Document:

f8kex10i_pioneer.htm

    

    Exhibit
10.1

     

    SECURITIES
PURCHASE AGREEMENT

    

     

    THIS SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated as of
December 2, 2009, by and among Pioneer Power Solutions, Inc., a Delaware
corporation (the “Company”), and each
investor  identified on the signature pages hereto (individually, an
“Investor” and
collectively, the “Investors”).

     

    BACKGROUND

     

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

     

    B.         Each
Investor, severally and not jointly, wishes to purchase, and the Company wishes
to sell, upon the terms and conditions stated in this Agreement, that aggregate
number of shares of the common stock, par value $0.001 per share, of the Company
(the “Common Stock”),
set forth on such Investor’s signature page to this Agreement (which aggregate
amount for all Investors together shall collectively be referred to herein as
the “Shares”).

     

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

     

    ARTICLE
I  

    DEFINITIONS

     

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

     

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

     

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

     

    “Best Efforts” means the
efforts that a prudent person desirous of achieving a result would use in
similar circumstances to ensure that such result is achieved as expeditiously as
practical; provided,
however, that an obligation to use Best Efforts under this Agreement does
not require the Company to dispose of or make any change to its business, expend
any material funds or incur any other material burden.

     

    
      
        
        

      

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

     

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

     

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

     

    “Closing Price” means, for any
date, the closing price per share of the Common Stock for such date (or, if not
a Trading Day, the nearest preceding date that is a Trading Day) on the primary
Eligible Market or exchange or quotation system on which the Common Stock is
then listed or quoted.

     

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

     

    “Company Counsel” means Haynes
and Boone, LLP, counsel to the Company.

     

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

     

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

     

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

     

    “Covering Shares” has the
meaning set forth in Section
4.1(b).

     

    “Disclosure Materials” means
the Super 8-K, together with this Agreement and the Schedules to this
Agreement.

     

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

     

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

     

     “Eligible Market” means any of
the New York Stock Exchange, the NYSE Amex Equities, the NASDAQ Global Select
Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin
Board.

     

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

     

    “Escrow Account” has the meaning set forth in Section 2.2.

     

    “Escrow Agent” has the meaning set forth in Section 2.2.

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    “Filing Date” means the date
that is sixty (60) days after the Closing Date or, if such date is not a
Business Day, the next date that is a Business Day.

     

    “FINRA” has the meaning set
forth in Section
3.2(c).

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Person” has the meaning set
forth in Section 3.1(aa).

     

    
      
        
        

      

      
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    “Pioneer” means Pioneer Transformers Ltd., a Canadian
corporation.

     

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

     

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

     

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

     

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

     

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

     

    “Required Effectiveness Date”
means one hundred and eighty (180) days after the Closing Date.

     

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

     

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

     

    “Super 8-K” has the meaning set
forth in Section 3.1(g).

     

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

     

    “Share Exchange” means the closing of the acquisition of 100% of the
issued and outstanding capital stock of Pioneer, by the Company, pursuant to the
Share Exchange Agreement.

     

    “Share Exchange Agreement” means that certain Share Exchange Agreement, of even
date herewith, by and among the Company, Pioneer and the shareholders of
Pioneer.

     

     

    
      
        
        

      

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

     

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

     

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

     

    “Trading Day” means (i) a day
on which the Common Stock is traded on a Trading Market (other than the OTC
Bulletin Board), or (ii) if the Common Stock is not listed or quoted on a
Trading Market (other than the OTC Bulletin Board), a day on which the Common
Stock is traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (iii) if the Common Stock is not listed or quoted on any Trading
Market, a day on which the Common Stock is quoted in the over-the-counter market
as reported by the Pink Sheets LLC (or any similar organization or agency
succeeding to its functions of reporting prices); provided, that in the event
that the Common Stock is not listed or quoted as set forth in (i), (ii) and
(iii) hereof, then Trading Day shall mean a Business Day.

     

    “Trading Market” means
whichever of the New York Stock Exchange, the NYSE Amex Equities, the NASDAQ
Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC
Bulletin Board on which the Common Stock is listed or quoted for trading on the
date in question.

     

    “Transaction” has the meaning set forth in Section
3.2(i).

     

    “Transfer Agent” means the
Company’s transfer agent at the time.

     

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

     

    “Variable Rate Transaction”
means a transaction in which the Company issues or sells (i) any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (A) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of Common Stock
at any time after the initial issuance of such debt or equity securities, or (B)
with a conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock or
(ii) enters into any agreement, including, but not limited to, an equity line of
credit, whereby the Company may sell securities at a future determined
price.

     

    ARTICLE
II 

    PURCHASE
AND SALE

     

    2.1 Closing.  Subject
to the terms and conditions set forth in this Agreement, at the Closing the
Company shall issue and sell to each Investor, and each Investor shall,
severally and not jointly, purchase from the Company, such number of Shares for
the price set forth on such Investor’s signature page to this
Agreement.  The date and time of the Closing and shall be 11:00 a.m.,
New York City Time, on the Closing Date.  The Closing shall take place
at the offices of the Company’s Counsel.

     

     

    
      
        
        

      

      
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    2.2 Escrow.  Pending
the Closing, all funds paid hereunder shall be deposited by the Investors in a
separate account maintained by Signature Bank (the “Escrow Agent”) for the benefit
of Investors (the “Escrow
Account”).

     

    2.3 Closing
Deliveries.

     

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

     

    (i) a copy of
the Company’s irrevocable instructions to the Transfer Agent instructing the
Transfer Agent to deliver, on an expedited basis, one or more stock
certificates, free and clear of all restrictive and other legends (except as
expressly provided in Section 4.1(b)
hereof), evidencing such number of Shares set forth on such Investor’s signature
page to this Agreement, registered in the name of such Investor;

     

    (ii) duly
executed Transfer Agent Instructions acknowledged by the Company’s transfer
agent;

     

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

     

    (iv) a
lock up agreement, in the form of Exhibit F attached
hereto, duly executed by all shareholders of Pioneer as of immediately prior to
the Share Exchange;

    (v)  a
certificate of the Secretary of the Company, dated as of the Closing Date,
(a) certifying the resolutions adopted by the Board of Directors of the
Company approving the transactions contemplated by this Agreement and the
issuance of the Shares, (b) certifying the current versions of the
certificate of incorporation, as amended and by-laws of the Company and
(c) certifying as to the signatures and authority of persons signing this
Agreement and all related documents on behalf of the Company; and

     

    (vi) a
certificate of the Chief Executive Officer or Chief Financial Officer of the
Company, dated as of the Closing Date, certifying to the fulfillment of the
conditions specified in Section 5.1(a) and
(b).

     

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

     

    (i) this
Agreement duly executed by such Investor;

     

    (ii) Exhibits
A-1, A-2 and A-3, as appropriate, duly completed and executed by such Investor;
and

     

     

    
      
        
        

      

      
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    (iii) the
purchase price set forth on such Investor’s signature page to this Agreement in
United States dollars and in immediately available funds, by wire transfer
pursuant to the release of the funds held in the Escrow Account to an account
designated in writing by the Company prior to the Closing.

     

    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES

     

    3.1 Representations and
Warranties of the Company.  The Company hereby represents and
warrants to the Investors as follows (which representations and warranties shall
be deemed to apply, where appropriate, to each Subsidiary of the
Company):

     

    (a) Subsidiaries.  The
Company owns or controls, directly or indirectly, all of the capital stock or
comparable equity interests of each Subsidiary free and clear of any Lien, and
all issued and outstanding shares of capital stock or comparable equity interest
of each Subsidiary are validly issued and are fully paid, non-assessable and
free of preemptive and similar rights; and the Company owns or controls,
directly or indirectly, only the following corporations, partnerships, limited
liability partnerships, limited liability companies, associations or other
entities: (i) Pioneer and (ii) Bernard Granby Realty Inc., a Canadian
corporation (each, a “Subsidiary”).

     

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

     

    (c) Authorization;
Enforcement. The Company has the requisite corporate authority to enter
into and to consummate the transactions contemplated by this Agreement and
otherwise to carry out its obligations hereunder. The execution and delivery of
this Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and no further consent or action is required by the
Company, its Board of Directors or its stockholders.  This Agreement
has been (or upon delivery will be) duly executed by the Company and is, or when
delivered in accordance with the terms hereof, will constitute, the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except (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.

     

     

    
      
        
        

      

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

     

    (e) The
Shares.   The Shares are duly authorized and, when issued
and paid for in accordance with this Agreement, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens and will not be
subject to preemptive or similar rights of stockholders (other than those
imposed by the Investors).

