Document:

SECURITIES
PURCHASE AGREEMENT

     

    This
Securities Purchase Agreement (this “Agreement”) is dated
as of August 16, 2010, between New Generation Biofuels Holdings, Inc., a
Florida corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and
collectively the “Purchasers”).

     

    WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
an effective registration statement under the Securities Act of 1933, as amended
(the “Securities
Act”), the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the Company,
securities of the Company as more fully described in this
Agreement.

     

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

     

    ARTICLE
I.

    DEFINITIONS

     

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

     

    “Acquiring Person”
shall have the meaning ascribed to such term in Section 4.5.

     

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

     

    “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person as such terms are
used in and construed under Rule 405 under the Securities Act.

     

    “Base Prospectus”
means the prospectus in the form in which it appears in the Registration
Statement.

     

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

     

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

     

    “Closing” means the
closing of the purchase and sale of the Securities pursuant to Section
2.1.

     

    “Closing Date” means
the Trading Day on which all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to (i)
the Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Securities, in each case, have been
satisfied or waived, but in no event later than the third Trading Day following
the date hereof.

     

     “Commission” means the
United States Securities and Exchange Commission.

     

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

     

    “Common Stock
Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right, option, warrant
or other instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Company Counsel”
means Fredrikson & Byron, P.A., with offices located at 200 South 6th Street,
Suite 4000, Minneapolis, Minnesota, 55402.

     

    “Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(r).

     

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

    

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

     

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

     

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

     

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

     

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

     

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

     

    “Per Share Purchase
Price” equals $0.20, subject to adjustment
for reverse and forward stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock that occur after the date of this
Agreement.

     

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

     

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

     

     “Prospectus
Supplement” means the supplement to the Base Prospectus complying with
Rule 424(b) of the Securities Act that is filed with the Commission and
delivered by the Company to each Purchaser at the Closing.

     

    “Prospectus Disclosure
Package” means collectively the Registration Statement, Base Prospectus,
Prospectus Supplement and any preliminary or free writing
prospectus.

     

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

     

    “Registration
Statement” means the effective registration statement with Commission
file No. 333-156449 which registers the sale of the Shares, the Warrants and the
Warrant Shares to the Purchasers.

     

    “Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Rule 424” means Rule
424 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended or interpreted from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.

     

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

     

    “Securities” means the
Shares, the Warrants and the Warrant Shares.

     

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

     

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

     

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

     

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

     

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

     

    “Trading Day” means a
day on which the principal Trading Market is open for trading.

     

    “Trading Market” means
any of the following markets or exchanges on which the Common Stock is listed or
quoted for trading on the date in question: the NYSE AMEX, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange or the OTC Bulletin Board (or any successors to any of the
foregoing).

     

    “Transaction
Documents” means this Agreement, the Warrants and any other documents or
agreements executed in connection with the transactions contemplated
hereunder.

     

    “Transfer Agent” means
Olde Monmouth Stock Transfer Company, the current transfer agent of the Company,
with a mailing address of 200 Memorial Parkway, Atlantic Highlands, New Jersey
07716 and a facsimile number of 732-872-2728 and any successor transfer agent of
the Company.

     

    “Warrants” means,
collectively, the Common Stock purchase warrants delivered to the Purchasers at
the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be
exercisable after the six month anniversary of the date of issuance until the
fifth anniversary of the date of issuance,  in the form of Exhibit A attached
hereto.

     

    “Warrant Shares” means
the shares of Common Stock issuable upon exercise of the Warrants.

     

    ARTICLE
II.

    PURCHASE
AND SALE

     

    2.1         
 Closing.  On
the Closing Date, upon the terms and subject to the conditions set forth herein,
substantially concurrent with the execution and delivery of this Agreement by
the parties hereto, the Company agrees to sell, and the Purchasers, severally
and not jointly,  agree to purchase, up to an aggregate of $2,000,000
of Shares and Warrants.  Each Purchaser shall deliver to the Company,
via wire transfer or a certified check of immediately available funds equal to
such Purchaser’s Subscription Amount as set forth on the signature page hereto
executed by such Purchaser and the Company shall deliver to each Purchaser its
respective Shares and a Warrant as determined pursuant to Section 2.2(a), and
the Company and each Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing.  Upon satisfaction of the
covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall
occur at the offices of _____ or such other location as the parties shall
mutually agree.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.2         
 Deliveries.

     

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

     

    (i)      
      this Agreement duly executed by the
Company;

     

    (ii)          
a copy of the irrevocable instructions to the Company’s transfer agent
instructing the transfer agent to deliver via The Depository Trust Company
Deposit or Withdrawal at Custodian system (“DWAC”) Shares equal
to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price,
registered in the name of such Purchaser;

     

    (iii)         
a Warrant registered in the name of such Purchaser to purchase up to a number of
shares of Common Stock equal to 25% of such Purchaser’s
Shares, with an exercise price equal to $0.30, subject to adjustment
therein (such Warrant certificate may be delivered within three Trading Days of
the Closing Date); and

     

    (iv)          
the Prospectus and Prospectus Supplement (which may be delivered in accordance
with Rule 172 under the Securities Act).

     

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

     

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

     

    (ii)           
such Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company.

     

    2.3          
 Closing
Conditions.

     

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

     

    (i)           
the accuracy in all material respects on the Closing Date of the representations
and warranties of the Purchasers contained herein (unless as of a specific date
therein in which case they shall be accurate as of such date);

     

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

     

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

     

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

     

    (i)            
the accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Company contained herein (unless as of a
specific date therein);

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

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

     

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

     

    (v)          
from the date hereof to the Closing Date, trading in the Common Stock shall not
have been suspended by the Commission or the Company’s principal Trading Market,
and, at any time prior to the Closing Date, trading in securities generally as
reported by Bloomberg L.P. shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are reported
by such service, or on any Trading Market, nor shall a banking moratorium have
been declared either by the United States or New York State authorities nor
shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or
any material adverse change in, any financial market which, in each case, in the
reasonable judgment of such Purchaser, makes it impracticable or inadvisable to
purchase the Securities at the Closing.

     

    ARTICLE
III.

    REPRESENTATIONS
AND WARRANTIES

     

    3.1            
Representations and
Warranties of the Company.  The Company hereby makes the
following representations and warranties to each Purchaser:

     

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

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    (d)     
  No
Conflicts.  The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents to which it is a
party, the issuance and sale of the Securities and the consummation by it 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, or (ii) result in a material breach of, or conflict with, or
constitute a material default (or an event that with notice or lapse of time or
both would become a material default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) subject to the Required Approvals, conflict with or
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities laws
and regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.

     

    (e)       
 Filings,
Consents and Approvals.  The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii)
the filing with the Commission of the Prospectus Supplement, (iii)
application(s) to each applicable Trading Market for the listing of the Shares
and Warrant Shares for trading thereon in the time and manner required thereby
and (iv) such filings as are required to be made under applicable state
securities laws and the rules and regulations of FINRA (collectively, the “Required Approvals”),
and except where the failure to obtain any such consent, waiver, authorization
or order, give any such notice or make any such filing could not reasonably be
expected to result in a Material Adverse Effect.

     

    (f)        
Issuance of the
Securities; Registration.  The Shares and Warrants are duly
authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the
Company.  The Warrant Shares, when issued in accordance with the terms
of the Warrants, will be validly issued, fully paid and nonassessable, free and
clear of all Liens imposed by the Company.  The Company has reserved
from its duly authorized capital stock the maximum number of shares of Common
Stock issuable pursuant to this Agreement and the Warrants, subject to such
adjustment to such reserve as may occur pursuant to the terms and adjusment
provisions of the Warrants. The Securities have been registered under the
Securities Act.  The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the effectiveness of
the Registration Statement or suspending or preventing the use of the Base
Prospectus has been issued by the Commission and no proceedings for that purpose
have been instituted or, to the knowledge of the Company, are threatened by the
Commission.  The Company, if required by the rules and regulations of
the Commission, proposes to file the Prospectus Supplement, with the Commission
pursuant to Rule 424(b).  At the time the Registration Statement and
any amendments thereto became effective, the Registration Statement and any
amendments thereto conformed in all material respects to the requirements of the
Securities Act and did not not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.  The Base Prospectus, as
of its date, conformed in all material respects to the requirements of the
Securities Act and did not not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.  The Prospectus
Supplement, and any amendments or supplements thereto, as of its date and at the
Closing Date, conformed and will conform in all material respects to the
requirements of the Securities Act and did not and will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (g)        
Capitalization.  The
capitalization of the Company is as set forth in the Prospectus Disclosure
Package.  Except as otherwise described in the Prospectus Disclosure
Package, the Company has not issued any capital stock since its most recently
filed periodic report under the Exchange Act, other than pursuant to the
exercise of employee stock options under the Company’s stock option plans, and
pursuant to the conversion and/or exercise of Common Stock Equivalents
(including the mandatory conversion of Series A preferred stock) outstanding as
of the date of the most recently filed periodic report under the Exchange
Act.  No Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.  Except as set forth in the
Prospectus Disclosure Package, there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common Stock
Equivalents.  Except as disclosed in the SEC Reports, 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 Purchasers) and will not
result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities. All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities.  No further approval or authorization of any
stockholder, the Board of Directors or others is required for the issuance and
sale of the Securities.  There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.

