exchange, transfer or replacement hereof, the “Warrant”),
        at
        any time or times on or after one hundred and eighty days (180) from the
        date
        hereof, but not after 5:30 p.m., New York time, on the Expiration Date (as
        defined below), ______________ (_____________)1 
        fully
        paid nonassessable shares of Common Stock (as defined below) (the
        “Warrant
        Shares”).
        Except as otherwise defined herein, capitalized terms in this Warrant shall
        have
        the meanings set forth in Section 16. This Warrant is one of the Warrants
        to
        purchase Common Stock (the “SPA
        Warrants”)
        issued
        pursuant to Section 1 of that certain Securities Purchase Agreement, dated
        as of
        November 1, 2007 (the “Subscription
        Date”),
        by
        and among the Company and the investors (the “Buyers”)
        referred to therein (the “Securities
        Purchase Agreement”).

       

        
          

        

      

      
        1
          Insert
          number of shares equal to 20% of the number of shares of Common Stock purchased
          under the Securities Purchase Agreement.

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      1. EXERCISE
        OF WARRANT.

       

      (a) Mechanics
        of Exercise.
        Subject
        to the terms and conditions hereof (including, without limitation, the
        limitations set forth in Section 1(f)), this Warrant may be exercised by
        the
        Holder on any day on or after one hundred and eighty days (180) from the
        date
        hereof to and including the Expiration Date, in whole or in part, by
        (i) delivery of a properly completed and executed written notice, in the
        form attached hereto as Exhibit
        A
        (the
“Exercise
        Notice”),
        of
        the Holder’s election to exercise this Warrant and (ii) (A) payment to the
        Company of an amount equal to the applicable Exercise Price multiplied by
        the
        number of Warrant Shares as to which this Warrant is being exercised (the
        “Aggregate
        Exercise Price”)
        in
        cash or by wire transfer of immediately available funds or (B) by notifying
        the
        Company that this Warrant is being exercised pursuant to a Cashless Exercise
        (as
        defined in Section 1(d)). At 5:30 P.M., New York City time on the Expiration
        Date, the portion of this Warrant not exercised prior thereto shall be and
        become void and of no value. The Holder shall not be required to deliver
        the
        original Warrant in order to effect an exercise hereunder. Execution and
        delivery of the Exercise Notice with respect to less than all of the Warrant
        Shares shall have the same effect as cancellation of the original Warrant
        and
        issuance of a new Warrant evidencing the right to purchase the remaining
        number
        of Warrant Shares. On or before the second (2nd) Business Day following the
        date
        on which the Company has received each of the Exercise Notice and the Aggregate
        Exercise Price (or notice of a Cashless Exercise) (the “Exercise
        Delivery Documents”),
        the
        Company shall transmit by facsimile an acknowledgment of confirmation of
        receipt
        of the Exercise Delivery Documents to the Holder and the Company’s transfer
        agent (the “Transfer
        Agent”).
        On or
        before the second (2nd) Business Day following the date on which the Company
        has
        received all of the Exercise Delivery Documents, the Company shall (X) provided
        that the Transfer Agent is participating in The Depository Trust Company
        (“DTC”)
        Fast
        Automated Securities Transfer Program and the Warrant Shares may be issued
        without any restrictive legends in accordance with Section 4.1(b) of the
        Securities Purchase Agreement, upon the request of the Holder, credit such
        aggregate number of Warrant Shares to which the Holder is entitled pursuant
        to
        such exercise to the Holder’s or its designee’s balance account with DTC through
        its Deposit Withdrawal Agent Commission system, or (Y) if the Transfer Agent
        is
        not participating in the DTC Fast Automated Securities Transfer Program,
        issue
        and dispatch by overnight courier to the address as specified in the Exercise
        Notice, a certificate, registered in the Company’s share register in the name of
        the Holder or its designee, for the number of shares of Common Stock to which
        the Holder is entitled pursuant to such exercise, which certificate shall
        bear
        any legends required in accordance with Section 4.1(b) of the Securities
        Purchase Agreement. Upon delivery of the Exercise Delivery Documents, the
        Holder
        shall be deemed for all corporate purposes to have become the holder of record
        of the Warrant Shares with respect to which this Warrant has been exercised,
        irrespective of the date such Warrant Shares are credited to the Holder’s DTC
        account or the date of delivery of the certificates evidencing such Warrant
        Shares, as the case may be. If this Warrant is submitted in connection with
        any
        exercise pursuant to this Section 1(a) and the aggregate number of Warrant
        Shares represented by this Warrant at the time this Warrant submitted for
        exercise is greater than the number of Warrant Shares being acquired upon
        such
        exercise, then the Company shall as soon as practicable, and in no event
        later
        than five (5) Business Days after any exercise and at its own expense, issue
        a
        new Warrant (in accordance with Section 7(d)) representing the right to purchase
        the number of Warrant Shares purchasable immediately prior to such exercise
        under this Warrant, less the number of Warrant Shares with respect to which
        this
        Warrant is then exercised. No fractional shares of Common Stock are to be
        issued
        upon the exercise of this Warrant, but rather the number of shares of Common
        Stock to be issued shall be rounded up to the nearest whole number. The Company
        shall pay any and all taxes (other than taxes based upon the income of the
        Holder) which may be payable with respect to the issuance and delivery of
        Warrant Shares upon exercise of this Warrant. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b) Exercise
        Price.
        For
        purposes of this Warrant, “Exercise
        Price”
means
        $10.08 per Warrant Share, subject to adjustment as provided herein.

       

      (c) Company’s
        Failure to Timely Deliver Securities.
        If
within
        three (3) Trading Days after the
        Company’s receipt of the Exercise Delivery Documents the
        Company shall fail to
        issue
        and deliver a certificate to the Holder
        and
        register such shares of Common Stock on the Company’s share register or
credit
        the Holder’s balance account with DTC for the
        number
        of shares of Common Stock to which the Holder is entitled upon the Holder’s
        exercise hereunder,
        and if
        on or after such Trading Day the Holder purchases (in an open market transaction
        or otherwise) shares of Common Stock to deliver in satisfaction of a sale
        by the
        Holder of shares of Common Stock issuable upon such exercise that the Holder
        anticipated receiving from the Company, then the Company shall, within
five
        (5)
        Business Days after the Holder’s request and in the Holder’s discretion, either
        (i) pay cash to the Holder in an amount equal to the Holder’s total purchase
        price (including brokerage commissions, if any) for the shares of Common
        Stock
        so purchased (the “Buy-In
        Price”),
        at
        which point the Company’s obligation to deliver such certificate (and to issue
        such Warrant Shares) shall terminate, or (ii) promptly honor its obligation
        to
        deliver to the Holder a certificate or certificates representing such Warrant
        Shares and pay cash to the Holder in an amount equal to the excess (if any)
        of
        the Buy-In Price over the product of (A) such number of shares of Common
        Stock,
        times (B) the Weighted
        Average
        Price on
        the date of exercise. 

       

      (d) Cashless
        Exercise.
         Notwithstanding
        anything contained herein to the contrary, if a Registration Statement (as
        defined in the Securities Purchase Agreement) covering the Warrant Shares
        is not
        available for the resale of such Warrant Shares, the Holder may, in its sole
        discretion, exercise this Warrant in whole or in part and, in lieu of making
        the
        cash payment otherwise contemplated to be made to the Company upon such exercise
        in payment of the Aggregate Exercise Price, elect instead to receive upon
        such
        exercise the “Net Number” of shares of Common Stock determined according to the
        following formula (a “Cashless
        Exercise”):

       

      Net
        Number = (A
        x
        B) - (A x C)

        
         B

       

      For
        purposes of the foregoing formula:

       

      
        	
              	A=	
                the
                  total number of shares with respect to which this Warrant is then
                  being
                  exercised.

              

      

       

      
        	
              	B=	
                the
                  Weighted Average Price of the shares of Common Stock (as reported
                  by
                  Bloomberg) on the date immediately preceding the date of the Exercise
                  Notice.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
              	C=	
                the
                  Exercise Price then in effect for the applicable Warrant Shares
                  at the
                  time of such exercise.

              

      

      

      (e) Limitations
        on Exercises; Beneficial Ownership.
        The
        Company shall not effect the exercise of this Warrant, and the Holder shall
        not
        have the right to exercise this Warrant, to the extent that after giving
        effect
        to such exercise, such Holder (together with such Holder’s affiliates, and any
        other Persons whose beneficial ownership of Common Stock would be aggregated
        with such Holder’s for purposes of Section 13(d) of the Securities Exchange Act
        of 1934, as amended (the “Exchange
        Act”))
        would
        beneficially own in excess of 4.99% of the shares of Common Stock outstanding
        immediately after giving effect to such exercise (the “Maximum
        Percentage”).
        For
        purposes of the foregoing sentence, the aggregate number of shares of Common
        Stock beneficially owned by such Holder and its affiliates shall include
        the
        number of shares of Common Stock issuable upon exercise of this Warrant with
        respect to which the determination of such sentence is being made, but shall
        exclude shares of Common Stock which would be issuable upon (i) exercise of the
        remaining, unexercised portion of this Warrant beneficially owned by such
        Holder
        and its affiliates and (ii) exercise or conversion of the unexercised or
        unconverted portion of any other securities of the Company beneficially owned
        by
        such Person and its affiliates (including, without limitation, any convertible
        notes or convertible preferred stock or warrants) subject to a limitation
        on
        conversion or exercise analogous to the limitation contained herein. Except
        as
        set forth in the preceding sentence, for purposes of this paragraph, beneficial
        ownership shall be calculated in accordance with Section 13(d) of the Securities
        Exchange Act of 1934, as amended and Regulation 13D promulgated thereunder.
        For
        purposes of this Warrant, in determining the number of outstanding shares
        of
        Common Stock, the Holder may rely on the number of outstanding shares of
        Common
        Stock as reflected in (1) the Company’s most recent Form 10-K, Form 10-Q,
        Current Report on Form 8-K or other public filing with the Securities and
        Exchange Commission, as the case may be, (2) a more recent public announcement
        by the Company or (3) any other notice by the Company or the Transfer Agent
        setting forth the number of shares of Common Stock outstanding. For any reason
        at any time, upon the written request of the Holder, the Company shall within
        two (2) Business Days confirm orally and in writing to the Holder the number
        of
        shares of Common Stock then outstanding. In any case, the number of outstanding
        shares of Common Stock shall be determined after giving effect to the conversion
        or exercise of securities of the Company, including the SPA Warrants, by
        the
        Holder and its affiliates since the date as of which such number of outstanding
        shares of Common Stock was reported. 

       

      (f) Insufficient
        Authorized Shares.
        If
        at any
        time while any of the Warrants remain outstanding the Company does not have
        a
        sufficient number of authorized and unreserved shares of Common Stock to
        satisfy
        its obligation to reserve for issuance upon exercise of the Warrants at least
        a
        number of shares of Common Stock equal to 100% (the “Required
        Reserve Amount”)
        of the
        number of shares of Common Stock as shall from time to time be necessary
        to
        effect the exercise of all of the Warrants then outstanding, then the Company
        shall immediately
        take all
        action
necessary
        to increase the Company’s authorized shares of Common Stock to an amount
        sufficient to allow the Company to reserve the Required Reserve Amount for
        this
        Warrant then outstanding. Without limiting the generality of the foregoing
        sentence, as soon as practicable after the date of the occurrence of an
        Authorized Share Failure, but in no event later than ninety (90) days (but
        in
        the case of a review by the Securities and Exchange Commission of the Company’s
        proxy statement, then in no event later than one-hundred fifty (135) days)
        after
        the occurrence of such Authorized Share Failure, the Company shall hold a
        meeting of its stockholders for the approval of an increase in the number
        of
        authorized shares of Common Stock. In connection with such meeting, the Company
        shall provide each stockholder with a proxy statement and shall use its best
        efforts to solicit its stockholders’ approval of such increase in authorized
        shares of Common Stock and to cause its board of directors to recommend to
        the
        stockholders that they approve such proposal.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (g) Disputes.
        In the
        case of a dispute as to the determination of the Exercise Price or the
        arithmetic calculation of the Warrant Shares, the Company shall promptly
        issue
        to the Holder the number of Warrant Shares that are not disputed and resolve
        such dispute in accordance with Section 14.

       

      2.  ADJUSTMENT
        OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
        The
        Exercise Price and the number of Warrant Shares shall be adjusted from time
        to
        time as follows:

       

      (a) Adjustment
        upon Issuance of shares of Common Stock.
        If and
        whenever on or after the Subscription Date and through and including the
        twelve
        (12) month anniversary of the Issuance Date, the Company issues or sells,
        or in
        accordance with this Section 2 is deemed to have issued or sold, any shares
        of
        Common Stock (including the issuance or sale of shares of Common Stock owned
        or
        held by or for the account of the Company, but excluding shares of Common
        Stock
        deemed to have been issued by the Company in connection with any Excluded
        Securities (as defined below) for a consideration per share (the “New
        Issuance Price”)
        less
        than a price (the “Applicable
        Price”)
        equal
        to the Exercise Price in effect immediately prior to such issue or sale or
        deemed issuance or sale (the foregoing a “Dilutive
        Issuance”),
        then
        immediately after such Dilutive Issuance, the Exercise Price then in effect
        shall be reduced to an amount equal to the product of (A) the Exercise Price
        in
        effect immediately prior to such Dilutive Issuance and (B) the quotient
        determined by dividing (1) the sum of (I) the product derived by multiplying
        the
        Exercise Price in effect immediately prior to such Dilutive Issuance and
        the
        number of shares of Common Stock Deemed Outstanding immediately prior to
        such
        Dilutive Issuance plus (II) the consideration, if any, received by the Company
        upon such Dilutive Issuance, by (2) the product derived by multiplying (I)
        the
        Exercise Price in effect immediately prior to such Dilutive Issuance by (II)
        the
        number of shares of Common Stock Deemed Outstanding immediately after such
        Dilutive Issuance. Upon each such adjustment of the Exercise Price hereunder,
        the number of Warrant Shares shall be adjusted to the number of shares of
        Common
        Stock determined by multiplying the Exercise Price in effect immediately
        prior
        to such adjustment by the number of Warrant Shares acquirable upon exercise
        of
        this Warrant immediately prior to such adjustment and dividing the product
        thereof by the Exercise Price resulting from such adjustment. For purposes
        of
        determining the adjusted Exercise Price under this Section 2(a), the following
        shall be applicable:

       

      (i) Issuance
        of Options. If the Company in any manner grants any Options and the lowest
        price
        per share for which one share of Common Stock is issuable upon the exercise
        of
        any such Option or upon conversion, exercise or exchange of any Convertible
        Securities issuable upon exercise of any such Option is less than the Applicable
        Price, then such share of Common Stock shall be deemed to be outstanding
        and to
        have been issued and sold by the Company at the time of the granting or sale
        of
        such Option for such price per share. For purposes of this Section 2(a)(i),
        the
“lowest price per share for which one share of Common Stock is issuable upon
        exercise of such Options or upon conversion, exercise or exchange of such
        Convertible Securities issuable upon exercise of any such Option” shall be equal
        to the sum of the lowest amounts of consideration (if any) received or
        receivable by the Company with respect to any one share of Common Stock upon
        the
        granting or sale of the Option, upon exercise of the Option and upon conversion,
        exercise or exchange of any Convertible Security issuable upon exercise of
        such
        Option. No further adjustment of the Exercise Price or number of Warrant
        Shares
        shall be made upon the actual issuance of such shares of Common Stock or
        of such
        Convertible Securities upon the exercise of such Options or upon the actual
        issuance of such shares of Common Stock upon conversion, exercise or exchange
        of
        such Convertible Securities.  

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (ii) Issuance
        of Convertible Securities. If the Company in any manner issues or sells any
        Convertible Securities and the lowest price per share for which one share
        of
        Common Stock is issuable upon the conversion, exercise or exchange thereof
        is
        less than the Applicable Price, then such share of Common Stock shall be
        deemed
        to be outstanding and to have been issued and sold by the Company at the
        time of
        the issuance or sale of such Convertible Securities for such price per share.
        For the purposes of this Section 2(a)(ii), the “lowest price per share for which
        one share of Common Stock is issuable upon the conversion, exercise or exchange
        thereof” shall be equal to the sum of the lowest amounts of consideration (if
        any) received or receivable by the Company with respect to one share of Common
        Stock upon the issuance or sale of the Convertible Security and upon conversion,
        exercise or exchange of such Convertible Security. No further adjustment
        of the
        Exercise Price or number of Warrant Shares shall be made upon the actual
        issuance of such shares of Common Stock upon conversion, exercise or exchange
        of
        such Convertible Securities, and if any such issue or sale of such Convertible
        Securities is made upon exercise of any Options for which adjustment of this
        Warrant has been or is to be made pursuant to other provisions of this Section
        2(a), no further adjustment of the Exercise Price or number of Warrant Shares
        shall be made by reason of such issue or sale. 

       

      (iii) Change
        in
        Option Price or Rate of Conversion. If the purchase price provided for in
        any
        Options, the additional consideration, if any, payable upon the issue,
        conversion, exercise or exchange of any Convertible Securities, or the rate
        at
        which any Convertible Securities are convertible into or exercisable or
        exchangeable for shares of Common Stock increases or decreases at any time,
        the
        Exercise Price and the number of Warrant Shares in effect at the time of
        such
        increase or decrease shall be adjusted to the Exercise Price and the number
        of
        Warrant Shares which would have been in effect at such time had such Options
        or
        Convertible Securities provided for such increased or decreased purchase
        price,
        additional consideration or increased or decreased conversion rate, as the
        case
        may be, at the time initially granted, issued or sold. For purposes of this
        Section 2(a)(iii), if the terms of any Option or Convertible Security that
        was
        outstanding as of the date of issuance of this Warrant are increased or
        decreased in the manner described in the immediately preceding sentence,
        then
        such Option or Convertible Security and the shares of Common Stock deemed
        issuable upon exercise, conversion or exchange thereof shall be deemed to
        have
        been issued as of the date of such increase or decrease. No adjustment pursuant
        to this Section 2(a) shall be made if such adjustment would result in an
        increase of the Exercise Price then in effect or a decrease in the number
        of
        Warrant Shares.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (iv) Calculation
        of Consideration Received. In case any Option is issued in connection with
        the
        issue or sale of other securities of the Company, together comprising one
        integrated transaction, (x) the Options will be deemed to have been issued
        for a
        value determined by use of the Black Scholes Option Pricing Model (the
“Option
        Value”)
        and
        (y) the other securities issued or sold in such integrated transaction shall
        be
        deemed to have been issued for the difference of (I) the aggregate consideration
        received by the Company, less (II) the Option Value. If any shares of Common
        Stock, Options or Convertible Securities are issued or sold or deemed to
        have
        been issued or sold for cash, the consideration received therefor will be
        deemed
        to be the net amount received by the Company therefor. If any shares of Common
        Stock, Options or Convertible Securities are issued or sold for a consideration
        other than cash, the amount of such consideration received by the Company
        will
        be the fair value of such consideration, except where such consideration
        consists of securities, in which case the amount of consideration received
        by
        the Company will be the Weighted Average Price of such security on the date
        of
        receipt. If any shares of Common Stock, Options or Convertible Securities
        are
        issued to the owners of the non-surviving entity in connection with any merger
        in which the Company is the surviving entity, the amount of consideration
        therefor will be deemed to be the fair value of such portion of the net assets
        and business of the non-surviving entity as is attributable to such shares
        of
        Common Stock, Options or Convertible Securities, as the case may be. The
        fair
        value of any consideration other than cash or securities will be determined
        jointly by the Company and the Required Holders. If such parties are unable
        to
        reach agreement within ten (10) days after the occurrence of an event requiring
        valuation (the “Valuation
        Event”),
        the
        fair value of such consideration will be determined within five (5) Business
        Days after the tenth (10th)
        day
        following the Valuation Event by an independent, reputable appraiser jointly
        selected by the Company and the Required Holders. The determination of such
        appraiser shall be final and binding upon all parties absent manifest error
        and
        the fees and expenses of such appraiser shall be borne by the Company.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (v) Record
        Date. If the Company takes a record of the holders of shares of Common Stock
        for
        the purpose of entitling them (A) to receive a dividend or other distribution
        payable in shares of Common Stock, Options or in Convertible Securities or
        (B)
        to subscribe for or purchase shares of Common Stock, Options or Convertible
        Securities, then such record date will be deemed to be the date of the issue
        or
        sale of the shares of Common Stock deemed to have been issued or sold upon
        the
        declaration of such dividend or the making of such other distribution or
        the
        date of the granting of such right of subscription or purchase, as the case
        may
        be. 

       

      (b) Adjustment
        upon Subdivision or Combination of Common Stock.
        If the
        Company at any time on
        or
        after the Subscription Date
        subdivides (by any stock split, stock dividend, recapitalization or otherwise)
        one
        or
        more classes of its
        outstanding shares of Common Stock into a greater number of shares, the Exercise
        Price in effect immediately prior to such subdivision will be proportionately
        reduced and the number of Warrant Shares will be proportionately increased.
        If
        the Company
        at any
        time on
        or
        after the Subscription Date
        combines
        (by combination, reverse stock split or otherwise)
        one or
        more classes of
        its
        outstanding shares of Common Stock into a smaller number of shares, the Exercise
        Price in effect immediately prior to such combination will be proportionately
        increased and the number of Warrant Shares will be proportionately decreased.
        Any adjustment under this Section 2(b)
        shall
        become effective at the close of business on the date the subdivision or
        combination becomes effective.