     

    (f) Capitalization.  The
aggregate number of shares and type of all authorized, issued and outstanding
classes of capital stock, options and other securities of the Company (whether
or not presently convertible into or exercisable or exchangeable for shares of
capital stock of the Company) is set forth in Schedule 3.1(f)
hereto. To the Company’s knowledge, all outstanding shares of capital stock are
duly authorized, validly issued, fully paid and nonassessable and have been
issued in compliance in all material respects with all applicable securities
laws.  Except as disclosed in Schedule 3.1(f)
hereto, to the Company’s knowledge, the Company does not have outstanding any
other Options, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or entered into any
agreement giving any Person any right to subscribe for or acquire, any shares of
Common Stock, or securities or rights convertible or exchangeable into shares of
Common Stock. Except as set forth on Schedule 3.1(f)
hereto, and except for customary adjustments as a result of stock dividends,
stock splits, combinations of shares, reorganizations, recapitalizations,
reclassifications or other similar events, to the Company’s knowledge, there are
no anti-dilution or price adjustment provisions contained in any security issued
by the Company (or in any agreement providing rights to security holders) and
the issuance and sale of the Shares will not obligate the Company to issue

     

     

    
      
        
        

      

      
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    shares of
Common Stock or other securities to any Person (other than the Investors) and
will not result in a right of any holder of securities to adjust the exercise,
conversion, exchange or reset price under such securities.  To the
Company’s knowledge, except as disclosed in the Super 8-K and any Schedules 13D
or 13G filed with the SEC pursuant to Rule 13d-1 of the Exchange Act by
reporting persons or in Schedule 3.1(f)
hereto, no Person or group of related Persons beneficially owns (as determined
pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire, by
agreement with or by obligation binding upon the Company, beneficial ownership
of in excess of 5% of the outstanding Common Stock.

     

    (g) Super 8-K; Financial
Statements.  Attached hereto as Schedule 3.1(g) is a
copy of a substantially final Current Report on Form 8-K (the “Super 8-K”) that the Company
will file with the SEC in connection with the Share Exchange on or prior to the
4th Trading Day immediately following the date thereof (which Current Report
contains, among other information, risk factors concerning the Company and
financial statements required to be filed therewith).  The Super 8-K,
upon its filing with the SEC, will comply, in all material respects with the
requirements of the Exchange Act, and the rules and regulations of the SEC
promulgated thereunder and other federal, state and local laws applicable to the
Super 8-K, and the Super 8-K does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the Super 8-K comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles (“GAAP”) applied on a consistent
basis during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements), and fairly present in all material respects
the financial position of the Company and its Subsidiaries as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). All material agreements to which the Company or any Subsidiary is
a party or to which the property or assets of the Company or any Subsidiary are
subject are included as part of or identified in the Super 8-K, to the extent
such agreements are required to be included or identified pursuant to the rules
and regulations of the SEC.

     

    (h) Material Changes;
Undisclosed Events, Liabilities or Developments;
Solvency.   Since the date of the latest audited financial
statements included within the Super 8-K, except as disclosed in the Super 8-K
or in Schedule
3.1(h) hereto, (i) there has been no event, occurrence or
development that, individually or in the aggregate, has had or that would result
in a Material Adverse Effect, (ii) the Company has not incurred any
material liabilities other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company's financial
statements pursuant to GAAP or required to be disclosed in filings made with the
SEC, (iii) the Company has not altered its method of accounting or changed
its auditors, except as disclosed in the Super 8-K, (iv) the Company has
not declared or made any dividend or distribution of cash or other property to
its stockholders, in their capacities as such, or purchased, redeemed or made

     

     

     

    
      
        
        

      

      
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    any
agreements to purchase or redeem any shares of its capital stock, and
(v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock-based
plans.  The Company has not taken any steps to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or reason
to believe that its creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a
creditor to do so.  The Company is not as of the date hereof, and
after giving effect to the transactions contemplated hereby to occur at the
Closing, will not be Insolvent (as defined below).  For purposes of
this Section
3.1(h), “Insolvent” means (i) the
present fair saleable value of the Company's assets is less than the amount
required to pay the Company's total Indebtedness (as defined in Section 3.1(aa)),
(ii) the Company is unable to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured, (iii) the Company intends to incur or believes that it will incur debts
that would be beyond its ability to pay as such debts mature or (iv) the Company
has unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted. The
representations and warranties in this Section 3.1(h) as they relate to the
Company prior to consummation of the Share Exchange are qualified to the extent
of the Company’s knowledge.

     

    (i) Absence of
Litigation.  Except as disclosed in the Super 8-K, there is no
action, suit, claim, or Proceeding, or, to the Company's knowledge, inquiry or
investigation, before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any Subsidiary that
could, individually or in the aggregate, to have a Material Adverse Effect. The
representations and warranties in this Section 3.1(i) as they relate to the
Company prior to consummation of the Share Exchange are qualified to the extent
of the Company’s knowledge.

     

    (j) Compliance.  Except
as would not, individually or in the aggregate, reasonably be expected to have
or result in a Material Adverse Effect, (i)  neither the Company nor any
Subsidiary is in default under or in violation of (and no event has occurred
that has not been waived that, with notice or lapse of time or both, would
result in a default by the Company or any Subsidiary under), nor has the Company
or any Subsidiary received written notice of a claim that it is in default under
or that it is in violation of, any 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) neither the Company nor any Subsidiary is in violation of any
order of any court, arbitrator or governmental body, or (iii)  neither the
Company nor any Subsidiary is or has been in violation of any statute, rule or
regulation of any governmental authority. The representations and warranties in
this Section 3.1(j) as they relate to the Company prior to consummation of the
Share Exchange are qualified to the extent of the Company’s
knowledge.

     

    (k) Title to
Assets.  The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material to the
business of the Company and each Subsidiary, in each case free and clear of all
Liens, except for Liens that do not, individually or in the aggregate, have or
result in a Material Adverse Effect. Any real property and facilities held under
lease by the Company or any Subsidiary is held by it under valid, subsisting and
enforceable leases of which the Company and each Subsidiary is in material
compliance. The representations and warranties in this Section 3.1(k) as they
relate to the Company prior to the consummation of the Share Exchange are
qualified to the extent of the Company’s knowledge.

     

     

    
      
        
        

      

      
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    (l) No General Solicitation;
Placement Agent's Fees.  Neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Shares. The
Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, or brokers’ commission (other than for persons engaged
by any Investor or its investment advisor) relating to or arising out of the
issuance of the Shares pursuant to this Agreement. The Company shall pay, and
hold each Investor harmless against, any liability, loss or expense (including,
without limitation, reasonable attorney's fees and out-of-pocket expenses)
arising in connection with any such claim for fees arising out of the issuance
of the Shares pursuant to this Agreement. Notwithstanding the foregoing, the
Company has not engaged any placement agent or other agent in connection with
the sale of the Shares.

     

    (m)   Private Placement;
Investment Company; U.S. Real Property Holding
Corporation.  Neither the Company nor any of its Affiliates
nor, any Person acting on the Company’s behalf has, directly or indirectly, at
any time within the past six months, made any offer or sale of any security or
solicitation of any offer to buy any security under circumstances that would
(i) eliminate the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer and sale
by the Company of the Shares as contemplated hereby or (ii) cause the
offering of the Shares pursuant to this Agreement to be integrated with prior
offerings by the Company for purposes of any applicable law, regulation or
stockholder approval provisions, including, without limitation, under the rules
and regulations of any Trading Market. Assuming the accuracy of the
representations and warranties of the Investors set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the
Shares by the Company to the Investors as contemplated hereby. The sale and
issuance of the Shares hereunder does not contravene the rules and regulations
of any Trading Market on which the Common Stock is listed or quoted. The Company
is not required to be registered as, and is not an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as
amended.  The Company is not required to be registered as a United
States real property holding corporation within the meaning of the Foreign
Investment in Real Property Tax Act of 1980.

     

    (n) Form S-1
Eligibility.  The Company is eligible to register the Shares
for resale by the Investors using Form S-1 promulgated under the Securities
Act.

     

    (o) Listing and Maintenance
Requirements.  The Company has not, in the twelve months
preceding the date hereof, received notice (written or oral) from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market.  The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

     

     

    
      
        
        

      

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

     

    (q) Application of Takeover
Protections. The Company and its Board of Directors have taken all
necessary action, if any, 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 charter
documents or the laws of its state of incorporation that is or could become
applicable to any of the Investors as a result of the Investors and the Company
fulfilling their obligations or exercising their rights under this Agreement,
including, without limitation, as a result of the Company’s issuance of the
Shares and the Investors’ ownership of the Shares.

     

    (r) Disclosure.  The
Company confirms that neither it nor any officers, directors or Affiliates, has
provided any of the Investors or their agents or counsel with any information
that constitutes or might constitute material, nonpublic information (other than
the existence and terms of the issuance of Shares, as contemplated by this
Agreement, and the information set forth in the Super 8-K). The Company
understands and confirms that each of the Investors will rely on the foregoing
representations in effecting transactions in securities of the Company. All
disclosure provided by the Company to the Investors regarding the Company, its
business and the transactions contemplated hereby, including the Schedules to
this Agreement furnished by or on behalf of the Company, are true and correct in
all material respects and do not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. To the Company’s knowledge, except for the transactions contemplated
by this Agreement and the Super 8-K, no event or circumstance has occurred or
information exists with respect to the Company or any Subsidiary or their
businesses, properties, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed. The
Company acknowledges and agrees that no Investor makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those set forth in this Agreement.

     

    (s) Acknowledgment Regarding
Investors' Purchase of Securities.  Based upon the assumption
that the transactions contemplated by this Agreement are consummated in all
material respects in conformity with this Agreement, the Company acknowledges
and agrees that each of the Investors is acting solely in the capacity of an
arm's length purchaser with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that no Investor is acting
as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any
advice given by any Investor or any of their respective representatives or
agents in connection with this Agreement and the transactions contemplated
hereby is merely incidental to the Investors’ purchase of the Shares. The
Company further represents to each Investor that the Company’s decision to enter
into this Agreement has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its advisors and
representatives.