     

    (h)    
   SEC
Reports; Financial Statements.  Except for a Current Report on
Form 8-K filed May 13, 2009, the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under
the Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such shorter
period as the Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, together with the Base Prospectus and the
Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Company has never been an issuer subject to Rule 144(i) under
the Securities Act. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing.  Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated Subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i)       
  Material
Changes; Undisclosed Events, Liabilities or
Developments.  Since the date of the latest audited financial
statements included within the SEC Reports, except as contemplated by this
Agreement or disclosed in a subsequent SEC Report filed prior to the date
hereof, (i) there has been no event, occurrence or development that has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or disclosed in
filings made with the Commission, (iii) the Company has not altered its method
of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option
plans.  The Company does not have pending before the Commission any
request for confidential treatment of information.  Except for the
issuance of the Securities contemplated by this Agreement, the Company has
publicly disclosed all information required to be disclosed under applicable
securities laws at the time this representation is made or deemed made that has
not been publicly disclosed at least 1 Trading Day prior to the date that this
representation is made.

     

    (j)     
    Litigation.  There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect.  Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty.  There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or, to the knowledge of
the Company, any current or former director or officer of the Company that is
required to be disclosed in the SEC Reports.  The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.

     

    (k)      
  Labor
Relations.  No labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company, which
could reasonably be expected to result in a Material Adverse
Effect.  None of the Company’s or its Subsidiaries’ employees is a
member of a union that relates to such employee’s relationship with the Company
or such Subsidiary, and neither the Company nor any of its Subsidiaries is a
party to a collective bargaining agreement, and the Company and its Subsidiaries
believe that their relationships with their employees are good.  To
the knowledge of the Company, no executive officer of the Company or any
Subsidiary, is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing
matters.  The Company and its Subsidiaries are in compliance with all
U.S. federal, state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (l)       
  Compliance.  Neither
the Company nor any Subsidiary: (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any judgment, decree or
order of any court, arbitrator or other governmental authority or (iii) is or
has been in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not have or reasonably be expected to result in a Material
Adverse Effect.

     

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

     

    (n)      
 Title to
Assets.  The Company owns no real property.  Other
than liens on personal or other property securing indebtedness of the Company in
the ordinary course of business or as described in the Prospectus Disclosure
Package, the Company has 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 (i) Liens as
do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries and (ii) Liens for the payment of federal, state or
other taxes, for which appropriate reserves have been made therefore in
accordance with GAAP and, the payment of which is neither delinquent nor subject
to penalties.  Except as disclosed in the SEC Reports or not required
to be disclosed in the SEC Reports, any real property and
facilities held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance.

     

    (o)     
  Intellectual
Property.  The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights necessary or
required for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could have a Material Adverse
Effect (collectively, the “Intellectual Property
Rights”).  None of, and neither the Company nor any Subsidiary
has received a notice (written or otherwise) that any of, the Intellectual
Property Rights has expired, terminated or been abandoned, or is expected to
expire or terminate or be abandoned, within two (2) years from the date of this
Agreement.  Neither the Company nor any Subsidiary has received, since
the date of the latest audited financial statements included within the SEC
Reports, a written notice of a claim or otherwise has any knowledge that the
Intellectual Property Rights violate or infringe upon the rights of any Person,
except as could not have or reasonably be expected to not have a Material
Adverse Effect.  To the knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property
Rights.  The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties, except where failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (q)    
  Transactions
With Affiliates and Employees.  Except as set forth in the SEC
Reports, none of the officers or directors of the Company or any Subsidiary and,
to the knowledge of the Company, none of the employees of the Company or any
Subsidiary is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, providing for the borrowing of money from or lending of
money to or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee, stockholder, member or partner, in each case in
excess of $120,000 other than for (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the
Company and (iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.

     

    (r)       
 Sarbanes-Oxley;
Internal Accounting Controls.  The Company and the Subsidiaries
is in material compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and
all applicable rules and regulations promulgated by the Commission thereunder
that are effective as of the date hereof and as of the Closing
Date.  The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that: (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
the Subsidiaries and designed such disclosure controls and procedures to ensure
that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and
forms.  The Company’s certifying officers have evaluated the
effectiveness of the disclosure controls and procedures of the Company and the
Subsidiaries as of the end of the period covered by the most recently filed
periodic report under the Exchange Act (such date, the “Evaluation
Date”).  The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date.  Since the Evaluation
Date, there have been no changes in the internal control over financial
reporting (as such term is defined in the Exchange Act) of the Company and its
Subsidiaries that have materially affected, or is reasonably likely to
materially affect, the internal control over financial reporting of the Company
and its Subsidiaries.

     

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

     

    (t)       
Investment
Company. The Company is not, and is not an Affiliate of, and immediately
after receipt of payment for the Securities, will not be or be an Affiliate of,
an “investment company” within the meaning of the Investment Company Act of
1940, as amended.  The Company shall conduct its business in a manner
so that it will not become an “investment company” subject to registration under
the Investment Company Act of 1940, as amended.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (u)      
  Registration
Rights.  Except as disclosed in the SEC Reports, no Person has
any right to cause the Company to effect the registration under the Securities
Act of any securities of the Company.

     

    (v)      
 Listing and
Maintenance Requirements.  The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration.  Except as disclosed in
the SEC Reports, the Company has not, in the 12 months preceding the date
hereof, received 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. Except as
disclosed in the SEC Reports, the Company is, and has no reason to believe that
it will not in the foreseeable future continue to be, in compliance with all
such listing and maintenance requirements.

     

    (w)        Application of Takeover
Protections.  The Company and the Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Purchasers as a
result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation as a result of the Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities.

     

    (x) 
       Disclosure.  Except
with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither it
nor any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or
might constitute material, non-public information which is not otherwise
disclosed in the Prospectus Disclosure Package.   The Company
understands and confirms that the Purchasers will rely on the foregoing
representation in effecting transactions in securities of the
Company.  All of the disclosure furnished by or on behalf of the
Company to the Purchasers regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, is true and
correct and does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The
press releases disseminated by the Company during the twelve months preceding
the date of this Agreement taken as a whole, together with other public
disclosure included in the SEC Reports, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made and when made, not misleading.  The Company
acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 3.2 hereof.

     

    (y)       
 No Integrated
Offering. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of
any applicable shareholder approval provisions of any Trading Market on which
any of the securities of the Company are listed or designated.

     

    (aa)    
 Tax
Status.  Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and its Subsidiaries each (i) has made or filed all United
States federal, state and local income and all foreign income and franchise 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 and (iii) has set aside on its books provision
reasonably adequate for the payment of all material 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
or of any Subsidiary know of no basis for any such claim.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    (cc)   
  Accountants.  The
Company’s accounting firm is named in the Prospectus Supplement.  To
the knowledge and belief of the Company, such accounting firm (i) is a
registered public accounting firm as required by the Exchange Act and (ii) shall
express its opinion with respect to the financial statements to be included in
the Company’s Annual Report for the fiscal year ending December 31,
2010.

     

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

     

    (ee)     
 Acknowledgement
Regarding Purchaser’s Trading Activity.  Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(e) and 4.14 hereof), it is understood and acknowledged by the
Company that: (i) none of the Purchasers has been asked by the Company to agree,
nor has any Purchaser agreed, to desist from purchasing or selling, long and/or
short, securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold the Securities for any specified term; (ii)
past or future open market or other transactions by any Purchaser, specifically
including, without limitation, Short Sales or “derivative” transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company’s publicly-traded securities;
(iii) any Purchaser, and counter-parties in “derivative” transactions to which
any such Purchaser is a party, directly or indirectly, presently may have a
“short” position in the Common Stock, and (iv) each Purchaser shall not be
deemed to have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction.  The Company further
understands and acknowledges that (y) one or more Purchasers may engage in
hedging activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value of
the Warrant Shares deliverable with respect to Securities are being determined,
and (z) such hedging activities (if any) could reduce the value of the existing
stockholders' equity interests in the Company at and after the time that the
hedging activities are being conducted.  The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ff)      
 Regulation M
Compliance.  The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
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 Company’s placement agent in connection with the
placement of the Securities.

     

    (gg)     
Office of Foreign
Assets Control.  Neither the Company or any Subsidiary nor, to
the Company's knowledge, any director, officer, agent, employee or affiliate of
the Company  or any Subsidiary is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”).

     

    (hh)    
 U.S. Real
Property Holding Corporation.  The Company is not and has never
been a U.S. real property holding corporation within the meaning of Section 897
of the Internal Revenue Code of 1986, as amended, and the Company shall so
certify upon Purchaser’s request.

     

    (ii)       
 Bank Holding
Company Act.  Neither the Company nor any of its Subsidiaries
or Affiliates is subject to the Bank Holding Company Act of 1956, as amended
(the “BHCA”)
and to regulation by the Board of Governors of the Federal Reserve System (the
“Federal
Reserve”).  Neither the Company nor any of its Subsidiaries or
Affiliates owns or controls, directly or indirectly, five percent (5%) or more
of the outstanding shares of any class of voting securities or twenty-five
percent or more of the total equity of a bank or any entity that is subject to
the BHCA and to regulation by the Federal Reserve.  Neither the
Company nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

     

    (jj)       
 Money
Laundering.  The operations of the Company and its Subsidiaries
are and have been conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, applicable money laundering
statutes and applicable rules and regulations thereunder (collectively, the
“Money Laundering
Laws”), and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any Subsidiary with respect to the Money Laundering Laws is pending or, to
the knowledge of the Company or any Subsidiary, threatened.

    

    (kk)       Anti-Dilution.  Based
on the Company’s interpritation of the applicable accounting rules, the Company
is not obligated to issue in excess of 211,541 shares of common stock pursuant
to any anti-dilution provisions, as disclosed in the SEC Reports.