       

      (c) Other
        Events.
        If any
        event occurs of the type contemplated by the provisions of this Section 2
        but
        not expressly provided for by such provisions (including, without limitation,
        the granting of stock appreciation rights, phantom stock rights or other
        rights
        with equity features), then the Company’s Board of Directors will make an
        appropriate adjustment in the Exercise Price and the number of Warrant Shares
        so
        as to protect the rights of the Holder; provided that no such adjustment
        pursuant to this Section 2(c) will increase the Exercise Price or decrease
        the
        number of Warrant Shares as otherwise determined pursuant to this Section
        2.

       

      (d) De
        Minimis Adjustments.
        No
        adjustment in the Conversion Price shall be required unless such adjustment
        would require an increase or decrease of at least $0.01 in such price, provided,
        however, that any adjustment which by reason of this Section 2(d) is not
        required to be made shall be carried forward and taken into account in any
        subsequent adjustments under this Section 2. All calculations under this
        Section
        2 shall be made by the Company in good faith and shall be made to the nearest
        cent or to the nearest one hundredth of a share, as applicable. No adjustment
        need be made for a change in the par value or no par value of the Company’s
        Common Stock.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

      3. RIGHTS
        UPON DISTRIBUTION OF ASSETS.
        If the
        Company shall declare or make any dividend or other distribution of its assets
        (or rights to acquire its assets) to holders of shares of Common Stock (which
        dividend or other distribution has not already been given to the Holders
        of the
        Warrants), by way of return of capital or otherwise (including, without
        limitation, any distribution of cash, stock or other securities, property
        or
        options by way of a dividend, spin off, reclassification, corporate
        rearrangement, scheme of arrangement or other similar transaction) (a
“Distribution”),
        at
        any time after the issuance of this Warrant and prior to the Expiration Date,
        then, in each such case:

       

      (a) any
        Exercise Price in effect immediately prior to the close of business on the
        record date fixed for the determination of holders of shares of Common Stock
        entitled to receive the Distribution shall be reduced, effective as of the
        close
        of business on such record date, to a price determined by multiplying such
        Exercise Price by a fraction of which (i) the numerator shall be the Closing
        Bid
        Price of the shares of Common Stock on the Trading Day immediately preceding
        such record date minus the value of the Distribution (as determined in good
        faith by the Company’s Board of Directors) applicable to one share of Common
        Stock, and (ii) the denominator shall be the Closing Bid Price of the shares
        of
        Common Stock on the Trading Day immediately preceding such record date;
        and

       

      (b) the
        number of Warrant Shares shall be increased to a number of shares equal to
        the
        number of shares of Common Stock obtainable immediately prior to the close
        of
        business on the record date fixed for the determination of holders of shares
        of
        Common Stock entitled to receive the Distribution multiplied by the reciprocal
        of the fraction set forth in the immediately preceding paragraph (a); provided
        that in the event that the Distribution is of shares of Common Stock (or
        common
        stock) (“Other
        Shares of Common Stock”)
        of a
        company whose common shares are traded on a national securities exchange
        or a
        national automated quotation system, then the Holder may elect to receive
        a
        warrant to purchase Other Shares of Common Stock in lieu of an increase in
        the
        number of Warrant Shares, the terms of which shall be identical to those
        of this
        Warrant, except that such warrant shall be exercisable into the number of
        shares
        of Other Shares of Common Stock that would have been payable to the Holder
        pursuant to the Distribution had the Holder exercised this Warrant immediately
        prior to such record date and with an aggregate exercise price equal to the
        product of the amount by which the exercise price of this Warrant was decreased
        with respect to the Distribution pursuant to the terms of the immediately
        preceding paragraph (a) and the number of Warrant Shares calculated in
        accordance with the first part of this paragraph (b).

       

      4. PURCHASE
        RIGHTS; FUNDAMENTAL TRANSACTIONS.
        

       

      (a) Purchase
        Rights.
        In
        addition to any adjustments pursuant to Section 2 above, if at any time the
        Company grants, issues or sells any Options, Convertible Securities or rights
        to
        purchase stock, warrants, securities or other property pro rata to the record
        holders of any class of shares of Common Stock (the “Purchase
        Rights”),
        then
        the Holder will be entitled to acquire, upon the terms applicable to such
        Purchase Rights, the aggregate Purchase Rights which the Holder could have
        acquired if the Holder had held the number of shares of Common Stock acquirable
        upon complete exercise of this Warrant (without regard to any limitations
        on the
        exercise of this Warrant) immediately before the date on which a record is
        taken
        for the grant, issuance or sale of such Purchase Rights, or, if no such record
        is taken, the date as of which the record holders of shares of Common Stock
        are
        to be determined for the grant, issue or sale of such Purchase
        Rights.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b) Fundamental
        Transactions.
        If, at
        any time while this Warrant is outstanding there is a Fundamental Transaction,
        then the Holder shall have the right thereafter to receive, upon exercise
        of
        this Warrant, the same amount and kind of securities, cash or property as
        it
        would have been entitled to receive upon the occurrence of such Fundamental
        Transaction if it had been, immediately prior to such Fundamental Transaction,
        the Holder of the number of Warrant Shares then issuable upon exercise in
        full
        of this Warrant (the “Alternate
        Consideration”).
        For
        purposes of any such exercise, the determination of the Exercise Price shall
        be
        appropriately adjusted to apply to such Alternate Consideration based on
        the
        amount of Alternate Consideration issuable in respect of one share of Common
        Stock in such Fundamental Transaction, and the Company shall apportion the
        Exercise Price among the Alternate Consideration in a reasonable manner
        reflecting the relative value of any different components of the Alternate
        Consideration. If holders of Common Stock are given any choice as to the
        securities, cash or property to be received in a Fundamental Transaction,
        then
        the Holder shall be given the same choice as to the Alternate Consideration
        it
        receives upon any exercise of this Warrant following such Fundamental
        Transaction. Any successor to the Company or surviving entity in such
        Fundamental Transaction shall issue to the Holder a new warrant substantially
        in
        the form of this Warrant and consistent with the foregoing provisions and
        evidencing the Holder’s right to purchase the Alternate Consideration for the
        aggregate Exercise Price upon exercise thereof. The terms of any agreement
        pursuant to which a Fundamental Transaction is effected shall include terms
        requiring any such successor or surviving entity to comply with the provisions
        of this Section 4 and insuring that the Warrant (or any such replacement
        security) will be similarly adjusted upon any subsequent transaction analogous
        to a Fundamental Transaction.

       

      5. NONCIRCUMVENTION.
        The
        Company hereby covenants and agrees that the Company will not, except and
        to the
        extent as waived or consented to by the Holder, by amendment of its Certificate
        of Incorporation, Bylaws or through any reorganization, transfer of assets,
        consolidation, merger, scheme of arrangement, dissolution, issue or sale
        of
        securities, or any other voluntary action, avoid or seek to avoid the observance
        or performance of any of the terms of this Warrant, and will at all times
        in
        good faith carry out all the provisions of this Warrant and take all action
        as
        may be required to protect the rights of the Holder. Without limiting the
        generality of the foregoing, the Company (i) shall not increase the par
        value of any shares of Common Stock receivable upon the exercise of this
        Warrant
        above the Exercise Price then in effect, (ii) shall take all such actions
        as may be necessary or appropriate in order that the Company may validly
        and
        legally issue fully paid and nonassessable shares of Common Stock upon the
        exercise of this Warrant, and (iii) shall, so long as any of the SPA Warrants
        are outstanding, take all action necessary to reserve and keep available
        out of
        its authorized and unissued shares of Common Stock, solely for the purpose
        of
        effecting the exercise of the SPA Warrants, 100% of the number of shares
        of
        Common Stock as shall from time to time be necessary to effect the exercise
        of
        the SPA Warrants then outstanding (without regard to any limitations on
        exercise).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      6. WARRANT
        HOLDER NOT DEEMED A STOCKHOLDER.
        Except
        as otherwise specifically provided herein, the Holder, solely in such Person’s
        capacity as a holder of this Warrant, shall not be entitled to vote or receive
        dividends or be deemed the holder of share capital of the Company for any
        purpose, nor shall anything contained in this Warrant be construed to confer
        upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
        any of the rights of a shareholder of the Company or any right to vote, give
        or
        withhold consent to any corporate action (whether any reorganization, issue
        of
        stock, reclassification of stock, consolidation, merger, conveyance or
        otherwise), receive notice of meetings, receive dividends or subscription
        rights, or otherwise, prior to the issuance to the Holder of the Warrant
        Shares
        which such Person is then entitled to receive upon the due exercise of this
        Warrant. In addition, nothing contained in this Warrant shall be construed
        as
        imposing any liabilities on the Holder to purchase any securities (upon exercise
        of this Warrant or otherwise) or as a shareholder of the Company, whether
        such
        liabilities are asserted by the Company or by creditors of the Company.
        Notwithstanding this Section 6, the Company shall provide the Holder with
        copies
        of the same notices and other information given to the shareholders of the
        Company generally, contemporaneously with the giving thereof to the
        shareholders.

       

      7. REISSUANCE
        OF WARRANTS.

       

      (a) Transfer
        of Warrant.
        If this
        Warrant is to be transferred, the Holder shall surrender this Warrant to
        the
        Company, together with a written assignment of this Warrant duly executed
        by the
        Holder or its agent or attorney and funds sufficient to pay any transfer
        taxes
        payable upon the making of such transfer, if any, whereupon the Company will
        forthwith issue and deliver upon the order of the Holder a new Warrant (in
        accordance with Section 7(d)), registered as the Holder may request,
        representing the right to purchase the number of Warrant Shares being
        transferred by the Holder and, if less than the total number of Warrant Shares
        then underlying this Warrant is being transferred, a new Warrant (in accordance
        with Section 7(d)) to the Holder representing the right to purchase the balance
        of the number of Warrant Shares not being transferred.

       

      (b) Lost,
        Stolen or Mutilated Warrant.
        Upon
        receipt by the Company of evidence reasonably satisfactory to the Company
        of the
        loss, theft, destruction or mutilation of this Warrant, and, in the case
        of
        loss, theft or destruction, of any indemnification undertaking by the Holder
        to
        the Company reasonably satisfactory to the Company and, in the case of
        mutilation, upon surrender and cancellation of this Warrant, the Company
        shall
        execute and deliver to the Holder a new Warrant (in accordance with Section
        7(d)) representing the right to purchase the Warrant Shares then underlying
        this
        Warrant.

       

      (c) Exchangeable
        for Multiple Warrants.
        This
        Warrant is exchangeable, upon the surrender hereof by the Holder at the
        principal office of the Company, for a new Warrant or Warrants (in accordance
        with Section 7(d)) representing in the aggregate the right to purchase the
        number of Warrant Shares then underlying this Warrant, and each such new
        Warrant
        will represent the right to purchase such portion of such Warrant Shares
        as is
        designated in writing by the Holder at the time of such surrender; provided,
        however, that no Warrants for fractional shares of Common Stock shall be
        given.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (d) Issuance
        of New Warrants.
        Whenever the Company is required to issue a new Warrant pursuant to the terms
        of
        this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
        (ii) shall represent, as indicated on the face of such new Warrant, the right
        to
        purchase the Warrant Shares then underlying this Warrant (or in the case
        of a
        new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant
        Shares designated by the Holder which, when added to the number of shares
        of
        Common Stock underlying the other new Warrants issued in connection with
        such
        issuance, does not exceed the number of Warrant Shares then underlying this
        Warrant), (iii) shall have an issuance date, as indicated on the face of
        such
        new Warrant which is the same as the Issuance Date, and (iv) shall have the
        same
        rights and conditions as this Warrant.

       

      8. NOTICES.
        Whenever notice is required or permitted to be given under this Warrant,
        unless
        otherwise provided herein, such notice shall be given in accordance with
        Section
        7(d) of the Securities Purchase Agreement. The Company shall provide the
        Holder
        with prompt written notice of all actions taken pursuant to this Warrant,
        including in reasonable detail a description of such action and the reason
        therefore. Without limiting the generality of the foregoing, the Company
        will
        give written notice to the Holder (i) promptly upon any adjustment of the
        Exercise Price, setting forth in reasonable detail, the calculation of such
        adjustment and (ii) at least fifteen days prior to the date on which the
        Company
        closes its books or takes a record (A) with respect to any dividend or
        distribution upon the shares of Common Stock, (B) with respect to any grants,
        issuances or sales of any Options, Convertible Securities or rights to purchase
        stock, warrants, securities or other property to holders of shares of Common
        Stock or (C) for determining rights to vote with respect to any Fundamental
        Transaction, dissolution or liquidation, provided in each case that such
        information shall be made known to the public prior to or in conjunction
        with
        such notice being provided to the Holder.

       

      9. AMENDMENT
        AND WAIVER.
        Except
        as otherwise provided herein, the provisions of this Warrant may be amended
        and
        the Company may take any action herein prohibited, or omit to perform any
        act
        herein required to be performed by it, only if the Company has obtained the
        written consent of the Required Holders; provided that no such action may
        (i)
        increase the exercise price of any SPA Warrant, (ii) decrease the number
        of
        shares or class of stock obtainable upon exercise of any SPA Warrant, (iii)
        increase the
        beneficial ownership of Common Stock held by such Holder’s for purposes of
        Section 13(d) of the Exchange Act where such beneficial ownership of Common
        Stock would be in excess of the Maximum Percentage after exercise of this
        Warrant or (iv) amend or remove Section 1(e) hereof without
        the written consent of the Holder. 

       

      10. GOVERNING
        LAW.
        This
        Warrant shall be governed by and construed and enforced in accordance with,
        and
        all questions concerning the construction, validity, interpretation and
        performance of this Warrant shall be governed by, the internal laws of the
        State
        of New York, without giving effect to any choice of law or conflict of law
        provision or rule (whether of the State of New York or any other jurisdictions)
        that would cause the application of the laws of any jurisdictions other than
        the
        State of New York.

       

      11. SEVERABILITY.
        If any
        provision of this Agreement is prohibited by law or otherwise determined
        to be
        invalid or unenforceable by a court of competent jurisdiction, the provision
        that would otherwise be prohibited, invalid or unenforceable shall be deemed
        amended to apply to the broadest extent that it would be valid and enforceable,
        and the invalidity or unenforceability of such provision shall not affect
        the
        validity of the remaining provisions of this Agreement so long as this Agreement
        as so modified continues to express, without material change, the original
        intentions of the parties as to the subject matter hereof and the prohibited
        nature, invalidity or unenforceability of the provision(s) in question does
        not
        substantially impair the respective expectations or reciprocal obligations
        of
        the parties or the practical realization of the benefits that would otherwise
        be
        conferred upon the parties. The parties will endeavor in good faith negotiations
        to replace the prohibited, invalid or unenforceable provision(s) with a valid
        provision(s), the effect of which comes as close as possible to that of the
        prohibited, invalid or unenforceable provision(s). 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      12. CONSTRUCTION;
        HEADINGS.
        This
        Warrant shall be deemed to be jointly drafted by the Company and all the
        Buyers
        and shall not be construed against any person as the drafter hereof. The
        headings of this Warrant are for convenience of reference and shall not form
        part of, or affect the interpretation of, this Warrant.

       

      13. DISPUTE
        RESOLUTION.
        In the
        case of a dispute as to the determination of the Exercise Price or the
        arithmetic calculation of the Warrant Shares, the Company shall submit the
        disputed determinations or arithmetic calculations via facsimile within five
        (5)
        Business Days of receipt of the Exercise Notice giving rise to such dispute,
        as
        the case may be, to the Holder. If the Holder and the Company are unable
        to
        agree upon such determination or calculation of the Exercise Price or the
        Warrant Shares within three Business Days of such disputed determination
        or
        arithmetic calculation being submitted to the Holder, then the Company shall,
        within two Business Days submit via facsimile (a) the disputed determination
        of
        the Exercise Price to an independent, reputable investment bank selected
        by the
        Company and approved by the Holder or (b) the disputed arithmetic calculation
        of
        the Warrant Shares to the Company’s independent, outside accountant. The Company
        shall cause at its expense the investment bank or the accountant, as the
        case
        may be, to perform the determinations or calculations and notify the Company
        and
        the Holder of the results no later than ten Business Days from the time it
        receives the disputed determinations or calculations. Such investment bank’s or
        accountant’s determination or calculation, as the case may be, shall be binding
        upon all parties absent demonstrable error.

       

      14. REMEDIES,
        OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
        The
        remedies provided in this Warrant shall be cumulative and in addition to
        all
        other remedies available under this Warrant and the other Transaction Documents,
        at law or in equity (including a decree of specific performance and/or other
        injunctive relief), and nothing herein shall limit the right of the Holder
        to
        pursue actual damages for any failure by the Company to comply with the terms
        of
        this Warrant. The Company acknowledges that a breach by it of its obligations
        hereunder will cause irreparable harm to the Holder and that the remedy at
        law
        for any such breach may be inadequate. The Company therefore agrees that,
        in the
        event of any such breach or threatened breach, the holder of this Warrant
        shall
        be entitled, in addition to all other available remedies, to an injunction
        restraining any breach, without the necessity of showing economic loss and
        without any bond or other security being required.

       

      15. TRANSFER. Subject
        to applicable law, this Warrant may be offered for sale, sold, transferred
        or
        assigned without the consent of the Company, except as may otherwise be required
        by Section 4(a) of the Securities Purchase Agreement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      16. CERTAIN
        DEFINITIONS.
        For
        purposes of this Warrant, the following terms shall have the following
        meanings:

       

      (a) “Bloomberg”
means
        Bloomberg Financial Markets.

       

      (b) “Business
        Day”
means
        any day other than Saturday, Sunday or other day on which commercial banks
        in
        The City of New York are authorized or required by law to remain
        closed.

       

      (c) “Closing
        Bid Price”
and
        “Closing
        Sale Price”
means,
        for any security as of any date, the last closing bid price and last closing
        trade price, respectively, for such security on the Principal Market, as
        reported by Bloomberg, or, if the Principal Market begins to operate on an
        extended hours basis and does not designate the closing bid price or the
        closing
        trade price, as the case may be, then the last bid price or last trade price,
        respectively, of such security prior to 4:00 p.m., New York time, as reported
        by
        Bloomberg, or, if the Principal Market is not the principal securities exchange
        or trading market for such security, the last closing bid price or last trade
        price, respectively, of such security on the principal securities exchange
        or
        trading market where such security is listed or traded as reported by Bloomberg,
        or if the foregoing do not apply, the last closing bid price or last trade
        price, respectively, of such security in the over-the-counter market on the
        electronic bulletin board for such security as reported by Bloomberg, or,
        if no
        closing bid price or last trade price, respectively, is reported for such
        security by Bloomberg, the average of the bid prices, or the ask prices,
        respectively, of any market makers for such security as reported in the “pink
        sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If
        the Closing Bid Price or the Closing Sale Price cannot be calculated for
        a
        security on a particular date on any of the foregoing bases, the Closing
        Bid
        Price or the Closing Sale Price, as the case may be, of such security on
        such
        date shall be the fair market value as mutually determined by the Company
        and
        the Holder. If the Company and the Holder are unable to agree upon the fair
        market value of such security, then such dispute shall be resolved pursuant
        to
        Section 14. All such determinations to be appropriately adjusted for any
        stock
        dividend, stock split, stock combination or other similar transaction during
        the
        applicable calculation period.

       

      (d) “Common
        Stock”
means
        (i) the Company’s shares of Common Stock, par value $0.001 per share, and
        (ii) any share capital into which such Common Stock shall have been changed
        or any share capital resulting from a reclassification of such Common
        Stock.

       

      (e) “Common
        Stock Deemed Outstanding”
means,
        at any given time, the number of shares of Common Stock actually outstanding
        at
        such time, plus the number of shares of Common Stock deemed to be outstanding
        pursuant to Sections 2(a)(i) and 2(a)(ii) hereof regardless of whether the
        Options or Convertible Securities are actually exercisable at such time,
        but
        excluding any shares of Common Stock owned or held by or for the account
        of the
        Company or issuable upon exercise of the SPA Warrants.

       

      (f) “Convertible
        Securities”
means
        any stock or securities (other than Options) directly or indirectly convertible
        into or exercisable or exchangeable for shares of Common Stock.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (g) “Dollar”,
        “US
        Dollar”
and
        “$”
each
        mean the lawful money of the United States.

       

      (h) “Eligible
        Market”
means
        the Principal Market, The New York Stock Exchange, Inc., the American Stock
        Exchange, The NASDAQ Global Market or The NASDAQ Global Select
        Market.

       

      (i) "Excluded
        Securities"
        means
        any Common Stock issued or issuable: (i) in connection with the Company’s 2006
        Stock Incentive Plan or 2001 Stock Option Plan; (ii) upon exercise of the
        Warrants; (iii) pursuant to a bona fide firm commitment underwritten public
        offering with a nationally recognized underwriter which generates gross proceeds
        to the Company in excess of $20,000,000 (other than an "at-the-market offering"
        as defined in Rule 415(a)(4) under the 1933 Act and "equity lines"); (iv)
        in
        connection with any acquisition by the Company, whether through an acquisition
        of stock or a merger of any business, assets or technologies the primary
        purpose
        of which is not to raise equity capital; (v) in connection with any other
        strategic transaction or alliance the primary purpose of which is not to
        raise
        equity capital; and (vii) upon conversion or exercise of any Options or
        Convertible Securities which are outstanding on the day immediately preceding
        the Subscription Date, provided that the conversion or exercise price of
        such
        Options or Convertible Securities is not amended, modified or changed on
        or
        after the Subscription Date.

