Document:

exhibit10_78.htm

    
 

    EXHIBIT
10.78

    

      [***]
DENOTES CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT

    

    CONFIDENTIAL

    TECHNOLOGY
TRANSFER AGREEMENT

    FOR
68-50NM PROCESS NODES

    

    This
TECHNOLOGY TRANSFER AGREEMENT
FOR 68-50NM PROCESS NODES (this “Agreement”), is executed on
this 11th day of
October, 2008 (“Execution
Date”), by and between Micron Technology, Inc., a Delaware corporation
(“Micron”) and Inotera
Memories, Inc., a company-limited-by-shares incorporated under the laws of the
Republic of China (“Joint
Venture Company”).  (Micron and the Joint Venture Company are
referred to in this Agreement individually as a “Party” and collectively as the
“Parties”).  This
Agreement shall take effect as of the date of the 2nd
Closing. In the event the 2nd Closing
does not occur, this Agreement shall not take effect and neither Party shall
have any rights or obligations hereunder.

     

    RECITALS

     

    A.         Micron
has developed technology for 68nm and 50nm Process Nodes for the manufacture of
Stack DRAM Products.

     

    B.         The
Joint Venture Company desires to have such technology transferred to the Joint
Venture Company for its use in the manufacture of Stack DRAM Products, and
Micron intends to so transfer such technology to the Joint Venture
Company.

     

    AGREEMENT

     

    NOW,
THEREFORE, in consideration of the mutual promises and agreements herein set
forth, the Parties, intending to be legally bound, hereby agree as
follows.

     

    ARTICLE
1

    DEFINITIONS; CERTAIN
INTERPRETATIVE MATTERS

     

    1.1 Definitions.

     

     “2nd Closing” shall have the meaning
set forth in the Share Purchase Agreement.

     

    “Agreement” shall have the
meaning set forth in the preamble to this Agreement.

     

    “Applicable Law” means any
applicable laws, statutes, rules, regulations, ordinances, orders, codes,
arbitration awards, judgments, decrees or other legal requirements of any
Governmental Entity.

     

    “Effective Date” shall mean, if
the 2nd Closing
occurs, the date that the 2nd Closing
occurs.

     

    “Force Majeure Event” means the
occurrence of an event or circumstance beyond the reasonable control of a Party
and includes, without limitation, (a) explosions, fires, flood, earthquakes,
catastrophic weather conditions, or other elements of nature or acts of God; (b)
acts of war (declared or undeclared), acts of terrorism, insurrection, riots,
civil disorders, rebellion or sabotage; (c) acts of federal, state, local or
foreign Governmental Entity; (d) labor disputes, lockouts, strikes or other
industrial action, whether direct or indirect and whether lawful or unlawful;
(e) failures or fluctuations in electrical power or telecommunications service
or equipment; and (f) delays caused by the other Party or Third-Party
nonperformance (except for delays caused by a Party’s contractors,
subcontractors or agents).

     

    
      
        
          
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    “GAAP” means, with respect to
Micron, United States generally accepted accounting principles, and with respect
to the Joint Venture Company, Republic of China generally accepted accounting
principles, in each case, as consistently applied by the Party for all periods
at issue.

     

    “Governmental Entity” means any
governmental authority or entity, including any agency, board, bureau,
commission, court, municipality, department, subdivision or instrumentality
thereof, or any arbitrator or arbitration panel.

     

    “IP Rights” means copyrights,
rights in trade secrets, Mask Work Rights and pending applications or
registrations of any of the foregoing anywhere in the world.  The term
“IP Rights” does not include any Patent Rights or rights in
trademarks.

     

    “Joint Venture Company” shall
have the meaning set forth in the preamble to this Agreement.

     

     “Mask Work Rights" means rights
under the United States Semiconductor Chip Protection Act of 1984, as amended
from time to time, or under any similar equivalent laws in countries other than
the United States.

     

    “Micron” shall have the meaning
set forth in the preamble to this Agreement.

