Document:

Exhibit 4.10

NEITHER THIS SECURITY NOR
THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. 
THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES AS PERMITTED BY LAW AND THE SECURITIES PURCHASE
AGREEMENT PURSUANT TO WHICH THE SECURITIES WERE ISSUED.

	
                 COMMON STOCK PURCHASE WARRANT

  	
   

  	
  NO. 1

  

 

To Purchase Shares of Common Stock of

UNIPIXEL, INC.

This COMMON STOCK
PURCHASE WARRANT (this “Warrant”)
certifies that, for value received, CAPSOURCE FUND, L.P., a Mississippi limited
partnership (the “Holder”), is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof, May
24, 2006 (the “Initial Exercise Date”),
and on or prior to the close of business on the fifth anniversary of the
Initial Exercise Date (the “Termination Date”),
to subscribe for and purchase from UNIPIXEL, INC., a Delaware corporation (the “Company”), such number of shares
of common stock, par value $001 per share, of the Company (the “Common Stock”), subject to
adjustment herein (the “Warrant Shares”)
as follows:

750,000 divided
by: the lesser of (i) $1.75; or (ii) 70% of the average price per share of the Common Stock and Common Stock
Equivalents sold to any Person in the first Qualifying Transaction to be
consummated following the Original Issue Date (determined by dividing the total
number of shares of Common Stock issued plus shares issuable under Common Stock
Equivalents in such Qualifying Transaction, by the aggregate consideration
received by the Company plus all consideration to be received upon
exercise or conversion of all Common Stock Equivalents issued in such
Qualifying Transaction).  With respect to
determining the price paid per share in any asset purchase, only shares of
Common Stock actually issued and outstanding shall be used in determining such
per share calculation.

In the event no Qualifying Transaction has been consummated on or by
the first anniversary hereof, then the number of Warrant Shares purchasable
hereby shall equal 5% (subject to adjustment as set forth in Section 4.15 of
the Purchase Agreement) of then outstanding Common Stock, computed on a Fully
Diluted Basis.

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Notwithstanding the foregoing, the parties agree that the number of
Warrant Shares to be issued in accordance herewith shall be adjusted up from
the determination resulting from the foregoing formula by mutual agreement of
the parties in the event that any convertible securities are sold to investors
in any Qualifying Transaction, the parties hereby recognizing that the issuance
thereof, even at an exercise or conversion price above the Exercise Price (as
defined below), would increase the value of the securities issued to such
investors and thus entitle Holder to a greater number of Warrant Shares.  The parties agree to negotiate such
determination in good faith.

The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).

Section 1.               Definitions.  Capitalized
terms used and not otherwise defined herein shall have the meanings set forth
in that certain Securities Purchase Agreement (the “Purchase Agreement”), of even date herewith, entered
into by and among the Company and the Holder.

Section 2.               Exercise.

a)             Exercise
of Warrant.  Exercise of the purchase
rights represented by this Warrant may be made at any time or times on or after
the Initial Exercise Date and on or before the Termination Date (each, an “Exercise Date”) by delivery to
the Company of a duly executed facsimile copy of the Notice of Exercise Form
annexed  hereto (or such other office or
agency of the Company as it may designate by notice in writing to the
registered Holder at the address of such Holder appearing on the books of the
Company); provided, however,
within five Business Days of the date said Notice of Exercise is delivered to
the Company, the Holder shall have surrendered this Warrant to the Company and
the Company shall have received  payment
of the aggregate Exercise Price of the shares thereby purchased by wire
transfer or cashier’s check drawn on a United States bank.

b)            Exercise Price.  The Exercise Price (so called
herein) of each share of Common Stock under this Warrant shall be equal to the
lesser of:

(i)                                     90%
of the average price per share of the Common Stock and Common Stock
Equivalents sold to any Person in the first Qualifying Transaction to be
consummated following the Initial Exercise Date (determined by dividing the
total number of shares of Common Stock issued plus shares issuable under Common
Stock Equivalents in such Qualifying Transaction, by the aggregate
consideration received by the Company plus all consideration to be received
upon exercise or conversion of all Common Stock Equivalents issued in such
Qualifying Transaction).  With respect to
determining the price paid per share in any asset purchase, only shares of
Common Stock actually issued and outstanding shall be used in determining such
per share calculation; or

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(ii)                                  $1.75 per share (which such Exercise Price
shall apply in the event no Qualifying Transaction has closed on or by the
Exercise Date.

Notwithstanding the
foregoing, the parties agree that the Exercise Price shall be adjusted down
from the determination resulting from the foregoing formula by mutual agreement
of the parties in the event that any convertible securities are sold to
investors in any Qualifying Transaction, the parties hereby recognizing that
the issuance thereof, even at an exercise or conversion price above the
Exercise Price, would increase the value of the securities issued to such
investors and thus entitle Holder to a greater number of shares of Common Stock
upon conversion hereof.  The parties
agree to negotiate such determination in good faith.

c)             Cashless
Exercise.  If at any time after one
year from the date of issuance of this Warrant there is no effective
Registration Statement registering the resale of the Warrant Shares by the
Holder, then this Warrant may also be exercised at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a certificate for
the number of Warrant Shares equal to the quotient obtained by dividing [(A-B)
(X)] by (A), where:

(A)      =     the price of said Common Stock determined by reference to the
last reported sale price for the Common Stock on such day on the principal
securities exchange on which the Common Stock is listed or admitted to trading
or if no such sale takes place on such date, the average of the closing bid and
asked prices thereof as officially reported, or, if not so listed or admitted
to trading on any securities exchange, the last sale price for the Common Stock
on the National Association of Securities Dealers national market system on
such date, or, if there shall have been no trading on such date or if the
Common Stock shall not be listed on such system, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any NASD member
firm selected from time to time by the Company for such purpose or, if the
Common Stock is not traded, then such price as is reasonably determined by the
Company’s Board of Directors (the “Market Value”);

(B)        =     the Exercise Price of this Warrant, as adjusted; and

(X)       =     the number of Warrant Shares issuable upon exercise of this
Warrant in accordance with the terms of this Warrant by means of a cash
exercise rather than a cashless exercise.

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

d)            Intentionally Deleted.

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e)             Mechanics
of Exercise.

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

ii.     Delivery
of Certificates Upon Exercise. 
Certificates for shares purchased hereunder shall be transmitted by the
transfer agent of the Company to the Holder by crediting the account of the
Holder’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission (“DWAC”) system if the Company is a
participant in such system and if the certificates may be issued without a
restrictive legend in accordance with applicable federal securities laws, and
otherwise by physical delivery to the address specified by the Holder in the
Notice of Exercise within two (2) Business Days from the delivery to the
Company of the Notice of Exercise Form, surrender of this Warrant and payment
of the aggregate Exercise Price as set forth above (“Warrant
Share Delivery Date”). 
This Warrant shall be deemed to have been exercised on the date the
Exercise Price is received by the Company. 
The Warrant Shares shall be deemed to have been issued, and Holder or
any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the Exercise Price and
all taxes required to be paid by the Holder, if any, pursuant to Section
2(d)(vii) prior to the issuance of such shares, have been paid.

iii.    Delivery
of New Warrants Upon Exercise.  If
this Warrant shall have been exercised in part, the Company shall, at the time
of delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to 

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purchase the unpurchased Warrant Shares called for by
this Warrant, which new Warrant shall in all other respects be identical with
this Warrant.

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

v.     Failure
to Timely Deliver Certificates Upon Exercise.  In addition to any other rights available to
the Holder, if the Company or the Company’s transfer agent fails to cause
delivery to the Holder of a certificate or certificates representing the
Warrant Shares or if the Company or its transfer agent fails to deliver such
certificates without the restrictive legend (if applicable) on or before the
Warrant Share Delivery Date, the Company shall pay to Purchaser, in cash, as
partial liquidated damages and not as a penalty, the greater of (i) $500 for
each Business Day after the Warrant Share Delivery Date until such certificate
is delivered with an appropriate legend or without a restrictive legend, as the
case may be; and (ii) the difference in the Market Value of the Warrant Shares
on the Warrant Share Delivery Date and the date such shares are actually
received by the Holder.  Nothing herein
shall limit Purchaser’s right to pursue actual damages for the Company’s
failure to deliver certificates representing any Securities as required herein,
and Purchaser shall have the right to pursue all remedies available to it at
law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief.

vi.    No
Fractional Shares or Scrip.  No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant.  As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall round such fractional share up to the next
whole number.

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

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

Section 3.               Certain Adjustments.