       

      (j) “Expiration
        Date”
means
        the date 60 months from the Closing Date or, if such date falls on a day
        other
        than a Business Day or on which trading does not take place on the Principal
        Market (a “Holiday”),
        the
        next date that is not a Holiday.

       

      (k) “Fundamental
        Transaction”
means
        that the Company shall, directly or indirectly, in one or more related
        transactions, (i) consolidate or merge with or into (whether or not the Company
        is the surviving corporation) another Person
        or
        Persons, if the holders of the Voting Stock (not including any shares of
        Voting
        Stock held by the Person or Persons making or party to, or associated or
        affiliated with the Persons making or party to, such consolidation or merger)
        immediately prior to such consolidation or merger shall hold or have the
        right
        to direct the voting of less than 50% of the Voting Stock or such voting
        securities of such other surviving Person immediately following such
        transaction,
        or
        (ii)
        sell, assign, transfer, convey or otherwise dispose of all or substantially
        all
        of the properties or assets of the Company to another Person, or (iii) allow
        another Person to make a purchase, tender or exchange offer that is accepted
        by
        the holders of more than the 50% of the outstanding shares of Voting Stock
        (not
        including any shares of Voting Stock held by the Person or Persons making
        or
        party to, or associated or affiliated with the Persons making or party to,
        such
        purchase, tender or exchange offer), or (iv) consummate a stock purchase
        agreement or other business combination (including, without limitation, a
        reorganization, recapitalization, spin-off or scheme of arrangement) with
        another Person whereby such other Person acquires more than the 50% of the
        outstanding shares of Voting Stock (not including any shares of Voting Stock
        held by the other Person or other Persons making or party to, or associated
        or
        affiliated with the other Persons making or party to, such stock purchase
        agreement or other business combination), (v) reorganize, recapitalize or
        reclassify its Common Stock, or (vi) any “person” or “group” (as these terms are
        used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or
        shall
        become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
        directly or indirectly, of 50% of the aggregate ordinary voting power
        represented by issued and outstanding Common Stock.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (l) “Options”
means
        any rights, warrants or options to subscribe for or purchase shares of Common
        Stock or Convertible Securities.

       

      (m) “Person”
means
        an individual, a limited liability company, a partnership, a joint venture,
        a
        corporation, a trust, an unincorporated organization, any other entity and
        a
        government or any department or agency thereof.

       

      (n) “Principal
        Market”
means
        The NASDAQ Capital Market.

       

      (o) “Required
        Holders”
means
        the holders of the SPA Warrants representing at least a majority of shares
        of
        Common Stock underlying the SPA Warrants then outstanding.

       

      (p) “Trading
        Day”
means
        any day on which the Common Stock is traded on the Principal Market, or,
        if the
        Principal Market is not the principal trading market for the Common Stock,
        then
        on the principal securities exchange or securities market on which the Common
        Stock is then traded; provided that “Trading Day” shall not include any day on
        which the Common Stock is scheduled to trade on such exchange or market for
        less
        than 4.5 hours or any day that the Common Stock is suspended from trading
        during
        the final hour of trading on such exchange or market (or if such exchange
        or
        market does not designate in advance the closing time of trading on such
        exchange or market, then during the hour ending at 4:00 p.m., New York
        time).

       

      (q) “Voting
        Stock”
of
        a
        Person means capital stock of such Person of the class or classes pursuant
        to
        which the holders thereof have the general voting power to elect, or the
        general
        power to appoint, at least a majority of the board of directors, managers
        or
        trustees of such Person (irrespective of whether or not at the time capital
        stock of any other class or classes shall have or might have voting power
        by
        reason of the happening of any contingency).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (r) “Weighted
        Average Price”
means,
        for any security as of any date, the dollar volume-weighted average price
        for
        such security on the Principal Market during the period beginning at 9:30:01
        a.m., New York City time, and ending at 4:00:00 p.m., New York City time,
        as
        reported by Bloomberg through its “Volume at Price” function or, if the
        foregoing does not apply, the dollar volume-weighted average price of such
        security in the over-the-counter market on the electronic bulletin board
        for
        such security during the period beginning at 9:30:01 a.m., New York City
        time,
        and ending at 4:00:00 p.m., New York City time, as reported by Bloomberg,
        or, if
        no dollar volume-weighted average price is reported for such security by
        Bloomberg for such hours, the average of the highest closing bid price and
        the
        lowest closing ask price of any of the market makers for such security as
        reported in the “pink sheets” by Pink Sheets LLC (formerly the National
        Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated
        for
        such security on such date on any of the foregoing bases, the Weighted Average
        Price of such security on such date shall be the fair market value as mutually
        determined by the Company and the Required Holders. If the Company and the
        Required Holders are unable to agree upon the fair market value of the such
        security, then such dispute shall be resolved pursuant to Section 14 with
        the
        term “Weighted Average Price” being substituted for the term “Exercise Price.”
All such determinations shall be appropriately adjusted for any share dividend,
        share split or other similar transaction during such period.

       

      [Signature
        Page Follows]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF,
        the
        Company has caused this Warrant to Purchase Common Stock to be duly executed
        as
        of the Issuance Date set out above.

       

      
        
          
            	
                    AKEENA
                      SOLAR, INC.

                  
	 	 
	 	 
	
                    By:

                  	
                    /s/
                      Gary Effren

                  
	
                    Name:

                  	
                    Gary
                      Effren

                  
	
                    Title:

                  	
                    Chief
                      Financial Officer

                  

          

          
            
              
                 

              

              
              

            

            
              
              

              
                

              

            

            
              
              

              
              

            

          

        

      

       

      EXHIBIT
        A

       

      

      EXERCISE
        NOTICE

       

      TO
        BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

      WARRANT
        TO PURCHASE COMMON STOCK

      

      AKEENA
        SOLAR,
        INC.

       

      The
        undersigned holder hereby exercises the right to purchase _________________
        of
        the shares of Common Stock (“Warrant
        Shares”)
        of
Akeena
        Solar, Inc., a corporation organized under the laws of Delaware
        (the
“Company”),
        evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
        Capitalized terms used herein and not otherwise defined shall have the
        respective meanings set forth in the Warrant.

      

      1.
        Form
        of Exercise Price. The Holder intends that payment of the Exercise Price
        shall
        be made as:

      

      ____________ a
        “Cash
        Exercise”
        with
        respect to _________________ Warrant Shares; and/or

      

      ____________ a
        “Cashless
        Exercise”
        with
        respect to _______________ Warrant Shares.

      

      2.
        Payment of Exercise Price. In the event that the holder has elected a Cash
        Exercise with respect to some or all of the Warrant Shares to be issued pursuant
        hereto, the holder shall pay the Aggregate Exercise Price in the sum of
        $___________________ to the Company in accordance with the terms of the
        Warrant.

      

      3.
        Delivery of Warrant Shares. The Company shall deliver to the holder __________
        Warrant Shares in accordance with the terms of the Warrant.

      

      Date:
        _______________ __, ______

      

      ____________________________

      Name
        of
        Registered Holder

      

        
          	
                  By:

                	 
	 	
                  Name:

                
	 	
                  Title:

                

        

        

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

      

      ACKNOWLEDGMENT

       

      The
        Company hereby acknowledges this Exercise Notice and hereby directs Empire
        Stock
        Transfer Inc to issue the above indicated number of shares of Common Stock
        in
        accordance with the Transfer Agent Instructions dated November 1, 2007 from
        the
        Company and acknowledged and agreed to by Empire Stock Transfer
        Inc.

       

      
        
          	
                  AKEENA
                    SOLAR, INC.

                
	 	 
	 	 
	
                  By:

                	 
	
                  Name:

                	 
	
                  Title:SECURITIES
      PURCHASE AGREEMENT

     

    SECURITIES
      PURCHASE AGREEMENT
      (this
“Agreement”),
      dated
      as of November 1, 2007, by and among Akeena Solar, Inc., a Delaware
      corporation
      with
      headquarters located at 16005 Los Gatos Boulevard, Los Gatos, California 94032
      (the “Company”),
      and
      the investors listed on the Schedule of Investors attached hereto as
      Exhibit A (individually,
      an “Investor”
and
      collectively, the “Investors”).
      

     

    BACKGROUND

    

    A. The
      Company and each Investor are executing and delivering this Agreement in
      reliance upon the exemption from registration afforded by Section 4(2) of
      the Securities Act of 1933, as amended (the “Securities
      Act”),
      and
      Rule 506
      of
      Regulation D
      (“Regulation
      D”)
      as
      promulgated by the United States Securities and Exchange Commission (the
“SEC”)
      under
      the Securities Act. 

     

    B. Each
      Investor, severally and not jointly, wishes to purchase, and the Company wishes
      to sell, upon the terms and conditions stated in this Agreement, (i) that
      aggregate number of shares of the common stock, par value $0.001 per share,
      of
      the Company (the “Common
      Stock”),
      set
      forth opposite such Investor’s name in column two (2) on the Schedule of
      Investors in Exhibit A
      (which
      aggregate amount for all Investors together shall be 3,728,572 shares of Common
      Stock and shall collectively be referred to herein as the “Common
      Shares”)
      and
      (ii) warrants, in substantially the form attached hereto as Exhibit F
      (the
“Warrants”)
      to
      acquire up to that number of additional shares of Common Stock set forth
      opposite such Investor’s name in column three (3) on the Schedule of Investors
      (the shares of Common Stock issuable upon exercise of or otherwise pursuant
      to
      the Warrants, collectively, the “Warrant
      Shares”).
      

     

    C. The
      Common Shares, the
      Warrants and the Warrant Shares
      issued
      pursuant to this Agreement are
      collectively referred to herein as the “Securities.”
      

     

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

     

    ARTICLE
      I

    DEFINITIONS

     

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

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 144
      under
      the Securities Act.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Agreement”
has
      the
      meaning set forth in the Preamble.

     

    “Business
      Day”
means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

     

    “Closing”
means
      the closing of the purchase and sale of the Securities pursuant to
      Section 2.

     

    “Closing
      Date”
means
      the date and time of the Closing and shall be on such date and time as is
      mutually agreed to by the Company and each Investor.

     

    “Company”
      has
      the
      meaning set forth in the Preamble.

     

    “Company
      Counsel”
means
      DLA
      Piper
      US LLP,
      counsel
      to the Company.

     

    “Common
      Shares”
has
      the
      meaning set forth in the Preamble.

     

    “Common
      Stock”
has
      the
      meaning set forth in the Preamble.

     

    “Contingent
      Obligation”
has
      the
      meaning set forth in Section 3.1(bb). 

     

    “Convertible
      Securities”
means
      any stock or securities (other than Options) convertible into or exercisable
      or
      exchangeable for Common Stock. 

     

    “Disclosure
      Materials”
has
      the
      meaning set forth in Section 3.1(g).

     

    “Effective
      Date”
means
      the date that the Registration Statement is first declared effective by the
      SEC.

     

    “Effectiveness
      Period”
has
      the
      meaning set forth in Section 6.1(b).

     

    “8-K
      Filing”
has
      the
      meaning set forth in Section 4.5. 

     

    “Eligible
      Market”
means
      any of the New York Stock Exchange, the American Stock Exchange, The Nasdaq
      Global Select Market, The Nasdaq Global Market or The Nasdaq Capital
      Market.

     

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

     

    “Event”
has
      the
      meaning set forth in Section 6.1(d).

     

    “Event
      Payments”
has
      the
      meaning set forth in Section 6.1(d).

     

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

     

    “Excluded
      Events”
has
      the
      meaning set forth in Section 6.1(d)(ii).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Excluded
      Investors”
means
      Cowen and Company, LLC and its Affiliates.

     

    “Existing
      Holders”
are
      existing holders of the Company’s Common Stock that purchased such Common Stock
      pursuant to the provisions of the Company’s Securities Purchase
      Agreements.

     

    “Filing
      Date”
means
      30 days after the Closing Date.

     

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

     

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

     

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

     

    “Indemnified
      Party”
has
      the
      meaning set forth in Section 6.4(c).

     

    “Indemnifying
      Party”
has
      the
      meaning set forth in Section 6.4(c).

     

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

     

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

     

    “Investor”
has
      the
      meaning set forth in the Preamble.
      

     

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

     

    “Losses”
means
      any and all losses, claims, damages, liabilities, settlement costs and expenses,
      including, without limitation, reasonable attorneys’
      fees.

     

    “Material
      Adverse Effect”
means
      (i) a material adverse effect on the results of operations, assets,
      business or financial condition of the Company and the Subsidiaries, taken
      as a
      whole on a consolidated basis, or (ii) materially and adversely impair the
      Company's ability to perform its obligations under any of the Transaction
      Documents, provided, that none of the following alone shall be deemed, in and
      of
      itself, to constitute a Material Adverse Effect: (i) a change in the market
      price or trading volume of the Common Stock or (ii) changes in general
      economic conditions or changes affecting the industry in which the Company
      operates generally (as opposed to Company-specific changes) so long as such
      changes do not have a disproportionate effect on the Company and its
      Subsidiaries taken as a whole.

     

    “Material
      Permits”
has
      the
      meaning set forth in Section 3.1(v).

     

    “Options”
means
      any outstanding rights, warrants or options to subscribe for or purchase Common
      Stock or Convertible Securities.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Person”
means
      any individual or corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, or joint
      stock company. 

     

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

     

    “Prospectus”
means
      the prospectus included in the Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A,
      430B or Rule 430C promulgated under the Securities Act), as amended or
      supplemented by any prospectus supplement, with respect to the terms of the
      offering of any portion of the Registrable Securities covered by the
      Registration Statement, and all other amendments and supplements to the
      Prospectus including post-effective amendments, and all material incorporated
      by
      reference or deemed to be incorporated by reference in such
      Prospectus.

     

    “Registrable
      Securities”
means
      the Common Shares and the Warrant Shares issued or issuable pursuant to the
      Transaction Documents, together with any securities issued or issuable upon
      any
      stock split, dividend or other distribution, recapitalization or similar event
      with respect to the foregoing.

     

    “Registration
      Statement”
means
      each registration statement required to be filed under Article VI,
      including (in each case) the Prospectus, amendments and supplements to such
      registration statement or Prospectus, including pre- and post-effective
      amendments, all exhibits thereto, and all material incorporated by reference
      or
      deemed to be incorporated by reference in such registration
      statement.

     

    “Regulation
      D”
has
      the
      meaning set forth in the Preamble. 

     

    “Required
      Effectiveness Date”
means
      the
      date
      which is the earliest of (i) if the Registration Statement does not become
      subject to review by the SEC, (a) ninety (90) days after the Closing Date or
      (b)
      five (5) Trading Days after the Company receives notification from the SEC
      that
      the Registration Statement will not become subject to review and the Company
      fails to request to accelerate the effectiveness of the Registration Statement,
      or (ii) if the Registration Statement becomes subject to review by the SEC,
      one hundred thirty five (135) days after the Closing Date.

     

    “Rule 144,”
      “Rule 415,”
      “Rule 424,”
      “Rule 430A,”
      “Rule 430B,”
and
      “Rule 430C”
means
      Rule 144,
      Rule 415,
      Rule 424,
      Rule 430A, Rule 430B, and Rule 430C respectively, promulgated by
      the SEC pursuant to the Securities Act, as such Rules may be amended from time
      to time, or any similar rule or regulation hereafter adopted by the SEC having
      substantially the same effect as such Rule.

     

    “SEC”
      has the
      meaning set forth in the Preamble.

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Securities”
has
      the
      meaning set forth in the Preamble.

     

    “Securities
      Act”
has
      the
      meaning set forth in the Preamble. 

     

    “Securities
      Purchase Agreements”
has
      the
      meaning set forth in Section 3.1(d).

     

    “Shares”
means
      shares of Common Stock.

     

    “Short
      Sales”
has
      the
      meaning set forth in Section 3.2(h). 

     

    “Subsidiary”
means
      any direct
      or
      indirect subsidiary of the Company.

     

    “Trading
      Day”
means
      (a) any day on which the Common Stock is listed or quoted or traded on its
      primary Trading Market, (b) if the Common Stock is not then listed or
      quoted or traded on its primary Trading Market, the any date on which the common
      Stock is listed or quoted or traded on any other Eligible Market (or any
      respective successor thereto), or (c) if trading ceases to occur on any
      Eligible Market (or any respective successor thereto), any Business
      Day.

     

    “Trading
      Market”
      means
      The
      Nasdaq Capital Market or any other Eligible Market or any national securities
      exchange, market or trading or quotation facility on which the
      Common
      Stock is
      then listed or quoted.

     

    “Transaction
      Documents”
means
      this Agreement, the schedules and exhibits attached hereto, the Warrants and
      the
      Transfer Agent Instructions.

     

    “Transfer
      Agent”
means
      Empire Stock Transfer, Inc. or any successor transfer agent for the
      Company.

     

    “Transfer
      Agent Instructions”
means,
      with respect to the Company, the Irrevocable Transfer Agent Instructions, in
      the
      form of Exhibit E,
      executed by the Company and delivered to and acknowledged in writing by the
      Transfer Agent.

     

    “Warrants”
has
      the
      meaning set forth in the Preamble.

     

    “Warrant
      Shares”
has
      the
      meaning set forth in the Preamble.

     

    ARTICLE
      II

    PURCHASE
      AND SALE

     

    2.1 Closing.
      Subject
      to the terms and conditions set forth in this Agreement, at the Closing the
      Company shall issue and sell to each Investor, and each Investor shall,
      severally and not jointly, purchase from the Company, such number of Common
      Shares and Warrants for the price set forth opposite such Investor's name on
      Exhibit A
      hereto
      under the headings “Common Shares” and “Warrants”. The date and time of the
      Closing and shall be 11:00 a.m., New York City Time, on the Closing Date. The
      Closing shall take place at the offices of the Company’s Counsel. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    2.2 Closing
      Deliveries.

     

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

     

    (i) one
      or
      more stock certificates (or copies thereof provided by the Transfer Agent),
      containing the restrictive and other legends provided in Section 4.1(b)
      hereof, evidencing such number of Common Shares set forth opposite such
      Investor’s name on Exhibit A
      hereto
      under the heading “Common Shares,” registered in the name of such
      Investor;

     

    (ii) a
      Warrant, issued in the name of such Investor, pursuant to which such Investor
      shall have the right to acquire such number of Warrant Shares set forth opposite
      such Investor’s name on Exhibit A
      hereto
      under the heading “Warrant Shares”; and

     

    (iii) a
      legal
      opinion of Company Counsel, in the form of Exhibit C,
      executed by such counsel and delivered to the Investors.

     

    (b) At
      the
      Closing, each Investor shall deliver or cause to be delivered to the
      Company the purchase price set forth opposite such Investor’s name on
Exhibit A
      hereto
      under the heading “Purchase Price” in United States dollars and in immediately
      available funds, by wire transfer to an account designated in writing to such
      Investor by the Company for such purpose.

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Representations
      and Warranties of the Company.
      Except
      as disclosed in the corresponding section of the Schedules, which Schedules
      shall be deemed a part hereof, the Company hereby represents and warrants to
      the
      Investors and the Agent as follows:

     

    (a) Subsidiaries.
      The
      Company has no Subsidiaries other than those listed in Schedule 3.1(a)
      hereto.
      Except as disclosed in Schedule 3.1(a)
      hereto,
      the Company owns, directly or indirectly, all of the capital stock or comparable
      equity interests of each Subsidiary free and clear of any Lien and all the
      issued and outstanding shares of capital stock or comparable equity interest
      of
      each Subsidiary are validly issued and are fully paid, non-assessable and free
      of preemptive and similar rights.

     

    (b) Organization
      and Qualification.
      Each of
      the Company and the Subsidiaries is an entity duly organized, validly existing
      and in good standing under the laws of the jurisdiction of its incorporation
      or
      organization (as applicable), with the requisite corporate authority to own
      and
      use its properties and assets and to carry on its business as currently
      conducted. Neither the Company nor any Subsidiary is in violation of any of
      the
      provisions of its respective certificate or articles of incorporation, bylaws
      or
      other organizational or charter documents. Each of the Company and the
      Subsidiaries is duly qualified to do business and is in good standing as a
      foreign corporation or other entity in each jurisdiction in which the nature
      of
      the business conducted or property owned by it makes such qualification
      necessary, except where the failure to be so qualified or in good standing,
      as
      the case may be, would not, individually or in the aggregate, have or reasonably
      be expected to result in a Material Adverse Effect.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

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

     

    (d) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents to which it
      is
      a party by the Company and the consummation by the Company of the transactions
      contemplated hereby and thereby do not, and will not, (i) conflict with or
      violate any provision of the Company’s or any Subsidiary’s certificate or
      articles of incorporation, bylaws or other organizational or charter documents,
      (ii) conflict with, or constitute a default (or an event that with notice
      or lapse of time or both would become a default) under, or give to others any
      rights of termination, amendment, acceleration or cancellation (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other
      instrument (evidencing a Company or Subsidiary debt or otherwise), including,
      without limitation, under those certain Securities Purchase Agreements, dated
      March 8, 2007 and May 25, 2007, respectively, between the Company and the
      investors named therein (the “Securities
      Purchase Agreements”)
      or
      other understanding to which the Company or any Subsidiary is a party or by
      which any property or asset of the Company or any Subsidiary is bound, or
      affected, except to the extent that such conflict, default or rights would
      not
      reasonably be expected to have a Material Adverse Effect, or (iii) to the
      Company’s knowledge, result in a violation of any law, rule, regulation,
      order, judgment, injunction, decree or other restriction of any court or
      governmental authority to which the Company or a Subsidiary is subject
      (including, assuming the accuracy of the representations and warranties of
      the
      Investors set forth in Section 3.2 hereof, federal and state securities
      laws and regulations and the rules and regulations of any self-regulatory
      organization to which the Company or its securities are subject, including
      all
      applicable Trading Markets), or by which any property or asset of the Company
      or
      a Subsidiary is bound or affected, except to the extent that such violation
      would not reasonably be expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (e) The
      Securities.
      The
      Securities (including the Warrant Shares) are duly authorized and, when issued
      and paid for in accordance with the Transaction Documents, will be duly and
      validly issued, fully paid and nonassessable, free and clear of all Liens and
      will not be subject to preemptive or similar rights (“Preemptive
      Rights”)
      of
      stockholders (other than those imposed by (i) the Investors or (ii) any
      Preemptive Rights set forth in the Securities Purchase Agreements for which
      proper notice was delivered to such Existing Holders by the Company with respect
      to their rights to participate in this offering of Securities and for which
      such
      Preemptive Rights have been either exercised or lapsed with respect to such
      Existing Holders after proper notice under the Securities Purchase Agreements).
      The Company has reserved from its duly authorized capital stock the maximum
      number of shares of Common Stock issuable upon exercise of the Warrants. The
      offer, issuance and sale of the Shares, the Warrants and the Warrant Shares
      to
      the Investors pursuant to this Agreement, and in the case of the Warrant Shares,
      pursuant to the Warrants as of the date hereof, are exempt from the registration
      requirements of the Securities Act.