     

     “Party” and “Parties” shall have the
meaning set forth in the preamble to this Agreement

     

    “Patent Rights” means all
rights associated with any and all issued and unexpired patents and pending
patent applications in any country in the world, together with any and all
divisionals, continuations, continuations-in-part, reissues, reexaminations,
extensions, foreign counterparts or equivalents of any of the foregoing,
wherever and whenever existing.

     

    “Person” means any natural
person, corporation, joint stock company, limited liability company,
association, partnership, firm, joint venture, organization, business, trust,
estate or any other entity or organization of any kind or
character.

     

    “Process Node” means
[***].

     

    “Recoverable Taxes” shall
have the meaning set forth in Section
3.5(a).

     

    “Share
Purchase Agreement” means that certain Share Purchase Agreement by and
between Micron and Qimonda AG entered into as of the Execution Date, as the same
may be amended from time to time.

     

    “Software” means computer
program instruction code, whether in human-readable source code form,
machine-executable binary form, firmware, scripts, interpretive text, or
otherwise.  The term “Software” does not include databases and other
information stored in electronic form, other than executable instruction codes
or source code that is intended to be compiled into executable instruction
codes.

     

    
      
        
          
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    “Stack DRAM” means dynamic
random access memory cell that functions by using a  capacitor arrayed
predominantly above the semiconductor substrate.

     

    “Stack DRAM Design” means, with respect to
a Stack DRAM Product, the corresponding design components, materials and
information listed on Schedule 2.

     

    “Stack DRAM Product” means any
memory comprising Stack DRAM, whether in die or wafer form.

     

    “Tax” or “Taxes” means any federal,
state, local or foreign net income, gross income, gross receipts, sales, use ad
valorem, transfer, franchise, profits, service, service use, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
customs, duties or other type of fiscal levy and all other taxes, governmental
fees, registration fees, assessments or charges of any kind whatsoever, together
with any interest and penalties,  additions to tax or additional
amounts imposed or assessed with respect thereto.

     

    “Taxing Authority” means any
Governmental Entity exercising any authority to impose, regulate or administer
the imposition of Taxes.

     

    “Third Party” means any Person
other than Micron or the Joint Venture Company.

     

    “Transferred Technology” means
[***].

     

    1.2 Certain Interpretive
Matters.

     

    (a) Unless
the context requires otherwise, (1) all references to Sections, Articles,
Exhibits, Appendices or Schedules are to Sections, Articles, Exhibits,
Appendices or Schedules of or to this Agreement, (2) each accounting term
not otherwise defined in this Agreement has the meaning commonly applied to it
in accordance with GAAP, (3) words in the singular include the plural and
vice versa, (4) the term “including” means “including
without limitation,” and (5) the terms “herein,” “hereof,” “hereunder” and words of
similar import shall mean references to this Agreement as a whole and not to any
individual section or portion hereof.  Unless otherwise denoted, all
references to $ or dollar amounts will be to lawful currency of the United
States of America.  All references to “day” or “days” will mean calendar
days.

     

    (b) No
provision of this Agreement will be interpreted in favor of, or against, any of
the Parties by reason of the extent to which (1) any such Party or its counsel
participated in the drafting thereof or (2) any such provision is inconsistent
with any prior draft of this Agreement or such provision.

     

    
      
        
          
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    ARTICLE
2

    TRANSFER OF TECHNOLOGY TO
JOINT VENTURE COMPANY

     

    2.1 Delivery of Transferred
Technology to Joint Venture Company.  On a delivery schedule
mutually agreed between the Parties, but no earlier than the Effective Date,
Micron shall provide to the Joint Venture Company the Transferred [***], which
process is outlined on Schedule
3.  Except as provided in Section 2.2, the
foregoing obligation does not require Micron to create, make, adapt, develop,
modify and/or translate any such information or materials.  The Joint
Venture Company may at any time request Micron in writing to supplement its
prior disclosures of such Transferred Technology with any items the Joint
Venture Company believes to be missing or incomplete from such disclosures;
however, with respect to the subject matter of any such requests made [***], the
Joint Venture Company shall be precluded from asserting that Micron is in breach
of its obligations under this Section.