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

b)            Subsequent
Equity Sales. If the Company at any time while this Warrant is outstanding,
shall offer, sell, grant any option to purchase or offer, sell or grant any
right to reprice its securities, or otherwise dispose of or issue  any Common Stock or Common Stock Equivalents
entitling any Person to acquire shares of Common Stock, at an effective price
per share less than the then Exercise Price (such lower price, the “Base Share Price” and such
issuances collectively, a “Dilutive Issuance”),
as adjusted hereunder (if the holder of the Common Stock or Common Stock
Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights per share which is issued
in connection with such issuance, be entitled to receive shares of Common Stock
at an effective price per share which is less than the Exercise Price, such
issuance shall be deemed to have occurred for less than the Exercise Price),
then, the Exercise Price shall be reduced to equal the Base Share Price and the
number of Warrant Shares issuable hereunder shall be increased such that the
aggregate Exercise Price payable hereunder, after taking into account the
decrease in the Exercise Price, shall be equal to the aggregate Exercise Price
prior to such adjustment.  Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued.  The Company shall notify the
Holder in writing, no later than the Business Day following the issuance of any
Common Stock or Common Stock Equivalents subject to this section, indicating
therein the applicable issuance price, or of applicable reset price, exchange
price, conversion price and other pricing terms (such notice the “Dilutive Issuance

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Notice”).  For purposes of clarification, whether or not
the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b),
upon the occurrence of any Dilutive Issuance, after the date of such Dilutive
Issuance the Holder is entitled to receive a number of Warrant Shares based
upon the Base Share Price regardless of whether the Holder accurately refers to
the Base Share Price in the Notice of Exercise.

c)             Pro Rata Distributions.  If the Company, at any time prior to the
Termination Date, shall distribute to all holders of Common Stock (and not to
Holders of the Warrants) evidences of its indebtedness or assets or rights or
warrants to subscribe for or purchase any security other than the Common Stock
(which shall be subject to Section 3(b)), then in each such case the Exercise
Price shall be adjusted by multiplying the Exercise Price in effect immediately
prior to the record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which the denominator shall be the
closing bid price of the Common Stock on the then principal Trading Market
determined as of the record date mentioned above (if the closing bid price of
the Common Stock on the then principal Trading Market shall then be
determinable and otherwise the fair market value per share as determined by the
Board of Directors in good faith, and of which the numerator shall be such
closing bid price of the Common Stock on the then principal Trading Market on
such record date less the then per share fair market value at such record date
of the portion of such assets or evidence of indebtedness so distributed
applicable to one outstanding share of the Common Stock as determined by the
Board of Directors in good faith.  In
either case the adjustments shall be described in a statement provided to the
Holders of the portion of assets or evidences of indebtedness so distributed or
such subscription rights applicable to one share of Common Stock.  Such adjustment shall be made whenever any
such distribution is made and shall become effective immediately after the
record date mentioned above.

d)            Fundamental
Transaction. If, at any time while this Warrant is outstanding, there
occurs a Fundamental Transaction, then, upon any subsequent conversion of this
Warrant, the Holder shall have the right to receive, for each Warrant Share
that would have been issuable upon such exercise absent such Fundamental
Transaction, at the option of the Holder, (a) upon exercise of this Warrant,
the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and Alternate
Consideration receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event or (b) if the Company is acquired in an all
cash transaction, cash equal to the value of this Warrant as determined by the
difference between the applicable Exercise Price and the amount of cash paid
per share to the shareholders of the Company (the “Alternate
Consideration”).  For
purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common
Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder 

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shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction.  To the extent
necessary to effectuate the foregoing provisions, any successor to the Company
or surviving entity in such Fundamental Transaction shall issue to the Holder a
new warrant consistent with the foregoing provisions and evidencing the Holder’s
right to exercise such warrant into Alternate Consideration. The terms of any
agreement pursuant to which a Fundamental Transaction is effected shall include
terms requiring any such successor or surviving entity to comply with the
provisions of this Section 3(d) and insuring that this Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.

e)             Exempt
Issuance. Notwithstanding the foregoing, no adjustments, Alternate
Consideration, nor notices shall be made, paid, or issued under this Section 3
in respect of an Exempt Issuance.

f)             Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. The number of shares of Common
Stock outstanding at any given time shall not includes shares of Common Stock
owned or held by or for the account of the Company, and the description of any
such shares of Common Stock shall be considered on issue or sale of Common  Stock. 
For purposes of this Section 3, the number of shares of Common Stock
deemed to be issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.

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

h)            Intentionally Omitted.

i)              Notice
to Holders.

i.      Adjustment to Exercise Price. Whenever the Exercise
Price is adjusted pursuant to this Section 3, the Company shall promptly mail
to each Holder a notice setting forth the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment. If the
Company issues a variable rate security, despite the prohibition thereon in the
Purchase Agreement, the Company shall be deemed to have issued Common Stock or
Common Stock Equivalents at the lowest possible conversion or exercise price at
which such securities may be converted or exercised in the case of a Variable
Rate Transaction (as defined in the Purchase Agreement), or the lowest possible
adjustment price in the case of an MFN Transaction.  The term “MFN
Transaction” shall mean a transaction in which the Company
issues or sells any securities in a capital raising transaction or series of
related transactions which grants to an investor the right to receive
additional shares based 

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upon future transactions
of the Company on terms more favorable than those granted to such investor in
such offering.

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

Section 4.               Transfer of Warrant.

a)             Transferability.  Subject to compliance with any applicable
securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof
and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant
and all rights hereunder are transferable, in whole or in part, upon surrender
of this Warrant at the principal office of the Company, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or 

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Warrants in the name of the assignee or assignees and
in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be
cancelled.  A Warrant, if properly
assigned, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.

b)            New
Warrants. This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as
to any transfer which may be involved in such division or combination, the
Company shall execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with such notice.

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

d)            Transfer
Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant
shall not be registered pursuant to an effective registration statement under
the Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer (i) that the
Holder or transferee of this Warrant, as the case may be, furnish to the
Company a written opinion of counsel (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions) to the
effect that such transfer may be made without registration under the Securities
Act and under applicable state securities or blue sky laws, (ii) that the
holder or transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee be
an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act or a qualified institutional buyer as defined in Rule
144A(a) under the Securities Act.

Section 5.               Covenants.

(a)           Negative
Covenants. So long as any portion of this Warrant is outstanding, without
the prior written consent of the Holder, which consent may be withheld in the
sole discretion of the Holder, the Company will not and will not permit any of
its Subsidiaries to directly or indirectly:

i.              Sale
of Assets, Dissolution, Etc. 
Transfer, sell, assign, lease or otherwise dispose of all or
substantially all of its properties or assets, or any assets or properties
necessary or desirable for the proper conduct of its business, or transfer,
sell, assign or otherwise dispose of any of its accounts, or contract rights to
any person or entity, or change the nature of its business, wind-up,
liquidate or 

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dissolve, or agree to any of the foregoing, other than
in the ordinary course of business;

ii.             No
Further Issuance of Securities. 
Other than in accordance herewith or with respect to an Exempt Issuance,
create, issue or permit the issuance of any additional securities of the
Company or of any of its Subsidiaries (including with respect to any Qualifying
Transaction), if any, or any rights, options or warrants to acquire any such
securities; provided, however, that in
the event that Company desires to issue securities with preferences or rights
greater than that which the Common Stock has and the Holder consents to same,
the Holder will then have the option of converting all or any part of this
Warrant into such stock in lieu of the Common Stock;;

iii.            Agreement.           Enter into any agreement obligating
the Company to undertake any of the matters set forth in this Section 5(a).

(b)           Affirmative Covenants.  So long as any portion of this Warrant is
outstanding and unless the Holder otherwise consents in writing, which consent
may be withheld in the sole discretion of the Holder, the Company will:

i.              True
Books.  Keep true books of record and
account in which full, true and correct entries will be made of all of its
dealings and transactions, and set aside on its books such reserves as may be
required by GAAP, consistently applied, with respect to all taxes, assessments,
charges, levies and claims referred to in (a) above, and with respect to its
business in general, and include such reserves in interim as well as year-end
financial statements; and

ii.             Right
of Inspection.  Permit any person
designated by the Holder, at the Holder’s expense, to visit and inspect any of
the properties, books and financial reports of the Company, all at such
reasonable times upon three (3) Business Days prior notice to the Company, and
as often as the Holder may reasonably request, provided the Holder does not
unreasonably interfere with the daily operations of the Company and Holder
executes a confidentiality agreement.

Section 6.               Miscellaneous.

a)             Title
to Warrant.  Prior to the Termination
Date and subject to compliance with applicable laws and Section 4 of this
Warrant, this Warrant and all rights hereunder are transferable, in whole or in
part, at the office or agency of the Company by the Holder in person or by duly
authorized attorney, upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed.  The transferee shall sign an investment
letter in form and substance reasonably satisfactory to the Company.

b)            No
Rights as Shareholder Until Exercise. 
This Warrant does not entitle the Holder to any voting rights or other
rights as a shareholder of the Company prior to the exercise hereof.  Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price (or by means of a cashless exercise),
the Warrant Shares so purchased 

 11
 

 

shall be and be deemed to be issued to such Holder as
the record owner of such shares as of the close of business on the later of the
date of such surrender or payment.

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

d)            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 be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be exercised on the next succeeding
day not a Saturday, Sunday or legal holiday.

e)             Authorized
Shares.

The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its
issuance of this Warrant shall constitute full authority to its officers who
are charged with the duty of executing stock certificates to execute and issue
the necessary certificates for the Warrant Shares upon the exercise of the
purchase rights under this Warrant.  The
Company will take all such reasonable action as may be necessary to assure that
such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon
which the Common Stock may be listed.

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

 12
 

 

 

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

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

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

h)            Expenses.  If the Company willfully and knowingly fails
to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys’ fees, including those of appellate proceedings, incurred
by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.

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

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

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

l)              Successors
and Assigns.  Subject to applicable
securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and permitted assigns of 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 or holder of Warrant Shares.

m)            Amendment
and Waiver.  This Warrant may be
modified or amended only with the written consent of the Company and the
Holder.  No course of dealing or any
delay or failure to exercise any right hereunder on the part of Holder shall
operate as a 

 13
 

 

waiver of such right or otherwise prejudice Holder’s
rights, powers or remedies, notwithstanding the fact that all rights hereunder
terminate on the Termination Date.  

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

o)            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.

p)            Registration Rights. The Holder
has certain rights with respect to the registration of the Warrant Shares upon
exercise of this Warrant, such rights being specifically set forth in the
Purchase Agreement entered into by and between Holder and the Company on the
date hereof.

[Signature Page Follows]

 

 14

 

 

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

	
  

  	
  UNIPIXEL, INC.

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Reed Killion

  
	
   

  	
   

  	
  Title: President

  

 

 

 

NOTICE OF EXERCISE

TO:         UNIPIXEL, INC.