     

    (f) Capitalization.
      The
      aggregate number of shares and type of all authorized, issued and outstanding
      classes of capital stock, options and other securities of the Company (whether
      or not presently convertible into or exercisable or exchangeable for shares
      of
      capital stock of the Company) is set forth in Schedule 3.1(f)
      hereto.
      All outstanding shares of capital stock are duly authorized, validly issued,
      fully paid and nonassessable and have been issued in compliance in all material
      respects with all applicable securities laws. Except as disclosed in the
      Securities Purchase Agreements and in Schedule 3.1(f)
      hereto,
      the Company did not have outstanding as of the date hereof any other options,
      warrants, script rights to subscribe to, calls or commitments of any character
      whatsoever relating to, or securities, rights or obligations convertible into
      or
      exercisable or exchangeable for, or entered into any agreement giving any Person
      any right to subscribe for or acquire, any shares of Common Stock, or securities
      or rights convertible or exchangeable into shares of Common Stock. Except as
      set
      forth on Schedule 3.1(f)
      hereto,
      and except for customary adjustments as a result of stock dividends, stock
      splits, combinations of shares, reorganizations, recapitalizations,
      reclassifications or other similar events, there are no anti-dilution or price
      adjustment provisions contained in any security issued by the Company (or in
      any
      agreement providing rights to security holders) and the issuance and sale of
      the
      Securities will not obligate the Company to issue shares of Common Stock or
      other securities to any Person (other than the Investors) and will not result
      in
      a right of any holder of securities to adjust the exercise, conversion, exchange
      or reset price under such securities. To the knowledge of the Company, except
      as
      disclosed in the SEC Reports and any Schedules filed with the SEC pursuant
      to
      Rule 13d-1 of the Exchange Act by reporting persons or in Schedule 3.1(f)
      hereto,
      no Person or group of related Persons beneficially owns (as determined pursuant
      to Rule 13d-3 under the Exchange Act), or has the right to acquire, by
      agreement with or by obligation binding upon the Company, beneficial ownership
      of in excess of 5% of the outstanding Common Stock.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (g) SEC
      Reports; Financial Statements.
      Since
      February 3, 2006, the Company has filed all reports required to be filed by
      it
      under the Exchange Act, including pursuant to Section 13(a) or 15(d)
      thereof. Such reports required to be filed by the Company under the Exchange
      Act, including pursuant to Section 13(a) or 15(d) thereof, together with
      any materials filed or furnished by the Company under the Exchange Act, whether
      or not any such reports were required being collectively referred to herein
      as
      the “SEC
      Reports”
and,
      together with this Agreement and the Schedules to this Agreement, the
“Disclosure
      Materials”.
      As of
      their respective dates, the SEC Reports filed by the Company complied in all
      material respects with the requirements of the Securities Act and the Exchange
      Act and the rules and regulations of the SEC promulgated thereunder, and none
      of
      the SEC Reports, when filed by the Company, contained any untrue statement
      of a
      material fact or omitted to state a material fact required to be stated therein
      or necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading. The financial
      statements of the Company included in the SEC Reports comply in all material
      respects with applicable accounting requirements and the rules and regulations
      of the SEC with respect thereto as in effect at the time of filing. Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements, the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP or may be condensed or summary statements, and fairly
      present in all material respects the consolidated financial position of the
      Company and its consolidated Subsidiaries as of and for the dates thereof and
      the results of operations and cash flows for the periods then ended, subject,
      in
      the case of unaudited statements, to normal, year-end audit adjustments. All
      material agreements to which the Company or any Subsidiary is a party or to
      which the property or assets of the Company or any Subsidiary are subject are
      included as part of or identified in the SEC Reports, to the extent such
      agreements are required to be included or identified pursuant to the rules
      and
      regulations of the SEC.

     

    (h) Since
      the
      date of the latest audited financial statements included within the SEC Reports,
      except as disclosed in Schedule 3.1(h)
      hereto,
      (i) there has been no event, occurrence or development that, individually
      or in the aggregate, has had or that would result in a Material Adverse Effect,
      (ii) the Company has not incurred any material liabilities other than
      (A) trade payables and accrued expenses incurred in the ordinary course of
      business consistent with past practice and (B) liabilities not required to
      be reflected in the Company's financial statements pursuant to GAAP or required
      to be disclosed in filings made with the SEC, (iii) the Company has not
      altered its method of accounting or changed its auditors, except as disclosed
      in
Schedule 3.1(h)
      hereto,
      (iv) the Company has not declared or made any dividend or distribution of
      cash or other property to its stockholders, in their capacities as such, or
      purchased, redeemed or made any agreements to purchase or redeem any shares
      of
      its capital stock (except for repurchases by the Company of shares of capital
      stock held by employees, officers, directors, or consultants pursuant to an
      option to repurchase such shares upon the termination of employment or
      services), and (v) the Company has not issued any equity securities to any
      officer, director or Affiliate, except pursuant to current or previously
      existing Company stock-based plans. The Company has not taken any steps to
      seek
      protection pursuant to any bankruptcy law nor does the Company have any
      knowledge or reason to believe that its creditors intend to initiate involuntary
      bankruptcy proceedings or any actual knowledge of any fact which would
      reasonably lead a creditor to do so. The Company is not as of the date hereof,
      and after giving effect to the transactions contemplated hereby to occur at
      the
      applicable Closing, will not be Insolvent (as defined below). For purposes
      of
      this Section 3.1(h), “Insolvent”
means
      (i)  the present fair saleable value of the Company's assets is less than
      the amount required to pay the Company's total Indebtedness (as defined in
      Section 3.1(bb)), (ii) the Company is unable to pay its debts and
      liabilities, subordinated, contingent or otherwise, as such debts and
      liabilities become absolute and matured, (iii) the Company intends to incur
      or believes that it will incur debts that would be beyond its ability to pay
      as
      such debts mature or (iv) the Company has unreasonably small capital with which
      to conduct the business in which it is engaged as such business is now conducted
      and is proposed to be conducted.

     

    
      
        
        

      

      
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    (i) Absence
      of Litigation.
      Except
      as disclosed in Schedule
      3(i),
      there
      is no action, suit, claim, or Proceeding, or, to the Company’s knowledge,
      inquiry or investigation, before or by any court, public board, government
      agency, or self-regulatory organization pending or, to the knowledge of the
      Company, threatened against or affecting the Company or any of its Subsidiaries
      that could, individually or in the aggregate, have a Material Adverse
      Effect.

     

    (j) Compliance.
      Except
      as described in Schedule 3.1(j),
      neither
      the Company nor any Subsidiary, except in each case as would not, individually
      or in the aggregate, reasonably be expected to have or result in a Material
      Adverse Effect, (i) is in default under or in violation of (and no event
      has occurred that has not been waived that, with notice or lapse of time or
      both, would result in a default by the Company or any Subsidiary under), nor
      has
      the Company or any Subsidiary received written notice of a claim that it is
      in
      default under or that it is in violation of, any material indenture, loan or
      credit agreement or any other material agreement or instrument to which it
      is a
      party or by which it or any of its properties is bound (whether or not such
      default or violation has been waived), (ii) is in violation of any order of
      any court, arbitrator or governmental body, or (iii) is or has been in
      violation of any material statute, rule or regulation of any governmental
      authority.  

     

    (k) Title
      to Assets.
      The
      Company and the Subsidiaries have good and marketable title to all real property
      owned by them that is material to the business of the Company and the
      Subsidiaries have 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 that do not,
      individually or in the aggregate, have or result in a Material Adverse Effect.
      To the Company’s knowledge, any real property and facilities held under lease by
      the Company and the Subsidiaries are held by them under valid and subsisting
      leases of which the Company and the Subsidiaries are in material
      compliance.

     

    (l) No
      General Solicitation; Placement Agent's Fees.
      Neither
      the Company, nor any of its Affiliates, nor any Person acting on its or their
      behalf, has engaged in any form of general solicitation or general advertising
      (within the meaning of Regulation D) in connection with the offer or sale
      of the Securities. The Company shall be responsible for the payment of any
      placement agent’s fees, financial advisory fees, or brokers’ commission (other
      than for persons engaged by any Investor or its investment advisor) relating
      to
      or arising out of the issuance of the Securities pursuant to this Agreement.
      The
      Company acknowledges that it has engaged Cowen and Company, LLC as its exclusive
      placement agent (the “Agent”)
      in
      connection with the sale of the Securities. Other than the Agent, the Company
      has not engaged any placement agent or other agent in connection with the sale
      of the Securities.

     

    
      
        
        

      

      
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    (m) No
      Integration.
      Neither
      the Company nor any of its Affiliates nor, any Person acting on the Company’s
      behalf has, directly or indirectly, at any time within the past six months,
      made
      any offer or sale of any security or solicitation of any offer to buy any
      security under circumstances that would (i) eliminate the availability of
      the exemption from registration under Regulation D under the Securities Act
      in connection with the offer and sale by the Company of the Securities as
      contemplated hereby or (ii) cause the offering of the Securities pursuant
      to the Transaction Documents to be integrated with prior offerings by the
      Company for purposes of any applicable stockholder approval provisions,
      including, without limitation, under the rules and regulations of any Trading
      Market. The Company is not required to be registered as, and is not an Affiliate
      of, an “investment company” within the meaning of the Investment Company Act of
      1940, as amended. The Company is not required to be registered as, a United
      States real property holding corporation within the meaning of the Foreign
      Investment in Real Property Tax Act of 1980.

     

    (n) Private
      Placement.
      Assuming the accuracy of the representations and warranties of the Investors
      contained in Section 3.2 of this Agreement and the compliance by the
      Investors with the provisions set forth herein, it is not necessary, in
      connection with the issuance and sale of any Securities, in the manner
      contemplated by the Transaction Documents, to register any Securities under
      the
      Securities Act.

     

    (o) Eligibility
      for Registration.
      The
      Company is eligible to register the Common Shares and the Warrant Shares for
      resale by the Investors using Form S-3 or Form SB-2 promulgated under the
      Securities Act.

     

    (p) Listing
      and Maintenance Requirements.
      The
      Company has not, in the twelve months preceding the date hereof, received
      written notice from any Trading Market on which the Common Stock is or has
      been
      listed or quoted to the effect that the Company is not in compliance with the
      listing or maintenance requirements of such Trading Market. The Company is
      in
      compliance, in all material respects, with all such listing and maintenance
      requirements.

     

    (q) Registration
      Rights.
      Except
      as described in Schedule 3.1(q),
      the
      Company has not granted or agreed to grant to any Person any rights (including
      “piggy-back” registration rights) to have any securities of the Company
      registered with the SEC or any other governmental authority that have not been
      satisfied or waived.

     

    (r) Application
      of Takeover Protections.
      Except
      as described in Schedule 3.1(r),
      there
      is no control share acquisition, business combination, poison pill (including
      any distribution under a rights agreement) or other similar anti-takeover
      provision under the Company’s charter documents or the laws of its state of
      incorporation that is or could become applicable to any of the Investors as
      a
      result of the Investors and the Company fulfilling their obligations or
      exercising their rights under the Transaction Documents, including, without
      limitation, as a result of the Company’s issuance of the Securities and the
      Investors’ ownership of the Securities.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (s) Disclosure.
      The
      Company confirms that neither it nor any officers, directors or Affiliates,
      has
      provided any of the Investors (other than Excluded Investors) or their agents
      or
      counsel with any information that constitutes or might constitute material,
      nonpublic information (other than the existence and terms of the issuance of
      Securities, as contemplated by this Agreement). The
      Company understands and confirms that each of the Investors will rely on the
      foregoing representations in effecting transactions in securities of the Company
      (other than Excluded Investors). All disclosure provided by the Company to
      the
      Investors regarding the Company, its business and the transactions contemplated
      hereby, including the Schedules to this Agreement, furnished by or on the behalf
      of the Company are true and correct in all material respects and do not contain
      any untrue statement of a material fact or omit to state any material fact
      necessary in order to make the statements made therein, in the light of the
      circumstances under which they were made, not misleading. The Company
      acknowledges and agrees that no Investor (other than Excluded Investors) makes
      or has made any representations or warranties with respect to the transactions
      contemplated hereby other than those set forth in the Transaction Documents.
      

     

    (t) Acknowledgment
      Regarding Investors' Purchase of Securities.
      Based
      upon the assumption that the transactions contemplated by this Agreement are
      consummated in all material respects in conformity with the Transaction
      Documents, the Company acknowledges and agrees that each of the Investors (other
      than Excluded Investors) is acting solely in the capacity of an arm's length
      purchaser with respect to the Transaction Documents and the transactions
      contemplated hereby and thereby. The Company further acknowledges that no
      Investor (other than Excluded Investors) is acting as a financial advisor or
      fiduciary of the Company (or in any similar capacity) with respect to this
      Agreement and the transactions contemplated hereby and any advice given by
      any
      Investor (other than Excluded Investors) or any of their respective
      representatives or agents in connection with the Transaction Documents and
      the
      transactions contemplated hereby and thereby is merely incidental to the
      Investors’ purchase of the Securities. The Company further represents to each
      Investor that the Company’s decision to enter into this Agreement has been based
      solely on the independent evaluation of the transactions contemplated hereby
      by
      the Company and its representatives.

     

    (u) Patents
      and Trademarks.
      To the
      Company’s knowledge, the Company and its Subsidiaries own, or possess adequate
      rights or licenses to use, all trademarks, trade names, service marks, service
      mark registrations, service names, patents, patent applications, patent rights,
      copyrights, inventions, licenses, approvals, governmental authorizations, trade
      secrets and other intellectual property rights (“Intellectual
      Property Rights”)
      necessary to conduct their respective businesses
      as now
      conducted. Except as set forth in Schedule 3.1(u),
      none of
      the Company's Intellectual Property Rights have expired or terminated, or are
      expected to expire or terminate, within three years from the date of this
      Agreement. The Company does not have any knowledge of any infringement by the
      Company or its Subsidiaries of Intellectual Property Rights of others. Except
      as
      disclosed in Schedule
      3(u),
      there
      is no claim, action or proceeding being made or brought, or to the knowledge
      of
      the Company, being threatened, against the Company or its Subsidiaries regarding
      its Intellectual Property Rights. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (v) Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses and location in which the Company and the
      Subsidiaries are engaged. 

     

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

     

    (x) Transactions
      With Affiliates.
      Except
      as set forth or incorporated by reference in the Company’s SEC Reports, none of
      the officers or directors of the Company is presently a party to any transaction
      that would be required to be disclosed pursuant to Item 404 of Regulation S-B
      with the Company or any of its Subsidiaries (other than for ordinary course
      services as officers or 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 such officer or director or, to the Company's knowledge, any
      corporation, partnership, trust or other entity in which any such officer or
      director has a substantial interest or is an officer, director, trustee or
      partner.

     

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

     

    (z) Sarbanes-Oxley
      Act.
      The
      Company is in compliance in all respects with applicable requirements of the
      Sarbanes-Oxley Act of 2002 and applicable rules and regulations promulgated
      by
      the SEC thereunder, except where such noncompliance would not have, individually
      or in the aggregate, a Material Adverse Effect.

     

    (aa) Foreign
      Corrupt Practices.
      Neither
      the Company nor any of its Subsidiaries nor, to the knowledge of the Company,
      any director, officer, agent, employee or other Person acting on behalf of
      the
      Company or any of its Subsidiaries has, in the course of its actions for, or
      on
      behalf of, the Company (i) used any corporate funds for any unlawful
      contribution, gift, entertainment or other unlawful expenses relating to
      political activity; (ii) made any direct or indirect unlawful payment to
      any foreign or domestic government official or employee from corporate funds;
      (iii) violated or is in violation of any provision of the U.S. Foreign
      Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe,
      rebate, payoff, influence payment, kickback or other unlawful payment to any
      foreign or domestic government official or employee, except where such actions
      would not have, individually or in the aggregate, a Material Adverse
      Effect.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (bb) Indebtedness.
      Except
      as disclosed in Schedule 3.1(bb),
      neither
      the Company nor any of its Subsidiaries (i) has any outstanding
      Indebtedness (as defined below) or (ii) is a party to any contract,
      agreement or instrument relating to any Indebtedness, the performance of which,
      in the judgment of the Company's officers, has or is expected to have a Material
      Adverse Effect. For purposes of this Agreement: (x) “Indebtedness”
of
      any
      Person means, without duplication (A) all indebtedness for borrowed money,
      (B) all obligations issued, undertaken or assumed as the deferred purchase
      price of property or services (other than trade payables entered into in the
      ordinary course of business), (C) all reimbursement or payment obligations
      with respect to letters of credit, surety bonds and other similar instruments,
      (D) all obligations evidenced by notes, bonds, debentures or similar
      instruments, including obligations so evidenced incurred in connection with
      the
      acquisition of property, assets or businesses, (E) all indebtedness created
      or arising under any conditional sale or other title retention agreement, or
      incurred as financing, in either case with respect to any property or assets
      acquired with the proceeds of such indebtedness (even though the rights and
      remedies of the seller or bank under such agreement in the event of default
      are
      limited to repossession or sale of such property), (F) all monetary
      obligations under any leasing or similar arrangement which, in connection with
      generally accepted accounting principles, consistently applied for the periods
      covered thereby, is classified as a capital lease, (G) all indebtedness
      referred to in clauses (A) through (F) above secured by (or for which the holder
      of such Indebtedness has an existing right, contingent or otherwise, to be
      secured by) any mortgage, lien, pledge, charge, security interest or other
      encumbrance upon or in any property or assets (including accounts and contract
      rights) owned by any Person, even though the Person which owns such assets
      or
      property has not assumed or become liable for the payment of such indebtedness,
      and (H) all Contingent Obligations in respect of indebtedness or
      obligations of others of the kinds referred to in clauses (A) through (G) above;
      (y) “Contingent
      Obligation”
means,
      as to any Person, any direct or indirect liability, contingent or otherwise,
      of
      that Person with respect to any indebtedness, lease, dividend or other
      obligation of another Person if the primary purpose or intent of the Person
      incurring such liability, or the primary effect thereof, is to provide assurance
      to the obligee of such liability that such liability will be paid or discharged,
      or that any agreements relating thereto will be complied with, or that the
      holders of such liability will be protected (in whole or in part) against loss
      with respect thereto; and (z) “Person”
means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof.

     

    (cc) Employee
      Relations.
      Neither
      the Company nor any of its Subsidiaries is a party to any collective bargaining
      agreement or, to the Company’s knowledge, employs any member of a union. The
      Company believes that its relations with its employees are as disclosed in
      the
      SEC Reports. Except as disclosed in Schedule
      3(cc),
      since
      January 1, 2007 no executive officer of the Company or any of its Subsidiaries
      (as defined in Rule 501(f) of the Securities Act) has notified in writing
      the Company or any such Subsidiary that such officer intends to leave the
      Company or any such Subsidiary or otherwise terminate such officer's employment
      with the Company or any such Subsidiary. To the knowledge of the Company or
      any
      such Subsidiary, no executive officer of the Company or any of its Subsidiaries
      is in violation of any material term of any employment contract,
      confidentiality, disclosure or proprietary information agreement,
      non-competition agreement, or any other contract or agreement or any restrictive
      covenant, and the continued employment of each such executive officer does
      not
      subject the Company or any such Subsidiary to any liability with respect to
      any
      of the foregoing matters.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (dd) Labor
      Matters.
      The
      Company and its Subsidiaries are in compliance in all material respects with
      all
      federal, state, local and foreign laws and regulations respecting labor,
      employment and employment practices and benefits, terms and conditions of
      employment and wages and hours, except where failure to be in compliance would
      not, either individually or in the aggregate, reasonably be expected to result
      in a Material Adverse Effect.