     

    
      
        
        

      

      
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    (t) Patents and
Trademarks.  The Company and each Subsidiary owns, or possesses
adequate rights or licenses to use, all trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
other intellectual property rights (“Intellectual Property Rights”)
necessary to conduct their respective businesses as now conducted. None of the
Company’s or any Subsidiary’s Intellectual Property Rights have expired or
terminated, or are expected to expire or terminate within three years from the
date of this Agreement. The Company does not have any knowledge of any
infringement by the Company or any Subsidiary of Intellectual Property Rights of
others.  There is no claim, action or proceeding being made or
brought, or to the knowledge of the Company, being threatened, against the
Company or any Subsidiary regarding its Intellectual Property Rights. The
representations and warranties in this Section 3.1(t) as they relate to the
Company prior to the consummation of the Share Exchange are qualified to the
extent of the Company’s knowledge.

     

    (u) Insurance.  The
Company and each Subsidiary 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 and locations in which the Company and each
Subsidiary is engaged.

     

    (v) Regulatory
Permits.  The Company and each Subsidiary possesses all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as presently conducted and described in the Super 8-K
(“Material Permits”),
except where the failure to possess such permits does not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, and neither the Company nor any Subsidiary has received any written
notice of proceedings relating to the revocation or modification of any Material
Permit. The representations and warranties in this Section 3.1(v) as they relate
to the Company prior to the consummation of the Share Exchange are qualified to
the extent of the Company’s knowledge.

     

    (w) Transactions With Affiliates
and Employees.  Except as disclosed in the Super 8-K, none of
the officers, directors or employees of the Company is presently a party to any
transaction with the Company that would be required to be reported on Form 10-K
by Item 13 thereof pursuant to Regulation S-K Item 404 (other than for ordinary
course services as employees, officers or directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or, to the
Company's knowledge, any corporation, partnership, trust or other entity in
which any such officer, director, or employee has a substantial interest or is
an officer, director, trustee or partner. The representations and warranties in
this Section 3.1(w) as they relate to the Company prior to the consummation of
the Share Exchange are qualified to the extent of Company’s
knowledge.

     

    
      
        
        

      

      
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    (x) Internal Accounting
Controls.  The Company and each Subsidiary 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 existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences. The representations and warranties in this Section 3.1(x) as
they relate to the Company prior to the consummation of the Share Exchange are
qualified to the extent of the Company’s knowledge.

     

    (y) Sarbanes-Oxley Act.
The Company is in compliance in all material respects with applicable
requirements of the Sarbanes-Oxley Act of 2002 and applicable rules and
regulations promulgated by the SEC thereunder, except where such noncompliance
would not have, individually or in the aggregate, a Material Adverse Effect. The
representations and warranties in this Section 3.1(y) as they relate to the
Company prior to the consummation of the Share Exchange are qualified to the
extent of the Company’s knowledge.

     

    (z) Foreign Corrupt
Practices.  Neither the Company nor any Subsidiary nor, to the
knowledge of the Company, any director, officer, agent, employee or other Person
acting on behalf of the Company or any Subsidiary has, in the course of its
actions for, or on behalf of, the Company (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee or to any foreign or
domestic political parties or campaigns from corporate funds; (iii) violated or
is in violation in any material respect of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee. The representations and
warranties in this Section 3.1(z) as they relate to the Company prior to the
consummation of the Share Exchange are qualified to the extent of the Company’s
knowledge.

     

    (aa) Indebtedness.  Except
as disclosed in the Super 8-K, neither the Company nor any Subsidiary (i) has
any outstanding Indebtedness (as defined below), (ii) is in violation of any
term of or is in default under any contract, agreement or instrument relating to
any Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, and (iii) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company's officers, has or is
expected to have a Material Adverse Effect.  The representatives and
Warranties in this Section 3.1(aa) as they relate to the Company prior to the
Share Exchange are qualified to the extent of the Company’s
knowledge.  For purposes of this Agreement: (x) “Indebtedness” of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (other than trade payables entered into in the ordinary
course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of 

     

     

     

    
      
        
        

      

      
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    property,
assets or businesses, (E) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as financing,
in either case with respect to any property or assets acquired with the proceeds
of such indebtedness (even though the rights and remedies of the seller or bank
under such agreement in the event of default are limited to repossession or sale
of such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with GAAP, consistently applied for the periods
covered thereby, is classified as a capital lease, (G) all indebtedness
referred to in clauses (A) through (F) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in any property or assets (including accounts and contract
rights) owned by any Person, even though the Person which owns such assets or
property has not assumed or become liable for the payment of such indebtedness,
and (H) all Contingent Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means,
as to any Person, any direct or indirect liability, contingent or otherwise, of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto; and (z) “Person” means an individual,
a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, a government or any department or agency
thereof and any other legal entity.

     

    (bb) Employee
Relations.  Except as disclosed in Schedule 3.1(bb),
neither the Company nor any Subsidiary is a party to any collective bargaining
agreement or employs any member of a union. The Company believes that its
relations with its employees are as disclosed in the Super 8-K.  No
executive officer of the Company or any Subsidiary has notified the Company or
any Subsidiary that such officer intends to leave the Company or a Subsidiary,
as applicable, or otherwise terminate such officer's employment with the Company
or a Subsidiary, as applicable. To the knowledge of the Company or any
Subsidiary, no executive officer of the Company or any Subsidiary is in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer does not subject the Company or any
Subsidiary to any liability with respect to any of the foregoing matters. The
representations and warranties in this Section 3.1(bb) as they relate to the
Company prior to consummation of the Share Exchange are qualified to the extent
of the Company’s knowledge.

     

    (cc) Labor
Matters.   The Company and each Subsidiary is in
compliance in all material respects with all federal, state, local and foreign
laws and regulations respecting labor, employment and employment practices and
benefits, terms and conditions of employment and wages and hours, except where
failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. The
representations and warranties in this Section 3.1(cc) as they relate to the
Company prior to consummation of the Share Exchange are qualified to the extent
of the Company’s knowledge.

     

     

     

    
      
        
        

      

      
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    (dd) Environmental
Laws.  The Company and each Subsidiary (i) is in compliance in
all material respects with any and all Environmental Laws (as hereinafter
defined), (ii) has received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) is in compliance in all material respects with all terms
and conditions of any such permit, license or approval where, in each of the
foregoing clauses (i), (ii) and (iii), the failure to so comply would be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect.  The term “Environmental Laws” means all
federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous Materials”) into
the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder. The representations and warranties in this Section 3.1(dd) as they
relate to the Company prior to consummation of the Share Exchange are qualified
to the extent of the Company’s knowledge.

     

    (ee) Subsidiary
Rights.  The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such Subsidiary.

     

    (ff) Tax
Status.  The Company and each Subsidiary (i) has made or filed
all foreign, federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and (iii) has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations
apply.  There are no unpaid taxes in any material amount claimed to be
due by the taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim. The representations and warranties in this
Section 3.1(ff) as they relate to the Company prior to consummation of the Share
Exchange are qualified to the extent of the Company’s knowledge.

     

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

     

    (a) Organization;
Authority.  If the Investor is an entity, such Investor is a
corporation, partnership, limited liability company or partnership, association,
joint stock company, trust, unincorporated organization or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate, partnership or
other power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations

     

     

    
      
        
        

      

      
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    hereunder.
The purchase by such Investor of the Shares hereunder has been, to the extent
such Investor is an entity, duly authorized by all necessary corporate,
partnership or other action on the part of such Investor. This Agreement has
been duly executed and delivered by such Investor and constitutes the valid and
binding obligation of such Investor, enforceable against it in accordance with
its terms, except (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) No Public Sale or
Distribution.  Such Investor is acquiring the Shares in the
ordinary course of business for its own account and not with a view towards, or
for resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered under the Securities Act or under an exemption from
such registration and in compliance with applicable federal and state securities
laws, and such Investor does not have a present arrangement to effect any
distribution of the Shares to or through any person or entity; provided, however, that by
making the representations herein, such Investor does not agree to hold any of
the Shares for any minimum or other specific term and reserves the right to
dispose of the Shares at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act.

     

    (c) Investor
Status.  At the time such Investor was offered the Shares, it
was, and at the date hereof it is an “accredited investor” as defined in Rule
501(a) under the Securities Act or a “qualified institutional buyer” as defined
in Rule 144A(a) under the Securities Act.  Such Investor is not a
registered broker dealer registered under Section 15(a) of the Exchange Act, or
a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) or an entity engaged
in the business of being a broker dealer.  Except as otherwise
disclosed in writing to the Company on Exhibit A-2 (attached
hereto) on or prior to the date of this Agreement, such Investor is not
affiliated with any broker dealer registered under Section 15(a) of the Exchange
Act, or a member of FINRA or an entity engaged in the business of being a broker
dealer.

    

    (d) General
Solicitation.  Such Investor is not purchasing the Shares as a
result of any advertisement, article, notice or other communication regarding
the Shares published in any newspaper, magazine or similar media, broadcast over
television or radio, disseminated over the Internet or presented at any seminar
or any other general solicitation or general advertisement.