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

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

[  ] in lawful money of the United States; or

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

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

_______________________________

The
Warrant Shares shall be delivered to the following:

_______________________________

_______________________________

_______________________________

(4)  Accredited
Investor.  The undersigned, and, if
applicable, the person or entity identified in subsection 3 above, is an “accredited
investor” as defined in Regulation D promulgated under the Securities Act of
1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:
_____________________________________________________________

Signature of Authorized Signatory of Investing
Entity: _______________________________________

Name of Authorized Signatory: _________________________________________________________

Title of Authorized Signatory:
__________________________________________________________

Date:
______________________________________________________________________________

 

 

ASSIGNMENT
FORM

(To assign the foregoing warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)

FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to

_______________________________________________
whose address is

_______________________________________________________________.

_______________________________________________________________

Dated:  ______________, _______

Holder’s Signature:   _____________________________

Holder’s Address:     _____________________________

           _____________________________

Signature
Guaranteed: 
___________________________________________

NOTE:  The signature to this Assignment Form must
correspond with the name as it appears on the face of the Warrant, without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank or trust company.  Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.Exhibit 10.1

SECURITIES
PURCHASE AGREEMENT

This Securities
Purchase Agreement (this “Agreement”)
is dated as of May 24, 2006, by and between UNIPIXEL, INC., a Delaware
corporation, along with its wholly-owned subsidiary, UNIPIXEL DISPLAYS, INC., a
Texas corporation (collectively, hereinafter referred to as the “Company”), and each purchaser
identified on the signature pages hereto (each, including its successors and
assigns, a “Purchaser” and
collectively the “Purchasers”).

WITNESSETH:

WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
an exemption from registration contained in Section 4(2) of the Securities Act
of 1933, as amended (the “Securities Act”)
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
Purchasers, and Purchasers desire 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 Purchasers agree
as follows:

ARTICLE I.

DEFINITIONS

1.1           Definitions.  In addition to the terms defined elsewhere in
this Agreement: (a) capitalized terms that are not otherwise defined herein
have the meanings given to such terms in the Debenture(s) (as defined herein),
and (b) the following terms have the meanings indicated in this Section 1.1:

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

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

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions in the State of Texas are authorized or required by law or other government action to close.
“CapSource” means CapSource Fund, L.P., a Mississippi limited partnership.

“Change of Control
Transaction” means the occurrence after the date hereof of
any of (i) an acquisition after the date hereof by an individual or legal
entity or “group” 

 1
 

 

(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership (as
described in Rule 13d-3 of the Exchange Act) of capital stock of the Company,
by contract or otherwise) of in excess of 40% of the voting securities of the
Company, or (ii) a replacement at one time or within a one year period of more
than one-half of the members of the Company’s board of directors which is not
approved by a majority of those individuals who are members of the board of
directors on the date hereof (or by those individuals who are serving as
members of the board of directors on any date whose nomination to the board of
directors was approved by a majority of the members of the board of directors
who are members on the date hereof), or (iii) the execution by the Company of
an agreement to which the Company is a party or by which it is bound, providing
for any of the events set forth above in (i) or (ii).

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

“Closing Date”
means the Business Day when all of the Transaction Documents have been executed
and delivered by the applicable parties thereto, and all conditions precedent
to (i) Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Securities have been satisfied or
waived.  There may be multiple Closing
Dates.

“Commission”
means the Securities and Exchange Commission.

“Common Stock”
means the common stock of UniPixel, par value $.001 per share, and any
securities into which such common stock shall hereinafter have been
reclassified into.

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

“Company”
means UniPixel, Inc., a Delaware corporation, and UniPixel Displays, Inc., a
Texas corporation, and such reference herein shall, when referring to any
obligation of the Company shall impose a joint and several obligation on each
such entity.

“Debentures”
mean the 12% Senior Secured Convertible Debentures, in the form of Exhibit A.

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

“Effective Date”
Not Applicable.

 2
 

 

 

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

“Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock or option plan
currently in place as of the date hereof which has been duly adopted by the
Board of Directors and shareholders of the Company, (b) securities upon the
exercise of or conversion of any securities issued hereunder, convertible
securities, options or warrants 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 underlying shares in
connection therewith, (c) securities issued pursuant to acquisitions or
strategic transactions, provided any such issuance shall only be to a Person
which is, itself or through its subsidiaries, an operating company in a
business synergistic with the business of the Company and in which the Company
receives 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, and (d) shares of Common Stock or Common Stock Equivalents issued
in connection with a Qualifying Transaction.

“Fully Diluted Basis”
shall mean all Common Stock or Common Stock Equivalents of the Company
including the exercise or conversion of all rights, options, derivative and
convertible securities and further including the conversion (whether
convertible or not) of all other common or preferred stock equivalents outstanding
or required to be issued by the Company.

“Fundamental Transaction”
shall mean (A) the Company effects any merger or consolidation of the Company
with or into another Person, (B) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (C)
any tender offer or exchange offer (whether by the Company or another Person)
is completed pursuant to which holders of Common Stock are permitted to tender
or exchange their shares for other securities, cash or property, or (D) the
Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property.

“GAAP”
shall mean generally accepted accounting principles, consistently applied.

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

“Legend Removal Date”
shall have the meaning ascribed to such term in Section 4.1(c).

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

 3
 

 

 

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

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

“Maximum Rate”
shall have the meaning ascribed to such term in Section 6.15.

“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 investigation or partial proceeding, such as a deposition),
whether commenced or threatened.

“Public Offering Date”
Not Applicable.

“Purchaser Party”
shall have the meaning ascribed to such term in Section 4.10.

“Purchaser’s Designee”
shall have the meaning ascribed to such term in Section 4.15.

“Qualifying Transaction”
shall mean (i) an equity or debt/equity financing wherein the Company receives
gross proceeds equal to at least $2,000,000 from the sale of Common Stock or
Common Stock Equivalents issued by the Company to unaffiliated third parties or
(ii) a Fundamental Transaction..

“Registrable Securities”
means (i) all Underlying Shares (exercised and unexercised); (ii) any
securities issued or transferred to a Purchaser in connection with or arising
out of any Transaction Document; and (iii) any securities issued or issuable
upon any stock split, dividend or other distribution recapitalization or
similar event with respect to the foregoing.

“Registration Statement”
means a registration statement covering the sale or resale of the Registrable
Securities.

“Required Minimum”
means, as of any date, the maximum aggregate number of shares of Common Stock
then issued or potentially issuable in the future pursuant to the Transaction
Documents, including any Underlying Shares issuable upon exercise of the
Warrant or conversion of the Debenture, ignoring any exercise limits set forth
therein.

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

 4
 

 

 

“SBA”
shall have the meaning ascribed to such term in Section 5.1.

“SBA Documents”
shall have the meaning ascribed to such term in Section 5.1(b).

“SBIC”
shall have the meaning ascribed to such term in Section 5.1.

“SBIC Act”
shall have the meaning ascribed to such term in Section 5.1(a).

“Securities”
means the Debenture, the Warrant, and the Underlying Shares.

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

“Security Agreement”
means the Security Agreement, dated as of the date hereof, between the Company
and the Purchasers, in the form of Exhibit B attached hereto.

“Security Documents”
shall mean the Security Agreement and any other documents and filing required
thereunder in order to grant Purchasers a first priority security interest in
all of the assets of the Company.

“Subordination Agreement”
Not Applicable.

“Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for Debentures and
Warrants purchased hereunder as specified on the Purchasers Signature Page in
the corresponding column next to such Purchaser’s name under the heading “Subscription
Amount”, in United States Dollars in immediately available funds.

“Subsequent Financing”
shall have the meaning ascribed to such term in Section 4.12.

“Subsequent Financing
Notice” shall have the meaning ascribed to such term in
Section 4.12.

“Subsidiary”
means any corporation or limited liability company of which at least 50% of the
outstanding securities having ordinary voting powers for the election of Board
of Directors (or similar governing body) are at the time owned by the
Company.  As used herein, the term “Company”
shall be deemed to include all of the Company’s Subsidiaries, if any.

“Trading Market”
means, as applicable, the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American
Stock Exchange, the New York Stock Exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market, the OTC Bulletin Board or the “Pink Sheets” published by the
Pink Sheets LLC.

 5
 

 

 

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

“Trident”
means Trident Growth Fund, L.P., a Delaware limited partnership.

“Underlying Shares”
means the shares of Common Stock issuable upon exercise of the Warrants or
conversion of the Debenture, or any other shares of Common Stock acquired by
Purchasers hereby.

“Unipixel”
means Unipixel, Inc., a Delaware Corporation.

“Unipixel Displays”
means Unipixel Displays, Inc., a Texas corporation, and wholly-owned Subsidiary
of Unipixel.

“Variable Rate Transaction”
shall mean a transaction in which the Company issues or sells (i) any debt or
equity securities that are convertible into, exchangeable or exercisable for,
or include the right to receive additional shares of Common Stock (A) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of Common Stock
at any time after the initial issuance of such debt or equity securities, (B)
with a conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock, or
(C) whereby the number of underlying shares of Common Stock to be received upon
exercise, conversion, or exchange thereof, is variable in any respect in which
the number of such underlying shares could be increased.

“Warrants”
means the Common Stock Purchase Warrants, in the form of Exhibit C
delivered to each Purchaser at the Closing in accordance with Section 2.2
hereof, which Warrants shall be exercisable immediately and be exercisable
until the close of business on the fifth anniversary following the Initial
Exercise Date (as defined in the Warrant). 
The Company and Purchasers agree that the value of the Warrants, in the
aggregate, as of the date hereof is less than $1,000.

ARTICLE II.