     

    (ee) Environmental
      Laws.
      To the
      Company’s knowledge, the Company and its Subsidiaries (i) are in compliance
      in all material respects with any and all Environmental Laws (as hereinafter
      defined), (ii) have received all permits, licenses or other approvals
      required of them under applicable Environmental Laws to conduct their respective
      businesses and (iii) are in compliance in all material respects with all
      terms and conditions of any such permit, license or approval where, in each
      of
      the foregoing clauses (i), (ii) and (iii), the failure to so comply would
      be reasonably expected to have, individually or in the aggregate, a Material
      Adverse Effect. The term “Environmental
      Laws”
means
      all federal, state, local or foreign laws relating to pollution or protection
      of
      human health or the environment (including, without limitation, ambient air,
      surface water, groundwater, land surface or subsurface strata), including,
      without limitation, laws relating to emissions, discharges, releases or
      threatened releases of chemicals, pollutants, contaminants, or toxic or
      hazardous substances or wastes (collectively, “Hazardous
      Materials”)
      into
      the environment, or otherwise relating to the manufacture, processing,
      distribution, use, treatment, storage, disposal, transport or handling of
      Hazardous Materials, as well as all authorizations, codes, decrees, demands
      or
      demand letters, injunctions, judgments, licenses, notices or notice letters,
      orders, permits, plans or regulations issued, entered, promulgated or approved
      thereunder.

     

    (ff) Subsidiary
      Rights.
      Except
      as set forth in Schedule 3.1(ff),
      the
      Company or its Subsidiaries have the unrestricted right to vote, and (subject
      to
      limitations imposed by applicable law) to receive dividends and distributions
      on, all capital securities of its Subsidiaries as owned by the Company or such
      Subsidiary.

     

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

     

    
      
        
        

      

      
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    (hh) 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 Securities,
      (ii) sold, bid for, purchased, or, paid any compensation for soliciting
      purchases of, any of the Securities, 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 Agent in connection with the placement of the
      Securities.

     

    (ii) Disclosure
      Controls and Procedures.
      The
      Company maintains disclosure controls and procedures (as such term is defined
      in
      Rule 13a-15 of the General Rules and Regulations under the Exchange Act) that
      comply with the requirements of the Exchange Act; such disclosure controls
      and
      procedures have been designed to ensure that information required to be
      disclosed by the Company and its Subsidiaries is accumulated and communicated
      to
      the Company’s management, including the Company’s principal executive officer
      and principal financial officer by others within those entities, such disclosure
      controls and procedures are effective.

     

    3.2 Representations,
      Warranties and Covenants of the Investors.
      Each
      Investor hereby, as to itself only and for no other Investor, represents,
      warrants and covenants to the Company and the Agent as follows:

     

    (a) Organization;
      Authority.
      Such
      Investor is an entity duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization with the requisite
      corporate, partnership or other power and authority to enter into and to
      consummate the transactions contemplated by the Transaction Documents and
      otherwise to carry out its obligations hereunder and thereunder. The purchase
      by
      such Investor of the Securities hereunder has been duly authorized by all
      necessary corporate, partnership or other action on the part of such Investor.
      This Agreement has been duly executed and delivered by such Investor and
      constitutes the valid and binding obligation of such Investor, enforceable
      against it in accordance with its terms, except as may be limited by
      (i) applicable bankruptcy, insolvency, reorganization or other laws of
      general application relating to or affecting the enforcement of creditors rights
      generally, and (ii) the effect of rules of law governing the availability
      of specific performance and other equitable remedies.

     

    (b) No
      Public Sale or Distribution.
      Such
      Investor is (i) acquiring the Common Shares and the Warrants and
      (ii) upon exercise of the Warrants will acquire the Warrant Shares issuable
      upon exercise thereof, in the ordinary course of business for its own account
      and not with a view towards, or for resale in connection with, the public sale
      or distribution thereof, except pursuant to sales registered under the
      Securities Act or under an exemption from such registration and in compliance
      with applicable federal and state securities laws, and such Investor does not
      have a present arrangement to effect any distribution of the Securities to
      or
      through any person or entity; provided,
      however,
      that by
      making the representations herein, such Investor does not agree to hold any
      of
      the Securities for any minimum or other specific term and reserves the right
      to
      dispose of the Securities at any time in accordance with or pursuant to a
      registration statement or an exemption under the Securities Act.

     

    
      
        
        

      

      
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    (c) Investor
      Status.
      At
      the
      time such Investor was offered the Securities, it was, and at the date hereof
      it
      is, either (A) a “qualified institutional buyer” as defined in Rule 144A(a)
      under the Securities Act or (B) an “accredited investor” as defined in Rule
      501(a)(1), (2) or (3) under the Securities Act. At the date hereof, such
      Investor has that dollar amount of securities invested in its portfolio or
      under
      management (including investments held by its wholly owned subsidiaries) as
      set
      forth on the Investor Signature Page. Such Investor is not a registered broker
      dealer registered under Section 15(a) of the Exchange Act, or a member of the
      NASD, Inc. or an entity engaged in the business of being a broker dealer. Except
      as otherwise disclosed in writing to the Company on Exhibit B-2 (attached
      hereto) on or prior to the date of this Agreement, such Investor is not
      affiliated with any broker dealer registered under Section 15(a) of the Exchange
      Act, or a member of the NASD, Inc. or an entity engaged in the business of
      being
      a broker dealer.

     

    (d) Experience
      of Such Investor.
      Such
      Investor, either alone or together with its representatives has such knowledge,
      sophistication and experience in business and financial matters so as to be
      capable of evaluating the merits and risks of the prospective investment in
      the
      Securities, and has so evaluated the merits and risks of such investment. Such
      Investor understands that it must bear the economic risk of this investment
      in
      the Securities indefinitely, and is able to bear such risk and is able to afford
      a complete loss of such investment.

     

    (e) Access
      to Information.
      Such
      Investor acknowledges that it has reviewed the Disclosure Materials and has
      been
      afforded: (i) the opportunity to ask such questions as it has deemed
      necessary of, and to receive answers from, representatives of the Company
      concerning the terms and conditions of the offering of the Securities and the
      merits and risks of investing in the Securities; (ii) access to information
      (other than material non-public information) about the Company and the
      Subsidiaries and their respective financial condition, results of operations,
      business, properties, management and prospects sufficient to enable it to
      evaluate its investment; and (iii) the opportunity to obtain such
      additional information that the Company possesses or can acquire without
      unreasonable effort or expense that is necessary to make an informed investment
      decision with respect to the investment. Neither such inquiries nor any other
      investigation conducted by or on behalf of such Investor or its representatives
      or counsel shall modify, amend or affect such Investor’s right to rely on the
      truth, accuracy and completeness of the Disclosure Materials and the Company’s
      representations and warranties contained in the Transaction Documents. Such
      Investor acknowledges receipt of copies of the SEC Reports.

     

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

     

    
      
        
        

      

      
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    (g) No
      Conflicts.
      The
      execution, delivery and performance by such Investor of this Agreement and
      the
      consummation by such Investor of the transactions contemplated hereby will
      not
      (i) result in a violation of the organizational documents of such Investor
      or (ii) conflict with, or constitute a default (or an event which with
      notice or lapse of time or both would become a default) under, or give to others
      any rights of termination, amendment, acceleration or cancellation of, any
      agreement, indenture or instrument to which such Investor is a party, or
      (iii) result in a violation of any law, rule, regulation, order, judgment
      or decree (including federal and state securities laws) applicable to such
      Investor, except in the case of clauses (ii) and (iii) above, for such that
      are
      not material and do not otherwise affect the ability of such Investor to
      consummate the transactions contemplated hereby.

     

    (h) Prohibited
      Transactions.
      No
      Investor, directly or indirectly, and no Person acting on behalf of or pursuant
      to any understanding with any Investor, has engaged in any purchases or sales
      of
      any securities, including any derivatives, of the Company (including, without
      limitation, any Short Sales involving any of the Company’s securities) (a
“Transaction”)
      since
      the time that such Investor was first contacted by the Company, the Agent or
      any
      other Person regarding the investment in the Company contemplated hereby. Such
      Investor covenants that neither it nor any Person acting on its behalf or
      pursuant to any understanding with such Investor will engage, directly or
      indirectly, in any Transactions prior to the time the transactions contemplated
      by this Agreement are publicly disclosed. “Short
      Sales”
      include, without limitation, all “short sales” as defined in Rule 200
      promulgated under Regulation SHO under the Exchange Act and all types of direct
      and indirect stock pledges, forward sale contracts, options, puts, calls, short
      sales, swaps, derivatives and similar arrangements (including on a total return
      basis), and sales and other transactions through non-U.S. broker-dealers or
      foreign regulated brokers.

     

    (i) Restricted
      Securities.
      The
      Investors understand that the Securities are characterized as “restricted
      securities” under the U.S. federal securities laws inasmuch as they are being
      acquired from the Company in a transaction not involving a public offering
      and
      that under such laws and applicable regulations such securities may be resold
      without registration under the Securities Act only in certain limited
      circumstances.

     

    (j) Legends.
      It is
      understood that, except as provided in Section 4.1(b) of this Agreement,
      certificates evidencing such Securities may bear the legend set forth in
      Section 4.1(b)

     

    (k) No
      Legal, Tax or Investment Advice.
      Such
      Investor understands that nothing in this Agreement or any other materials
      presented by or on behalf of the Company to the Investor in connection with
      the
      purchase of the Securities constitutes legal, tax or investment advice. Such
      Investor has consulted such legal, tax and investment advisors as it, in its
      sole discretion, has deemed necessary or appropriate in con-nection with its
      purchase of the Securities. Such Investor understands that the Agent has acted
      solely as the agent of the Company in this placement of the Securities, and
      that
      the Agent makes no representation or warranty with regard to the merits of
      this
      transaction or as to the accuracy of any information such Investor may have
      received in connection therewith. Such Investor acknowledges that he has not
      relied on any information or advice furnished by or on behalf of the
      Agent.

     

    
      
        
        

      

      
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    (l) Brokers
      or Finders.
      Such
      Investor has not engaged any brokers, finders or agents, and neither the Company
      nor any Investor has, nor will, incur, directly or indirectly, as a result
      of
      any action taken by each Investor, any liability for brokerage or finders’ fees
      or agents’ commissions or any similar charges in connection with the Transaction
      Documents.

     

    ARTICLE
      IV

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1 Transfer
      Restrictions.

     

    (a) The
      Investors covenant that the Securities will only be disposed of pursuant to
      an
      effective registration statement under, and in compliance with the requirements
      of, the Securities Act or pursuant to an available exemption from the
      registration requirements of the Securities Act, and in compliance with any
      applicable state securities laws. In connection with any transfer of Securities
      other than pursuant to an effective registration statement or to the Company,
      or
      pursuant to Rule 144(k), the Company may require the transferor to provide
      to the Company an opinion of counsel selected by the transferor, the form and
      substance of which opinion shall be reasonably satisfactory to the Company,
      to
      the effect that such transfer does not require registration under the Securities
      Act. Notwithstanding the foregoing, the Company hereby consents to and agrees
      to
      register on the books of the Company and with its Transfer Agent, without any
      such legal opinion, except to the extent that the Transfer Agent requests such
      legal opinion, any transfer of Securities by an Investor to an Affiliate of
      such
      Investor, provided that the transferee certifies to the Company that it is
      an
“accredited investor” as defined in Rule 501(a) under the Securities Act
      and provided that such Affiliate does not request any removal of any existing
      legends on any certificate evidencing the Securities.

     

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

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”),
      OR
      ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR
      SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
      ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
      TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
      APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE
      FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
      SECURITIES.

     

    
      
        
        

      

      
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    Certificates
      evidencing Securities shall not be required to contain such legend or any other
      legend (i) following the Effective Date upon written request of an Investor
      which request confirms in writing that such Investor will comply with the
      provisions of Section 4.1(a); (ii) following any sale of such Securities
      pursuant to an effective registration statement (including the Registration
      Statement) covering the resale of the Securities, (iii) following any sale
      of such Securities pursuant to Rule 144
      if
      the
      holder provides the Company with a legal opinion (and the documents upon which
      the legal opinion is based) reasonable acceptance to the Company to the effect
      that the Securities can be sold under Rule 144, (iv) if the holder
      provides the Company with a legal opinion (and the documents upon which the
      legal opinion is based) reasonably acceptable to the Company to the effect
      that
      the
      Securities are eligible for sale under Rule 144(k), or (v) if
the
      holder provides the Company with a legal opinion (and the documents upon which
      the legal opinion is based) reasonably acceptable to the Company to the effect
      that the
      legend
      is not required under applicable requirements of the Securities Act (including
      controlling judicial interpretations and pronouncements issued by the Staff
      of
      the SEC). The Company shall cause its counsel to issue the notice included
      in
      the Transfer Agent Instructions to the Transfer Agent on the Effective Date.
      Following the Effective Date or at such earlier time as a legend is no longer
      required for certain Securities, the Company will no later than three
      Trading
Days
      following the delivery by an Investor to the Company or the Transfer Agent
      of
      (i) a legended certificate representing such Securities, and (ii) an
      opinion of counsel to the extent required by Section 4.1(a), deliver or
      cause to be delivered to such Investor a certificate representing such
      Securities that is free from all restrictive and other legends. The Company
      may
      not make any notation on its records or give instructions to the Transfer Agent
      that enlarge the restrictions on transfer set forth in this
      Section.

    

    If
      within
three
      Trading
      Days after the Company’s
      receipt
      of a legended certificate and the other documents as specified in
      Clauses (i) and (ii) of the paragraph immediately above, the Company shall
      fail to issue and deliver to such Investor a certificate representing such
      Securities that is free from all restrictive and other legends, and if on or
      after such Trading Day the Investor purchases (in an open market transaction
      or
      otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
      Investor of shares of Common Stock that the Investor anticipated receiving
      from
      the Company without any restrictive legend (the “Covering
      Shares”),
      then
      the Company shall, within three
      Trading
      Days after the Investor’s
      request,
      pay cash
      to the Investor in an amount equal to the excess
      (if any) of the Investor’s
      total
      purchase price (including brokerage commissions, if any) for the Covering
      Shares,
      over the
      product of (A) the number of Covering Shares, times (B) the closing
      bid price
      on the
      date of delivery of such certificate and the other documents as specified in
      Clauses (i) and (ii) of the paragraph immediately above.

     

    
      
        
        

      

      
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    (c) The
      Company will not object to and shall permit (except as prohibited by law) an
      Investor to pledge or grant a security interest in some or all of the Securities
      in connection with a bona fide margin agreement or other loan or financing
      arrangement secured by the Securities, and if required under the terms of such
      agreement, loan or arrangement, the Company will not object to and shall permit
      (except as prohibited by law) such Investor to transfer pledged or secured
      Securities to the pledgees or secured parties. Except as required by law, such
      a
      pledge or transfer would not be subject to approval of the Company, no legal
      opinion of the pledgee, secured party or pledgor shall be required in connection
      therewith, and no notice shall be required of such pledge. Each Investor
      acknowledges that the Company shall not be responsible for any pledges relating
      to, or the grant of any security interest in, any of the Securities or for
      any
      agreement, understanding or arrangement between any Investor and its pledgee
      or
      secured party. At the appropriate Investor's expense, the Company will execute
      and deliver such reasonable documentation as a pledgee or secured party of
      Securities may reasonably request in connection with a pledge or transfer of
      the
      Securities, including the preparation and filing of any required prospectus
      supplement under Rule 424(b)(3) of the Securities Act or other applicable
      provision of the Securities Act to appropriately amend the list of Selling
      Stockholders thereunder. Provided that the Company is in compliance with the
      terms of this Section 4.1(c), the Company’s indemnification obligations
      pursuant to Section 6.4 shall not extend to any Proceeding or Losses
      arising out of or related to this Section 4.1(c).

     

    4.2 Furnishing
      of Information.
      Until
      the date that all Investors owning Shares or Warrant Shares may sell all of
      them
      under Rule 144(k) of the Securities Act (or any successor provision), the
      Company covenants to use its reasonable best efforts to timely file (or obtain
      extensions in respect thereof and file within the applicable grace period)
      all
      reports required to be filed by the Company after the date hereof pursuant
      to
      the Exchange Act. The Company further covenants that it will take such further
      action as any holder of Securities may reasonably request to satisfy the
      provisions of this Section 4.2.

     

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

     

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

     

    
      
        
        

      

      
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    4.5 Securities
      Laws Disclosure; Publicity.
      The
      Company shall, on or before 8:30 a.m., New York time, on the first Trading
      Day
      following execution of this Agreement, issue a press release reasonably
      acceptable to the Investors disclosing all material terms of the transactions
      contemplated hereby. On the Closing Date, the Company shall file a Current
      Report on Form 8-K with the SEC (the “8-K
      Filing”)
      describing the terms of the transactions contemplated by the Transaction
      Documents and including as exhibits to 8-K Filing the Transaction Documents
      (including the schedules and the names, and addresses of the Investors and
      the
      amount(s) of Securities respectively purchased) and the form of Warrants, in
      the
      form required by the Exchange Act. Thereafter, the Company shall timely file
      any
      filings and notices required by the SEC or applicable law with respect to the
      transactions contemplated hereby and provide copies thereof to the Investors
      promptly after filing. Except as herein provided, the Company shall not publicly
      disclose the name of any Investor, or include the name of any Investor in any
      press release without the prior written consent of such Investor, unless
      otherwise required by law. The Company shall not, and shall cause each of its
      Subsidiaries and its and each of their respective officers, directors, employees
      and agents not to, provide any Investor with any material nonpublic information
      regarding the Company or any of its Subsidiaries from and after the issuance
      of
      the above referenced press release without the express written consent of such
      Investor. 

     

    4.6 Use
      of
      Proceeds.
      The
      Company intends to use the net proceeds from the sale of the Securities for
      working capital and general corporate purposes. The Company also may use a
      portion of the net proceeds, currently intended for general corporate purposes,
      to acquire or invest in technologies, products or services that complement
      its
      business, although the Company has no present plans or commitments and is not
      currently engaged in any material negotiations with respect to these types
      of
      transactions. Pending these uses, the Company intends to invest the net proceeds
      from this offering in short-term, interest-bearing, investment-grade securities,
      or as otherwise pursuant to the Company's customary investment
      policies.

     

    4.7 Listing
      of Common Stock.
      The
      Company hereby agrees to use reasonable best efforts to maintain the listing
      of
      the Common Stock on the Nasdaq Capital Market or another Eligible
      Market.

     

    4.8 Form D;
      Blue Sky Filings.
      The
      Company agrees to timely file a Form D with respect to the Securities as
      required under Regulation D and to provide a copy thereof, promptly upon request
      of any Investor. 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 Securities for, sale to the Investors 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 any
      Investor.

     

    4.9 Covenant
      Regarding No Offerings.
      For a
      period of thirty (30) days from the effective date of the Registration
      Statement, the Company shall refrain from selling, contracting to sell or
      otherwise disposing of or issuing any securities of the Company, except (i)
      pursuant any agreements or outstanding securities providing for anti-dilution
      or
      other share issuance rights in existence on the date hereof, (ii) in connection
      with the Company’s 2006 Stock Incentive Plan or 2001 Stock Option Plan; (iii)
      upon exercise of the Warrants; (iv) in connection with any acquisition by the
      Company, whether through an acquisition of stock or a merger of any business,
      assets or technologies the primary purpose of which is not to raise equity
      capital; (v) in connection with any other strategic transaction or alliance
      the
      primary purpose of which is not to raise equity capital; and (vi) upon
      conversion or exercise of any Options or Convertible Securities which are
      outstanding on the date hereof.

     

    
      
        
        

      

      
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    ARTICLE
      V

    CONDITIONS

     

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

     

    (a) Representations
      and Warranties.
      The
      representations and warranties of the Company contained herein shall be true
      and
      correct in all material respects (except
      for those representations and warranties that are qualified by materiality
      or
      Material Adverse Effect, which shall be true and correct in all respects)
as
      of the
      date when made and as of the Closing as though made on and as of such
      date;

     

    (b) Compliance
      with Provisions of Securities Purchase Agreements.
      The
      Company shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required to be performed by it
      under the Securities Purchase Agreements with respect to the issuance of the
      Securities under the Transaction Documents, or shall have received waivers
      of
      such covenants, agreements or conditions, prior to the Closing; 

     

    (c) Closing
      Deliveries.
      The
      Company shall have delivered or caused to be delivered to the Investors the
      Closing Deliveries specified in Section 2.2(a); 

     

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

     

    (e) Common
      Stock.
      The
      Common Stock shall be authorized for quotation or trading on the Trading Market,
      trading in the Common Stock shall not have been suspended for any reason, and
      all the Common Shares and Warrant Shares shall be approved for listing or
      trading on the Trading Market.