     

    3.2             
Representations and
Warranties of the Purchasers.  Each Purchaser, for itself and
for no other Purchaser, hereby represents and warrants as of the date hereof and
as of the Closing Date to the Company as follows (unless as of a specific date
therein):

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)  
      Understandings or
Arrangements.  Such Purchaser is acquiring the Securities as
principal for its own account and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding the
distribution of such Securities (this representation and warranty not limiting
such Purchaser’s right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state
securities laws).  Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.

     

    (c)     
   Purchaser
Status.  At the time such Purchaser was offered the Securities,
it was, and as of the date hereof it is, and on each date on which it exercises
any Warrants, it will be either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule 144A(a) under the Securities
Act.  Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.

     

    (d)       
 Experience of
Such Purchaser.  Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment.  Such Purchaser is able to bear
the economic risk of an investment in the Securities and, at the present time,
is able to afford a complete loss of such investment. The Purchaser understands
that nothing in this Agreement, the Prospectus Disclosure Package or any other
materials presented to the Purchaser in connection with the purchase and sale of
the Securities constitutes legal, tax or investment advice. The Purchaser has
consulted such legal, tax and investment advisors and made such investigation as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of Securities.

     

    (e)    
    Certain Transactions and
Confidentiality.  Other than consummating the transactions
contemplated hereunder, such Purchaser has not, nor has any Person acting on
behalf of or pursuant to any understanding with such Purchaser, directly or
indirectly executed any purchases or sales, including Short Sales, of the
securities of the Company during the period commencing as of the time that such
Purchaser first received a term sheet (written or oral) from the Company or any
other Person representing the Company setting forth the material terms of the
transactions contemplated hereunder and ending immediately prior to the
execution hereof.  Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Securities covered by this Agreement.  Other than to
other Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this
transaction).

     

    (f)       
 No Trading
Market for Warrants. The Purchaser understands that there is no
established public trading market for the Warrants and that the Company does not
expect such a market to develop.  In addition, the Company does not
intend to apply for listing the Warrants on any securities
exchange.  Without an active market, the liquidity of the Warrants
will be limited.

     

    The
Company acknowledges and agrees that the representations contained in Section
3.2 shall not modify, amend or affect such Purchaser’s right to rely on the
Company’s representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transaction contemplated
hereby.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
IV.

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1         
 Warrant
Shares.  If all or any portion of a Warrant is exercised at a
time when there is an effective registration statement to cover the issuance or
resale of the Warrant Shares or if the Warrant is exercised via cashless
exercise, the Warrant Shares issued pursuant to any such exercise shall be
issued free of all legends.  If at any time following the date hereof
the Registration Statement (or any subsequent registration statement registering
the sale or resale of the Warrant Shares) is not effective or is not otherwise
available for the sale or resale of the Warrant Shares, the Company shall
immediately notify the holders of the Warrants in writing that such registration
statement is not then effective and thereafter shall promptly notify such
holders when the registration statement is effective again and available for the
sale or resale of the Warrant Shares (it being understood and agreed that the
foregoing shall not limit the ability of the Company to issue, or any Purchaser
to sell, any of the Warrant Shares in compliance with applicable federal and
state securities laws).  The Company shall use best efforts to keep a
registration statement (including the Registration Statement) registering the
issuance or resale of the Warrant Shares effective during the term of the
Warrants.

     

    4.2       
   Furnishing of
Information.  Until the earliest of the time that (i) no
Purchaser owns Securities or (ii) the Warrants have expired, the Company
covenants use all reasonable 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, if the Company is subject to the reporting requirements of the
Exchange Act.

     

    4.3        
  Integration.  The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities for
purposes of the rules and regulations of any Trading Market such that it would
require shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of such subsequent
transaction.

     

    4.4        
  Securities Laws
Disclosure; Publicity.  The Company shall (a) by 9:00 a.m. (New
York City time) on the Trading Day immediately following the date hereof, issue
a press release disclosing the material terms of the transactions contemplated
hereby, and (b) file a Current Report on Form 8-K, including the Transaction
Documents as exhibits thereto, with the Commission within the time required by
the Exchange Act.  From and after the issuance of such press release,
the Company represents to the Purchasers that it shall have publicly disclosed
all material, non-public information delivered to any of the Purchasers by the
Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated
by the Transaction Documents.  The Company and each Purchaser shall
consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser
shall issue any such press release nor otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of
any Purchaser, or without the prior consent of each Purchaser, with respect to
any press release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law, in which case
the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication.  Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (a) as required by federal securities law in connection with
the filing of final Transaction Documents (including signature pages thereto)
with the Commission and (b) to the extent such disclosure is required by law or
Trading Market regulations.

     

    4.5      
   Shareholder Rights
Plan.  No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person, that any Purchaser is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, by virtue of receiving Securities under the Transaction
Documents or under any other agreement between the Company and the
Purchasers.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.6        
  Non-Public
Information.  Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it, nor any other Person acting on its
behalf will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have entered into a written agreement with
the Company regarding the confidentiality and use of such
information.  The Company understands and confirms that each Purchaser
shall be relying on the foregoing covenant in effecting transactions in
securities of the Company.

     

    4.7       
   Use of
Proceeds.  The Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes or as otherwise
described in the Prospectus Supplement and shall not use such proceeds: (a) for
the satisfaction of any portion of the Company’s debt (other than payment of all
or a portion of the Company’s secured convertible notes issued in April 2010
(the “Convertible
Notes”) or trade payables in the ordinary course of the Company’s
business and prior practices), (b) for the redemption of any Common Stock or
Common Stock Equivalents, other than the Convertible Notes (c) for the
settlement of any outstanding litigation or (d) in violation of the “FCPA”
(means the Foreign Corrupt Practices Act) or OFAC regulations.

     

    4.8       
   Indemnification of
Purchasers.   Subject to the provisions of this Section
4.8, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective
Affiliates, by any stockholder of the Company who is not an Affiliate of such
Purchaser Party, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such
Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with
any such stockholder or any violations by such Purchaser Party of state or
federal securities laws or any conduct by such Purchaser Party which constitutes
fraud, gross negligence, willful misconduct or malfeasance).  If any
action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing reasonably
acceptable to the Purchaser Party.  Any Purchaser Party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of
counsel, a material conflict on any material issue between the position of the
Company and the position of such Purchaser Party, in which case the Company
shall be responsible for the reasonable fees and expenses of no more than one
such separate counsel.  The Company will not be liable to any
Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party
effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (z) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party’s
breach of any of the representations, warranties, covenants or agreements made
by such Purchaser Party in this Agreement or in the other Transaction Documents.
The indemnification required by this Section 4.8 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or are incurred. The indemnity
agreements contained herein shall be in addition to any cause of action or
similar right of any Purchaser Party against the Company or others, and (y) any
liabilities the Company may be subject to pursuant to law.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.9       
  Reservation of
Common Stock. As of the date hereof, the Company has reserved and the
Company shall continue to reserve and keep available at all times, free of
preemptive rights, a sufficient number of shares of Common Stock for the purpose
of enabling the Company to issue Shares pursuant to this Agreement and Warrant
Shares pursuant to any exercise of the Warrants, subject to such adjustment to
such reserve as may occur pursuant to the terms and adjusment provisions of the
Warrants or any corporate restructuring.

     

    4.10    
   Listing
of Common Stock. The Company hereby agrees to use best efforts (but shall
not be obliged to conduct a reverse stock split) to maintain the listing or
quotation of the Common Stock on the Trading Market on which it is currently
listed, and concurrently with the Closing, the Company shall apply to list or
quote all of the Shares and Warrant Shares on such Trading Market and promptly
secure the listing of all of the Shares and Warrant Shares on such Trading
Market, if required by the rules of the Trading Market. The Company further
agrees, if the Company applies to have the Common Stock traded on any other
Trading Market, it will then include in such application all of the Shares and
Warrant Shares, and will take such other action as is necessary to cause all of
the Shares and Warrant Shares to be listed or quoted on such other Trading
Market as promptly as possible.  The Company will then take all action
reasonably necessary to continue the listing and trading of its Common Stock on
a Trading Market and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Trading
Market.

     

    4.11    
   Equal
Treatment of Purchasers.  No consideration (including any
modification of any Transaction Document) shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered to all of
the parties to the Transaction Documents.  For clarification purposes,
this provision constitutes a separate right granted to each Purchaser by the
Company and negotiated separately by each Purchaser, and is intended for the
Company to treat the Purchasers as a class and shall not in any way be construed
as the Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.

     

    4.12     
   Certain
Transactions and Confidentiality. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that neither it nor any Affiliate
acting on its behalf or pursuant to any understanding with it will execute any
purchases or sales, including Short Sales of any of the Company’s securities
during the period commencing with the execution of this Agreement and ending at
such time that the transactions contemplated by this Agreement are first
publicly announced pursuant to the initial press release as described in Section
4.4.  Each Purchaser, severally and not jointly with the other Purchasers,
covenants that until such time as the transactions contemplated by this
Agreement are publicly disclosed by the Company pursuant to the initial press
release as described in Section 4.4, such Purchaser will maintain the
confidentiality of the existence and terms of this transaction and the
information included in the Disclosure Schedules.  Notwithstanding the
foregoing and notwithstanding anything contained in this Agreement to the
contrary, the Company expressly acknowledges and agrees that (i) no Purchaser
makes any representation, warranty or covenant hereby that it will not engage in
effecting transactions in any securities of the Company after the time that the
transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.4, (ii) no
Purchaser shall be restricted or prohibited from effecting any transactions in
any securities of the Company in accordance with applicable securities laws from
and after the time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as described in
Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality to the
Company or its Subsidiaries after the issuance of the initial press release as
described in Section 4.4.  Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the
covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.15       
Delivery of Warrants
After Closing.  The Company shall deliver, or cause to be
delivered, the respective Warrant certificates purchased by each Purchaser to
such Purchaser within 3 Trading Days of the Closing Date.