PURCHASE
AND SALE

2.1           Closing.  On the Closing Date, upon the terms and
subject to the conditions set forth herein, concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and Purchasers agree to purchase the Debentures and Warrants for an aggregate
amount of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000) (the “Aggregate Subscription Amount”).  On the Closing Date, Purchasers shall deliver
to the Company via wire transfer of immediately available funds equal to the
Aggregate Subscription Amount (less all expenses and fees due hereunder), and
the Company shall deliver 

 6
 

 

to Purchasers the Debentures, the Warrants, and the other items set
forth in Section 2.2 issuable at the Closing. 
On the Closing Date, contemporaneous with the funding of the purchase
made the basis hereof, the Company shall promptly pay to the order of each
Purchaser a Closing Fee of 4% and an Application Fee of 1% of the Subscription
Amount for each such Purchaser, such amounts to be offset from the Aggregate
Subscription Amount wire transfer described above.  Upon satisfaction of the conditions set forth
in Section 2.2, the Closing shall occur at the offices of Trident, or such
other location as the parties shall mutually agree.

2.2          Deliveries

a)              On the Closing Date,
the Company shall execute and deliver or cause to be delivered to Purchasers
the following, each fully executed by the appropriate authorized officer or
officers of the Company:

(i)            this Agreement (along with all
Disclosure Schedules);

(ii)           the Debentures;

(iii)          the Warrants;

(iv)          the Security Agreement along with all
Security Documents;

(v)           to each Trident and CapSource, SBA
Form 480 (Size Status Declaration), SBA Form 652 (Assurance of Compliance) and
SBA Form 1031 (Portfolio Finance Report), Parts A and B, in the forms of Exhibit
C, Exhibit D and Exhibit E, respectively, attached hereto;

(vi)          Approval by the Board of Directors of
the Company, done in conformance with all applicable law and the Bylaws of the
Company, certified by the Secretary of the Company as of the Closing Date,
approving or otherwise ratifying the transactions contemplated by this
Agreement, and approving the form of this Agreement and the Transaction
Documents, and authorizing execution, delivery, and performance thereof;

(vii)         A copy of the Certificate of
Incorporation of the Company, as amended to date, certified by an official of
the Company’s jurisdiction of formation or incorporation and further certified
by the Secretary of the Company not to have been altered or amended since
certification by such official; a Certificate of Good Standing dated within 30
days of the date first written above from the Secretary of State of the Company’s
jurisdiction of formation or incorporation; and a copy of the Bylaws of the
Company, certified as true and correct by the Secretary of the Company;

(viii)        Payment of the Application and Closing
fees, if any, referenced in Section 2.1 hereof; and

 7
 

 

 

(ix)          Such
other instruments, documents or items as Purchasers may reasonably request.

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

(i)            this Agreement duly executed by each
Purchaser;

(ii)           Each Purchasers’ respective
Subscription Amount by wire transfer to the account as specified in writing by
the Company; and

(iii)          the Security Agreement, duly executed
by each Purchaser.

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
when made and on the Closing Date of the representations and warranties of the
Purchasers contained herein;

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

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

b)            The obligations of Purchasers
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 Company
contained herein;

(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; and

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

 8
 

 

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1           Representations
and Warranties of the Company. 
Except as set forth under the corresponding section of the disclosure
schedules delivered to Purchasers concurrently herewith (the “Disclosure Schedules”) which
Disclosure Schedules shall be deemed a part hereof, the UniPixel and UniPixel
Displays hereby, jointly and severally, make the representations and warranties
set forth below to Purchasers, again, where the term “Company” shall mean each
of UniPixel and UniPixel Displays.

a)    Subsidiaries.  The Company does not have any Subsidiaries;
provided, however, that the Purchasers acknowledge that UniPixel Displays is
the wholly-owned Subsidiary of UniPixel.

b)   Organization and Qualification.  The Company is an entity duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.  The Company is not in violation or default of
any of the provisions of its certificate or articles of incorporation, bylaws,
or other organizational or charter documents. 
The Company 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 Documents, (ii) a material adverse effect on
the results of operations, assets, business, prospects or financial condition
of the Company, 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 Documents (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or qualification.

c)    Authorization; Enforcement.  The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents and otherwise to carry out its obligations
thereunder.  The execution and delivery
of each of the Transaction Documents by the Company and the consummation by it
of the transactions contemplated thereby have been duly authorized by all
necessary action on the part of the Company. 
Each Transaction Documents has been (or upon delivery will have been)
duly executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.

 9

 

d)   No Conflicts.  The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the other transactions contemplated thereby do not and will not: (i) conflict
with or violate any provision of the Company’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, result in the creation of any
Lien upon any of the properties or assets of the Company, 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 debt or otherwise) or other
understanding to which the Company is a party or by which any property or asset
of the Company is bound or affected, or (iii) 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
is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company 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.  Other than as set forth on Schedule 3.1(e)
and except for filing of a Form D and/or state “blue sky” securities filings,
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.

f)    Issuance of the Securities.  The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear
of all Liens imposed by the Company other than restrictions on transfer
provided for in the Transaction Documents. 
The Underlying Shares, when issued in accordance with the terms of the
Transaction Documents, will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company or any third party.  The Company has reserved from its duly
authorized capital stock a number of shares of Common Stock for issuance of a
number of Underlying Shares at least equal to the Required Minimum on the date
hereof.  The Company has not, and to the
knowledge of the Company, no Affiliate of the Company has sold, offered for
sale or solicited offers to buy or otherwise negotiated in respect of any
security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities
to Purchasers.

g)   Capitalization.  The capitalization of the Company is as
described in Schedule 3.1(g).  The
Company has not issued any capital stock other than as set forth on Schedule
3.1(g). No Person has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. 
Except as a result of the purchase and sale of the Securities or 

 10
 

 

as set forth on Schedule 3.1(g), there
are no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any
right to subscribe for or acquire, any shares of the Company’s capital stock,
or contracts, commitments, understandings or arrangements by which the Company
is or may become bound to issue additional shares of its capital stock, or
securities or rights convertible or exchangeable into shares of its capital
stock. 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
Purchasers) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under such
securities. All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities.  No further
approval or authorization of any stockholder, the Board of Directors of the
Company or others is required for the issuance and sale of the Securities.  Except as disclosed in Schedule 3.1(g),
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.  A complete list
of stockholders of the Company that are officers, directors and individuals
holding 5% or more of the outstanding Common Stock is included in Schedule
3.1(g).

h)    SEC Documents.  If the Company is subject to the reporting
provisions of the Exchange Act, the Company has filed all required reports,
schedules, forms, statements and other documents with the Commission. (the “SEC Documents”).  As of their respective dates, the SEC
Documents complied in all material respects with requirements of the Securities
Act or the Exchange Act, as the case may be and the rules and regulations of
the Commission promulgated thereunder applicable to such SEC Documents, and
none of the SEC Documents 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 light of the circumstances under which
they were made, not misleading, except to the extent that information contained
in any SEC Document has been revised or superseded by a later filed SEC
Document.  The financial statements of
the Company included in the SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited statements as permitted
by Form 10-Q or Form 10-QSB) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operation and cash flows for the period then ending in accordance with GAAP
(subject, in the case of the unaudited statements, to normal year end audit
adjustments).  Except as set forth in the
filed SEC Documents, neither the Company nor any Subsidiaries has any
liabilities or obligations of any nature (whether 

 11
 

 

accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of the Company
and its consolidated subsidiaries or in the notes thereto and which could
reasonably be expected to have a Material Adverse Effect.

i)     Litigation.  Other than as set forth on Schedule 3.1(i),
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, or any of its 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 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 any current or former director or officer
of the Company.

j)     Labor Relations.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which could reasonably be expected to result in a Material Adverse
Effect.

k)    Compliance.  The Company (i) is not 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), nor
has the Company 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 not in violation of any order of any court, arbitrator or governmental
body, or (iii) is not or has not been in violation of any statute, rule or
regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws applicable to its business except in each
case as could not have a Material Adverse Effect.

l)     Regulatory Permits.  The Company possesses all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct its business as described
in Schedule 3.1(l), except where the failure to possess such permits
could not have or reasonably be expected to result in a Material Adverse Effect
(“Material Permits”),
and the Company has not received any notice of Proceedings relating to the
revocation or modification of any Material Permit.

m)   Title to Assets.  Except as set forth on Schedule 3.1(m),
the Company has good and marketable title in (or licenses or rights to use) all
personal property that is material to the business of the Company, in each case
free and clear of all Liens.  The 

 12
 

 

Company does not own any real property. Any
real property and facilities held under lease by the Company are held by it
under valid, subsisting and enforceable leases of which the Company is in compliance.  The Company has not granted, and no third
party has obtained in any manner, other than as contemplated by the Transaction
Documents, any security interest in the assets of the Company.  Schedule 3.1(m) sets forth and details which,
if any, of such assets are owned by any Subsidiary.

n)   Intellectual Property.

(i)           Schedule 3.1(n) contains a
list of the Company’s Intellectual Property.  For purposes hereof, “Intellectual Property” means
any or all of the following and all rights and goodwill, arising out of or
associated therewith:  (A) all United States, international, and foreign
patents and applications therefor (including provisional applications) and all
reissues, reexaminations, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof; (B) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know-how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing throughout the
world; (C) all international, U.S. and foreign registered trademarks, trade
names, service marks, logos, slogans, and designs, applications to register
trademarks, trade names, service marks, logos, slogans, and designs, intent-to-use
applications, or other registrations or applications related to trademarks,
service marks, common law trademarks, trade names, service marks, logos,
slogans, and designs and all associated goodwill associated with all of the
foregoing; (D) all copyrights, copyright registrations and applications
therefor, and all other rights corresponding thereto throughout the world; (E)
all industrial designs and any registrations and applications therefor
throughout the world; (F) all URL’s, domain names, trade names, logos, slogans,
designs, common law trademarks and service marks, trademark and service mark
registrations and applications therefor throughout the world; (G) all databases
and data collections and all rights therein throughout the world; (H) all moral
and economic rights of authors and inventors, however denominated, throughout
the world; (I) any other intellectual property that is the subject of an
application, certificate, filing, registration or other document issued, filed
with, or recorded with any federal, state, local or foreign government or other
public body; and (J) any similar or equivalent rights to any of the foregoing
anywhere in the world.  For purposes
hereof, “Company Intellectual
Property” means any Company Intellectual Property owned or
licensed by the Company, and “Company
Registered Intellectual Property” means any items of
Intellectual Property described in subsections (A), (C) or (D) of this
paragraph.