     

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

     

    (a) Representations
      and Warranties.
      The
      representations and warranties of the Investors contained herein shall be true
      and correct in all material respects (except
      for those representations and warranties that are qualified by materiality
      or
      Material Adverse Effect, which shall be true and correct in all respects)
as
      of the
      date when made and as of the Closing Date as though made on and as of such
      date;

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (b) Purchases
      by Existing Investors.
      Purchases of Securities pursuant to this Agreement by Existing Holders shall
      be
      for their own account or for an account the name of a designee which they have
      designated to the Company in writing prior to the Closing (“Designee”)
      in
      accordance with the provisions of the Securities Purchase Agreements and such
      Existing Holder or Designee shall not have any present arrangement to effect
      any
      transfer, directly or indirectly, of the Securities to or through any person
      or
      entity through syndication of such Securities to any such other person or entity
      or otherwise; 

     

    (c) Closing
      Deliveries.
      Each
      Investor shall have delivered or caused to be delivered to the Company the
      Closing Deliveries specified in Section 2.2(b); and

     

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

     

    ARTICLE
      VI

    REGISTRATION
      RIGHTS

     

    6.1 Registration
      Statement.

     

    (a) As
      promptly as possible, and in any event on or prior to the Filing Date, the
      Company shall prepare and file with the SEC a Registration Statement covering
      the resale of all Registrable Securities for an offering to be made on a
      continuous basis pursuant to Rule 415. The Registration Statement shall be
      on Form S-3 (except if the Company is not then eligible to register for
      resale the Registrable Securities on Form S-3, in which case such
      registration shall be on another appropriate form in accordance with the
      Securities Act and the Exchange Act) and shall contain (except if otherwise
      directed by the Investors or requested by the SEC) the Plan of Distribution
      in
      substantially the form attached hereto as Exhibit D.

     

    (b) The
      Company shall use its reasonable best efforts to cause the Registration
      Statement to be declared effective by the SEC as promptly as possible after
      the
      filing thereof, but in any event prior to the Required Effectiveness Date,
      and
      shall use its reasonable best efforts to keep the Registration Statement
      continuously effective under the Securities Act until the earlier of the date
      that all Common Shares and Warrant Shares covered by such Registration Statement
      have been sold or can be sold publicly under Rule 144(k) (the “Effectiveness
      Period”);
      provided that, upon notification by the SEC that a Registration Statement will
      not be reviewed or is no longer subject to further review and comments, the
      Company shall request acceleration of such Registration Statement within
      five (5) Trading Days after receipt of such notice and request that it
      becomes effective on 4:00 p.m. New York City time on the Effective Dave and
      file
      a prospectus supplement for any Registration Statement, whether or not required
      under Rule 424 (or otherwise), by 9:00 a.m. New York City time the day
      after the Effective Date. Notwithstanding the foregoing, if
      the
      SEC, by written or oral comment or otherwise, limits the Company’s ability to
      request effectiveness, or prohibits the effectiveness of, a Registration
      Statement with respect to any or all the Registrable Securities pursuant to
      Rule
      415, it shall not be a breach or default by the Company under this Agreement
      and
      shall not be deemed a failure by the Company to use reasonable best efforts.
      Any
      limitations on the number of Registrable Securities pursuant to Rule 415 will
      be
      made pro rata to each Investor.

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    (c) The
      Company shall notify the Investors in writing promptly (and in any event within
      two Trading Days) after receiving notification from the SEC that the
      Registration Statement has been declared effective.

     

    (d) Should
      an
      Event (as defined below) occur, then upon the occurrence of such Event, and
      on
      every monthly anniversary thereof until the applicable Event is cured, the
      Company shall pay to each Investor an amount in cash, as liquidated damages
      and
      not as a penalty, equal to one percent (1.0%) of (i) the number of Common
      Shares held by such Investor as of the date of such Event, multiplied by
      (ii) the purchase price paid by such Investor for such Common Shares then
      held; provided, however, that the total amount of payments pursuant to this
      Section 6.1(d) shall not exceed, when aggregated with all such payments
      paid to all Investors, ten percent (10%) of the aggregate purchase price. The
      payments to which an Investor shall be entitled pursuant to this
      Section 6.1(d) are referred to herein as “Event
      Payments.”
Any
      Event Payments payable pursuant to the terms hereof shall apply on a pro rated
      basis for any portion of a month prior to the cure of an Event. In the event
      the
      Company fails to make Event Payments in a timely manner, such Event Payments
      shall bear interest at the rate of one percent (1.0%) per month (prorated for
      partial months) until paid in full. All pro rated calculations made pursuant
      to
      this paragraph shall be based upon the actual number of days in such pro rated
      month. 

     

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

    

    (i) the
      Registration Statement is not filed on or prior to the Filing Date or is not
      declared effective on or prior to the Required Effectiveness Date; provided
      that
if
      the
      SEC, by written or oral comment or otherwise, limits the Company’s ability to
      request effectiveness, or prohibits the effectiveness of, a Registration
      Statement with respect to any or all the Registrable Securities pursuant to
      Rule
      415, it shall not be a breach or default by the Company under this Agreement
      and
      shall not be deemed a failure by the Company to use reasonable best
      efforts;
      

     

    (ii) except
      as
      provided for in Section 6.1(e) (the “Excluded
      Events”),
      after
      the Effective Date, an Investor is not permitted to sell Registrable Securities
      under the Registration Statement (or a subsequent Registration Statement filed
      in replacement thereof) for any reason (other than the fault of such Investor)
      for five or more Trading Days (whether or not consecutive);

    
      
        
        

      

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

     

    (iv) with
      respect to an Investor, the Company fails for any reason to deliver a
      certificate evidencing any Securities to such Investor within five Trading
      Days
      after delivery of such certificate is required pursuant to any Transaction
      Document or the exercise rights of the Investors pursuant to the Warrants are
      otherwise suspended for any reason; or

    (v) during
      the Effectiveness Period, except as a result of the Excluded Events, the Company
      fails to have any Shares listed on an Eligible Market.

     

    (e) Notwithstanding
      anything in this Agreement to the contrary, after 60 consecutive Trading Days
      of
      continuous effectiveness of the initial Registration Statement filed and
      declared effective pursuant to this Agreement, the Company may, by written
      notice to the Investors, suspend sales under a Registration Statement after
      the
      Effective Date thereof and/or require that the Investors immediately cease
      the
      sale of shares of Common Stock pursuant thereto and/or defer the filing of
      any
      subsequent Registration Statement if the Company is engaged in a material
      merger, acquisition or sale and the Board of Directors determines in good faith,
      by appropriate resolutions, that, as a result of such activity, (A) it
      would be materially detrimental to the Company (other than as relating solely
      to
      the price of the Common Stock) to maintain a
      Registration Statement at such time or (B) it is in the best interests of
      the Company to suspend sales under such registration at such time. Upon receipt
      of such notice, each Investor shall immediately discontinue any sales of
      Registrable Securities pursuant to such registration until such Investor is
      advised in writing by the Company that the current Prospectus or amended
      Prospectus, as applicable, may be used. In no event, however, shall this right
      be exercised to suspend sales beyond the period during which (in the good faith
      determination of the Company’s Board of Directors) the failure to require such
      suspension would be materially detrimental to the Company. The Company’s rights
      under this Section 6.1(e) may be exercised for a period of no more than 20
      Trading Days at a time and not more than three times in any twelve-month period,
      without such suspension being considered as part of an Event Payment
      determination. Immediately after the end of any suspension period under this
      Section 6.1(e), the Company shall take all necessary actions (including
      filing any required supplemental prospectus) to restore the effectiveness of
      the
      applicable Registration Statement and the ability of the Investors to publicly
      resell their Registrable Securities pursuant to such effective Registration
      Statement.

     

    (f) The
      Company shall not, from the date hereof until the Effective Date of the
      Registration Statement, prepare and file with the SEC a registration statement
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other
      than any registration statement or post-effective amendment to a registration
      statement (or supplement thereto) relating to the Company’s employee benefit
      plans registered on Form S-8.

     

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

    
      
        
        

      

      
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    (a) Not
      less
      than three Trading Days prior to the filing of a Registration Statement or
      any
      related Prospectus or any amendment or supplement thereto, furnish via email
      to
      those Investors who have supplied the Company with email addresses copies of
      all
      such documents proposed to be filed, which documents (other than any document
      that is incorporated or deemed to be incorporated by reference therein) will
      be
      subject to the review of such Investors. The Company shall reflect in each
      such
      document when so filed with the SEC such comments regarding the Investors and
      the Plan of Distribution as the Investors may reasonably and promptly propose
      no
      later than two Trading Days after the Investors have been so furnished with
      copies of such documents as aforesaid.

     

    (b) (i) Subject
      to Section 6.1(e), prepare and file with the SEC such amendments, including
      post-effective amendments, to each Registration Statement and the Prospectus
      used in connection therewith as may be necessary to keep the Registration
      Statement continuously effective, as to the applicable Registrable Securities
      for the Effectiveness Period and prepare and file with the SEC such additional
      Registration Statements in order to register for resale under the Securities
      Act
      all of the Registrable Securities; (ii) cause the related Prospectus to be
      amended or supplemented by any required Prospectus supplement, and as so
      supplemented or amended to be filed pursuant to Rule 424;
      (iii) respond as promptly as reasonably possible, and in
      any
      event within 15 Trading
      Days (except to the extent that the Company reasonably requires additional
      time
      to respond to accounting or Rule 415 comments), to any comments received from
      the SEC with respect to the Registration Statement or any amendment thereto;
      and
      (iv) comply in all material respects with the provisions of the Securities
      Act and the Exchange Act with respect to the disposition of all Registrable
      Securities covered by the Registration Statement during the applicable period
      in
      accordance with the intended methods of disposition by the Investors thereof
      set
      forth in the Registration Statement as so amended or in such Prospectus as
      so
      supplemented.

     

    (c) Notify
      the Investors as promptly as reasonably possible and as simultaneously as
      reasonably possible, and (if requested by the Investors confirm such notice
      in
      writing no later than three Trading Days thereafter, of any of the following
      events: (i) the SEC notifies the Company whether there will be a “review”
of any Registration Statement; (ii) the SEC comments in writing on any
      Registration Statement; (iii) any Registration Statement or any
      post-effective amendment is declared effective; (iv) the SEC or any other
      Federal or state governmental authority requests any amendment or supplement
      to
      any Registration Statement or Prospectus or requests additional information
      related thereto; (v) the SEC issues any stop order suspending the
      effectiveness of any Registration Statement or initiates any Proceedings for
      that purpose; (vi) the Company receives notice of any suspension of the
      qualification or exemption from qualification of any Registrable Securities
      for
      sale in any jurisdiction, or the initiation or threat of any Proceeding for
      such
      purpose; or (vii) the financial statements included in any Registration
      Statement become ineligible for inclusion therein or any Registration Statement
      or Prospectus or other document contains any untrue statement of a material
      fact
      or omits to state any material fact required to be stated therein or necessary
      to make the statements therein, in the light of the circumstances under which
      they were made, not misleading.

    
      
        
        

      

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

     

    (e) If
      requested by an Investor, provide such Investor and any counsel selected by
      a
      majority of holders of the Securities (“Investor
      Counsel”),
      without charge, at least one conformed copy
      of
      each Registration Statement and each amendment thereto, including financial
      statements and schedules, and all exhibits to the extent requested by such
      Person (including those previously furnished or incorporated by reference)
      promptly after the filing of such documents with the SEC.

     

    (f) Promptly
      deliver to each Investor, without charge, as many copies of the Prospectus
      or
      Prospectuses (including each form of prospectus) and each amendment or
      supplement thereto as such Persons may reasonably request. The Company hereby
      consents to the use of such Prospectus and each amendment or supplement thereto
      by each of the selling Investors in connection with the offering and sale of
      the
      Registrable Securities covered by such Prospectus and any amendment or
      supplement thereto to the extent permitted by federal and state securities
      laws
      and regulations.

     

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

     

    (h) Prior
      to
      any public offering of Registrable Securities, use reasonable best efforts
      to
      register or qualify or cooperate with the selling Investors in connection with
      the registration or qualification (or exemption from such registration or
      qualification) of such Registrable Securities for offer and sale under the
      securities or Blue Sky laws of such jurisdictions within the United States
      as
      any Investor requests in writing, to keep each such registration or
      qualification (or exemption therefrom) effective for so long as required, but
      not to exceed the duration of the Effectiveness Period, and to do any and all
      other acts or things reasonably necessary or advisable to enable the disposition
      in such jurisdictions of the Registrable Securities covered by a Registration
      Statement; provided,
      however,
      that
      the Company shall not be obligated to file any general consent to service of
      process or to qualify as a foreign corporation or as a dealer in securities
      in
      any jurisdiction in which it is not so qualified or to subject itself to
      taxation in respect of doing business in any jurisdiction in which it is not
      otherwise so subject.

     

    (i) Cooperate
      with the Investors to facilitate the timely preparation and delivery of
      certificates representing Registrable Securities to be delivered to a transferee
      pursuant to a Registration Statement, which certificates shall be free, to
      the
      extent permitted by this Agreement and under law, of all restrictive
      legends.

    
      
        
        

      

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

     

    (k) Cooperate
      with any reasonable due diligence investigation undertaken by the Investors
      in
      connection with the sale of Registrable Securities, including, without
      limitation, by making available documents and information; provided that the
      Company will not deliver or make available to any Investor material, nonpublic
      information unless such Investor requests in advance in writing to receive
      material, nonpublic information and agrees to keep such information
      confidential.

     

    (l) Comply
      in
      all material respects with all rules and regulations of the SEC applicable
      to
      the registration of the Securities.

     

    (m) 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 any particular Investor or to make any Event Payments set forth
      in
      Section 6.1(c) to such Investor that such Investor furnish to the Company
      the information specified in Exhibits
      B-1,
      B-2
      and
B-3
      hereto
      and such other information regarding itself, the Registrable Securities and
      other shares of Common Stock held by it and the intended method of disposition
      of the Registrable Securities held by it (if different from the Plan of
      Distribution set forth on Exhibit D
      hereto)
      as shall be reasonably required to effect the registration of such Registrable
      Securities and shall complete and execute such documents in connection with
      such
      registration as the Company may reasonably request.

     

    (n) The
      Company shall comply with all applicable rules and regulations of the SEC under
      the Securities Act and the Exchange Act, including, without limitation,
      Rule 172 under the Securities Act, file any final Prospectus, including any
      supplement or amendment thereof, with the SEC pursuant to Rule 424 under
      the Securities Act, promptly inform the Holders in writing if, at any time
      during the Effectiveness Period, the Company does not satisfy the conditions
      specified in Rule 172 and, as a result thereof, the Holders are required to
      make available a Prospectus in connection with any disposition of Registrable
      Securities and take such other actions as may be reasonably necessary to
      facilitate the registration of the Registrable Securities
      hereunder.

     

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

    
      
        
        

      

      
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    6.4 Indemnification

     

    (a) Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Investor, the officers, directors, partners, members, agents
      and employees of each of them, each Person who controls any such Investor
      (within the meaning of Section 15 of the Securities Act or Section 20
      of the Exchange Act) and the officers, directors, partners, members, agents
      and
      employees of each such controlling Person, to the fullest extent permitted
      by
      applicable law, from and against any and all Losses, as incurred, arising out
      of
      or relating to (i) any misrepresentation or breach of any representation or
      warranty made by the Company in the Transaction Documents, (ii) any breach
      of any covenant, agreement or obligation of the Company contained in the
      Transaction Documents, (iii) any cause of action, suit or claim brought or
      made against such Indemnified Party (as defined in Section 6.4(c) below) by
      a third party (including for these purposes a derivative action brought on
      behalf of the Company), arising out of or resulting from (x) execution,
      delivery, performance or enforcement of the Transaction Documents or
      (y) the status of Indemnified Party as holder of the Securities or
      (iv) any untrue or alleged untrue statement of a material fact contained in
      the Registration Statement, any Prospectus or any form of Company prospectus
      or
      in any amendment or supplement thereto or in any Company preliminary prospectus,
      or arising out of or relating to any omission or alleged omission of a material
      fact required to be stated therein or necessary to make the statements therein
      (in the case of any Prospectus or form of prospectus or supplement thereto,
      in
      the light of the circumstances under which they were made) not misleading,
      except to the extent, but only to the extent, that (A) such untrue
      statements, alleged untrue statements, omissions or alleged omissions are based
      solely upon information regarding such Investor furnished in writing to the
      Company by such Investor for use therein, or to the extent that such information
      relates to such Investor or such Investor's proposed method of distribution
      of
      Registrable Securities and was reviewed and expressly approved by such Investor
      expressly for use in the Registration Statement, or (B) with respect to any
      prospectus, if the untrue statement or omission of material fact contained
      in
      such prospectus was corrected on a timely basis in the prospectus, as then
      amended or supplemented, if such corrected prospectus was timely made available
      by the Company to the Holder, and the Holder seeking indemnity hereunder was
      advised in writing not to use the incorrect prospectus prior to the use giving
      rise to Losses.  

     

    (b) Indemnification
      by Investors.
      Each
      Investor shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and
      Section 20 of the Exchange Act), and the directors, officers, agents or
      employees of such controlling Persons, to the fullest extent permitted by
      applicable law, from and against all Losses arising solely out of any untrue
      statement of a material fact contained in the Registration Statement, any
      Prospectus, or any form of prospectus, or in any amendment or supplement
      thereto, or arising out of or relating to any omission of a material fact
      required to be stated therein or necessary to make the statements therein (in
      the case of any Prospectus or form of prospectus or supplement thereto, in
      the
      light of the circumstances under which they were made) not misleading, but
      only
      to the extent that such untrue statement or omission is contained in any
      information so furnished by such Investor in writing to the Company specifically
      for inclusion in such Registration Statement or such Prospectus or to the extent
      that (i) such untrue statements or omissions are based solely upon
      information regarding such Investor furnished to the Company by such Investor
      in
      writing expressly for use therein, or to the extent that such information
      relates to such Investor or such Investor’s proposed method of distribution of
      Registrable Securities and was reviewed and expressly approved by such Investor
      expressly for use in the Registration Statement (it being understood that the
      information provided by the Investor to the Company in Exhibits B-1,
      B-2
      and
B-3
      and the
      Plan of Distribution set forth on Exhibit D,
      as the
      same may be modified by such Investor, constitutes information reviewed and
      expressly approved by such Investor in writing expressly for use in the
      Registration Statement), such Prospectus or such form of Prospectus or in any
      amendment or supplement thereto. In no event shall the liability of any selling
      Investor hereunder be greater in amount than the dollar amount of the net
      proceeds (after discounts and commissions but before expenses) received by
      such
      Investor upon the sale of the Registrable Securities giving rise to such
      indemnification obligation.

    
      
        
        

      

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

     

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

    
      
        
        

      

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

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 6.4(d) were determined by pro rata allocation or
      by any other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph.
      Notwithstanding the provisions of this Section 6.4(d), no Investor shall be
      required to contribute, in the aggregate, any amount in excess of the amount
      by
      which the proceeds actually received by such Investor from the sale of the
      Registrable Securities subject to the Proceeding exceeds the amount of any
      damages that such Investor has otherwise been required to pay by reason of
      such
      untrue or alleged untrue statement or omission or alleged omission. No Person
      guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
      of the Securities Act) shall be entitled to contribution from any Person who
      was
      not guilty of such fraudulent misrepresentation.

     

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

     

    6.5 Dispositions.
      Each
      Investor agrees that it will comply with the prospectus delivery requirements
      of
      the Securities Act as applicable to it in connection with sales of Registrable
      Securities pursuant to the Registration Statement and shall sell its Registrable
      Securities in accordance with the Plan of Distribution set forth in the
      Prospectus. Each Investor further agrees that, upon receipt of a notice from
      the
      Company of the occurrence of any event of the kind described in Sections
      6.2(c)(v), (vi) or (vii), such Investor will discontinue disposition of such
      Registrable Securities under the Registration Statement until such Investor
      is
      advised in writing by the Company that the use of the Prospectus, or amended
      Prospectus, as applicable, may be used. The Company may provide appropriate
      stop
      orders to enforce the provisions of this paragraph.

    
      
        
        

      

      
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    6.6 No
      Piggyback on Registrations.
      Neither
      the Company nor any of its security holders (other than the Investors in such
      capacity pursuant hereto,
      the
      Agent
      for any placement agent warrants issued as compensation for this offering and
      any other placement agent receiving warrants issued as compensation for this
      offering) may include securities of the Company in the Registration Statement
      other than the Registrable Securities.

     

    6.7 Piggy-Back
      Registrations.
      If at
      any time during the Effectiveness Period there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the SEC a registration statement relating
      to
      an offering for its own account or the account of others under the Securities
      Act of any of its equity securities, other than on Form S-4 or
      Form S-8 (each as promulgated under the Securities Act) or their then
      equivalents relating to equity securities to be issued solely in connection
      with
      any acquisition of any entity or business or equity securities issuable in
      connection with stock option or other employee benefit plans, then the Company
      shall send to each Investor not then eligible to sell all of their Registrable
      Securities under Rule 144 in a three-month period, written notice of such
      determination and if, within ten days after receipt of such notice, any such
      Investor shall so request in writing, the Company shall include in such
      registration statement all or any part of such Registrable Securities such
      Investor requests to be registered. Notwithstanding
      the foregoing, in the event that, in connection with any underwritten public
      offering, the managing underwriter(s) thereof shall impose a limitation on
      the
      number of shares of Common Stock which may be included in the Registration
      Statement because, in such underwriter(s)’ judgment, marketing or other factors
      dictate such limitation is necessary to facilitate public distribution, then the
      Company shall be obligated to include in such Registration Statement only such
      limited portion of the Registrable Securities with respect to which such
      Investor has requested inclusion hereunder as the underwriter shall permit;
      provided,
      however,
      that
      (i) the Company shall not exclude any Registrable Securities unless the
      Company has first excluded all outstanding securities, the holders of which
      are
      not contractually entitled to inclusion of such securities in such Registration
      Statement or are not contractually entitled to pro rata inclusion with the
      Registrable Securities and (ii) after giving effect to the immediately
      preceding proviso, any such exclusion of Registrable Securities shall be made
      pro rata among the Investors seeking to include Registrable Securities and
      the
      holders of other securities having the contractual right to inclusion of their
      securities in such Registration Statement by reason of demand registration
      rights, in proportion to the number of Registrable Securities or other
      securities, as applicable, sought to be included by each such Investor or other
      holder. If an offering in connection with which an Investor is entitled to
      registration under this Section 6.7 is an underwritten offering, then each
      Investor whose Registrable Securities are included in such Registration
      Statement shall, unless otherwise agreed by the Company, offer and sell such
      Registrable Securities in an underwritten offering using the same underwriter
      or
      underwriters and, subject to the provisions of this Agreement, on the same
      terms
      and conditions as other shares of Common Stock included in such underwritten
      offering and shall enter into an underwriting agreement in a form and substance
      reasonably satisfactory to the Company and the underwriter or underwriters.
      Upon
      the effectiveness the registration statement for which piggy-back registration
      has been provided in this Section 6.7, any Event Payments payable to an
      Investor whose Securities are included in such registration statement shall
      terminate.