     

    4.16    
   Capital
Changes.  Until the one year anniversary of the Closing Date,
the Company shall not undertake a reverse or forward stock split or
reclassification of the Common Stock without the prior written consent of the
Purchasers holding a majority in interest of the Shares or unless required by
the rule of the Trading Market to maintain a listing on such Trading
Market.

     

    
      	
               
      

            	
              4.17

            	
               Participation in
      Future Financing.

            

    

     

    
      	
               
      

            	
              (a)         From
      the date hereof until the date that is the 24 month anniversary of the
      Closing Date, upon any issuance by the Company or any of its Subsidiaries
      of Common Stock or Common Stock Equivalents for cash consideration,
      Indebtedness (or a combination of units hereof) (a "Subsequent
      Financing"), each Purchaser shall have the right to participate in up to
      an amount of the Subsequent Financing equal to the lesser of (i) 100% of
      their Subscription Amount or (ii) fifty percent (50%) of the 20% Nasdaq
      cap limit (the "Participation Maximum") on the same terms, conditions and
      price provided for in the Subsequent Financing, unless the Subsequent
      Financing is any of the following:  (i) a registered public
      offering, in which case the Company shall offer each Purchaser the right
      to participate in such public offering when it is lawful for the Company
      to do so, but no Purchaser shall be entitled to purchase any particular
      amount of such public offering; (ii) shares of Common Stock or options to
      employees, officers or directors of the Company pursuant to any stock or
      option plan duly adopted for such purpose, by a majority of the
      non-employee members of the Board of Directors or a majority of the
      members of a committee of non-employee directors established for such
      purpose, (iii) securities exercisable or exchangeable for or convertible
      into shares of Common Stock issued and outstanding on the date of this
      Agreement, provided that such securities have not been amended since the
      date of this Agreement to increase the number of such securities or to
      decrease the exercise price, exchange price or conversion price of such
      securities, and (iv) securities issued pursuant to acquisitions, joint
      ventures, arrangements with the licensor of our proprietary technology,
      arrangements with customers or suppliers or strategic transactions
      approved by a majority of the disinterested directors of the Company
      (including without limitation possible transactions with Milestone
      Biofuels of China as disclosed in the SEC Reports), provided that any such
      issuance shall only be to a Person (or to the equityholders of a Person)
      which is, itself or through its subsidiaries, an operating company or an
      owner of an asset in a business synergistic with the business of the
      Company and shall provide to the Company additional benefits in addition
      to the investment of funds, but shall not include a transaction in which
      the Company is issuing securities primarily for the purpose of raising
      capital or to an entity whose primary business is investing in
      securities.

            

    

     

    
      	
               
      

            	
              (b)        
      At least five (5) Trading Days prior to the closing of the Subsequent
      Financing (the “Subsequent Financing Closing”), the Company shall deliver
      to each Purchaser a written notice of its intention to effect a Subsequent
      Financing ("Pre-Notice"), which Pre-Notice shall ask such Purchaser if it
      wants to review the details of such financing (such additional notice, a
      "Subsequent Financing Notice"). Upon the request of a Purchaser, and only
      upon a request by such Purchaser, for a Subsequent Financing Notice, the
      Company shall promptly, but no later than one (1) Trading Day after such
      request, deliver a Subsequent Financing Notice to such Purchaser. 
      The Subsequent Financing Notice shall describe in reasonable detail the
      proposed terms of such Subsequent Financing, the amount of proceeds
      intended to be raised thereunder and the Person or Persons through or with
      whom such Subsequent Financing is proposed to be effected and shall
      include a term sheet or similar document relating thereto as an
      attachment.   

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
               (c)       
      Any Purchaser desiring to participate in such Subsequent Financing up to
      their Participation Maximum must provide written notice to the Company by
      at least two (2) Trading Days prior to the Subsequent Financing Closing by
      not later than 5:30 p.m. (New York City time) of such intention and
      participation amount, if less than their Participation Maximum and
      representing and warranting that the Purchaser has such funds ready,
      willing, and available for investment on the terms set forth in the
      Subsequent Financing Notice.  If the Company receives no such notice
      from a Purchaser as of such Trading Day, such Purchaser shall be deemed to
      have notified the Company that it does not elect to participate up to
      their Participation Maximum and acknowledges that any subsequent
      particiaption after such Subsequent Financing Closing, as set forth in
      Section 4.11 (d) below, is subject to reduction based on the limitations
      of the 20% cap imposed by Nasdaq.  In the event the Purchasers
      did not participate in the Subsequent Financing Closing up to their
      Participation Maximum, the Company shall reserve for issuance Common Stock
      or Common Stock Equivilants for the Purchasers equal to fifty percent
      (50%) of the 20% Nasdaq cap limit, less any amount purchased pursuant to
      Section 4.11(c) (the “Holdback”) for issuance pursuant to Section 4.11 (d)
      and (e).

            

    

     

    
      (d)         After
closing on any such Subsequent Financing, any Purchaser who either did not give
notice as required by 4.11(c) above or participated at the Subsequent Financing
Closing in an amount less than their Participation Maximum, who desires to
participate in such Subsequent Financing after the Subsequent Financing Closing
must provide written notice to the Company by not later than 5:30 p.m. (New York
City time) on the fifth (5th) Trading Day after the Subsequent Financing Closing
that the Purchaser is willing to participate in the Subsequent Financing, the
amount of the Purchaser's participation, and representing and warranting that
the Purchaser has such funds ready, willing, and available for investment on the
terms set forth in the Subsequent Financing Notice.  If the Company
receives no such notice from a Purchaser as of such Trading Day, such Purchaser
shall be deemed to have notified the Company that it does not elect to
participate.

    

     

    
      	
               
      

            	
              (e)         
      If by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after
      the Subsequent Financing Closing, notifications by the Purchasers of their
      willingness to participate in the Subsequent Financing (or to cause their
      designees to participate) is, in the aggregate, less than or equal to the
      total amount of common stock that the Company is able to issue pursuant to
      the Nasdaq 20% cap , then the Company may effect a transaction with the
      Purchasers on the same terms as the Subsequent Financing, subject to the
      Nasdaq 20% cap limits.

            

    

     

    
      	
               
      

            	
              (e)         
      If by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after
      the Subsequent Financing Closing, the Company receives responses to a
      Subsequent Financing Notice from Purchasers who did not participate in the
      Subsequent Financing Closing as set forth in Section 4.11(c) up to the
      Participation Maximum seeking to purchase more than the aggregate amount
      of the Participation Maximum, each such Purchaser shall have the right to
      purchase its Pro Rata Portion (as defined below) of the Participation
      Maximum., subject to the limitations set forth in Section 4.11(e). 
      "Pro Rata Portion" means the ratio of (x) the Subscription Amount of
      Securities purchased on the Closing Date by a Purchaser participating
      under this Section 4.11 and (y) the sum of the aggregate Subscription
      Amounts of Securities purchased on the Closing Date by all Purchasers
      participating under this Section
4.11(e).

            

    

     

    
      	
               
      

            	
              (f)        
      The Company must provide the Purchasers with a second Subsequent Financing
      Notice, and the Purchasers will again have the right of participation set
      forth above in this Section 4.11, if the Subsequent Financing subject to
      the initial Subsequent Financing Notice is not consummated for any reason
      on the terms set forth in such Subsequent Financing Notice within 30
      Trading Days after the date of the initial Subsequent Financing
      Notice.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      (g)      
  In
the event the Purchasers effect a transaction with the Company on the same terms
of the Subsequent Financing for an amount less than the Holdback or their
Participation Maximum pursuant to Section 4.11(e), then the Company may effect
the remaining portion of such Subsequent Financing on the terms and with the
Persons set forth in the Subsequent Financing Notice.

    

    

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

    

    

    4.18                  Issuance of Other
Securities.  The Company shall not to issue any securities
(including any security convertible or exercisable into common stock) in a bona
fide financing transaction at a price under $0.20 per share without the consent
of the investors for a period of one year from the date of Closing.

     

    ARTICLE
V.

    MISCELLANEOUS

     

    5.1        
  Termination. 
This Agreement may be terminated by any Purchaser, as to such Purchaser’s
obligations hereunder only and without any effect whatsoever on the obligations
between the Company and the other Purchasers, by written notice to the other
parties, if the Closing has not been consummated on or before August 16, 2010;
provided, however, that no such
termination will affect the right of any party to sue for any breach by any
other party (or parties).

     

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

     

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

     

    5.4      
   Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of: (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto at or prior to 5:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number set forth on the signature pages attached hereto on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c)
the second (2nd)
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service or (d) upon actual receipt by the party to whom such
notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.5      
    Amendments;
Waivers.  No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Purchasers holding at least 67% in
interest of the Shares based on the initial Subscription Amounts hereunder or,
in the case of a waiver, by the party against whom enforcement of any such
waived provision is sought.  No waiver of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

     

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

     

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

     

    5.8        
  No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.8.

     

    5.9         
 Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under 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 other manner permitted by law.  If
either party shall commence an action, suit or proceeding to enforce any
provisions of the Transaction Documents, then, in addition to the obligations of
the Company under Section 4.8, the prevailing party in such action, suit or
proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.