     

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

     

     

    
      
        
        

      

      
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    (f) Access to
Information.  Such Investor acknowledges that it has been
afforded: (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Shares and the merits
and risks of investing in the Shares; (ii) access to information about the
Company and each Subsidiary and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment.

     

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

     

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

     

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

     

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

     

     

    
      
        
        

      

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

     

    (l) No Legal, Tax or Investment
Advice.  Such Investor understands that nothing in this
Agreement or any other materials presented by or on behalf of the Company to the
Investor in connection with the purchase of the Shares constitutes legal, tax or
investment advice.  Such Investor has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in con­nection with its purchase of the Shares.

     

    ARTICLE
IV

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1 Transfer
Restrictions.

     

    (a) The
Investors covenant that the Shares will only be disposed of pursuant to an
effective registration statement under, and in compliance with the requirements
of, the Securities Act or pursuant to an available exemption from the
registration requirements of the Securities Act, and in compliance with any
applicable state securities laws.  In connection with any transfer of
Securities other than pursuant to an effective registration statement or to the
Company, or at such time that the Shares may be sold without the requirement to
be in compliance with Rule 144(c)(1) and otherwise without restriction or
limitation pursuant to Rule 144, the Company may require the transferor to
provide to the Company an opinion of counsel selected by the transferor, the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration under
the Securities Act.  Notwithstanding the foregoing, the Company hereby
consents to and agrees to register on the books of the Company and with its
Transfer Agent, without any such legal opinion, except to the extent that the
transfer agent requests such legal opinion, any transfer of Shares by an
Investor to an Affiliate of such Investor, provided that the transferee
certifies to the Company that it is an “accredited investor” as defined in Rule
501(a) under the Securities Act and provided that such Affiliate does not
request any removal of any existing legends on any certificate evidencing the
Shares.

     

    (b) The
Investors agree to the imprinting, until no longer required by this Section 4.1(b),
of the following legend on any certificate evidencing any of the
Shares:

     

    THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.  THESE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN
SECURED BY SUCH SECURITIES.

     

     

    
      
        
        

      

      
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    Certificates
evidencing the Shares shall not be required to contain such legend or any other
legend (i) while a registration statement (including the Registration Statement)
covering the resale of the Shares is effective under the Securities Act, (ii)
following any sale of such Shares pursuant to Rule 144 if the holder provides the Company with a legal opinion
(and the documents upon which the legal opinion is based) reasonably acceptable
to the Company to the effect that the Shares can be sold under Rule 144, (iii)
if the Shares are eligible for sale
without the requirement to be in compliance with Rule 144(c)(1) and otherwise
without restriction or limitation pursuant to Rule 144, or (iv) if the holder provides the Company with a legal opinion
(and the documents upon which the legal opinion is based) reasonably acceptable
to the Company to the effect that the legend is not required under
applicable requirements of the Securities Act (including controlling judicial
interpretations and pronouncements issued by the Staff of the
SEC).  The Company shall cause its counsel to issue the legal opinion
included in the Transfer Agent Instructions to the Transfer Agent on the
Effective Date.  Following the Effective Date and provided the
registration statement referred to in clause (i) above is then in effect, or at
such earlier time as a legend is no longer required for certain Shares, the
Company will no later than three Trading
Days following the delivery by an Investor to the Company or the Transfer Agent
(if delivery is made to the Transfer Agent a copy shall be contemporaneously
delivered to the Company) of (i) a legended certificate representing such Shares
(and, in the case of a requested transfer, endorsed or with stock powers
attached, signatures guaranteed, and otherwise in form necessary to affect
transfer), and (ii) an opinion of counsel to the extent required by Section 4.1(a),
deliver or cause to be delivered to such Investor a certificate representing
such Shares that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to the Transfer Agent
that enlarge the restrictions on transfer set forth in this
Section.

     

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

     

     

    
      
        
        

      

      
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    (c) The
Company will not object to and shall permit (except as prohibited by law) an
Investor to pledge or grant a security interest in some or all of the Shares in
connection with a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Shares to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement,
and if required under the terms of such arrangement, the Company will not object
to and shall permit (except as prohibited by law) such Investor to transfer
pledged or secured Shares to the pledgees or secured parties.  Except
as required by law, such a pledge or transfer would not be subject to approval
of the Company, no legal opinion of the pledgee, secured party or pledgor shall
be required in connection therewith (but such legal opinion shall be required in
connection with a subsequent transfer or foreclosure following default by the
Investor transferee of the pledge), and no notice shall be required of such
pledge.  Each Investor acknowledges that the Company shall not be
responsible for any pledges relating to, or the grant of any security interest
in, any of the Shares or for any agreement, understanding or arrangement between
any Investor and its pledgee or secured party.  At the appropriate
Investor's expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Shares may reasonably request in
connection with a pledge or transfer of the Shares, including the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder. Provided that
the Company is in compliance with the terms of this Section 4.1(c), the
Company’s indemnification obligations pursuant to Section 6.4 shall not
extend to any Proceeding or Losses arising out of or related to this Section
4.1(c).

     

    4.2 Furnishing of
Information.  Until the date that any Investor owning Shares
may sell all of them without the requirement to be in compliance with Rule
144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144
(or any successor provision), the Company covenants to use its commercially
reasonable efforts to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act.  The
Company further covenants that it will take such further action as any holder of
Shares may reasonably request to satisfy the provisions of this Section
4.2.

     

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

     

    4.4 Securities Laws Disclosure;
Publicity.  The Company shall, at or before 5:30 p.m., New York
time, on the fourth Trading Day following execution of this Agreement and the
Share Exchange Agreement, file the Super 8-K with the SEC, including as exhibits
to the Super 8-K this Agreement, in the form required by the Exchange
Act.  Thereafter, the Company shall timely file any filings and
notices required by the SEC or applicable law with respect to the transactions
contemplated hereby and provide copies thereof to the Investors promptly after
filing.  Except as herein provided, neither the Company nor any
Subsidiary shall publicly disclose the name of any Investor, or include the name
of any Investor in any press release without the prior written consent of such
Investor (which consent shall not be unreasonably withheld or delayed), unless
otherwise required by law, regulatory authority or Trading
Market.  Neither the Company nor any Subsidiary shall, nor shall any
of their respective officers, directors, employees and agents, provide any
Investor with any material nonpublic information regarding the Company or any
Subsidiary from and after the issuance of the above referenced press release
without the express written consent of such Investor.

     

     

    
      
        
        

      

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

     

    4.6 Variable Rate
Transactions. From the date hereof until eighteen (18) months following
the Closing Date, the Company shall be prohibited from effecting or entering
into an agreement to effect the offer or sale to, or exchange with (or other
type of distribution to) any third party, of Common Stock or any debt or equity
securities convertible, exercisable or exchangeable into Common Stock involving
a Variable Rate Transaction.

     

    ARTICLE
V

    CONDITIONS

     

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

     

    (a) Representations and
Warranties.  The representations and warranties of the Company
contained herein shall be true and correct in all material respects as of the
date when made and as of the Closing as though made on and as of such date;
and

     

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

     

    (c) No Suspensions of Trading in
Common Stock; Listing. Trading in the Common Stock shall not have been
suspended by the SEC or any Trading Market (except for any suspensions of
trading of not more than one Trading Day solely to permit dissemination of
material information regarding the Company) at any time since the date of
execution of this Agreement, and the Common Stock shall have been at all times
since such date listed for trading on a Trading Market.

     

    
      
        
        

      

      
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    (d) Absence of
Litigation. No action, suit or proceeding by or before any court or any
governmental body or authority, against the Company or any Subsidiary or
pertaining to the transactions contemplated by this Agreement or their
consummation, shall have been instituted on or before the Closing Date, which
action, suit or proceeding would, if determined adversely, have a Material
Adverse Effect.

     

    (e) Closing of the Share
Exchange.  The Share Exchange shall have occurred and the
Company shall have (i) delivered to the Investors evidence thereof and (ii)
provided evidence that the Company is prepared to file the Super 8-K with the
SEC on or before the 4th
Trading Day following the consummation of the Share Exchange.

     

    (f) Closing
Deliveries.  The Company shall have delivered the items set
forth in Section 2.3(a) of this Agreement.

     

    (g)
Minimum Escrow
Deposit.  The Investors shall have deposited at least
$5,000,000 into the Escrow Account and shall have delivered executed signature
pages to this Agreement to the Company committing to purchase at least an
aggregate of $5,000,000 of Shares.

     

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

     

    (a) Representations and
Warranties.  The representations and warranties of the
Investors contained herein shall be true and correct in all material respects as
of the date when made and as of the Closing Date as though made on and as of
such date; and

     

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

     

    (c) Disclosure Materials
Reconfirmation.  Each Investor shall have signed an
acknowledgement of receipt of the Disclosure Materials, in the form attached
hereto as Exhibit
E, and shall have reconfirmed such Investor’s desire to acquire the
Shares hereunder.

     

    (d) Closing
Deliverables.  Each Investor shall have delivered the items set
forth in Section 2.3(b) of this Agreement.

     

    ARTICLE
VI 

    REGISTRATION
RIGHTS

     

    6.1 Registration
Statement.

     

    (a) As
promptly as possible, and in any event on or prior to the Filing Date, the
Company shall prepare and file with the SEC a Registration Statement covering
the resale of all Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415.  The Registration Statement
shall be on Form S-1 (except if the Company is not then eligible to register for
resale the Registrable Securities on Form S-1, in which case such registration
shall be on another appropriate form in accordance with the Securities Act and
the Exchange Act) and shall contain (except if otherwise directed by the
Investors or requested by the SEC) the “Plan of Distribution” in substantially
the form attached hereto as Exhibit C.