(ii)          No Company Intellectual Property or
product or service of the Company’s business related to the Company
Intellectual Property is subject to any Proceeding or outstanding decree,
order, judgment, agreement or stipulation restricting in any manner the use,
transfer or licensing thereof by the Company, or which may affect the validity,
use or enforceability of such Company Intellectual Property.  Each item of Company Registered Intellectual
Property is valid and subsisting.  All
necessary registration, maintenance and renewal fees currently due in
connection with the Company 

 13
 

 

Registered Intellectual Property have been
made and all necessary documents, recordations and certifications in connection
with such Company Registered Intellectual Property have been filed with the
relevant patent, copyright, trademark or other authorities in the United States
or foreign jurisdictions, as the case may be, for the purpose of maintaining
such Company Registered Intellectual Property.

(iii)         The Company owns and has good and
exclusive title to, or has licenses (any Intellectual Property subject to any
license to be identified as such in Schedule 3.1(n)) (sufficient for the
conduct of the Company’s business as currently conducted) to use each item of
the Company’s Intellectual Property free and clear of any Lien; and the Company
is the exclusive owner or exclusive licensee of all trademarks and service
marks, trade names and domain names used in connection with and material to the
operation or conduct of the Company’s business, including the sale of any
products or the provision of any services by same, free and clear of all
Liens.  The Company Intellectual
Property, other than future improvements, derivations, and additions to be made
by the Company or on behalf of the Company, constitutes all of the Intellectual
Property used or contemplated for use in connection with the Company’s current
business and in the performance of any contract, proposal or letter of intent
in connection with same.

(iv)        To the extent that any Company
Intellectual Property has been developed or created by a third party for the Company,
the Company has a written agreement with such third party with respect thereto
and the Company thereby either (A) has obtained ownership of and is the
exclusive owner of, or (b) has obtained a license (sufficient for the
conduct of the Company’s business as currently conducted) to all of such third
party’s Intellectual Property in such work, material or invention by operation
of law or by valid assignment, to the fullest extent it is legally possible to
do so, each such agreement being listed on Schedule 3.1(n).

(v)         The operation of the Company’s business
as it is currently conducted, including the Company’s design, development,
marketing and sale of the products or services of the Company (including with
respect to products currently under development) has not, does not and will not
infringe or misappropriate in any manner the Intellectual Property of any third
party or, to the knowledge of the Company, constitute unfair competition or
trade practices under the laws of any jurisdiction.

(vi)        The Company has no knowledge, and has
not received written notice or any other overt threats from any third party,
that the operation of the Company’s business as it is currently conducted, or
any act, product or service of the Company’s business, infringes or misappropriates
the Intellectual Property of any third party or constitutes unfair competition
or trade practices under the laws of any jurisdiction.  The Company’s Intellectual Property is not
the subject of any third party communications relating to validity or
enforceability, cease and desist orders, demand letters, warnings or prior
settlement agreements.  The Company’s Intellectual Property is not
currently the subject of any pending or threatened re-examinations,
oppositions, interferences, or 

 14
 

 

infringement actions.

(vii)       To the knowledge of the Company, no
Person has or is infringing or misappropriating any Company Intellectual
Property.

(viii)      The Company has taken reasonable steps to
protect the rights of the Company in the confidential information and trade
secrets of the Company used in the Company’s business or any trade secrets or
confidential information of third parties used in same, and, without limiting
the foregoing, the Company has enforced a policy requiring each employee and
contractor to execute a proprietary information/confidentiality agreement, and
except under confidentiality obligations or in the context of the
attorney-client relationship, there has not been any disclosure by the Company
of any such trade secrets or confidential information.

o)   Insurance.  The Company is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company is
engaged, including directors and officers insurance at least equal to the
aggregate principal amount of the Debenture. 
To the best of Company’s knowledge, such insurance contracts and
policies are accurate and complete.  The
Company has no 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.

p)   Transactions With Affiliates and Employees.  None of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company (other than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $60,000 other than (i) for payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including stock option agreements under any stock option plan of the Company.

q)   Internal Accounting Controls.  The Company
maintains 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 

 15
 

 

existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

r)    Certain Fees.  Other than as set forth on Schedule 3.1(r),
no brokerage or finder’s fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. 
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 this Agreement.

s)    Private Placement.  Assuming the accuracy of Purchasers’
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Securities by the
Company to Purchasers as contemplated hereby.

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 subject to the Investment Company Act.

u)   Registration Rights.  Other than as set forth on Schedule 3.1(u),
no Person has any right to cause the Company to effect the registration under
the Securities Act of any securities of the Company.

v)   Application of Takeover Protections.  The Company and its 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
Purchasers as a result of 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.

w)   Disclosure.  The Company confirms that neither it nor any
other Person acting on its behalf has provided Purchasers or their agents or
counsel with any information that constitutes or might constitute material,
nonpublic information except for such information that will be publicly
disclosed in documents filed with the Commission.  The Company understands and confirms that
Purchasers will rely on the foregoing representations and covenants in
effecting transactions in securities of the Company.  All written statements provided to Purchasers
regarding the Company, its business and the transactions contemplated hereby,
including the Disclosure Schedules to this Agreement, furnished by or on behalf
of the Company with respect to the 

 16
 

 

representations and warranties made herein
are true and correct with respect to such representations and warranties and do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.

x)    No Integrated Offering. Assuming the
accuracy of 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 the Securities Act or any applicable
shareholder approval provisions.

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

z)    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 has filed all necessary federal, state and
foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency
which has been asserted or threatened against the Company.

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

bb) Foreign Corrupt Practices.  Neither the Company, nor to the knowledge of
the Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment or 

 17
 

 

other unlawful expenses related to foreign or
domestic political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to any foreign or domestic
political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company (or made by any person acting on its
behalf of which the Company is aware) which is 
in violation of law, or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended

cc)     Indebtedness.  Other than as set forth on Schedule
3.1(cc), as of the Closing Date, the Company has no indebtedness.

dd)     No Disagreements with Accountants and
Lawyers.  There are no disagreements
of any kind presently existing, or reasonably anticipated by the Company to
arise, between the accountants and lawyers formerly or presently employed by
the Company and the Company is current with respect to any fees owed to its
accountants and lawyers.

ee)     Acknowledgment Regarding Purchasers’
Purchase of Securities.  The Company
acknowledges and agrees that Purchasers are acting solely in the capacity of
arm’s length purchasers with respect to the Transaction Documents and the
transactions contemplated hereby as they relate to the Company.  The Company further acknowledges that
Purchasers are not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by Purchasers or any of
their respective representatives or agents to the Company in connection with
this Agreement and the transactions contemplated hereby is merely incidental to
the Purchasers’ purchase of the Securities.

ff)       Material Liabilities.  The sole outstanding material liabilities of
the Company are set forth on Schedule 3.1(ff) .

gg)     Material Agreements.  Except for those agreements set forth on Schedule
3.1(gg) hereof, there are no other material agreements to which the Company
is a party.

hh)    Board of Directors.  The Board of Directors of the Company
consists of those persons set forth on Schedule 3.1(hh).

ii)       Financial Statements.  Other than as set forth on Schedule
3.1(ii), there are no audited financial statements of the Company.

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

(a)           Organization;
Authority.  Such Purchaser (if not an
individual) is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right,
corporate or partnership power and authority to enter into 

 18
 

 

and to
consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. The execution, delivery and
performance by Purchaser of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate or similar action on the
part of Purchaser.  Each of the
Transaction Documents to which it is a party has been duly executed by
Purchaser, and when delivered by Purchaser in accordance with the terms hereof,
will constitute the valid and legally binding obligation of 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)           Purchaser Representation.  Purchaser understands that the Securities are
“restricted securities” and have not been registered or qualified, as the case
may be, under the Securities Act or any applicable state securities law by
reason of a specific exemption from the registration or qualification
provisions of the Securities Act or any applicable state securities laws, the
availability of which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of Purchaser’s representations as
expressed herein.  Purchaser represents
that it is acquiring the Securities for investment as principal for its own
account and not with a view to or for distribution or resale of such Securities
or any part thereof, has no present intention of distributing any of such
Securities and has no arrangement or understanding with any other persons
regarding the distribution of such Securities (this representation and warranty
not limiting Purchaser’s right to sell the Securities pursuant to a
Registration Statement or otherwise in compliance with applicable federal and
state securities laws).  Purchaser is
acquiring the Securities hereunder in the ordinary course of its business.
Purchaser does not have any agreement or understanding, directly or indirectly,
with any Person to distribute any of the Securities.

(c)           Purchaser Status.  At the time Purchaser was offered the
Securities, it was, and at the date hereof it is, and on each date on which it
exercises any Warrants it will be either: (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8)) of Regulation D
promulgated under the Securities Act or (ii) a “qualified institutional buyer”
as defined in Rule 144A(a) under the Securities Act.

(d)           Experience of
Purchasers.  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.  Purchaser understands that the acquisition of
the Securities hereunder is highly a speculative investment which involves a
high degree of loss of Purchaser’s investment therein.  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.