    
      
        
        

      

      
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    ARTICLE
      VII

    MISCELLANEOUS

     

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

     

    7.2 Fees
      and Expenses.
      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 sale and issuance of their applicable
      Securities.

     

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

     

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

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    7.5 Amendments;
      Waivers.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and each of
      the
      Investors or, in the case of a waiver, by the party against whom enforcement
      of
      any such waiver is sought. No waiver of any default with respect to any
      provision, condition or requirement of this Agreement shall be deemed to be
      a
      continuing waiver in the future or a waiver of any subsequent default or a
      waiver of any other provision, condition or requirement hereof, nor shall any
      delay or omission of either party to exercise any right hereunder in any manner
      impair the exercise of any such right. Notwithstanding the foregoing, a waiver
      or consent to depart from the provisions hereof with respect to a matter that
      relates exclusively to the rights of Investors under Article VI may be
      given by Investors holding at least a majority of the Registrable Securities
      to
      which such waiver or consent relates.

     

    7.6 Construction.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party.

     

    7.7 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of the Investors. Any Investor may assign its rights under this
      Agreement to any Person to whom such Investor assigns or transfers any
      Securities, provided (i) such
      transferor agrees in writing with the transferee or assignee to assign such
      rights, and a copy of such agreement is furnished to the Company after such
      assignment, (ii) the Company is furnished with written notice of
      (x) the name and address of such transferee or assignee and (y) the
      Registrable Securities with respect to which such registration rights are being
      transferred or assigned, (iii) 
      such
      transferee agrees in writing to be bound, with respect to the transferred
      Securities, by the provisions hereof that apply to the “Investors”
and
      (iv) such
      transfer shall have been made in accordance with the applicable requirements
      of
      this Agreement and with all laws applicable thereto.

     

    7.8 Persons
      Entitled to Benefit of Agreement.
      This
      Agreement shall inure to the benefit of and be binding upon the Company and
      each
      Investor and their respective successors and permitted assigns. Nothing
      expressed or mentioned in this Agreement is intended or shall be construed
      to
      give any person, other than those persons mentioned in the preceding sentence
      or
      otherwise explicitly mentioned in this Agreement, any legal or equitable right,
      remedy or claim under or in respect of this Agreement, or any provisions herein
      contained, this Agreement and all conditions and provisions hereof being
      intended to be and being for the sole and exclusive benefit of such persons
      and
      for the benefit of no other person; except that each Indemnified Party is an
      intended third party beneficiary of Section 6.4
      and (in
      each case) may enforce the provisions of such Section directly against the
      parties with obligations thereunder.

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

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

     

    7.10 Survival.
      The
      representations and warranties contained herein shall survive the Closing for
      two years. The agreements and covenants contained herein shall survive the
      Closing.

     

    7.11 Execution.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission or email attachment, 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 email-attached
      signature page were an original thereof.

     

    7.12 Severability.
      If any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    7.13 Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever any Investor
      exercises a right, election, demand or option owed to such Investor by the
      Company under a Transaction Document and the Company does not timely perform
      its
      related obligations within the periods therein provided, then, prior to the
      performance by the Company of the Company's related obligation, such Investor
      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.

     

    7.14 Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Securities is mutilated, lost, stolen
      or destroyed, the Company shall issue or cause to be issued in exchange and
      substitution for and upon cancellation thereof, or in lieu of and substitution
      therefor, a new certificate or instrument, but only upon receipt of evidence
      reasonably satisfactory to the Company of such loss, theft or destruction and
      the execution by the holder thereof of a customary lost certificate affidavit
      of
      that fact and an agreement to indemnify and hold harmless the Company for any
      losses in connection therewith. The applicants for a new certificate or
      instrument under such circumstances shall also pay any reasonable third-party
      costs associated with the issuance of such replacement Securities.

     

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

     

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

     

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

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    7.18 Independent
      Nature of Investors' Obligations and Rights.
      The
      obligations of each Investor under any Transaction Document are several and
      not
      joint with the obligations of any other Investor, and no Investor shall be
      responsible in any way for the performance of the obligations of any other
      Investor under any Transaction Document. The decision of each Investor to
      purchase Securities pursuant to this Agreement has been made by such Investor
      independently of any other Investor and independently of any information,
      materials, statements or opinions as to the business, affairs, operations,
      assets, properties, liabilities, results of operations, condition (financial
      or
      otherwise) or prospects of the Company which may have been made or given by
      any
      other Investor or by any agent or employee of any other Investor, and no
      Investor or any of its agents or employees shall have any liability to any
      other
      Investor (or any other person) relating to or arising from any such information,
      materials, statements or opinions. Nothing contained herein or in any
      Transaction Document, and no action taken by any Investor pursuant thereto,
      shall be deemed to constitute the Investors as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Investors are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Document. Each
      Investor acknowledges that no other Investor has acted as agent for such
      Investor in connection with making its investment hereunder and that no other
      Investor will be acting as agent of such Investor in connection with monitoring
      its investment hereunder. Each Investor 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 Investor to be joined as an additional party
      in
      any proceeding for such purpose.

     

    [SIGNATURE
      PAGES TO FOLLOW]

    

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    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.

     

    
      	
              AKEENA
                SOLAR, INC.

            
	 	 
	
              By:

            	
              /s/
                Gary Effren

            
	
              Name:
                Garry Effren

            
	
              Title:
                Chief Financial Officer

            
	
              Address
                for Notice: 16005 Los Gatos Boulevard

            
	
              Los
                Gatos, CA 95032

            

    

    

    
      	
              Facsimile No.:
                

            	
              408-402-9492

            
	
              Telephone No.:
                

            	
              408-402-9404

            
	
              Attn:
                Gary Effren

            
	
              With
                a copy to: Angela Lipanovich

            
	
              Facsimile:
                

            	
              408-395-7979

            
	
              Telephone:
                

            	
              408-402-9404

            
	
              Attn:

            	
              Anglea
                Lipanovich

            

    

    

    COMPANY
      SIGNATURE PAGE

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Investor
      Signature Page

    

    By
      its
      execution and delivery of this signature page, the undersigned Investor hereby
      joins in and agrees to be bound by the terms and conditions of the Securities
      Purchase Agreement dated as of November 1, 2007 (the “Purchase Agreement”) by
      and among Akeena Solar, Inc. and the Investors (as defined therein), as to
      the
      number of shares of Common Stock and Warrants set forth below, and authorizes
      this signature page to be attached to the Purchase Agreement or counterparts
      thereof.

     

    
      	
              Name
                of Investor:

            
	 ___________________________
	 	 
	
              By:
                

            	 ________________________
	 	
              Name:

            
	 	
              Title:

            

    

    

    
      	
              Address: 
                ____________________________________

            
	 ________________________________
	 ________________________________
	
              Telephone No.: _________________________________

            
	
              Facsimile No.: __________________________________

            
	
              Email Address: __________________________________

            
	
              Number of Shares: _______________________________

            
	
              Number of Warrants: ______________________________

            
	
              Aggregate Purchase Price: $_________________________

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibits:

    

    
      	A	
              Schedule
                of Investors

            

    

    
      	B	
              Instruction
                Sheet for Investors

            

    

    
      	C	
              Opinion
                of Company Corporate Counsel

            

    

    
      	D	
              Plan
                of Distribution

            

    

    
      	E	
              Company
                Transfer Agent Instructions

            

    

    
      	F.	
              Form
                of Warrant

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      Exhibit A

       

      Schedule
        of Investors

      

        
          	
                  Investor

                	 	
                  Common Shares

                	 	
                  Warrants

                	 	
                  Warrant
                    Shares

                	 	
                  Purchase Price

                	 
	 	 	 	 	 	 	 	 	 	 
	
                  Ardsley
                    Partners Renewable Energy Fund L.P.

                	 	 	
                  187,500

                	 	 	
                  1

                	 	 	
                  37,500

                	 	
                  $

                	
                  1,312,500

                	 
	
                  Ardsley
                    Renewable Energy Offshore Fund, Ltd.

                	 	 	
                  253,500

                	 	 	
                  1

                	 	 	
                  50,700

                	 	
                  $

                	
                  1,774,500

                	 
	
                  HFR
                    HE Ardsley Master Trust

                	 	 	
                  59,000

                	 	 	
                  1

                	 	 	
                  11,800

                	 	
                  $

                	
                  413,000

                	 
	
                  Bristol
                    Investment Fund, Ltd.

                	 	 	
                  214,286

                	 	 	
                  1

                	 	 	
                  42,857

                	 	
                  $

                	
                  1,500,002

                	 
	
                  Chestnut
                    Ridge Partners, LP

                	 	 	
                  25,000

                	 	 	
                  1

                	 	 	
                  5,000

                	 	
                  $

                	
                  175,000

                	 
	
                  Cranshire
                    Capital, LP

                	 	 	
                  285,714

                	 	 	
                  1

                	 	 	
                  57,143

                	 	
                  $

                	
                  1,999,998

                	 
	
                  Enable
                    Growth Partners LP

                	 	 	
                  242,857

                	 	 	
                  1

                	 	 	
                  48,572

                	 	
                  $

                	
                  1,699,998

                	 
	
                  Enable
                    Opportunity Partners LP

                	 	 	
                  28,571

                	 	 	
                  1

                	 	 	
                  5,714

                	 	
                  $

                	
                  200,000

                	 
	
                  Pierce
                    Diversified Strategy Master Fund LLC, Ena

                	 	 	
                  14,286

                	 	 	
                  1

                	 	 	
                  2,857

                	 	
                  $

                	
                  100,000

                	 
	
                  Excalibur
                    Small Cap Opportunities LP

                	 	 	
                  57,143

                	 	 	
                  1

                	 	 	
                  11,429

                	 	
                  $

                	
                  400,001

                	 
	
                  GLG
                    North American Opportunity Fund

                	 	 	
                  745,714

                	 	 	
                  1

                	 	 	
                  149,143

                	 	
                  $

                	
                  5,219,998

                	 
	
                  GLG
                    Technology Fund

                	 	 	
                  186,429

                	 	 	
                  1

                	 	 	
                  37,286

                	 	
                  $

                	
                  1,305,003

                	 
	
                  Highbridge
                    International LLC

                	 	 	
                  71,429

                	 	 	
                  1

                	 	 	
                  14,286

                	 	
                  $

                	
                  500,003

                	 
	
                  Hudson
                    Bay Fund, LP

                	 	 	
                  245,714

                	 	 	
                  1

                	 	 	
                  49,143

                	 	
                  $

                	
                  1,719,998

                	 
	
                  Hudson
                    Bay Overseas Fund, Ltd.

                	 	 	
                  325,715

                	 	 	
                  1

                	 	 	
                  65,143

                	 	
                  $

                	
                  2,280,005

                	 
	
                  Iroquois
                    Master Fund Ltd.

                	 	 	
                  71,429

                	 	 	
                  1

                	 	 	
                  14,286

                	 	
                  $

                	
                  500,003

                	 
	
                  UBS
                    O’Connor LLC F/B/O: O’Connor Pipes Corporate Strategies Master
                    Limited

                	 	 	
                  142,857

                	 	 	
                  1

                	 	 	
                  28,571

                	 	
                  $

                	
                  999,999

                	 
	
                  UBS
                    O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage Master
                    Limited

                	 	 	
                  131,428

                	 	 	
                  1

                	 	 	
                  26,286

                	 	
                  $

                	
                  919,996

                	 
	
                  UBS
                    O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage II Master
                    Limited

                	 	 	
                  11,429

                	 	 	
                  1

                	 	 	
                  2,286

                	 	
                  $

                	
                  80,003

                	 
	
                  Winslow
                    Management Company, LLC FBO Winslow Hedge Fund

                	 	 	
                  57,140

                	 	 	
                  1

                	 	 	
                  11,428

                	 	
                  $

                	
                  399,980

                	 
	
                  Winslow
                    Management Company, LLC FBO Scenic Hudson

                	 	 	
                  21,431

                	 	 	
                  1

                	 	 	
                  4,286

                	 	
                  $

                	
                  150,017

                	 

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

        
          	
                  Investor

                	 	
                  Common Shares

                	 	
                  Warrants

                	 	
                  Warrant
                    Shares

                	 	
                  Purchase Price

                	 
	 	 	 	 	 	 	 	 	 	 
	
                  Winslow
                    Management Company, LLC FBO Great Lakes Protection Fund

                	 	 	
                  14,290

                	 	 	
                  1

                	 	 	
                  2,858

                	 	
                  $

                	
                  100,030

                	 
	
                  Winslow
                    Management Company, LLC FBO Jessie Smith Nates Foundation

                	 	 	
                  14,290

                	 	 	
                  1

                	 	 	
                  2,858

                	 	
                  $

                	
                  100,030

                	 
	
                  Winslow
                    Management Company, LLC FBO Farrell Distributing Corporation
                    Pension
                    Plan

                	 	 	
                  35,710

                	 	 	
                  1

                	 	 	
                  7,142

                	 	
                  $

                	
                  249,970

                	 
	
                  Winslow
                    Management Company, LLC FBO Winslow Green Growth Fund

                	 	 	
                  285,710

                	 	 	
                  1

                	 	 	
                  57,142

                	 	
                  $

                	
                  1,999,970

                	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  TOTAL

                	 	 	
                  3,728,572

                	 	 	
                  25

                	 	 	
                  745,716

                	 	
                  $

                	
                  26,100,004

                	 

        

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Exhibit B

       

      INSTRUCTION
        SHEET FOR INVESTOR

       

      (to
        be
        read in conjunction with the entire Securities Purchase Agreement)

       

      
        	
                A.

              	
                Complete
                  the following items in the Securities Purchase Agreement:

              

      

       

      
        	 	
                1.

              	
                Complete
                  and execute the Investor Signature Page. The Agreement must be
                  executed by
                  an individual authorized to bind the
                  Investor.

              

      

       

      
        	 	
                2.

              	
                Exhibit B-1
                  - Stock Certificate Questionnaire:

              

      

      Provide
        the information requested by the Stock Certificate Questionnaire;

       

      
        	 	
                3.

              	
                Exhibit B-2
                  - Registration Statement
                  Questionnaire:

              

      

      Provide
        the information requested by the Registration Statement
        Questionnaire.

       

      
        	 	
                4.

              	
                Exhibit B-3
                  /B-4 - Investor Certificate:

              

      

      Provide
        the information requested by the Certificate for Individual Investors (B-3)
        or
        the Certificate for Corporate, Partnership, Trust, Foundation and Joint
        Investors (B-4), as applicable.

       

      
        	 	
                5.

              	
                Return,
                  via facsimile, the signed Securities Purchase Agreement including
                  the
                  properly completed Exhibits B-1 through B-4,
                  to:

              

      

       

      Facsimile:

      Telephone:

      Attn:

       

      
        	 	
                6.

              	
                After
                  completing instruction number five (5) above, deliver the original
                  signed
                  Securities Purchase Agreement including the properly completed
                  Exhibits
                   B-1
                  through B-4 to:

              

      

       

      Facsimile:

      Telephone:

      Attn:

       

      
        	
                B.

              	
                Instructions
                  regarding the wire transfer of funds for the purchase of the Shares
                  will be telecopied to the Investor by the Company at a later
                  date.

              

      

       

      
        	
                C.

              	
                Upon
                  the resale of any Shares by the Investor after the Registration
                  Statement
                  covering any Shares is effective, as described in the Securities
                  Purchase
                  Agreement, the Investor
                  must send a letter in the form of Exhibit D to the Company and the
                  Company’s transfer agent so that the Shares may be properly
                  transferred.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Exhibit B-1

       

      AKEENA
        SOLAR, INC.

       

      STOCK
        CERTIFICATE QUESTIONNAIRE

      

      
        	 	
                 

                Please
                  provide us with the following information:

              	 
	
                 

                1.

              	
                 

                The
                  exact name that the Securities are to be registered in (this is
                  the name
                  that will appear on the stock certificate(s)). You may use a nominee
                  name
                  if appropriate:

              	 
	
                 

                2.

              	
                 

                The
                  relationship between the Investor of the Securities and the Registered
                  Holder listed in response to item 1 above:

              	 
	
                 

                3.

              	
                 

                The
                  mailing address, telephone and telecopy number and email address
                  of the
                  Registered Holder listed in response to item 1 above:

              	 
	
                 

                4.

              	
                 

                The
                  Tax Identification Number of the Registered Holder listed in response
                  to
                  item 1 above:

              	 

      

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Exhibit B-2

       

      AKEENA
        SOLAR, INC.

       

      REGISTRATION
        STATEMENT QUESTIONNAIRE

       

      In
        connection with the Registration Statement, please provide us with the following
        information regarding the Investor.

       

      1. Please
        state your organization’s name exactly as it should appear in the Registration
        Statement:

      ______________________________________________________________________

       

      Except
        as
        set forth below, your organization does not hold any equity securities of
        the
 Company
        on behalf of another person or entity.

       

      State
        any
        exceptions here:

       

      ______________________________________________________________________

       

      2.
        Address
        of your organization:

       

      ______________________________________________________

       

      ______________________________________________________

       

      Telephone:
        __________________________

       

      Fax:
        ________________________________

       

      Contact
        Person: _______________________

       

      3.
        Have
        you
        or your organization had any position, office or other material relationship
        within the past three years with the Company or its affiliates?
        (Include
        any relationships involving you or your affiliates, officers, directors,
        or
        principal equity holders (5% or more) that 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.)

       

      o  Yes   o
No

      If
        yes,
        please indicate the nature of any such relationship below:

       

      4.
        Are
        you
        the beneficial owner of any other securities of the Company?
        (Include
        any equity securities that you beneficially own or have a right to acquire
        within 60 days after the date hereof, and as to which you have sole voting
        power, shared voting power, sole investment power or shared investment
        power.)

       

      o
Yes   o
No

      

      If
        yes,
        please describe the nature and amount of such ownership
        as of a
        recent date.

       

      5.
        Except
        as set forth below, you wish that all the shares of the Company’s common stock
        beneficially owned by you or that you have the right to acquire from the
        Company
        be offered for your account in the Registration Statement.

       

      State
        any
        exceptions here:

       

      6.
        Have
        you
        made or are you aware of any arrangements relating to the distribution of
        the
        shares of the Company pursuant to the Registration Statement?

      o
Yes   o
No

      

      If
        yes,
        please describe the nature and amount of such arrangements.

       

      7. FINRA
        Matters

       

      (a) State
        below whether (i) you or any associate or affiliate of yours are a member
        of
        FINRA, a controlling shareholder of a FINRA member, a person associated with
        a
        member, a direct or indirect affiliate of a member, or an underwriter or
        related
        person with respect to the proposed offering; (ii) you or any associate or
        affiliate of yours owns any stock or other securities of any FINRA member
        not
        purchased in the open market; or (iii) you or any associate or affiliate
        of
        yours has made any outstanding subordinated loans to any FINRA member. If
        you
        are a general or limited partnership, a no answer asserts that no such
        relationship exists for you as well as for each of your general or limited
        partners.

       

      Yes:
        o  No:
o

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      If
“yes,”
        please identify the FINRA member and describe your relationship, including,
        in
        the case of a general or limited partner, the name of the partner:

       

      If
        you
        answer “no” to Question 7(a), you need not respond to Question
        7(b).

       

      State
        below whether you or any associate or affiliate of yours has been an
        underwriter, or a controlling person or member of any investment banking
        or
        brokerage firm which has been or might be an underwriter for securities of
        the
        Corporation or any affiliate thereof including, but not limited to, the common
        stock now being registered. 

      
        Yes:
          o  No:
o

         

      

      If
“yes,”
        please identify the FINRA member and describe your relationship, including,
        in
        the case of a general or limited partner, the name of the partner.

       

      ACKNOWLEDGEMENT

       

      The
        undersigned hereby agrees to notify the Company promptly of any changes in
        the
        foregoing information which should be made as a result of any developments,
        including the passage of time. The undersigned also agrees to provide the
        Company and the Company’s counsel any and all such further information regarding
        the undersigned promptly upon request in connection with the preparation,
        filing, amending, and supplementing of the Registration Statement (or any
        prospectus contained therein). The undersigned hereby consents to the use
        of all
        such information in the Registration Statement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      The
        undersigned understands and acknowledges that the Company will rely on the
        information set forth herein for purposes of the preparation and filing of
        the
        Registration Statement.