     

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

    (b) The
Company shall use its commercially reasonable efforts to cause the Registration
Statement to be declared effective by the SEC as promptly as possible after the
filing thereof, but in any event prior to the Required Effectiveness Date, and
shall use its commercially reasonable efforts to keep the Registration Statement
continuously effective under the Securities Act until the earlier of the date
that all Shares covered by such Registration Statement have been sold or can be
sold publicly under Rule 144 (the “Effectiveness Period”);
provided that, upon notification by the SEC that a Registration Statement will
not be reviewed or is no longer subject to further review and comments, the
Company shall request acceleration of such Registration Statement within
five (5) Trading Days after receipt of such notice and request that it
become effective on 4:00 p.m. New York City time on the Effective Date and file
a prospectus supplement for any Registration Statement, whether or not required
under Rule 424 (or otherwise), by 9:00 a.m. New York City time the day after the
Effective Date (unless the Company is required to update its financial
statements prior to requesting acceleration of the Registration Statement, which
will require the Company to file an amendment to such Registration
Statement).

     

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

     

    (d) Should an
Event (as defined below) occur, then upon the occurrence of such Event, and on
every monthly anniversary thereof until the applicable Event is cured, the
Company shall pay to each Investor an amount in cash, as liquidated damages and
not as a penalty, equal to one percent (1.0%) of (i) the number of Shares held
by such Investor as of the date of such Event, multiplied by (ii) the purchase
price paid by such Investor for such Shares then held; provided, however, that
the Company shall not be liable for liquidated damages under this Agreement as
to any Shares that (A) are not permitted by the SEC to be included in a
Registration Statement because of its application of Rule 415 or (B) can be sold
publicly under Rule 144.  The payments to which an Investor shall be
entitled pursuant to this Section 6.1(d)
are referred to herein as “Event
Payments.”  Any Event Payments payable pursuant to the terms
hereof shall apply on a pro rated basis for any portion of a month prior to the
cure of an Event.  All pro rated calculations made pursuant to this
paragraph shall be based upon the actual number of days in such pro rated
month.

     

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

     

    (i) the
Registration Statement is not filed on or prior to the Filing Date;

     

    (ii) the
Registration Statement is not declared effective on or prior to the Required
Effectiveness Date;

     

    
      
        
        

      

      
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    (iii) except as
provided for in Section 6.1(e) (the
“Excluded Events”),
after the Effective Date and during the Effectiveness Period, an Investor is not
permitted to sell Registrable Securities under the Registration Statement (or a
subsequent Registration Statement filed in replacement thereof) for any reason
(other than the fault of such Investor) for ten (10) or more Trading Days
(whether or not consecutive); provided, however, that if an Investor is not
permitted to sell Registrable Securities under the Registration Statement
because the financial statements included in such Registration statement become
ineligible for inclusion therein, the Company may suspend sales of Registrable
Securities under such Registration Statement for up to fifteen (15) Trading Days
prior to it being deemed an Event so long as the Company is not in breach of any
other provision of this Agreement;

     

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

     

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

     

    (e) Notwithstanding
anything in this Agreement to the contrary, the Company may, by written notice
to the Investors, suspend sales under a Registration Statement after the
Effective Date thereof and/or require that the Investors immediately cease the
sale of shares of Common Stock pursuant thereto and/or defer the filing of any
subsequent Registration Statement if the Company is engaged in a material
merger, acquisition or sale and the Board of Directors determines in good faith,
by appropriate resolutions, that, as a result of such activity, (A) it
would be materially detrimental to the Company (other than as relating solely to
the price of the Common Stock) to maintain a Registration Statement
at such time or (B) it is in the best interests of the Company to suspend
sales under such registration at such time.  Upon receipt of such
notice, each Investor shall immediately discontinue any sales of Registrable
Securities pursuant to such registration until such Investor is advised in
writing by the Company that the current Prospectus or amended Prospectus, as
applicable, may be used.  In no event, however, shall this right be
exercised to suspend sales beyond the period during which (in the good faith
determination of the Company’s Board of Directors) the failure to require such
suspension would be materially detrimental to the Company.  The
Company’s rights under this Section 6(e) may be
exercised for a period of no more than 30 Trading Days in any twelve-month
period, without such suspension being considered as part of an Event Payment
determination.  Immediately after the end of any suspension period
under this Section
6(e), the Company shall take all necessary actions (including filing any
required supplemental prospectus) to restore the effectiveness of the applicable
Registration Statement and the ability of the Investors to publicly resell their
Registrable Securities pursuant to such effective Registration
Statement.

     

    (f) The
Company shall not, from the date hereof until 90 days following the Effective
Date of the Registration Statement, prepare and file with the SEC a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities, other than any registration statement or post-effective
amendment to a registration statement (or supplement thereto) relating to the
Company’s employee benefit plans registered on Form S-8.

     

     

    
      
        
        

      

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

     

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

     

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

     

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

     

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    (i) Cooperate
with the Investors to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be free, to the
extent permitted by this Agreement and under law, of all restrictive legends,
and to enable such certificates to be in such denominations and registered in
such names as any such Investors may reasonably request.

     

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

     

    
      
        
        

      

      
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    6.4 Indemnification

     

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

     

     

    
      
        
        

      

      
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    (b) Indemnification by
Investors.  Each Investor shall, severally and not jointly,
indemnify and hold harmless the Company and its directors, officers, agents and
employees to the fullest extent permitted by applicable law, from and against
all Losses (as determined by a court of competent jurisdiction in a final
judgment not subject to appeal or review) arising solely out of any untrue
statement of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising out of or relating to any omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in the
light of the circumstances under which they were made) not misleading, but only
to the extent that (i) such untrue statements or omissions are based solely
upon information regarding such Investor furnished to the Company by such
Investor in writing expressly for use therein, or to the extent that such
information relates to such Investor or such Investor’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Investor expressly for use in the Registration Statement (it
being understood that the information provided by the Investor to the Company in
Exhibits A-1, A-2 and A-3 and the Plan of
Distribution set forth on Exhibit C, as the
same may be modified by such Investor and other information provided by the
Investor to the Company in or pursuant to this Agreement constitutes information
reviewed and expressly approved by such Investor in writing expressly for use in
the Registration Statement), such Prospectus or such form of prospectus or in
any amendment or supplement thereto. In no event shall the liability of any
selling Investor hereunder be greater in amount than the dollar amount of the
net proceeds received by such Investor upon the sale of the Registrable
Securities giving rise to such indemnification obligation.

     

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

     

    An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (i) the Indemnifying Party has agreed in writing to pay such fees
and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of
separate counsel shall be at the 

     

     

     

    
      
        
        

      

      
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    expense
of the Indemnifying Party).  It shall be understood, however, that the
Indemnifying Party shall not, in connection with any one such Proceeding
(including separate Proceedings that have been or will be consolidated before a
single judge) be liable for the fees and expenses of more than one separate firm
of attorneys at any time for all Indemnified Parties, which firm shall be
appointed by a majority of the Indemnified Parties. The Indemnifying Party shall
not be liable for any settlement of any such Proceeding effected without its
written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

     

    All
reasonable fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within 20 Trading
Days of written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).

     

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

     

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

     

     

    
      
        
        

      

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

     

    6.5 Dispositions.  Each
Investor agrees that it will comply with the prospectus delivery requirements of
the Securities Act as applicable to it in connection with sales of Registrable
Securities pursuant to the Registration Statement and shall sell its Registrable
Securities in accordance with the Plan of Distribution set forth in the
Prospectus.  Each Investor further agrees that, upon receipt of a
notice from the Company of the occurrence of any event of the kind described in
Sections
6.2(c)(v), (vi), (vii), or (viii), such Investor
will discontinue disposition of such Registrable Securities under the
Registration Statement until such Investor is advised in writing by the Company
that the use of the Prospectus, or amended Prospectus, as applicable, may be
resumed.  The Company may provide appropriate stop orders to enforce
the provisions of this paragraph. Each Investor, severally and not jointly with
the other Investors, agrees that the removal of the restrictive legend from
certificates representing Shares as set forth in this Section 4.1 is
predicated upon the Company’s reliance that the Investor will comply with the
provisions of this subsection. Both the Company and the Transfer Agent, and
their respective directors, officers, employees and agents, may rely on this
subsection.

     

    6.6 No Piggyback on
Registrations.  Except as set forth on Schedule 6.6 hereto,
neither the Company nor any of its security holders (other than the Investors in
such capacity pursuant hereto) may include securities of the Company in the
Registration Statement other than the Registrable Securities.