 19
 

 

 

(e)           Certain Fees.  Purchaser has not entered into an agreement
whereby brokerage or finder’s fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement.

The Company
acknowledges and agrees that no Purchaser has made any representations or
warranties with respect to the transactions contemplated hereby other than
those specifically set forth in this Section 3.2.

ARTICLE IV.

OTHER
AGREEMENTS OF THE PARTIES

4.1           Transfer
Restrictions.

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

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

NEITHER THESE SECURITIES
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.

 20
 

 

 

The Company acknowledges
and agrees that Purchasers may from time to time pledge pursuant to a bona fide
margin agreement with a registered broker-dealer or grant a security interest
in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to
be bound by the provisions of this Agreement and, if required under the terms
of such arrangement, Purchasers may transfer pledged or secured Securities to
the pledgees or secured parties.  Such a
pledge or transfer would not be subject to approval of the Company and no legal
opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith. 
Further, no notice shall be required of such pledge.  At the Purchaser’s expense, the Company will
execute and deliver such reasonable documentation as a pledgee or secured party
of Securities may reasonably request in connection with a pledge or transfer of
the Securities.

(c)           Certificates
evidencing Underlying Shares shall not contain any legend (including the legend
set forth in Section 4.1(b) hereof): (i) while a Registration Statement
covering the resale of such Underlying Shares is effective under the Securities
Act, (ii) following any sale of such Underlying Shares pursuant to Rule 144,
(iii) if such Underlying Shares are eligible for sale under Rule 144(k), or
(iv) if such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission); provided, however, in connection
with the issuance of the Underlying Shares, Purchasers hereby agrees to adhere
to and abide by all prospectus delivery requirements under the Securities Act
and rules and regulations of the Commission and all applicable state “blue sky”
securities laws. The Company shall cause its counsel to issue a legal opinion
to the Company’s transfer agent if so required by the Company’s transfer agent
to effect the removal of the legend hereunder. 
If all or any portion of a Warrant is exercised at a time when there is
an effective Registration Statement to cover the resale of the Underlying
Shares, or if such shares may be sold under Rule 144(k) or if such legend is
not otherwise required under applicable requirements of the Securities Act
(including judicial interpretations thereof) then such shares shall be issued
free of all legends.  The Company agrees
that at such time as such legend is no longer required under this Section
4.1(c), it will, no later than two Business Days following the delivery by Purchasers
to the Company or the Company’s transfer agent of a certificate representing
Underlying Shares, as applicable, issued with a restrictive legend (such second
Business Day, the “Legend
Removal Date”), deliver or cause to be delivered to
Purchasers a certificate (or certificates, as the case may be) representing
such shares that is free from all restrictive and other legends.  The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section.

(d)           In addition to
Purchasers’ other available remedies, the Company shall pay to Purchasers, in
cash, as partial liquidated damages and not as a penalty, the greater of (i)
$500 for each Business Day after the Legend Removal Date, the Warrant Share
Delivery Date, or other such date the Underlying Shares are to be delivered to
the Purchasers, as the case may be, until such certificate is delivered with an
appropriate 

 21
 

 

legend or
without a restrictive legend, as the case may be; and (ii) the difference in
the Market Value of the Underlying Shares (based on the closing bid price of
the Common Stock on the then principal Trading Market on the date such
Securities are submitted to the Company’s transfer agent) on the delivery date
and the date such shares are actually received by the Holder in such form as
required herein and in the Transaction Documents.  Nothing herein shall limit a Purchaser’s
right to pursue actual damages for the Company’s failure to deliver
certificates representing any Securities as required by the Transaction
Documents, and Purchasers shall have the right to pursue all remedies available
to it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief.

(e)           Purchasers agree
that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the Company’s
reliance that Purchasers will sell any Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom.

4.2           Acknowledgment
of Dilution.  The Company
acknowledges that the issuance of the Underlying Shares may result in dilution
of the outstanding shares of Common Stock, which dilution may be substantial
under certain market conditions.  The
Company further acknowledges that its obligations under the Transaction
Documents, including without limitation its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute
and not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have
against Purchasers and regardless of the dilutive effect that such issuance may
have on the ownership of the other stockholders of the Company.

4.3           Furnishing
of Information.  At any time after
the date hereof, if the Company is or becomes subject to the rules,
regulations, and/or reporting requirements of the Exchange Act and as long as
any Purchaser owns restricted Securities, the Company covenants 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.  As long as
any Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to each such
Purchaser and make publicly available in accordance with Rule 144(c) such
information as is required for Purchaser to sell the Underlying Shares under
Rule 144.  The Company further covenants
that it will take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such Person to
sell such Underlying Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144.

4.4           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 in a manner that would require the registration
under the Securities Act of the sale of the Securities to Purchasers or, if
then listed or 

 22
 

 

quoted on a Trading Market, that would be integrated with the offer or
sale of the Securities for purposes of the rules and regulations of any Trading
Market.

4.5           Exercise
Procedures.  The form of Notice of
Exercise and Conversion Notice included in the Warrant and Debenture,
respectively, set forth the totality of the procedures required of Purchasers
in order to exercise the respective Warrants or convert the Debentures.  No additional legal opinion or other
information or instructions shall be required of any Purchaser to exercise its
Warrant or convert their Debenture.  The
Company shall honor exercises of the Warrant and conversions of the Debenture
and shall deliver Underlying Shares in accordance with the terms, conditions
and time periods set forth in such Transaction Documents.

4.6           Shareholders
Rights Plan.  No claim will be made
or enforced by the Company or, to the knowledge of the Company, any other
Person that any Purchaser is an “Acquiring Person” under any shareholders
rights plan or similar plan or arrangement in effect or hereafter adopted by
the Company, or that 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 any
Purchaser.

4.7           Non-Public
Information.  If at any time the
Company becomes subject to the reporting provisions of the Exchange Act, 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 executed a written agreement regarding
the confidentiality and use of such information.  The Company understands and confirms that
such Purchaser shall be relying on the foregoing representations in effecting
transactions in securities of the Company.

4.8           Use
of Proceeds.  Except as set forth in Schedule
4.8, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and not for the satisfaction of any
portion of the Company’s debt (other than payment of trade payables in the
ordinary course of the Company’s business and prior practices), to redeem any
Common Stock or Common Stock Equivalents or to settle any outstanding
litigation.  Schedule 4.8 shall
detail the Company’s expected use of proceeds received from the sale of the
Securities hereunder.

4.9           Reimbursement.  If any Purchaser becomes involved in any
capacity in any Proceeding by or against any Person who is a stockholder of the
Company (except as a result of sales, pledges, margin sales or any similar
transaction(s) by such Purchaser to or with any current stockholder), solely as
a result of such Purchaser’s acquisition of the Securities under this
Agreement, and such Purchaser is successful in the Proceeding the Company will
reimburse Purchaser for its reasonable legal and other expenses (including the
cost of any investigation preparation and travel in connection therewith)
incurred in connection therewith, as such expenses are incurred.  The reimbursement obligations of the Company
under this paragraph shall be in addition to any liability which the Company
may otherwise have, shall extend upon the same terms and conditions to any
Affiliates of such Purchaser who are actually named in 

 23
 

 

such Action,
Proceeding or investigation, and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of Purchaser and any such
Affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company,
Purchaser and any such Affiliate and any such Person.  The Company also agrees that neither any
Purchaser nor any such Affiliates, partners, directors, agents, employees or
controlling persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company solely as a result of
acquiring the Securities under this Agreement.

4.10         Indemnification of
Purchasers.  Subject to the
provisions of this Section 4.10, the Company will indemnify and hold the
Purchasers and their respective directors, officers, managers, shareholders,
partners, employees and agents (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 any Purchaser, or any of its Affiliates, by any
stockholder of the Company who is not an Affiliate of Purchaser, with respect
to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of Purchaser’s representation, warranties or
covenants under the Transaction Documents or any agreements or understandings a
Purchaser may have with any such stockholder or any violations by a Purchaser
of state or federal securities laws or any conduct by such Purchaser 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.  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 such separate counsel, a material conflict on any material issue between the
position of the Company and the position of such Purchaser Party.  The Company will not be liable to any
Purchaser Party under this Agreement (i) for any settlement by a Purchaser
Party effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party’s
breach of any of the representations, warranties, covenants or agreements made
by such Purchaser in this Agreement or in the other Transaction Documents.

 24
 

 

 

4.11         Reservation
and Listing of Securities.

(a)           The Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents.

(b)           If, on any date, the number of
authorized but unissued (and otherwise unreserved) shares of Common Stock is
less than the Required Minimum on such date, then the Board of Directors of the
Company shall use commercially reasonable efforts to amend the Company’s
certificate or articles of incorporation to increase the number of authorized
but unissued shares of Common Stock to at least the Required Minimum at such
time, as soon as possible and in any event not later than the 75th day after
such date; and

(c)           The
Company shall, if then applicable: (i) in the time and manner required by the
Trading Market or if the Common Stock is listed on another Trading Market,
promptly prepare and file with such Trading Market an additional shares listing
application covering a number of shares of Common Stock at least equal to the
Required Minimum on the date of such application, (ii) take all steps necessary
to cause such shares of Common Stock to be approved for listing on the Trading
Market as soon as possible thereafter, (iii) provide to Purchasers evidence of
such listing, and (iv) maintain the listing of such Common Stock on any date at
least equal to the Required Minimum on such date on such Trading Market.