     

    5.10     
    Survival.  The
representations and warranties contained herein shall survive the Closing and
the delivery of the Securities.

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    5.13       
 Rescission and
Withdrawal Right.  Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights; provided, however, that in the
case of a rescission of an exercise of a Warrant, the applicable Purchaser shall
be required to return any shares of Common Stock subject to any such rescinded
exercise notice concurrently with the return to such Purchaser of the aggregate
exercise price paid to the Company for such shares and the restoration of such
Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant
(including, issuance of a replacement warrant certificate evidencing such
restored right).

     

    5.14     
   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 (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction.  The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.

     

    5.15    
    Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will
be entitled to specific performance under the Transaction
Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and
not to assert in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.17     
   Independent Nature of
Purchasers’ Obligations and Rights.  The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document.  Nothing contained herein or
in any other Transaction Document, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Purchaser shall be entitled to
independently protect and enforce its rights including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.  Each Purchaser
has been represented by its own separate legal counsel in its review and
negotiation of the Transaction Documents.  The Company has elected to
provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so
by any of the Purchasers.  It is expressly understood and agreed that
each provision contained in this Agreement and in each other Transaction
Document is between the Company and a Purchaser, solely, and not between the
Company and the Purchasers collectively and not between and among the
Purchasers.

     

    5.18         
Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein shall not be a
Business Day, then such action may be taken or such right may be exercised on
the next succeeding Business Day.

     

    5.19    
    Construction. The
parties agree that each of them and/or their respective counsel have reviewed
and had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction
Document shall be subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Agreement.

     

    5.20    
 WAIVER OF
JURY TRIAL.  IN ANY
ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY
OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

    

    (Signature
Pages Follow)

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    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.

    

    
      
        
          
            
              	
                      NEW
      GENERATION BIOFUELS HOLDINGS, INC.

                    	 	
                      Address for Notice:

                    
	 
      	 	 
      
	
                      By:

                    	 
      	 	
                      Fax:

                    
	 
      	
                      Name:

                    	 	 
      
	 
      	
                      Title:

                    	 	 
      
	
                      With
      a copy to (which shall not constitute notice):

                    	 	 
      

            

          

        

      

    

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    [PURCHASER
SIGNATURE PAGES TO NGBF SECURITIES PURCHASE AGREEMENT]

    

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

     

    Name of
Purchaser: ________________________________________________________

    Signature of Authorized Signatory of
Purchaser: _________________________________

    Name of
Authorized Signatory:
_______________________________________________

    Title of
Authorized Signatory:
________________________________________________

    Email
Address of Authorized
Signatory:_________________________________________

    Facsimile
Number of Authorized Signatory:
__________________________________________

    Address
for Notice to Purchaser:

    

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

    

    Subscription
Amount: $_________________

    

    Shares:
_________________

    

    Warrant
Shares: __________________

    

    EIN
Number:  [PROVIDE
THIS UNDER SEPARATE COVER]

    

    o  Notwithstanding
anything contained in this Agreement to the contrary, by checking this box (i)
the obligations of the above-signed to purchase the securities set forth in this
Agreement to be purchased from the Company by the above-signed, and the
obligations of the Company to sell such securities to the above-signed, shall be
unconditional and all conditions to Closing shall be disregarded, (ii) the
Closing shall occur on the third (3rd)
Trading Day following the date of this Agreement and (iii) any condition to
Closing contemplated by this Agreement (but prior to being disregarded by clause
(i) above) that required delivery by the Company or the above-signed of any
agreement, instrument, certificate or the like or purchase price (as applicable)
shall no longer be a condition and shall instead be an unconditional obligation
of the Company or the above-signed (as applicable) to deliver such agreement,
instrument, certificate or the like or purchase price (as applicable) to such
other party on the Closing Date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    FORM
OF WARRANTExhibit
4.1

      

    

     

    FORM
AMENDED AND RESTATED

     

    COMMON
STOCK PURCHASE WARRANT

     

    THIS
AMENDED AND RESTATED WARRANT (THIS “WARRANT”) AND THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION UNDER SAID ACT IS NOT REQUIRED.

     

    THIS
WARRANT DOES NOT REQUIRE PHYSICAL SURRENDER OF THE WARRANT IN THE EVENT OF A
PARTIAL EXERCISE. AS A RESULT, FOLLOWING ANY EXERCISE OF ANY PORTION OF THIS
WARRANT, THE NUMBER OF SHARES OF COMMON STOCK FOR WHICH THIS WARRANT MAY BE
EXERCISED MAY BE LESS THAN THE NUMBER OF SHARES SET FORTH BELOW.

     

    
      	
              Issuance
      Date: January 29, 2007

            	
              Warrant
      No. _____

            

    

    

    COMMON
STOCK PURCHASE WARRANT

     

    To
Purchase _________ Shares of Common Stock of AVATECH SOLUTIONS,
INC.

     

    THIS IS
TO CERTIFY THAT _____________, or registered assigns (the “Holder”), is
entitled, during the Exercise Period (as hereinafter defined), to purchase from
Avatech Solutions, Inc., a Delaware corporation (the “Company”), the Warrant
Stock (as hereinafter defined and subject to adjustment as provided herein), in
whole or in part, at a per share price equal to the Current Warrant Price, all
on and subject to the terms and conditions hereinafter set forth.

     

    1.           Definitions. As used
in this Warrant, the following terms have the respective meanings set forth
below:

     

    “Affiliate” means any
person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
person or entity, as such terms are used in and construed under Rule 144 under
the Securities Act. With respect to a Holder of Warrants, any investment fund or
managed account that is managed on a discretionary basis by the same investment
manager as such Holder will be deemed to be an Affiliate of such
Holder.

     

    “Appraised Value”
means, in respect of any share of Common Stock on any date herein specified, the
fair saleable value of such share of Common Stock (determined without giving
effect to the discount for (i) a minority interest or (ii) any lack of
liquidity of the Common Stock or to the fact that the Company may have no class
of equity registered under the Exchange Act) as of the last day of the most
recent fiscal month ending prior to such date specified, based on the value of
the Company on a fully-diluted basis, as determined by a nationally recognized
investment banking firm selected by the Company’s Board of Directors and having
no prior relationship with the Company.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Business Day” means
any day except Saturday, Sunday and any day which shall be a legal holiday or a
day on which banking institutions in the State of New York generally are
authorized or required by law or other government actions to close.

     

    “Change of Control”
means the (i) acquisition by an individual or legal entity or group (as set
forth in Section 13(d) of the Exchange Act) of more than one-half of the
voting rights or equity interests in the Company; or (ii) sale, conveyance,
or other disposition of all or substantially all of the assets, property or
business of the Company or the merger into or consolidation with any other
corporation (other than a wholly owned subsidiary corporation) or effectuation
of any transaction or series of related transactions where holders of the
Company’s voting securities prior to such transaction or series of transactions
fail to continue to hold at least 50% of the voting power of the Company (or, if
other than the Company, the successor or acquiring entity) immediately following
such transaction.

     

    “Commission” means the
Securities and Exchange Commission or any other federal agency then
administering the Securities Act and other federal securities laws.

     

    “Common Stock” means
(except where the context otherwise indicates) the Common Stock, $0.01 par value
per share, of the Company, and any capital stock into which such Common Stock
may thereafter be changed or converted, and shall also include (i) capital
stock of the Company of any other class (regardless of how denominated) issued
to the holders of shares of Common Stock upon any reclassification thereof which
is also not preferred as to dividends or assets on liquidation over any other
class of stock of the Company and which is not subject to redemption and
(ii) shares of common stock of any successor or acquiring corporation
received by or distributed to the holders of Common Stock of the Company in the
circumstances contemplated by Section 4.5.

     

    “Common Stock Purchase
Agreement” means that certain Common Stock and Warrant Purchase Agreement
dated as of January 29, 2007 among the Company and the other parties named
therein and terminated on August 17, 2010, pursuant to which this Warrant was
originally issued.

     

    “Current Market Price”
means, in respect of any share of Common Stock on any date herein
specified,

     

    (1)           if
there shall not then be a public market for the Common Stock, the higher
of

     

    (a)           the
book value per share of Common Stock at such date, and

     

    (b)           the
Appraised Value per share of Common Stock at such date,

     

    or

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (2)          if
there shall then be a public market for the Common Stock, the average of the
daily market prices for the five (5) consecutive Trading Days immediately
before such date. The daily market price for each such Trading Day shall be
(i) the closing bid price on such day on the principal stock exchange on
which such Common Stock is then listed or admitted to trading, or quoted, as
applicable, (ii) if no sale takes place on such day on any such exchange,
the last reported closing bid price on such day as officially quoted on any such
exchange, (iii) if the Common Stock is not then listed or admitted to
trading on any stock exchange, the last reported closing bid price on such day
in the over-the-counter market, as furnished by the National Association of
Securities Dealers Automatic Quotation System or the National Quotation Bureau,
Inc., (iv) if neither such corporation at the time is engaged in the
business of reporting such prices, as furnished by any similar firm then engaged
in such business, or (v) if there is no such firm, as furnished by any
member of the NASD selected mutually by the holder of this Warrant and the
Company or, if they cannot agree upon such selection, as selected by two such
members of the NASD, one of which shall be selected by holder of this Warrant
and one of which shall be selected by the Company.

     

    “Current Warrant
Price” means, in respect of a share of Common Stock at any date herein
specified, the price at which a share of Common Stock may be purchased pursuant
to this Warrant on such date. Unless and until the Current Warrant Price is
adjusted pursuant to the terms herein, the initial Current Warrant Price shall
be $1.11 per share of Common Stock.