     

    6.7 Piggy-Back
Registrations.  If at any time during the Effectiveness Period
there is not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company shall send to each Investor not then eligible to sell
all of their Registrable Securities under Rule 144 in a three-month period,
written notice of such determination and if, within ten days after receipt of
such notice, any such Investor shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable
Securities such Investor requests to be registered.  Notwithstanding the foregoing, in the event that, in
connection with any underwritten public offering, the managing underwriter(s)
thereof shall impose a limitation on the number of shares of Common Stock which
may be included in the Registration Statement because, in such underwriter(s)’
judgment, marketing or other factors dictate such limitation is necessary to
facilitate public distribution, then the Company shall be obligated to include
in such Registration Statement only such limited portion of the Registrable
Securities with respect to which such Investor has requested inclusion hereunder
as the underwriter shall permit; provided, however, that (i) the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities, the
holders of which are not contractually entitled to inclusion of such

     

     

    
      
        
        

      

      
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    securities in such Registration Statement or are not
contractually entitled to pro rata inclusion with the Registrable Securities and
(ii) after giving effect to the immediately preceding proviso, any such
exclusion of Registrable Securities shall be made pro rata among the Investors
seeking to include Registrable Securities and the holders of other securities
having the contractual right to inclusion of their securities in such
Registration Statement by reason of demand registration rights, in proportion to
the number of Registrable Securities or other securities, as applicable, sought
to be included by each such Investor or other holder.  If an offering
in connection with which an Investor is entitled to registration under this
Section
6.7 is an underwritten offering, then
each Investor whose Registrable Securities are included in such Registration
Statement shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering and shall enter into an underwriting agreement in a form and substance
reasonably satisfactory to the Company and the underwriter or underwriters. Upon
the effectiveness the registration statement for which piggy-back registration
has been provided in this Section 6.7, any Event Payments payable by an Investor whose
Registrable Securities are included in such registration statement shall
terminate and no longer be payable.

     

    ARTICLE
VII

    MISCELLANEOUS

     

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

     

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

     

    7.3 Entire
Agreement.  This Agreement, together with the Exhibits and
Schedules hereto, 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 document, exhibits and
schedules.  At or after the Closing, and without further
consideration, the Company will execute and deliver to the Investors such
further documents as may be reasonably requested in order to give practical
effect to the intention of the parties under this Agreement.

     

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

     

     

    
      
        
        

      

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

     

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

     

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

     

    7.8 No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except that each Indemnified Party is an intended third party
beneficiary of Section 6.4 and
(in each case) may enforce the provisions of such Section directly against the
parties with obligations thereunder.

     

     

    
      
        
        

      

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

     

    7.10 Survival.  The
representations and warranties, agreements and covenants contained herein shall
survive the Closing.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    7.17 Independent Nature of
Investors' Obligations and Rights.  The obligations of each
Investor under this Agreement are several and not joint with the obligations of
any other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under this
Agreement.  The decision of each Investor to purchase Shares pursuant
to this Agreement has been made by such Investor independently of any other
Investor and independently of any information, materials, statements or opinions
as to the business, affairs, operations, assets, properties, liabilities,
results of operations, condition (financial or otherwise) or prospects of the
Company which may have been made or given by any other Investor or by any agent
or employee of any other Investor, and no Investor or any of its agents or
employees shall have any liability to any other Investor (or any other person)
relating to or arising from any such information, materials, statements or
opinions.  Nothing contained herein, and no action taken by any
Investor pursuant thereto, shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated by this
Agreement.  Each Investor acknowledges that no other Investor has
acted as agent for such Investor in connection with making its investment
hereunder and that no other Investor will be acting as agent of such Investor in
connection with monitoring its investment hereunder. Each Investor shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Investor to be joined as an additional party in any
Proceeding for such purpose.

     

    SIGNATURE
PAGES TO FOLLOW

     

     

    
      
        
        

      

      
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    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.

     

     

    PIONEER
POWER SOLUTIONS, INC.

     

    By:                                       
                          

    Name:
Nathan J. Mazurek

    Title:   Chief
Executive Officer

     

     

    Address for
Notice:

     

    c/o
Provident Industries, Inc.

    c/o
Clinton Group 

    9 West
57th
Street, 26th
Floor

    New York,
New York 10019

    Tel:
(212)
867-0700                                                    

    Fax:
(212)
867-1325                                                    

    Attn:  Nathan
J. Mazurek, CEO

     

     

    With a copy
to:

     

    Haynes
and Boone, LLP

    1221
Avenue of the Americas, 26th
Floor

    New York,
New York 10020

    Tel:
(212) 659-4974

    Fax:
(212) 884-8234

    Attn:  Rick A. Werner,
Esq.

     

     

    COMPANY
SIGNATURE PAGE

    

    

    
      
        
        

      

      
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    Investor Signature
Page

     

    By its
execution and delivery of this signature page, the undersigned Investor hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement (the “Purchase Agreement”) by and among Pioneer Power
Solutions, Inc. and the Investors (as defined therein), as to the number of
Shares set forth below, and authorizes this signature page to be attached to the
Purchase Agreement or counterparts thereof.

     

     

    Name of
Investor:

     

                                                     
             
  

     

    By:                                            
       
      

    Name:                                            
          

    Title:                                                        
    

     

     

    Address:                                                  
           

                                                                             
    

                                                                                

     

    Telephone
No.: _________________________

    Facsimile
No.:                                                        
            

    Email
Address: __________________________

    Number of
Shares:                                                       

    Aggregate
Purchase Price: $                                    
       

    

     

    Delivery
Instructions (if different than above):

    

    c/o:
_________________________________________________________

    

    Address:
________________________________________________________

    

                
   ________________________________________________________

    
 

    Telephone
No.: _______________________________________________________

    

    Facsimile
No. : _______________________________________________________

    

    Other
Special Instructions: ___________________________________________f8kex10ii_pioneer.htm

     

    Exhibit
10.2

     

    WARRANT

     

    
      	
              PIONEER
      POWER SOLUTIONS, INC.

            
	 
	
              No.
      1

            	 
      	
              1,000,000
      Shares

            
	
              Date
      of Issuance: December 2, 2009

            	 
      	 
      

    

    

    WARRANT TO PURCHASE COMMON
STOCK

     

    VOID
AFTER 5:30 P.M., EASTERN

     

    TIME,
ON THE EXPIRATION DATE

     

    THIS
WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH
THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE
SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.

     

    FOR VALUE
RECEIVED, PIONEER POWER SOLUTIONS, INC., a Delaware corporation (the “Company”), hereby
agrees to sell upon the terms and on the conditions hereinafter set forth, but
no later than 5:30 p.m., Eastern Time, on December 2, 2014 (the “Expiration Date”), to
[___________________], or its registered assigns (the “Holder”), under the
terms as hereinafter set forth, up to 1,000,000 fully paid and non-assessable
shares of Common Stock (as defined in Section 12) of the Company (the “Warrant Stock”), at a
purchase price of $2.00 per share (the “Warrant Price”),
pursuant to this warrant (this “Warrant”). The number
of shares of Warrant Stock to be so issued and the Warrant Price are subject to
adjustment in certain events as hereinafter set forth.

     

    1. Exercise of
Warrant.

     

    (a) The
Holder hereof may exercise this Warrant, in whole or in part, by the surrender
of this Warrant (with the Notice of Exercise attached hereto duly executed) at
the principal office of the Company, and by the payment to the Company of an
amount of consideration therefor equal to the Warrant Price in effect on the
date of such exercise multiplied by the number of shares of Warrant Stock with
respect to which this Warrant is then being exercised, payable at the Holder’s
election (i) by certified or official bank check or by wire transfer to an
account designated by the Company, (ii) by “cashless exercise” in accordance
with the provisions of subsection (b) of this Section 1, but only when a
registration statement under the Securities Act (as defined in Section 12)
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

     

    (b) Notwithstanding
any provisions herein to the contrary and commencing one (1) year following the
Original Issue Date (as defined in Section 12), if (i) the Per Share Market
Value (as defined in Section 12) of one share of Common Stock is greater than
the Warrant Price (at the date of calculation as set forth below) and (ii) the
Holder at the time of exercise is not able to sell the Warrant Stock pursuant to
an effective registration statement filed under the Securities Act providing for
the resale of the Warrant Stock, in lieu of exercising this Warrant by payment
of cash, the Holder may exercise this Warrant by a cashless exercise and shall
receive the number of shares of Common Stock equal to an amount (as determined
below) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Notice of Exercise in which event the
Company shall issue to the Holder a number of shares of Common Stock computed
using the following formula:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	 
      	
               

              X=

            	
              

            
	 
      	 
      	 
      
	
              Where

            	
              X=

            	
              the
      number of shares of Common Stock to be issued to the
    Holder.

            
	 
      	 
      	 
      
	 
      	
              Y=

            	
              the
      number of shares of Common Stock purchasable upon exercise of all of the
      Warrant or, if only a portion of the Warrant is being exercised, the
      portion of the Warrant being exercised.

            
	 
      	 
      	 
      
	 
      	
              A=

            	
              the
      Warrant Price.

            
	 
      	 
      	 
      
	 
      	
              B=

            	
              the
      Per Share Market Value (as defined in Section 12) of one share of Common
      Stock on the Trading Day (as defined in Section 12) immediately preceding
      the date of such election.

            

    

    

    (c) This
Warrant may be exercised in whole or in part so long as any exercise in part
hereof would not involve the issuance of fractional shares of Warrant
Stock.  If exercised in part, the Company shall deliver to the Holder
a new Warrant, identical in form, in the name of the Holder, evidencing the
right to purchase the number of shares of Warrant Stock as to which this Warrant
has not been exercised, which new Warrant shall be signed by the Chairman, Chief
Executive Officer, President or any Vice President of the
Company.  The term Warrant as used herein shall include any subsequent
Warrant issued as provided herein.