4.12.        Participation in Future Financing.
From the date hereof until the one year anniversary of the date hereof, upon
any cash financing by the Company or any of its Subsidiaries of Common Stock or
Common Stock Equivalents (a “Subsequent Financing”),
each Purchaser shall have the right to participate in up to an amount of the
Subsequent Financing to the extent that such Purchaser’s percentage interest in
the Company after the Subsequent Financing is not less than such Purchaser’s
percentage interest in the Company immediately prior to the Subsequent
Financing (the “Participation Maximum”).  At least 5 Business Days prior to the closing
of the Subsequent Financing, the Company shall deliver to each Purchaser a
written notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice
shall ask such Purchaser if it wants to review the details of such financing
(such additional notice, a “Subsequent Financing
Notice”).  Upon the
request of a Purchaser, and only upon a request by such Purchaser, for a
Subsequent Financing Notice, the Company shall promptly, but no later than 1
Business Day after such request, deliver a Subsequent Financing Notice to such
Purchaser.  The Subsequent Financing
Notice shall describe in reasonable detail the proposed terms of such
Subsequent Financing, the amount of proceeds intended to be raised thereunder,
the Person with whom such Subsequent Financing is proposed to be effected, and
attached to which shall be a term sheet or similar document relating
thereto.    If by 5:30 p.m. (Dallas,
Texas time) on the 5th
Business Day after all of the Purchasers have received the
Pre-Notice, notifications by the Purchasers of their willingness to participate
in the Subsequent Financing (or to cause their designees to participate) is, in
the aggregate, less than the total amount of the Subsequent Financing, then the
Company may effect the remaining portion of such Subsequent 

 25
 

 

Financing on the terms
and to the Persons set forth in the Subsequent Financing Notice.  If the Company receives no notice from a
Purchaser as of such 5th Business Day, such Purchaser shall be deemed
to have notified the Company that it does not elect to participate.  The Company must provide the Purchasers with
a second Subsequent Financing Notice, and the Purchasers will again have the
right of participation set forth above in this Section 4.12, 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 15 Business Days after the date of the initial Subsequent Financing
Notice. In the event the Company receives responses to Subsequent Financing
Notices from Purchasers seeking to purchase more than the aggregate amount of
the Subsequent Financing, each such Purchaser shall have the right to purchase
their Pro Rata Portion (as defined below) of the Participation Maximum.  “Pro Rata Portion”
is the ratio of (x) the Subscription Amount of Securities purchased by a
participating Purchaser and (y) the sum of the aggregate Subscription Amount of
all participating Purchasers. 
Notwithstanding the foregoing, this Section 4.12 shall not apply in respect
of an Exempt Issuance (not including subsection (d) within the definition of
Exempt Issuance).

4.13                Future Priced Securities.  From the date hereof until the date that less
than 20% in principal amount of the Debentures initially issued are
outstanding, the Company shall be prohibited from effecting or entering into an
agreement to affect any Subsequent Financing involving a Variable Rate
Transaction.

4.14                Equal Treatment of Purchasers.  No consideration shall be offered or paid to
any person to amend or consent to a waiver or modification of any provision of
any of the Transaction Documents unless the same consideration is also offered
to all of the parties to the Transaction Documents. Further, the Company shall
not make any payment of principal or interest on the Debentures in amounts which
are disproportionate to the respective principal amounts outstanding on the
Debentures at any applicable time.  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 to treat for the Company the Debenture holders 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.

4.15                Appointment of Board Member.  If the Debentures are not repaid in full on
or by the 180th day following the Closing Date, the Purchasers
shall have the right to appoint a member to the Board of Directors of UniPixel
to (the “Purchaser’s Designee”).
 The Company shall use its best efforts
to require one member of the then existing Board of Directors of UniPixel to
resign, thereby permitting the Purchasers to appoint their Purchaser’s
Designee. If within 30 days of the Company’s election to appoint it’s Purchaser’s
Designee to the Board of Directors of UniPixel, such appointment of the
Purchaser’s Designee has not occurred other than by reason of legal
prohibitions or restrictions, the number of Warrant Shares purchasable pursuant
to each Warrant purchased hereunder shall be increased by 10,000 per month
(including such initial 30 day period) for each month such appointment has not
occurred.  The Company must provide and
keep in effect officers’ and directors’ liability insurance for the Purchaser’s
Designee which liability insurance shall be satisfactory to Purchaser, and such
Purchaser’s Designee shall be entitled to receive reasonable and customary
director’s fees and such other compensation as is 

 26
 

 

ordinarily given to the
Company’s directors as well as the reimbursement of all out of pocket expenses.

4.16         Registration Rights.

(a)           Piggyback Registrations.

A.           At
any time after the Closing Date, if the Company proposes to register any Common
Stock for sale solely for cash, either for its own account or for the account
of a stockholder or stockholders (a “Company Registration”),
then the Company shall give Purchasers written notice of its intention to do so
and of the intended method of sale (the “Registration Notice”)
not fewer than 30 days prior to the anticipated filing date of the Registration
Statement effecting such Company Registration. 
Purchasers may request inclusion of any Registrable Securities in such
Company Registration by delivering to the Company, within 20 days after receipt
of the Registration Notice, a written notice (the “Piggyback
Notice”) stating the number of shares of Registrable
Securities proposed to be included and that such shares are to be included in
any underwriting only on the same terms and conditions as the shares of Common Stock
otherwise being sold through underwriters under such Company Registration.  The Company shall use its best efforts to
cause all Registrable Securities specified in the Piggyback Notice to be
included in the Company Registration and any related offering, all to the
extent requisite to permit the sale by Purchasers of such Registrable
Securities in accordance with the method of sale applicable to the other shares
of Common Stock included in the Company Registration.  If the Company fails to file the Registrable
Securities in such Registration Statement, then, at the option of Purchasers,
for each full calendar month that the Registrable Securities are not fully
registered, Company shall issue to Purchaser 0.1% of its Common Stock then
outstanding computed on a Fully Diluted Basis per day until the shares are
registered.

B.            Limitations on Piggyback Registrations.  The Company’s obligation to include
Registrable Securities in a Company Registration pursuant to this Section
4.16(a) shall be subject to the following limitations:

(i)            The
Company shall not be obligated to include any Registrable Securities in a
registration statement (I) filed on Form S-4 or Form S-8 or such other similar
successor forms then in effect under the Securities Act, (II) pursuant to which
the Company is offering to exchange its own securities, or (III) relating to
dividend reinvestment plans.

(ii)           If
the managing underwriter(s), if any, of an offering related to the Company
Registration determines in its reasonable judgment that marketing factors
require a limitation of the number of shares of Common Stock that can be
included in such offering, the managing underwriter(s) may exclude the
appropriate number of shares of Common Stock held by the stockholders of the
Company, including Purchasers, from such registration.  If the managing underwriter(s) determine(s)
to 

 27
 

 

exclude from such offering any Registrable Securities that Purchasers
desire to include or any shares of Common Stock that other Company stockholders
with applicable registration rights desire to include, Purchasers and such
other Company stockholders (except for such Person or Persons, if any, upon
whose demand such Company Registration is being made) shall share pro rata in
the portion of such offering available to them (the “Available
Portion”), with Purchasers and each such other Company
stockholder entitled to include in such Company Registration and related
offering a number of shares of Common Stock equal to the product of (I) the
Available Portion and (II) a fraction, the numerator of which is the total
number of Registrable Securities which Purchasers desires to include in such
Company Registration (in the case of Purchasers) or the total number of shares
of Common Stock which such other Company stockholder desires to include in such
Company Registration (in the case of each such other Company stockholder) and
the denominator of which is (x) the total of the number of Registrable
Securities which Purchasers desire to include in such Company Registration plus
(y) the total number of shares of Common Stock that such other Company
stockholders desire to include in such Company Registration.

(b)           Provisions Applying to All
Registrations Under Section 4.16.

(i)           Selection
of Underwriter.  Any Company
Registration and related offering shall be managed by the Company; the Company
shall have the power to select the managing underwriter(s) for such offering,
and shall in consultation with the managing underwriter(s) have the power to
determine the offering price, the underwriting discounts and commissions, the
terms of the underwriting agreement and, the timing of the registration and
related offering.  To the extent that
Purchasers participate in a Company Registration and related offering, Purchasers
shall enter into, and sell its Registrable Securities only pursuant to, the
underwriting arranged by the Company, and shall either commit to attend the
closing of the offering and take such other actions as may be reasonably
necessary to effect Purchasers’ participation in the offering and to provide
any assurances reasonably requested by the Company and the managing
underwriter(s) in that regard, or shall deliver to the Company in custody
certificates representing all Registrable Securities to be included in the
registration and shall execute and deliver to the Company a custody agreement
and a power of attorney, each in form and substance appropriate for the purpose
of effecting Purchasers’ participation in the Company Registration and related
offering and otherwise reasonably satisfactory to the Company.  If Purchasers disapprove of the features of
the Company Registration and related offering, Purchasers or such individual
Purchaser, as the case may be, may withdraw therefrom (in whole or part) by
written notice to the Company and the managing underwriter(s) delivered no
later than ten days prior to the effectiveness of the applicable registration
statement and the Registrable Securities of Purchasers shall thereupon be
withdrawn from such registration.

(ii)          The
Company shall furnish Purchasers such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably 

 28
 

 

request in order to facilitate the disposition of the Registrable
Securities owned by it that are included in such registration;

(ii)          Whenever required to include
Registrable Securities in any registration or to effect the registration of any
Registrable Securities pursuant to this Agreement, the Company shall, as expeditiously
as reasonably possible, prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its absolute best lawful
efforts to cause such registration statement to become effective, and use its
absolute best efforts to keep such registration statement effective until all
such Registrable Securities have been distributed.  In addition, the Company shall use its best
lawful efforts to register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Purchasers, provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify as a broker-dealer in any states or jurisdictions or to do
business or to file a general consent to service of process in any of such
states or jurisdictions.

(iii)         All expenses, other than underwriting
discounts and commissions incurred in connection the registrations contemplated
herein, including, without limitation, all registration, filing and
qualification fees, printers’ and accounting fees, fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements of one
counsel for each selling Purchaser, shall be borne by the Company.