       

      The
        undersigned understands that the undersigned may be subject to serious civil
        and
        criminal liabilities if the Registration Statement, when it becomes effective,
        either contains an untrue statement of a material fact or omits to state
        a
        material fact required to be stated in the Registration Statement or necessary
        to make the statements in the Registration Statement not misleading. The
        undersigned represents and warrants that all information it provides to the
        Company and its counsel is currently accurate and complete and will be accurate
        and complete at the time the Registration Statement becomes effective and
        at all
        times subsequent thereto, and agrees during the Effectiveness Period and
        any
        additional period in which the undersigned is making sales of Shares under
        and
        pursuant to the Registration Statement, and agrees during such periods to
        notify
        the Company immediately of any misstatement of a material fact in the
        Registration Statement, and of the omission of any material fact necessary
        to
        make the statements contained therein not misleading.

       

      
        Dated:
          __________

        

          
            	 
	
                    Name

                  
	 
	
                    Signature

                  
	 
	
                    Name
                      and Title of Signatory

                  

          

        

         

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Exhibit B-3

       

      AKEENA
        SOLAR, INC.

       

      CERTIFICATE
        FOR CORPORATE, PARTNERSHIP, LIMITED LIABILITY COMPANY, 

      TRUST,
        FOUNDATION AND JOINT INVESTORS

       

      If
        the
        investor is a corporation, partnership, limited liability company, trust,
        pension plan, foundation, joint Investor (other than a married couple) or
        other
        entity, an authorized officer, partner, or trustee must complete, date and
        sign
        this Certificate.

       

      CERTIFICATE

      

      The
        undersigned certifies that the representations and responses below are true
        and
        accurate:

       

      (a) The
        investor has been duly formed and is validly existing and has full power
        and
        authority to invest in the Company. The person signing on behalf of the
        undersigned has the authority to execute and deliver the Securities Purchase
        Agreement on behalf of the Investor and to take other actions with respect
        thereto.

      

      (b) Indicate
        the form of entity of the undersigned:

       

      ____ Limited
        Partnership

      ____ General
        Partnership

      ____ Limited
        Liability Company

      ____ Corporation

      ____ Revocable
        Trust (identify each grantor and indicate under what circumstances the trust
        is
        revocable by the grantor):____________

      __________________________________________________________________________________________________

      (Continue
        on a separate piece of paper, if necessary.)

      ____ Other
        type of Trust (indicate type of trust and, for trusts other than pension
        trusts,
        name the grantors and beneficiaries):______________________________

      __________________________________________________________________________________________________

      (Continue
        on a separate piece of paper, if necessary.)

      ____ Other
        form of organization (indicate form of organization
        (____________________).

      (c) Indicate
        the approximate date the undersigned entity was formed: ___.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (d) In
        order
        for the Company to offer and sell the Securities in conformance with state
        and
        federal securities laws, the following information must be obtained regarding
        your investor status. Please initial
        each category
        applicable to you as an investor in the Company.

       

      ___ 1. A
        bank as
        defined in Section 3(a)(2) of the Securities Act, or any savings and loan
        association or other institution as defined in Section 3(a)(5)(A) of the
        Securities Act whether acting in its individual or fiduciary
        capacity;

       

      ___ 2. A
        broker
        or dealer registered pursuant to Section 15 of the Securities Exchange Act
        of 1934;

       

      ___ 3. An
        insurance company as defined in Section 2(13) of the Securities
        Act;

       

      ___ 4. An
        investment company registered under the Investment Company Act of 1940 or
        a
        business development company as defined in Section  2(a)(48)
        of that Act;

       

      ___ 5. A
        Small
        Business Investment Company licensed by the U.S. Small Business Administration
        under Section 301(c) or (d) of the Small Business Investment Act of
        1958;

       

      ___ 6. A
        plan
        established and maintained by a state, its political subdivisions, or any
        agency
        or instrumentality of a state or its political subdivisions, for the benefit
        of
        its employees, if such plan has total assets in excess of
        $5,000,000;

       

      ___ 7. An
        employee benefit plan within the meaning of the Employee Retirement Income
        Security Act of 1974, if the investment decision is made by a plan fiduciary,
        as
        defined in Section 3(21) of such Act, which is either a bank, savings and
        loan association, insurance company, or registered investment advisor, or
        if the
        employee benefit plan has total assets in excess of $5,000,000 or, if a
        self-directed plan, with investment decisions made solely by persons that
        are
        accredited investors;

       

      ___ 8. A
        private
        business development company as defined in Section 202(a)(22) of the
        Investment Advisers Act of 1940;

       

      ___ 9. Any
        partnership or corporation or any organization described in
        Section 501(c)(3) of the Internal Revenue Code or similar business trust,
        not formed for the specific purpose of acquiring the Shares, with total assets
        in excess of $5,000,000;

       

      ___ 10. A
        trust,
        with total assets in excess of $5,000,000, not formed for the specific purpose
        of acquiring the Shares, whose purchase is directed by a sophisticated person
        as
        described in Rule  506(b)(2)(ii) of
        the Exchange Act;

       

      ___ 11. An
        entity
        in which all of the equity owners qualify under any of the above subparagraphs.
        If the undersigned belongs to this investor category only, list the equity
        owners of the undersigned, and the investor category which each such equity
        owner satisfies:_         

      ____________________________________________________________________________________

      (Continue
        on a separate piece of paper, if necessary.)

       

      
        	 	
                (e)

              	
                As
                  of the date hereof, please set forth below the dollar amount of
                  securities
                  in the aggregate in your portfolio or under management, including
                  investments held by wholly owned
                  subsidiaries.

              

      

       

      
        	 	
                (f)

              	
                Please
                  set forth in the space provided below the (i) states, if any, in the
                  U.S. in which you maintained your principal office during the past
                  two
                  years and the dates during which you maintained your office in
                  each state,
                  (ii) state(s), if any, in which you are incorporated or otherwise
                  organized and (iii) state(s), if any, in which you pay income
                  taxes.

              

      

       

      
        	
                Dated:__________________________,
                  2007

              
	 
	___________________________________ 
	
                Print
                  Name of Investor

              
	___________________________________ 
	
                Name:

              
	
                Title:

              
	
                (Signature
                  and title of authorized officer, partner or
                  trustee)

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    SECURITIES
      DELIVERY INSTRUCTIONS

     

    Please
      instruct us as to where you would like the Securities delivered to at
      Closing:

    

      Name:
        __________________________________________________________________

       

      Company: _______________________________________________________________

       

      Address: ________________________________________________________________

       

      ____________________________________________________________

       

      Telephone:
        ______________________________________________________________

       

      Other
        Special
        Instructions: __________________________________________________

       

                  _________________________________________________________________________________

    

     

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit C

     

    OPINION
      OF COMPANY CORPORATE COUNSEL

     

    
      	 	
              1.

            	
              The
                Company is a corporation duly incorporated, validly existing and
                in good
                standing under the laws of the State of Delaware, with corporate
                power and
                authority to own, lease and operate its properties and to conduct
                its
                business.

            

    

     

    
      	 	
              2.

            	
              The
                Company has all necessary corporate power and authority to execute
                and
                deliver the Transaction Documents, to perform its obligations thereunder,
                to issue the Securities and to consummate the other transactions
                contemplated thereby.

            

    

     

    
      	 	
              3.

            	
              Each
                of the Transaction Documents (other than the Warrants) has been duly
                authorized, executed and delivered by the Company and, assuming the
                due
                authorization, execution and delivery thereof by all parties thereto
                other
                than the Company, constitutes a valid and binding agreement of the
                Company, enforceable against the Company in accordance with its terms,
                subject
                to (i) applicable bankruptcy, insolvency, fraudulent conveyance or
                transfer, reorganization, moratorium and other similar laws affecting
                the
                rights of creditors generally and subject to general principles of
                equity,
                regardless of whether such enforcement is considered in a proceeding
                at
                law or in equity and (ii) any rights to indemnity and contribution
                thereunder limited by federal and state securities laws and public
                policy
                considerations.

            

    

     

    
      	 	
              4.

            	
              The
                Company has all necessary corporate power and authority to execute,
                issue
                and deliver the Warrants. The Warrants have been duly authorized
                for
                issuance and sale by the Company and, when fully executed and issued
                in
                accordance with the terms of the Purchase Agreement and delivered
                to and
                paid for by the Investors pursuant to the Purchase Agreement, will
                constitute valid and binding obligations of the Company, enforceable
                against the Company in accordance with their terms subject
                to (i) applicable bankruptcy, insolvency, fraudulent conveyance or
                transfer, reorganization, moratorium and other similar laws affecting
                the
                rights of creditors generally and subject to general principles of
                equity,
                regardless of whether such enforcement is considered in a proceeding
                at
                law or in equity and (ii) any rights to indemnity and contribution
                thereunder as may be limited by federal and state securities laws
                and
                public policy considerations.

            

    

     

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              5.

            	
              The
                Company has all necessary corporate power and authority to issue
                and
                deliver the Warrant Shares. The Warrant Shares have been duly reserved
                for
                issuance by the Company. The Warrant Shares, when issued in accordance
                with the Warrant, will be validly issued, fully paid and nonassessable.
                Assuming the Warrant Shares were issued as of the date hereof, (i)
                except
                as set forth in Schedule
                3.1(d)
                to
                the Schedule of Exceptions of the Purchase Agreement, the issuance
                of the
                Warrant Shares would not violate any statutory or, to our knowledge,
                contractual preemptive or other similar rights to subscribe for or
                purchase securities of the Company upon the issuance or sale thereof;
                and
                (ii) such Warrant Shares may
                be issued to the Investors without registration under the Securities
                Act.

            

    

     

    
      	 	
              6.

            	
              The
                Company has all necessary corporate power and authority to issue
                and
                deliver the Shares. The Shares have been duly authorized, and, when
                issued
                and delivered to the Investors and paid for by the Investors in accordance
                with the terms of the Purchase Agreement, the Shares will be duly
                and
                validly issued, fully paid and nonassessable and may
                be issued to the Investors without registration under the Securities
                Act.
                Except
                as set forth in Schedule
                3.1(d)
                to
                the Schedule of Exceptions of the Purchase Agreement, none
                of the Shares will be issued in violation of any statutory
                or, to our knowledge, contractual preemptive
                or other similar rights to subscribe for or purchase securities of
                the
                Company upon the issuance and sale
                thereof.

            

    

     

    
      	 	
              7.

            	
              The
                execution and delivery of the Transaction Documents by the Company,
                the
                performance by the Company of its obligations thereunder, the issuance
                and
                sale of the Shares, the issuance and sale of the Warrants and the
                issuance
                of the Warrant Shares upon exercise of the Warrants in accordance
                with the
                provisions of the Warrants (assuming
                the Warrant Shares were issued as of the date hereof)
                (i) will not result in any violation of the provisions of the Charter
                or
                By-laws of the Company; (ii) will not constitute a breach of, or
                default
                under, or result in the creation or imposition of any security interest,
                mortgage, pledge, lien, charge, encumbrance or adverse claim upon
                any
                property or assets of the Company, pursuant to any material agreement
                filed as an exhibit to the SEC Documents, including, without limitation,
                under the Purchase Agreement; (iii) will not result in any violation
                of
                any federal or New York law or the General Corporation Law of the
                State of
                Delaware or, to our knowledge, any administrative or court decree,
                applicable to the Company; or (iv) to our knowledge, will not require
                any
                consent, approval, authorization or other order of, or registration
                or
                filing with, any federal or New York court or other governmental
                or
                regulatory authority or agency, except (i) with respect to the
                transactions contemplated by Section 6 of the Purchase Agreement
                as may be
                required under the Securities Act and the Exchange Act, (ii) the
                filing of
                Form D with the Commission; (iii) as required by the state securities
                or
                “blue sky” laws as to which we express no opinion and (iv) for those which
                will be obtained prior to closing or for which, to our knowledge,
                the
                failure to obtain could not, individually or in the aggregate, reasonably
                be expected to have a Material Adverse
                Effect.

            

    

     

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              8.

            	
              Assuming
                the accuracy of the representations and warranties of the Company
                and the
                Investors contained in the Purchase Agreement and the compliance
                of such
                parties with the agreements set forth therein (other than Section
                3.1(n))
                of the Purchase Agreement), it is not necessary, in connection with
                the
                issuance and sale of any of the Securities, in the manner contemplated
                by
                Transaction Documents, to register any of the Securities under the
                Securities Act.

            

    

     

    
      	 	
              9.

            	
              Based
                on the Company’s certifications as to the use of proceeds from the sale of
                the Securities, the Company is not, and after receipt of payment
                for the
                Securities will not be, an “investment company” within the meaning of the
                Investment Company Act.

            

    

     

    
      	 	
              10.

            	
              The
                Company has an authorized capitalization as set forth in the Purchase
                Agreement.

            

    

     

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit D

     

    PLAN
      OF DISTRIBUTION

     

    The
      selling stockholders may, from time to time, sell any or all of their shares
      of
      common stock on any stock exchange, market or trading facility on which the
      shares are traded or in private transactions. These sales may be at fixed
      prices, at prevailing market prices at the time of the sale, at varying prices
      determined at the time of sale, or negotiated prices. The selling stockholders
      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;

     

    short
      sales;

     

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

     

    a
      combination of any such methods of sale; and

     

    any
      other
      method permitted pursuant to applicable law.

     

    The
      selling stockholders may also sell shares under Rule 144 under the
      Securities Act, 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. The
      selling stockholders do not expect these commissions and discounts to exceed
      what is customary in the types of transactions involved. Any profits on the
      resale of shares of common stock by a broker-dealer acting as principal might
      be
      deemed to be underwriting discounts or commissions under the Securities Act.
      Discounts, concessions, commissions and similar selling expenses, if any,
      attributable to the sale of shares will be borne by a selling stockholder.
      The
      selling stockholders may agree to indemnify any agent, dealer or broker-dealer
      that participates in transactions involving sales of the shares if liabilities
      are imposed on that person under the Securities Act. In connection with sales
      of
      the shares of common stock or otherwise, the selling stockholders may enter
      into
      hedging transactions with broker-dealers, which may in turn engage in short
      sales of the shares of common stock in the course of hedging in positions they
      assume. The selling stockholders may also sell shares of common stock short
      and
      deliver shares of common stock covered by this prospectus to close out short
      positions and to return borrowed shares in connection with such short sales.
      The
      selling stockholders may also loan or pledge shares of common stock to
      broker-dealers that in turn may sell such shares.

     

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      selling stockholders may from time to time pledge or grant a security interest
      in some or all of the shares of common stock owned by them and, if they default
      in the performance of their secured obligations, the pledgees or secured parties
      may offer and sell the shares of common stock from time to time under this
      prospectus after we have filed a supplement to this prospectus under
      Rule 424(b)(3) or other applicable provision of the Securities Act of 1933
      supplementing or amending the list of selling stockholders to include the
      pledgee, transferee or other successors in interest as selling stockholders
      under this prospectus.

     

    The
      selling stockholders also may transfer the shares of common stock in other
      circumstances, in which case the transferees, pledgees or other successors
      in
      interest will be the selling beneficial owners for purposes of this prospectus
      and may sell the shares of common stock from time to time under this prospectus
      after we have filed a supplement to this prospectus under Rule 424(b)(3) or
      other applicable provision of the Securities Act of 1933 supplementing or
      amending the list of selling stockholders to include the pledgee, transferee
      or
      other successors in interest as selling stockholders under this
      prospectus.

     

    The
      selling stockholders and any broker-dealers or agents that are involved in
      selling the shares of common stock may be deemed to be “underwriters” 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 of common stock purchased by them may be deemed to be
      underwriting commissions or discounts under the Securities Act.

     

    Under
      the
      securities laws of some states, the shares of common stock may be sold in such
      states only through registered or licensed brokers or dealers. In addition,
      in
      some states the shares of common stock may not be sold unless such shares have
      been registered or qualified for sale in such state or an exemption from
      registration or qualification is available and is complied with.

     

    There
      can
      be no assurance that any selling stockholder will sell any or all of the shares
      of common stock registered pursuant to the shelf registration statement, of
      which this prospectus forms a part.

     

    We
      are
      required to pay all fees and expenses incident to the registration of the shares
      of common stock. We have agreed to indemnify the selling stockholders against
      certain losses, claims, damages and liabilities, including liabilities under
      the
      Securities Act.

     

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      selling stockholders have advised us that they have not entered into any
      agreements, understandings or arrangements with any underwriters or
      broker-dealers regarding the sale of their shares of common stock, nor is there
      an underwriter or coordinating broker acting in connection with a proposed
      sale
      of shares of common stock by any selling stockholder. If we are notified by
      any
      selling stockholder that any material arrangement has been entered into with
      a
      broker-dealer for the sale of shares of common stock, if required, we will
      file
      a supplement to this prospectus. If the selling stockholders use this prospectus
      for any sale of the shares of common stock, they will be subject to the
      prospectus delivery requirements of the Securities Act.

     

    The
      selling stockholders and any other person participating in such distribution
      will be subject to applicable provisions of the Securities Exchange Act of
      1934,
      as amended, and the rules and regulations thereunder, including, without
      limitation, Regulation M of the Exchange Act, which may limit the timing of
      purchases and sales of any of the shares of common stock by the selling
      stockholders and any other participating person. Regulation M may also restrict
      the ability of any person engaged in the distribution of the shares of common
      stock to engage in market-making activities with respect to the shares of common
      stock. All of the foregoing may affect the marketability of the shares of common
      stock and the ability of any person or entity to engage in market-making
      activities with respect to the shares of common stock.

     

    Once
      sold
      under the shelf registration statement, of which this prospectus forms a part,
      the shares of common stock will be freely tradable in the hands of persons
      other
      than our affiliates.

     

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit E

     

    COMPANY
      TRANSFER AGENT INSTRUCTIONS

     

    EMPIRE
      STOCK TRANSFER INC.

    2470
      Saint Rose Pkwy, Suite 304

    Henderson,
      NV 89074

    

    Attention:
      Patrick Mokros

     

    Ladies
      and Gentlemen:

     

    Reference
      is made to that certain Securities Purchase Agreement, dated as of November
      1,
      2007 (the “Agreement”), by and among Akeena Solar, Inc., a Delaware corporation
      (the “Company”), and the investors named on the Schedule of Investors attached
      thereto (collectively, the “Holders”), pursuant to which the Company is issuing
      to the Holders shares (the “Common Shares”) of Common Stock of the Company, par
      value $0.001 per share (the “Common Stock”), and Warrants (the “Warrants”),
      which are exercisable into shares of Common Stock.

     

    This
      letter shall serve as our irrevocable authorization and direction to you
      (provided that you are the transfer agent of the Company at such
      time):

     

    (i) 
      to issue shares of Common Stock upon transfer or resale of the Common Shares;
      and

     

    (ii) 
      to issue shares of Common Stock upon the exercise of the Warrants (the
“Warrant
      Shares”)
      to or
      upon the order of a Holder from time to time upon delivery to you of a properly
      completed and duly executed Exercise Notice, in the form attached hereto as
      Exhibit I,
      which
      has been acknowledged by the Company as indicated by the signature of a duly
      authorized officer of the Company thereon.

     

    You
      acknowledge and agree that so long as you have previously received
      (a) written confirmation from the Company’s legal counsel that either
      (i) a registration statement covering resales of the Common Shares and the
      Warrant Shares has been declared effective by the Securities and Exchange
      Commission (the “SEC”)
      under
      the Securities Act of 1933, as amended (the “Securities
      Act”)
      and
      that resales of the Common Shares and the Warrant Shares may be made thereunder,
      or (ii) sales of the Common Shares and the Warrant Shares may be made in
      conformity with Rule 144 under the Securities Act (“Rule 144”),
      (b) if applicable, a copy of such registration statement, and
      (c) notice from legal counsel to the Company or any Holder that a transfer
      of Common Shares and/or Warrant Shares has been effected either pursuant to
      the
      registration statement (and a prospectus delivered to the transferee) or
      pursuant to Rule 144, then, unless otherwise required by law, within three
      (3) business days of your receipt of the notice referred to in (c), you shall
      issue the certificates representing the Common Shares and the Warrant Shares
      so
      sold to the transferees registered in the names of such transferees, and such
      certificates shall not bear any legend restricting transfer of the Common Shares
      and the Warrant Shares thereby and should not be subject to any stop-transfer
      restriction.

     

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    A
      form of
      written confirmation (to be used in connection with any sale) from the Company’s
      outside legal counsel that a registration statement covering resales of the
      Common Shares and the Warrant Shares has been declared effective by the SEC
      under the Securities Act is attached hereto as Exhibit II.

     

    Please
      be
      advised that the Holders are relying upon this letter as an inducement to enter
      into the Agreement and, accordingly, each Holder is a third party beneficiary
      to
      these instructions.

     

    Please
      execute this letter in the space indicated to acknowledge your agreement to
      act
      in accordance with these instructions. Should you have any questions concerning
      this matter, please contact me at (408) 402-9404..

    

      
        	 	
                Very
                  truly yours,

              
	 	 
	 	
                AKEENA
                  SOLAR, INC.

              
	 	 
	 	
                By:

              	 
	 	 	
                Name:

              
	 	 	
                Title:

              

      

    

     

    
      THE
        FOREGOING INSTRUCTIONS ARE

      ACKNOWLEDGED
        AND AGREED TO

      this
        day
        of November 1, 2007

      

      EMPIRE
        STOCK TRANSFER INC.

      

        
          	
                  By:

                	 	 
	 	
                  Name:

                	 	 
	 	
                  Title:

                	 	 

        

      

    

     

    Enclosures

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit F

     

    FORM
      OF WARRANT

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