     

    “Exchange Act” means
the Securities Exchange Act of 1934, as amended, or any similar federal statute,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect from time to time.

     

    “Exercise Period”
means the period during which this Warrant is exercisable pursuant to
Section 2.1.

     

    “Expiration Date”
means the fourth (4th) anniversary
of the date of issuance hereof.

     

    “GAAP” means generally
accepted accounting principles in the United States of America as from time to
time in effect.

     

    “NASD” means the
National Association of Securities Dealers, Inc., or any successor corporation
thereto.

     

    “Other Property” has
the meaning set forth in Section 4.5.

     

    “Person” means any
individual, sole proprietorship, partnership, joint venture, trust, incorporated
organization, association, corporation, limited liability company, institution,
public benefit corporation, entity or government (whether federal, state,
county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).

     

    “Restricted Common
Stock” means shares of Common Stock which are, or which upon their
issuance upon the exercise of any Warrant would be required to be, evidenced by
a certificate bearing the restrictive legend set forth in
Section 3.2.

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    “Securities Act” means
the Securities Act of 1933, as amended, or any similar federal statute, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.

     

    “Trading Day” means
any day on which the primary market on which shares of Common Stock are listed
is open for trading.

     

    “Transfer” means any
disposition of any Warrant or Warrant Stock or of any interest in either
thereof, which would constitute a sale thereof within the meaning of the
Securities Act.

     

    “Warrants” means this
Warrant and all warrants issued upon transfer, division or combination of, or in
substitution for, any thereof. All Warrants shall at all times be identical as
to terms and conditions and date, except as to the number of shares of Common
Stock for which they may be exercised.

     

    “Warrant Price” means
an amount equal to (i) the number of shares of Common Stock being purchased
upon exercise of this Warrant pursuant to Section 2.1, multiplied by
(ii) the Current Warrant Price.

     

    “Warrant Stock” means
the _________ shares of Common Stock to be purchased upon the exercise hereof,
subject to adjustment as provided herein.

     

    2.           Exercise of
Warrant.

     

    2.1         Manner of Exercise.
From and after the date of issuance hereof and until 5:00 P.M., New York time,
on the Expiration Date (the “Exercise Period”), the Holder may exercise this
Warrant, on any Business Day, for all or any part of the number of shares of
Warrant Stock purchasable hereunder.

     

    In order
to exercise this Warrant, in whole or in part, the Holder shall deliver to the
Company at its principal office or at the office or agency designated by the
Company pursuant to Section 12, (i) a written notice of Holder’s
election to exercise this Warrant, which notice shall specify the number of
shares of Warrant Stock to be purchased, (ii) payment of the Warrant Price
as provided herein, and (iii) upon exercise of this Warrant in full, this
Warrant. Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly
executed by the Holder or its agent or attorney. Upon receipt thereof, the
Company shall, as promptly as practicable, and in any event within three
Business Days thereafter, electronically transmit the Common Stock issuable upon
exercise hereof to the Holder, by crediting the account of the Holder’s prime
broker with Depository Trust Company (“DTC”) through its Deposit Withdrawal
Agent Commission (“DWAC”) system using the Fast Automated Securities Transfer
(“FAST”) program. The parties agree to coordinate with DTC to accomplish this
objective. In lieu of such electronic delivery through DWAC, the Company shall,
to the extent requested by the Holder or required by law, execute or cause to be
executed and deliver or cause to be delivered to the Holder a certificate or
certificates representing the aggregate number of full shares of Warrant Stock
issuable upon exercise hereof. The time periods for delivery of physical
certificates evidencing the Warrant Shares are the same as those described
above. Any stock certificate or certificates so delivered shall be, to the
extent possible, in such denomination or denominations as the Holder shall
request in the notice and shall be registered in the name of the Holder or such
other name as shall be designated in the notice. This Warrant shall be deemed to
have been exercised and such certificate or certificates shall be deemed to have
been issued, and the Holder or any other Person so designated to be named
therein shall be deemed to have become a Holder of record of such shares for all
purposes, as of the date when the notice to exercise is received by the Company
as described above. If this Warrant shall have been exercised in part, the
Company shall, at the time of delivery of the certificate or certificates
representing Warrant Stock, if not effected using book entry as described below,
deliver to the Holder a new Warrant evidencing the rights of the Holder to
purchase the unpurchased shares of Common Stock called for by this Warrant,
which new Warrant shall in all other respects be identical with this Warrant, or
at the request of the Holder, appropriate notation may be made on this Warrant
and the same returned to the Holder.

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    Payment
of the Warrant Price may be made at the option of the Holder by:
(i) certified or official bank check payable to the order of the Company,
(ii) wire transfer to the account of the Company or (iii) the
surrender and cancellation of a portion of shares of Common Stock then held by
the Holder or issuable upon such exercise of this Warrant, which shall be valued
and credited toward the total Warrant Price due the Company for the exercise of
the Warrant based upon the Current Market Price of the Common Stock. All shares
of Common Stock issuable upon the exercise of this Warrant pursuant to the terms
hereof shall be validly issued and, upon payment of the Warrant Price, shall be
fully paid and nonassessable and not subject to any preemptive
rights.

     

    Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon exercise of any
portion of this Warrant in accordance with the terms hereof, the warrantholder
shall not be required to physically surrender this Warrant to the Company unless
such holder is purchasing the full amount of Warrant Shares represented by this
Warrant. The warrantholder and the Company shall maintain records showing the
number of Warrant Shares so purchased hereunder and the dates of such purchases
or shall use such other method, reasonably satisfactory to the warrantholder and
the Company, so as not to require physical surrender of this Warrant upon each
such exercise. In connection therewith a form of ledger to maintain a record of
such transactions is attached hereto. The warrantholder and any assignee, by
acceptance of this Warrant or a new Warrant, acknowledge and agree that, by
reason of the provisions of this paragraph, following exercise of any portion of
this Warrant, the number of Warrant Shares which may be purchased upon exercise
of this Warrant may be less than the number of Warrant Shares set forth on the
face hereof.

     

    2.2         Fractional Shares.
The Company shall not be required to issue a fractional share of Common Stock
upon exercise of any Warrant. As to any fraction of a share which the Holder of
one or more Warrants, the rights under which are exercised in the same
transaction, would otherwise be entitled to purchase upon such exercise, the
Company shall pay an amount in cash equal to the Current Market Price per share
of Common Stock on the date of exercise multiplied by such
fraction.

     

    2.3         Continued Validity. A
Holder of shares of Common Stock issued upon the exercise of this Warrant, in
whole or in part (other than a Holder who acquires such shares after the same
have been publicly sold pursuant to a Registration Statement under the
Securities Act or sold pursuant to Rule 144 thereunder), shall continue to be
entitled with respect to such shares to all rights to which it would have been
entitled as the Holder under Sections 10 and 13 of this
Warrant.

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    2.4         Restrictions on Exercise
Amount. In the event the Company is prohibited from issuing shares of
Warrant Stock as a result of any restrictions or prohibitions under applicable
law or the rules or regulations of any stock exchange, interdealer quotation
system or other self-regulatory organization, the Company shall as soon as
practicable seek the approval of its stockholders and take such other action to
authorize the issuance of the full number of shares of Common Stock issuable
upon full exercise of this Warrant but in any event the Board of Directors shall
call a special meeting of the stockholders of the Company in the manner set
forth in the By-laws of the Company to be held within ninety (90) days
following the inception of such occurrence, which inception shall occur at such
time as the Company is not able to honor the full exercise of all outstanding
Warrants due to such law, rule or regulation, whether or not any such conversion
or exercise is actually attempted.

     

    3.           Transfer, Division and
Combination.

     

    3.1         Transfer. The
Warrants and the Warrant Stock shall be freely transferable, subject to
compliance with all applicable laws, including, but not limited to the
Securities Act. If, at the time of the surrender of this Warrant in connection
with any transfer of this Warrant or the resale of the Warrant Stock, this
Warrant or the Warrant Stock, as applicable, shall not be registered under the
Securities Act, the Company may require, as a condition of allowing such
transfer (i) that the Holder or transferee of this Warrant or the Warrant
Stock as the case may be, furnish to the Company a written opinion of counsel
that is reasonably acceptable to the Company to the effect that such transfer
may be made without registration under the Securities Act, (ii) that the
Holder or transferee execute and deliver to the Company an investment letter in
form and substance reasonably acceptable to the Company, and (iii) that the
transferee be an “accredited investor” as defined in Rule 501(a) promulgated
under the Securities Act. Transfer of this Warrant and all rights hereunder, in
whole or in part, in accordance with the foregoing provisions, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred to in
Section 2.1 or the office or agency designated by the Company pursuant to
Section 12, together with a written assignment of this Warrant
substantially in the form of Exhibit B hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute  and deliver
a new Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. Following a transfer that complies
with the requirements of this Section 3.1, the Warrant may be exercised by
a new Holder for the purchase of shares of Common Stock regardless of whether
the Company issued or registered a new Warrant on the books of the Company. In
connection with any transfer of this Warrant, the Holder or transferee of this
Warrant shall reimburse the Company for its reasonable out of pocket costs in
connection with such transfer (including without limitation the reasonable
attorneys fees for preparing and filing any prospectus supplement with the SEC
and/or delivering an updated opinion letter to the Seller’s transfer
agent).