(c)           Subject to the terms and conditions
of this Agreement and the other Transaction Documents, the right to cause the
Company to register Registrable Securities pursuant to this Agreement may be
assigned by each Purchaser to any transferee or assignee of such securities;
provided that said transferee or assignee is a transferee or assignee of at
least five percent (5%) of the such Purchaser’s Registrable Securities.

ARTICLE
V.

SMALL
BUSINESS INVESTMENT COMPANY

5.1           Small Business Investment Company Provisions.  The Company acknowledges that Trident and
CapSource, are small business investment companies (“SBIC”) licensed
by the United States Small Business Administration (the “SBA”), and makes the following
representations, warranties and covenants to Trident and CapSource for so long
as the Debentures held by Trident and CapSource areoutstanding:

(a)           Small Business
Concern.  The Company represents and
warrants that it, taken together with its “affiliates” (as that term is defined
in 13 C.F.R. §121.103), is a “Small Business Concern” within the meaning of 15
U.S.C. §662(5), that is Section 103(5) of the Small Business Investment Act of
1958, as amended (the “SBIC Act”),
and the regulations thereunder, including 13 C.F.R. §107, and meets the
applicable size eligibility criteria set forth in 13 C.F.R. §121.301(c)(1) or
the industry standard covering 

 29
 

 

the industry
in which the Company is primarily engaged as set forth in 13 C.F.R.
§121.301(c)(2).  Neither the Company nor
any of its Subsidiaries presently engages in any activities for which a small
business investment company is prohibited from providing funds by the SBIC Act,
including 13 C.F.R. §107.

(b)           Small Business
Administration Documentation.  On or
before the Closing Date, Trident and CapSource shall have received SBA Form 480
(Size Status Declaration) and SBA Form 652 (Assurance of Compliance) which have
been completed and executed by the Company, and SBA Form 1031 (Portfolio
Finance Report), Parts A and B of which have been completed by the Company (the
“SBA Documents”).

(c)           Inspection.  The Company will permit Trident and CapSource
or their representatives, at the Company’s expense, and examiners of the SBA to
visit and inspect the properties and assets of the Company, to examine its
books of account and records, and to discuss the Company’s affairs, finances
and accounts with the Company’s officers, senior management and accountants,
all at such reasonable times as may be requested by Trident or the SBA.

(d)           Informational
Covenant.  Within sixty (60) calendar
days after the end of the Company’s fiscal year, the Company will furnish or
cause to be furnished to Trident and CapSource information required by the SBA
concerning the economic impact of Trident’s and CapSource’s investment, for (or
as of the end of) each fiscal year, including but not limited to: (i) board
minutes, (ii) information concerning full-time equivalent employees, (iii)
federal, state and local income taxes paid, (iv) gross revenue, (v) source of
revenue growth, (vi) after-tax profit and loss, and (vii) and federal, state
and local income tax withholding.  Such
information shall be forwarded by the Company on a form provided by Trident and
CapSource.  The Company also will furnish
or cause to be furnished to Trident and CapSource such other information
regarding the business, affairs and condition of the Company as Trident may
from time to time reasonably request.

(e)           Use of Proceeds.  The Company will deliver to Trident and
CapSourcefrom time to time promptly following Trident’s and CapSource’s
request, a written report, certified as correct by an officer, verifying the
purposes and amounts for which proceeds from the Debenture have been
disbursed.  The Company will supply to
Trident and CapSource such additional information and documents as they may
reasonably request with respect to the Company’s use of proceeds, and will
permit Trident to have access to any and all the Company’s records and
information and personnel as Trident and CapSource deem necessary to verify how
such proceeds have been or are being used, and to assure that the proceeds have
been used for the purposes specified on Schedule 4.9.

(f)            Activities and
Proceeds.

(i)            Neither the Company
nor any of its Affiliates will engage in any activities or use directly or
indirectly the proceeds from the 

 30
 

 

Debenture for
any purpose for which a SBIC is prohibited from providing funds by the SBIC
Act, including 13 C.F.R. §107.

(ii)           Without obtaining
the prior written approval of Trident and CapSource, the Company will not
change, within one (1) year of the Closing Date, the Company’s business
activity from that described on Schedule 5.1(f) to a business activity
which a SBIC is prohibited from providing funds by the SBIC Act.  The Company agrees that any such changes in
its business activity without such prior written consent of Trident and
CapSource will constitute a material breach of the obligations of the Company
under the Transaction Documents (an “Activity
Event of Default”).

ARTICLE
VI.

MISCELLANEOUS

6.1           Fees
and Expenses.  At the closing, the
Company shall reimburse Trident for Purchasers’ legal fees and expenses up to
the amount of $25,000.  Except as
expressly set forth above and 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 and the other Transaction Documents.  The Company shall pay all transfer agent
fees, stamp taxes and other taxes and duties levied in connection with the
issuance of any Securities.

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

6.2           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 prior to
5:30 p.m. (Dallas, Texas time) on a Business Day, (b) the next Business 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 Business Day or later than 5:30 p.m. (Dallas,
Texas time) on any Business Day, (c) the second Business 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.

 31
 

 

 

6.3           Amendments; Waivers.  No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each Purchaser or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. 
No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right.

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

6.5           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.  Each
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
such transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions hereof that apply to such Purchaser.

6.6           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 4.9.

6.7           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 Texas,
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, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of Dallas, Texas.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
Dallas, Texas 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 inconvenient venue for such proceeding.  THE PARTIES
HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.  If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the 

 32
 

 

other party for its attorneys’ fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.

6.8           Survival. 
The representations and warranties contained herein shall survive the
Closing and the delivery of the Securities until the later of the satisfaction,
complete conversion, or exercise of the Debenture and/or the Warrant, as the
case may be.

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

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

6.11         Rescission and Withdrawal Right.  Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever a 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,
in the case of a rescission of an exercise of a Warrant, such Purchaser shall
be required to return any shares of Common Stock subject to any such rescinded
exercise notice.

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

6.13         Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, 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 

 33
 

 

obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.

6.14         Payment Set Aside. To the extent that the Company
makes a payment or payments to any Purchaser pursuant to any Transaction
Documents 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.

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

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

(Signature Page
Follows)

 

 34

 

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.

 

	
  COMPANY 

  
	
  UNIPIXEL, INC.

  	
  Address for Notice and
  Delivery:

  8708 Technology Forest Place 

  Suite 100 

  The Woodlands, Texas 77381 

  Telephone: (281) 825-4500 

  Facsimile: (281) 825-4599 

  Attn: Reed Killion, President

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name: Reed Killion 

  	
   

  
	
   

  	
  Title: President

  	
   

  
	
   

  	
   

  	
   

  
	
  UNIPIXEL DISPLAYS, INC.

  	
  Address for Notice and
  Delivery:

  8708 Technology Forest Place 

  Suite 100 

  The Woodlands, Texas 77381 

  Telephone: (281) 825-4500 

  Facsimile: (281) 825-4599 

  Attn: Reed Killion, President

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name: Reed Killion 

  	
   

  
	
   

  	
  Title: President

  	
   

  

 

 

 

PURCHASER
SIGNATURE PAGE

	
  PURCHASERS:

  	
   

  	
  SUBSCRIPTION AMOUNT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TRIDENT GROWTH FUND, L.P.

  	
   

  	
  $750,000

  
	
   

  	
   

  	
   

  
	
  By:

  	
  TRIDENT MANAGEMENT, LLC, its

  	
   

  	
   

  
	
   

  	
  GENERAL PARTNER

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Frank DeLape

  	
   

  	
   

  
	
   

  	
  Title: Authorized Member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address for Notice and Delivery

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  700 Gemini

  	
   

  	
   

  
	
  Houston, TX 77058

  	
   

  	
   

  
	
  Telephone: (281) 488-8484

  	
   

  	
   

  
	
  Facsimile: (281) 488-5353

  	
   

  	
   

  
	
  Attn: Larry St. Martin

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CAPSOURCE FUND, L.P.

  	
   

  	
  $750,000

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  CapSource Partners, L.P.

  	
   

  	
   

  
	
   

  	
  its general partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  CapSource Managers, Inc.

  	
   

  	
   

  
	
   

  	
  its general partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name: R. Rand Ray

  	
   

  
	
   

  	
  Title: Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notice and Delivery

  	
   

  
	
   

  	
   

  
	
  795 Woodlands Parkway, Suite 100

  	
   

  
	
  Ridgeland, MS 39157

  	
   

  

 

 

ATTACHMENTS

Exhibit
A                        Form of Debenture

Exhibit
B                        Form of Security
Agreement

Exhibit
C                        Form of Warrant

Exhibit
D                        SBA Form 480

Exhibit
E                         SBA Form 652

Exhibit F                         SBA Form 1031

Schedule
3.1(a)             Subsidiaries

Schedule
3.1(e)             Filings,
Consents and Approvals

Schedule
3.1(g)             Capitalization

Schedule
3.1(i)              Litigation

Schedule
3.1(l)              Regulatory Permits

Schedule 3.1(m)            Title
to Assets (Outstanding liens)

Schedule 3.1(n)             Intellectual
Property

Schedule 3.1(r)              Certain
Fees (Broker Fees)

Schedule 3.1(u)             Registration
Rights

Schedule 3.1(cc)           Indebtedness

Schedule 3.1(ff)            Material
Liabilities

Schedule 3.1(gg)          Material
Agreements

Schedule 3.1(hh)          Board
of Directors

Schedule
3.1(ii)             Financial Statements

Schedule 4.8                  Use
of Proceeds

Schedule
5.1(f)              Business Activity

 

 

DISCLOSURE
SCHEDULE

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