     

    (d) No
fractional shares of Warrant Stock will be issued in connection with any
exercise hereof, but in lieu of such fractional shares, the Company shall round
the number of shares to be issued upon exercise up to the nearest whole number
of shares.

     

    (e) In the
event of any exercise of the rights represented by this Warrant, a certificate
or certificates for the Warrant Stock so purchased, registered in the name of
the Holder, shall be delivered to the Holder within a reasonable time after such
rights shall have been so exercised. The person or entity in whose name any
certificate for the Warrant Stock is issued upon exercise of the rights
represented by this Warrant shall for all purposes be deemed to have become the
holder of record of such shares immediately prior to the close of business on
the date on which the Warrant was surrendered and payment of the Warrant Price
and any applicable taxes was made, irrespective of the date of delivery of such
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are closed, such person shall be
deemed to have become the holder of such shares at the opening of business on
the next succeeding date on which the stock transfer books are open. The Company
shall pay any and all documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of Common Stock on
exercise of this Warrant; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any issuance and delivery of shares of Warrant Stock to any Person (as defined
in Section 12) other than the Holder or with respect to any income tax due by
the Holder with respect to any shares of Warrant Stock.

     

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    2. Disposition of Warrant Stock
and Warrant.

     

    (a) The
Holder hereby acknowledges that this Warrant and any Warrant Stock purchased
pursuant hereto are, as of the date hereof, not registered: (i) under the
Securities Act on the ground that the issuance of this Warrant is exempt from
registration under Section 4(2) of the Securities Act as not involving any
public offering or (ii) under any applicable state securities law because the
issuance of this Warrant does not involve any public offering; and that the
Company’s reliance on the Section 4(2) exemption of the Securities Act and under
applicable state securities laws is predicated in part on the representations
hereby made to the Company by the Holder that it is acquiring this Warrant and
will acquire the Warrant Stock for investment for its own account, with no
present intention of dividing its participation with others or reselling or
otherwise distributing the same, subject, nevertheless, to any requirement of
law that the disposition of its property shall at all times be within its
control.

     

    The
Holder hereby agrees that it will not sell or transfer all or any part of this
Warrant and/or Warrant Stock, except pursuant to an effective registration
statement under the Securities Act, unless and until it shall first have given
notice to the Company describing such sale or transfer and furnished to the
Company either (i) an opinion of counsel reasonably satisfactory to the Company,
to the effect that the proposed sale or transfer may be made without
registration under the Securities Act and without registration or qualification
under any state law, or (ii) an interpretative letter from the Securities and
Exchange Commission to the effect that no enforcement action will be recommended
if the proposed sale or transfer is made without registration under the
Securities Act.

     

    (b) If, at
the time of issuance of any Warrant Stock, no registration statement is in
effect with respect to such shares under applicable provisions of the Securities
Act, the Company may at its election require that the Holder provide the Company
with written reconfirmation of the Holder’s investment intent and that any stock
certificate delivered to the Holder of a surrendered Warrant (in connection with
an exercise) shall bear a legend reading substantially as follows:

     

    “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF
THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

     

    In
addition, so long as the foregoing legend may remain on any stock certificate
delivered to the Holder, the Company may maintain appropriate “stop transfer”
orders with respect to such certificates and the shares represented thereby on
its books and records and with those to whom it may delegate registrar and
transfer functions.

     

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    3. Reservation of
Shares.  The Company hereby agrees that at all times there
shall be reserved for issuance upon the exercise of this Warrant such number of
shares of its Common Stock as shall be required for issuance upon exercise of
this Warrant. The Company further agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will be duly
authorized and will, upon issuance and against payment of the Warrant Price
therefor, be validly issued, fully paid and non assessable, free from all taxes,
liens, charges and preemptive rights with respect to the issuance thereof, other
than taxes, if any, in respect of any transfer occurring contemporaneously with
such issuance and other than transfer restrictions imposed by federal and state
securities laws.

     

    4. Exchange, Transfer or
Assignment of Warrant.  Subject to Section 2 hereof, this
Warrant may be transferred by the Holder, in whole or in part, without the
consent of the Company. If transferred pursuant to this paragraph, this Warrant
may be transferred on the books of the Company by the Holder hereof in person or
by duly authorized attorney, upon surrender of this Warrant at the principal
office of the Company, properly endorsed (by the Holder executing an assignment
in the form attached hereto) and upon payment of any necessary transfer tax or
other governmental charge imposed upon such transfer. This Warrant is
exchangeable at the principal office of the Company for Warrants to purchase the
same aggregate number of shares of Warrant Stock, each new Warrant to represent
the right to purchase such number of shares of Warrant Stock as the Holder
hereof shall designate at the time of such exchange. All Warrants issued on
transfers or exchanges shall be dated the Original Issue Date and shall be
identical with this Warrant except as to the number of shares of Warrant Stock
issuable pursuant thereto.

     

    5. Capital
Adjustments.  This Warrant is subject to the following further
provisions:

     

    (a) If any
recapitalization of the Company or reclassification of its Common Stock or any
merger or consolidation of the Company into or with a Person, or the sale or
transfer of all or substantially all of the Company’s assets or of any successor
corporation’s assets to any Person (any such Person being included within the
meaning of the term “successor corporation”) shall be effected, at any time
while this Warrant remains outstanding and unexpired, then, as a condition of
such recapitalization, reclassification, merger, consolidation, sale or
transfer, lawful and adequate provision shall be made whereby the Holder of this
Warrant thereafter shall have the right to receive upon the exercise hereof as
provided in Section 1 and in lieu of the shares of Common Stock immediately
theretofore issuable upon the exercise of this Warrant, such shares of capital
stock, securities or other property as may be issued or payable with respect to
or in exchange for a number of outstanding shares of Common Stock equal to the
number of shares of Common Stock immediately theretofore issuable upon the
exercise of this Warrant had such recapitalization, reclassification, merger,
consolidation, sale or transfer not taken place, and in each such case, the
terms of this Warrant shall be applicable to the shares of stock or other
securities or property receivable upon the exercise of this Warrant after such
consummation.

     

    (b) If the
Company at any time while this Warrant remains outstanding and unexpired shall
subdivide or combine its Common Stock, the number of shares of Warrant Stock
purchasable upon exercise of this Warrant and the Warrant Price shall be
proportionately adjusted.

     

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

     

    (c) Whenever
the number of shares of Warrant Stock purchasable upon exercise of this Warrant
is adjusted, as herein provided, the Warrant Price payable upon the exercise of
this Warrant shall be adjusted to that price determined by multiplying the
Warrant Price immediately prior to such adjustment by a fraction (i) the
numerator of which shall be the number of shares of Warrant Stock purchasable
upon exercise of this Warrant immediately prior to such adjustment, and (ii) the
denominator of which shall be the number of shares of Warrant Stock purchasable
upon exercise of this Warrant immediately thereafter.

     

    (d) The
number of shares of Common Stock outstanding at any given time for purposes of
the adjustments set forth in this Section 5 shall exclude any shares then
directly or indirectly held in the treasury of the Company.

     

    (e) The
Company shall not be required to make any adjustment pursuant to this Section 5
if the amount of such adjustment would be less than one percent (1%) of the
Warrant Price in effect immediately before the event that would otherwise have
given rise to such adjustment.  In such case, however, any adjustment
that would otherwise have been required to be made shall be made at the time of
and together with the next subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall amount to not less than one
percent (1%) of the Warrant Price in effect immediately before the event giving
rise to such next subsequent adjustment.

     

    (f) Following
each computation or readjustment as provided in this Section 5, the new adjusted
Warrant Price and number of shares of Warrant Stock purchasable upon exercise of
this Warrant shall remain in effect until a further computation or readjustment
thereof is required.

     

    6. Notice to
Holders.

     

    (a) In
case:

     

    (i) the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time receivable upon the exercise of this Warrant) for the
purpose of entitling them to receive any dividend (other than a cash dividend
payable out of earned surplus of the Company) or other distribution, or any
right to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right;

     

    (ii) of any
capital reorganization of the Company, any reclassification of the capital stock
of the Company, any consolidation with or merger of the Company into another
Person, or any conveyance of all or substantially all of the assets of the
Company to another Person; or

     

    (iii) of any
voluntary dissolution, liquidation or winding-up of the Company;

     

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    then, and
in each such case, the Company will mail or cause to be mailed to the Holder
hereof at the time outstanding a notice specifying, as the case may be, (i) the
date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such stock or securities at the time
receivable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or
winding-up.  Such notice shall be mailed at least twenty (20) days
prior to the record date therein specified, or if no record date shall have been
specified therein, at least twenty (20) days prior to the date of such action;
provided, however, failure to
provide any such notice shall not affect the validity of such
transaction.

     

    (b) Whenever
any adjustment shall be made pursuant to Section 5 hereof, the Company shall
promptly make a certificate signed by its Chairman, Chief Executive Officer,
President, Vice President, Chief Financial Officer or Treasurer, setting forth
in reasonable detail the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the Warrant
Price and number of shares of Warrant Stock purchasable upon exercise of this
Warrant after giving effect to such adjustment, and shall promptly cause copies
of such certificate to be mailed (by first class mail, postage prepaid) to the
Holder of this Warrant.