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    3.2         Restrictive Legends.
Each certificate for Warrant Stock initially issued upon the exercise of this
Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate, unless, in each case, such Warrant Stock is
registered under the Securities Act or is eligible for resale without
registration pursuant to Rule 144 under the Securities Act, shall be stamped or
otherwise imprinted with a legend in substantially the following
form:

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR
TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT
REQUIRED.”

     

    3.3         Division and Combination;
Expenses; Books. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office or agency of the
Company, together with a written notice specifying the names and denominations
in which new Warrants are to be issued, signed by the Holder or its agent or
attorney. Subject to compliance with Section 3.1 as to any transfer which
may be involved in such division or combination, the Company shall execute and
deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice. The Company shall prepare,
issue and deliver at its own expense the new Warrant or Warrants under this
Section 3. The Company agrees to maintain, at its aforesaid office or
agency, books for the registration and the registration of transfer of the
Warrants.

     

    4.           Adjustments. The
number of shares of Common Stock for which this Warrant is exercisable, and the
price at which such shares may be purchased upon exercise of this Warrant, shall
be subject to adjustment from time to time as set forth in this Section 4.
The Company shall give the Holder notice of any event described below which
requires an adjustment pursuant to this Section 4 in accordance with
Sections 5.1 and 5.2.

     

    4.1         Stock Dividends,
Subdivisions and Combinations. If at any time while this Warrant is
outstanding the Company shall:

     

    (a)           declare
a dividend or make a distribution on its outstanding shares of Common Stock in
shares of Common Stock,

     

    (b)           subdivide
its outstanding shares of Common Stock into a larger number of shares of Common
Stock, or

     

    (c)           combine
its outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then:

     

    (i)           the
number of shares of Common Stock acquirable upon exercise of this Warrant
immediately after the occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the same number of
shares of Common Stock that would have been acquirable under this Warrant
immediately prior to the record date for such dividend or distribution or the
effective date of such subdivision or combination would own or be entitled to
receive after such record date or the effective date of such subdivision or
combination, as applicable, and

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    (ii)          the
Current Warrant Price shall be adjusted to equal:

     

    (A)           the
Current Warrant Price in effect at the time of the record date for such dividend
or distribution or of the effective date of such subdivision or combination,
multiplied by the number of shares of Common Stock into which this Warrant is
exercisable immediately prior to the adjustment, divided by

     

    (B)           the
number of shares of Common Stock into which this Warrant is exercisable
immediately after such adjustment.

     

    Any
adjustment made pursuant to clause (a) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clauses (b) or (c) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination.

     

    4.2         [Reserved.]

     

    4.3         [Reserved.]

     

    4.4         Other Provisions Applicable
to Adjustments. The following provisions shall be applicable to the
making of adjustments of the number of shares of Common Stock into which this
Warrant is exercisable and the Current Warrant Price provided for in
Section 4:

     

    (a)           When Adjustments to Be
Made. The adjustments required by Section 4 shall be made whenever
and as often as any specified event requiring an adjustment shall occur. For the
purpose of any adjustment, any specified event shall be deemed to have occurred
at the close of business on the date of its occurrence.

     

    (b)           Fractional Interests.
In computing adjustments under this Section 4, fractional interests in
Common Stock shall be taken into account to the nearest 1/100th of a
share.

     

    (c)           When Adjustment Not
Required. If the Company undertakes a transaction contemplated under
this
Section 4 and as a result takes a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or distribution or
subscription or purchase rights or other benefits contemplated under this
Section 4 and shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights or other benefits contemplated under this
Section 4, then thereafter no adjustment shall be required by reason of the
taking of such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    (d)           Escrow of Stock. If
after any property becomes distributable pursuant to Section 4 by reason of
the taking of any record of the holders of Common Stock, but prior to the
occurrence of the event for which such record is taken, a holder of this Warrant
exercises the Warrant during such time, then such holder shall continue to be
entitled to receive any shares of Common Stock issuable upon exercise hereunder
by reason of such adjustment and such shares or other property shall be held in
escrow for the holder of this Warrant by the Company to be issued to holder of
this Warrant upon and to the extent that the event actually takes place.
Notwithstanding any other provision to the contrary herein, if the event for
which such record was taken fails to occur or is rescinded, then such escrowed
shares shall be canceled by the Company and escrowed property returned to the
Company.

     

    4.5         Reorganization,
Reclassification, Merger, Consolidation or Disposition of
Assets.

     

    (a)           If
there shall occur a Change of Control and, pursuant to the terms of such Change
of Control, shares of common stock of the successor or acquiring corporation, or
any cash, shares of stock or other securities or property of any nature
whatsoever (including warrants or other subscription or purchase rights) in
addition to or in lieu of common stock of the successor or acquiring corporation
(“Other Property”), are to be received by or distributed to the holders of
Common Stock of the Company, then the Holder of this Warrant shall have the
right thereafter to receive, upon the exercise of the Warrant, the number of
shares of common stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and the Other Property receivable
upon or as a result of such Change of Control by a holder of the number of
shares of Common Stock into which this Warrant is exercisable immediately prior
to such event.

     

    (b)           In
case of any such Change of Control described in Section 4.5(a) above, the
resulting, successor or acquiring entity (if other than the Company) and, if an
entity different from the successor or acquiring entity, the entity whose
capital stock or assets the holders of the Common Stock are entitled to receive
as a result of such Change of Control, shall expressly assume the due and
punctual observance and performance of each and every covenant and condition
contained in this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of the Common Stock
into which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in Section 4. For purposes of
Section 4, common stock of the successor or acquiring corporation shall
include stock of such corporation of any class which is not preferred as to
dividends or assets on liquidation over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 4 shall similarly apply to successive
Change of Control transactions.

     

    4.6         [Reserved.]

     

    4.7         Certain Limitations.
Notwithstanding anything herein to the contrary, the Company agrees not to enter
into any transaction which, by reason of any adjustment hereunder, would cause
the Current Warrant Price to be less than the par value per share of Common
Stock.

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    4.8         Stock Transfer Taxes.
The issue of stock certificates upon exercise of this Warrant shall be made
without charge to the holder for any tax in respect of such issue. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of shares in any name other
than that of the holder of this Warrant, and the Company shall not be required
to issue or deliver any such stock certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.

     

    5.           Notices to Warrant
Holders.

     

    5.1         Certificate as to
Adjustments. Upon the occurrence of each adjustment or readjustment of
the Current Warrant Price, the Company, at its expense, shall promptly compute
such adjustment or readjustment in accordance with the terms hereof and prepare
and furnish to the Holder of this Warrant a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written request
at any time of the Holder of this Warrant, furnish or cause to be furnished to
such Holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Current Warrant Price at the time in effect and
(iii) the number of shares of Common Stock and the amount, if any, or other
property which at the time would be received upon the exercise of Warrants owned
by such Holder.

     

    5.2         Notice of Corporate
Action. If at any time:

     

    (a)           the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend (other than a cash dividend payable out
of earnings or earned surplus legally available for the payment of dividends
under the laws of the jurisdiction of incorporation of the Company) or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or

     

    (b)           there
shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or
merger of the Company with, or any sale, transfer or other disposition of all or
substantially all the property, assets or business of the Company to, another
corporation,

     

    (c)           there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company, or

     

    (d)           the
Company shall cause the holders of its Common Stock to be entitled to receive
(i) any dividend or other distribution of cash, (ii) any evidences of
its indebtedness, or (iii) any shares of stock of any class or any other
securities or property or assets of any nature whatsoever (other than cash or
additional shares of Common Stock as provided in Section 4.1 hereof); or
(iv) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property or assets of any nature whatsoever;

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    then, in
any one or more of such cases, the Company shall give to the Holder (i) at
least 20 days’ prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, dissolution, liquidation or
winding up, at least 20 days’ prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause also shall
specify (i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, the date on which the holders
of Common Stock shall be entitled to any such dividend, distribution or right,
and the amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and the
time, if any such time is to be fixed, as of which the holders of Common Stock
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to the
Holder at the last address of the Holder appearing on the books of the Company
and delivered in accordance with Section 15.2.

     

    5.3         No Rights as
Stockholder. This Warrant does not entitle the Holder to any voting or
other rights as a stockholder of the Company prior to exercise and payment for
the Warrant Price in accordance with the terms hereof.

     

    6.           No Impairment. The
Company shall not by any action, including, without limitation, amending its
articles of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of the Holder against impairment.
Without limiting the generality of the foregoing, the Company will (a) not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action
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 (c) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant. Upon the request of the Holder, the Company will
at any time during the period this Warrant is outstanding acknowledge in
writing, in form satisfactory to the Holder, the continuing validity of this
Warrant and the obligations of the Company hereunder.

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    7.           Reservation and
Authorization of Common Stock; Registration With Approval of Any Governmental
Authority. From and after the date of issuance hereof, the Company shall
at all times reserve and keep available for issue upon the exercise of Warrants
such number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon exercise of
any Warrant and payment therefor in accordance with the terms of such Warrant,
shall be duly and validly issued and fully paid and nonassessable, and not
subject to preemptive rights. Before taking any action which would cause an
adjustment reducing the Current Warrant Price below the then par value, if any,
of the shares of Common Stock issuable upon exercise of the Warrants, the
Company shall take any corporate action which may be necessary in order that the
Company may validly and legally issue fully paid and non-assessable shares of
such Common Stock at such adjusted Current Warrant Price. Before taking any
action which would result in an adjustment in the number of shares of Common
Stock for which this Warrant is exercisable or in the Current Warrant Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof. If any shares of Common Stock required to be reserved for
issuance upon exercise of Warrants require registration or qualification with
any governmental authority under any federal or state law before such shares may
be so issued (other than as a result of a prior or contemplated distribution by
the Holder of this Warrant), the Company will in good faith and as expeditiously
as possible and at its expense endeavor to cause such shares to be duly
registered.