     

    7. Ownership Cap and Exercise
Restriction. Notwithstanding anything to the contrary set forth in this
Warrant, the Company shall not effect any exercise of this Warrant, and the
Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 1 hereof or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of
Exercise, the Holder (together with the Holder’s Affiliates (as defined in
Section 12), and any other person or entity acting as a group together with the
Holder or any of the Holder’s Affiliates), would beneficially own in excess of
the Beneficial Ownership Limitation (as defined below).  For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially
owned by the Holder and its Affiliates shall include the number of shares of
Common Stock issuable upon exercise of this Warrant with respect to which such
determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (A) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of its
Affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates.  Except as set forth in
the preceding sentence, for purposes of this Section 7, beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act (as
defined in Section 12) and the rules and regulations promulgated thereunder, it
being acknowledged by the Holder that the Company is not representing to the
Holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and the Holder is solely responsible for any schedules required to be filed
in accordance therewith. To the extent that the limitation contained in this
Section 7 applies, the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any Affiliates)
and of which portion of this Warrant is exercisable shall be in the sole
discretion of the 

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

     

     

    Holder,
and the submission of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable, in each case subject the Beneficial
Ownership Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a determination as to
any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 7, in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company’s most recent
Form 10-Q or Form 10-K, as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or the
Company’s transfer agent setting forth the number of shares of Common Stock
outstanding.  Upon the written or oral request of the Holder, the
Company shall confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding.  In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Warrant,
by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The “Beneficial Ownership
Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Beneficial Ownership
Limitation provisions of this Section 7 may be waived by the Holder, at the
election of the Holder, upon not less than 61 days’ prior notice to the Company
to change the Beneficial Ownership Limitation to 9.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock upon exercise of this Warrant, and the provisions of
this Section 7 shall continue to apply. Upon such a change by the Holder of the
Beneficial Ownership Limitation from such 4.99% limitation to such 9.99%
limitation, the Beneficial Ownership Limitation may not be further waived by the
Holder. The provisions of this paragraph shall be construed and implemented in a
manner otherwise than in strict conformity with the terms of this Section 7 to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.

     

    8. Registration Rights.
If, at any time while this Warrant remains outstanding, or the Holder holds any
shares of Warrant Stock, the Company shall determine to prepare and file with
the Securities and Exchange Commission a registration statement relating to an
offering for its own account or the account of others under the Securities Act
of any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with the
Company’s stock option or other employee benefit plans, then the Company shall
deliver to the Holder a written notice of such determination and, if within
fifteen days after the date of the delivery of such notice, the Holder shall so
request in writing, the Company shall include in such registration statement all
or any part of the Warrant Stock the Holder requests to be
registered.

     

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    9. Loss, Theft, Destruction or
Mutilation.  Upon receipt by the Company of evidence
satisfactory to it, in the exercise of its reasonable discretion, of the
ownership and the loss, theft, destruction or mutilation of this Warrant and, in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to
the Company and, in the case of mutilation, upon surrender and cancellation
hereof, the Company will execute and deliver in lieu hereof, without expense to
the Holder, a new Warrant of like tenor dated the date hereof.

     

    10. Warrant Holder Not a
Stockholder.  The Holder of this Warrant, as such, shall not be
entitled by reason of this Warrant to any rights whatsoever as a stockholder of
the Company.

     

    11. Notices.  Any
notice required or contemplated by this Warrant shall be deemed to have been
duly given if transmitted by registered or certified mail, return receipt
requested, postage prepaid, or nationally recognized overnight delivery service,
to the Company at c/o Provident Industries, Inc., c/o Clinton Group, 9 West
57th
Street, New York, New York 10019, Attention: Chief Executive Officer, or to the
Holder at the name and address set forth in the Warrant Register maintained by
the Company.

     

    12. Definitions. For the
purposes of this Warrant, the following terms have the following
meanings:

     

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

     

    “Common Stock” means
the common stock of the Company, par value $.001 per share, and any other class
of securities into which such securities may hereafter be reclassified or
changed into.

     

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

     

    “Original Issue Date”
means December __, 2009.

     

    “Per Share Market
Value” means on any particular date (a) the closing sales price per share
of the Common Stock on such date on any registered national stock exchange on
which the Common Stock is then listed, or if there is no such closing sales
price on such date, then the closing sales price on such exchange or quotation
system on the date nearest preceding such date, or (b) if the Common Stock is
not then listed on a registered national stock exchange, the closing sales price
for a share of Common Stock in the over-the-counter market, as reported by the
OTC Bulletin Board or in the National Quotation Bureau Incorporated (or similar
organization or agency succeeding to its functions of reporting prices) at the
close of business on such date, or (c) if the Common Stock is not then reported
by the OTC Bulletin Board or the National Quotation Bureau Incorporated (or
similar organization or agency succeeding to its functions of reporting prices),
then the average of the “Pink Sheet” quotes for the five days preceding such
date of determination, or (d) if the Common Stock is not then publicly traded
the fair market value of a share of Common Stock as determined in good faith by
the board of directors of the Company; provided, however, that all
determinations of the Per Share Market Value shall be appropriately adjusted for
any stock dividends, stock splits or other similar transactions during such
period.

     

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    “Person” shall mean
any natural person, corporation, division of a corporation, partnership, limited
liability company, trust, joint venture, association, company, estate,
unincorporated organization or government or any agency or political subdivision
thereof

     

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

     

    “Trading Day” means
(a) a day on which the Common Stock is eligible to be traded on a registered
national stock exchange, or (b) if the Common Stock is not eligible to be traded
on any registered national stock exchange, a day on which the Common Stock is
authorized for quotation on the OTC Bulletin Board, or (c) if the Common Stock
is not eligible to be traded on a registered national stock exchange or
authorized for quotation on the OTC Bulletin Board, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in (a), (b) or
(c) hereof, then Trading Day shall mean any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.

     

    13. Choice of Law. THIS
WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

     

    14. Jurisdiction and
Venue.  The Company and the Holder, by its acceptance hereof,
hereby agree that any dispute which may arise between them arising out of or in
connection with this Warrant shall be adjudicated before a court located in New
York, New York, and they hereby submit to the exclusive jurisdiction of the
federal and state courts of the State of New York located in New York City with
respect to any action or legal proceeding commenced by any party, and
irrevocably waive any objection they now or hereafter may have respecting the
venue of any such action or proceeding brought in such a court or respecting the
fact that such court is an inconvenient forum, relating to or arising out of
this Warrant or any acts or omissions relating to the sale of the securities
hereunder, and consent to the service of process in any such action or legal
proceeding by means of registered or certified mail, return receipt requested,
postage prepaid, in care of the address set forth herein or such other address
as either party shall furnish in writing to the other.

     

    

     

     

    [Signature
Page Follows]

     

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

     

    IN
WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its
behalf, in its corporate name and by its duly authorized officer, as of
this 2nd day of December, 2009.

     

     

    PIONEER
POWER SOLUTIONS, INC.

     

     

    By:_______________________________

    Name:  Nathan
J. Mazurek

    Title:  Chief
Executive Officer

     
 

     

     

     

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

     

    NOTICE OF
EXERCISE

     

    WARRANT

     

    PIONEER
POWER SOLUTIONS., INC.

     

    The
undersigned ____________________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _______________ shares of Common Stock of
Pioneer Power Solutions, Inc. covered by the within Warrant.

     

    
      	
              Dated:

            	 
      	 
      	
              Signature

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              Address

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

    

    

    Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: ______________________

     

    The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.

     

    The
undersigned intends that payment of the Warrant Price shall be made as (check
one):

     

    Cash
Exercise                                       o

     

    Cashless
Exercise                                o

     

    If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of
$______________ by certified or official bank check (or via wire transfer) to
the Company in accordance with the terms of the Warrant.

     

    If the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is _______________.

     

    

     

    Where:

     

    The
number of shares of Common Stock to be issued to the Holder
_________________  (“X”).

     

    The
number of shares of Common Stock purchasable upon exercise of all of the Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised _______________________ (“Y”).

     

    The
Warrant Price ___________________ (“A”).

     

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    The Per
Share Market Value of one share of Common Stock on the Trading Day immediately
preceding the date of such election ___________________ (“B”).

     

    ASSIGNMENT

     

    FOR VALUE
RECEIVED, ____________________hereby sells, assigns and transfers unto
______________________ the within Warrant and all rights evidenced thereby and
does irrevocably constitute and appoint __________________________, attorney, to
transfer the said Warrant on the books of the within named
corporation.

     

     

    
      	
              Dated:

            	 
      	 
      	
              Signature

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              Address

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

    

     
 

    PARTIAL
ASSIGNMENT

     

         FOR
VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
___________________ the right to purchase _______________________ shares of
Warrant Stock evidenced by the within Warrant together with all rights therein,
and does irrevocably constitute and appoint _____________________, attorney, to
transfer that part of the said Warrant on the books of the within named
corporation.

     

    
      	
              Dated:

            	 
      	 
      	
              Signature

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              Address

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

    

    

    FOR USE
BY THE COMPANY ONLY:

     

    This
Warrant No. _______canceled (or transferred or exchanged) this _____ day of
________________, _____________ shares of Common Stock issued therefor in the
name of _______________, Warrant No. ________ issued for ______________ shares
of Common Stock in the name of ________________________.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}]]