     

    8.           Taking of Record; Stock and
Warrant Transfer Books. In the case of all dividends or other
distributions by the Company to the holders of its Common Stock with respect to
which any provision of Section 4 refers to the taking of a record of such
holders, the Company will in each such case take such a record and will take
such record as of the close of business on a Business Day. The Company will not
at any time, except upon dissolution, liquidation or winding up of the Company,
close its stock transfer books or Warrant transfer books so as to result in
preventing or delaying the exercise or transfer of any Warrant.

     

    9.           [Reserved.]

     

    10.         RWW Strategic
Transaction. The Holder hereby waives
any rights, including, without limitation, any rights under this Warrant that
existed prior to its amendment and restatement hereby, arising as a result of or
in connection with (i) any failures by the Company to comply with any of the
provisions of this Warrant prior to the date hereof; or (ii) the acquisition by
the Company of Rand Worldwide, Inc. (“RWW”) in a reverse
merger transaction, pursuant to which the Company will issue shares of its
Common Stock to the sole stockholder of RWW, and the other transactions
contemplated thereby.

     

    11.         Loss or Mutilation.
Upon receipt by the Company from the Holder of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or mutilation of this
Warrant and indemnity or security reasonably satisfactory to it and
reimbursement to the Company of all reasonable expenses incidental thereto and
in case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to the Holder;
provided, however, that in the case of mutilation, no indemnity shall be
required if this Warrant in identifiable form is surrendered to the Company for
cancellation.

     

    12.         Office of the
Company. As long as any of the Warrants remain outstanding, the Company
shall maintain an office or agency (which may be the principal executive offices
of the Company) where the Warrants may be presented for exercise, registration
of transfer, division or combination as provided in this
Warrant.

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    13.         Financial and Business
Information.

     

    13.1       Quarterly
Information. The Company will deliver to the Holder, as soon as available
and in any event within 45 days after the end of each of the first three
quarters of each fiscal year of the Company, one copy of an unaudited
consolidated balance sheet of the Company and its subsidiaries as at the end of
such quarter, and the related unaudited consolidated statements of income,
retained earnings and cash flow of the Company and its subsidiaries for such
quarter and, in the case of the second and third quarters, for the portion of
the fiscal year ending with such quarter, setting forth in each case in
comparative form the figures for the corresponding periods in the previous
fiscal year. Such financial statements shall be prepared by the Company in
accordance with GAAP and accompanied by the certification of the Company’s chief
executive officer or chief financial officer that such financial statements
present fairly the consolidated financial position, results of operations and
cash flow of the Company and its subsidiaries as at the end of such quarter and
for such year-to-date period, as the case may be; provided, however, that the
Company shall have no obligation to deliver such quarterly information under
this Section 13.1 to the extent it is publicly available; and provided
further, that if such information contains material non-public information, the
Company shall so notify the Holder prior to delivery thereof and the Holder
shall have the right to refuse delivery of such information.

     

    13.2       Annual Information.
The Company will deliver to the Holder as soon as available and in any event
within 90 days after the end of each fiscal year of the Company, one copy of an
audited consolidated balance sheet of the Company and its subsidiaries as at the
end of such year, and audited consolidated statements of income, retained
earnings and cash flow of the Company and its subsidiaries for such year;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year; all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by an opinion thereon of
the independent certified public accountants regularly retained by the Company,
or any other firm of independent certified public accountants of recognized
national standing selected by the Company; provided, however, that the Company
shall have no obligation to deliver such annual information under this
Section 13.2 to the extent it is publicly available; and provided further,
that if such information contains material non-public information, the Company
shall so notify the Holder prior to delivery thereof and the Holder shall have
the right to refuse delivery of such information.

     

    13.3       Filings. The Company
will file on or before the required date all regular or periodic reports
(pursuant to the Exchange Act) with the Commission and will deliver to Holder
promptly upon their becoming available one copy of each report, notice or proxy
statement sent by the Company to its stockholders generally.

     

    14.         Limitation of
Liability. No provision hereof, in the absence of affirmative action by
the Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of the Holder hereof, shall give rise to any liability of
the Holder for the purchase price of any Common Stock, whether such liability is
asserted by the Company or by creditors of the Company.

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    15.         Miscellaneous.

     

    15.1       Nonwaiver and
Expenses. No course of dealing or any delay or failure to exercise any
right hereunder on the part of the Holder shall operate as a waiver of such
right or otherwise prejudice Holder’s rights, powers or remedies. If the Company
fails to make, when due, any payments provided for hereunder, or fails to comply
with any other provision of this Warrant, the Company shall pay to the Holder
such amounts as shall be sufficient to cover any third party costs and expenses
including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by the Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.

     

    15.2       Notice Generally. All
notices, requests, demands or other communications provided for herein shall be
in writing and shall be given in the manner and to the addresses set forth in
the Purchase Agreement.

     

    15.3       Successors and
Assigns. Subject to compliance with the provisions of Section 3.1,
this Warrant and the rights evidenced hereby shall inure to the benefit of and
be binding upon the successors of the Company and the successors and assigns of
the Holder. The provisions of this Warrant are intended to be for the benefit of
all Holders from time to time of this Warrant, and shall be enforceable by any
such Holder.

     

    15.4       Amendment. This
Warrant may be modified or amended or the provisions of this Warrant waived with
the written consent of both the Company and the Holder.

     

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

     

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

     

    15.7       Governing Law. This
Warrant and the transactions contemplated hereby shall be deemed to be
consummated in the State of New York and shall be governed by and interpreted in
accordance with the local laws of the State of New York without regard to the
provisions thereof relating to conflicts of laws. The Company hereby irrevocably
consents to the exclusive jurisdiction of the State and Federal courts located
in New York City, New York in connection with any action or proceeding arising
out of or relating to this Warrant. In any such litigation the Company agrees
that the service thereof may be made by certified or registered mail directed to
the Company pursuant to Section 15.2.

     

    [Signature
Page Follows]

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, Avatech Solutions, Inc. has caused this Warrant to be executed
by its duly authorized officer and attested by its Secretary.

     

    Dated:  August
17, 2010

    

    
      
        
          
            	
                    ATTEST:

                  	 
      	
                    AVATECH
      SOLUTIONS, INC.

                  
	 
      	 
      	 
      	 
      
	 
      	 
      	
                    By:

                  	 
      
	
                    Lawrence
      Rychlak, Secretary

                  	 
      	 
      	
                    George
      Davis, Chief Executive
Officer

                  

          

        

      

    

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    EXHIBIT
A

    SUBSCRIPTION
FORM

     

    [To
be executed only upon exercise of Warrant]

     

    Avatech
Solutions, Inc.

    10715 Red
Run Blvd., Suite 101

    Owings
Mills, MD 21117

    Attention:
Chief Executive Officer

    Facsimile
No.: (410) 753-1591

     

    This
undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant (“Warrant”) for, and to purchase thereunder
                        
shares of Common Stock (“Warrant Shares”) provided for therein, and requests
that certificates for the Warrant Shares be issued as follows:

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	 
	
                                              Name

                                            
	 
	
                                              Address

                                            
	 
	 
      
	 
      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    and, if
the number of Warrant Shares shall not be all the Warrant Shares purchasable
upon exercise of the Warrant, that a new Warrant for the balance of the Warrant
Shares.

     

    In lieu
of delivering physical certificates representing the Warrant Shares purchasable
upon exercise of this Warrant, provided the Company’s transfer agent is
participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer (“FAST”) program, upon request of the Holder, the Company shall use its
best efforts to cause its transfer agent to electronically transmit the Warrant
Shares issuable upon conversion or exercise to the undersigned, by crediting the
account of the undersigned’s prime broker with DTC through its Deposit
Withdrawal Agent Commission (“DWAC”) system.

     

    To the
extent the undersigned intends to sell the Warrant Shares issued to the
undersigned upon exercise of this Warrant pursuant to a registration statement
filed with the Securities and Exchange Commission, the undersigned agrees to
comply with all applicable prospectus delivery requirements under the Securities
Act with respect to such sale.

     

    
      
        
          
            
              
                
                  
                    	
                            Dated:                                                                       

                          	 	
                            Signature:                                                                      

                          
	 	 	 
	 	 	 
	 
      	 	
                            Name
      (please print)

                          
	 	 	 
	 	 	 
	 
      	 	
                            Address

                          

                  

                

              

            

          

        

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
B

     

    ASSIGNMENT
FORM

     

    FOR VALUE
RECEIVED the undersigned registered owner of this Warrant for the purchase of
shares of common stock of Avatech Solutions, Inc. hereby sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned
under this Warrant, with respect to the number of shares of common stock set
forth below:

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	 
	 
	 
	 
      
	 
      
	
                                          (Name and Address of
    Assignee

                                        
	 
	 
      
	
                                          (Number
      of Shares of Common
Stock)

                                        

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    and does
hereby irrevocably constitute and appoint                         
attorney-in-fact to register such transfer on the books of the Company,
maintained for the purpose, with full power of substitution in the
premises.

     

    Dated:                                                                             

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	 
      
	
                                  (Print Name and Title)

                                
	 
      
	 
	
                                  (Signature)

                                
	 
	 
      
	
                                  (Witness)

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    NOTICE:
The signature on this assignment must correspond with the name as written upon
the face of the Warrant in every particular, without alteration or enlargement
or any change whatsoever.

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