     

    2.2 Preproduction
Wafers.  On a delivery schedule mutually agreed between the
Parties, Micron shall, [***], provide to the Joint Venture Company
[***].  On a delivery schedule mutually agreed between the Parties,
Micron shall, at Micron’s cost, provide to the Joint Venture Company
[***].

     

    2.3 Engineering
Services.  As reasonably requested by the Joint Venture Company
from time to time and to the extent fulfilling such request would not cause
disruption of their respective operations, Micron will provide to the Joint
Venture Company engineering support for its implementation of the Transferred
Technology transferred by Micron to the Joint Venture Company for use in the
Joint Venture Company’s facilities for the manufacture of Stack DRAM
wafers.

     

    ARTICLE
3

    PAYMENTS

     

    3.1 Transfer of Technology to
Joint Venture Company.  For the transfer of the Transferred
Technology from Micron to the Joint Venture Company for the 68nm Process Node
and the 50nm Process Node, the Joint Venture Company shall pay to Micron the sum
of $50,000,000.00 (fifty million dollars) within ten (10) days of the Effective
Date, unless, prior to such time, MeiYa Technology Corporation (“MeiYa”) shall have paid to
Micron the technology transfer fees contemplated to be paid by it to Micron with
respect to the transfer by Micron to MeiYa of the 68 nm and 50 nm process
nodes.  The Joint Venture Company shall have no further or other
obligation to make additional technology transfer payments with respect to the
transfer of such process nodes.

     

    3.2 Engineering Service
Fees.  Micron shall charge Joint Venture Company for any
engineering services provided by Micron to Joint Venture Company under Section 2.3 for all
out-of-pocket expenses reasonably incurred in connection therewith. [***]. If
any employee(s) of Micron are required to provide such services at a location
other than his/her/their normal working location, then [***].  Micron
will invoice Joint Venture Company for all such costs and expenses monthly as
incurred.  Joint Venture Company will pay Micron the amount due within
thirty (30) days of receipt of invoice.

     

    3.3 Invoices;
Payments.

     

    
      
        
          
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    (a) All
invoices under this Agreement may be sent by any method described in Section 8.1 or
electronically with hardcopy confirmation sent promptly thereafter by any method
described in Section
8.1.  Such invoices should be sent to the following contacts or
such other contact as may be specified hereafter pursuant to a notice sent in
accordance with Section
8.1:

     

    Invoices to Joint Venture
Company:

     

    To be
provided by notice.

    

    

    

    (b) All
amounts owed by a Party under this Agreement are stated, calculated and shall be
paid in United States Dollars ($ U.S.).

     

    (c) Payment
is due on all amounts properly invoiced within thirty (30) days of receipt of
invoice.  All payments made under this Agreement shall be made by
check sent to the following person or by such other manner designated by such
person:

     

    Payments to Micron:

    

    [***]

    8000 S.
Federal Way

    P.O. Box
6, MS 1-107

    Boise,
Idaho, USA 83707-0006

    Fax:           [***]

    Email:        [***]                      

    

    3.4 Interest.  Any
amounts payable to a Party hereunder and not paid within the time period
provided shall accrue interest, from the time such payment was due until the
time payment is actually received, at the rate of [***] or the highest rate
permitted by Applicable Law, whichever is lower.

     

    3.5 Taxes.

     

    (a) All
sales, use and other transfer Taxes imposed directly on or solely as a result of
the services, rights licensed or technology transfers or the payments therefor
provided herein shall be stated separately on the service provider’s, licensor’s
or technology transferor’s invoice, collected from the service recipient,
licensee or technology transferee and shall be remitted by service provider,
licensor or technology transferor to the appropriate Taxing Authority (“Recoverable Taxes”), unless
the service recipient, licensee or technology transferee provides valid proof of
tax exemption prior to the Effective Date or otherwise as permitted by law prior
to the time the service provider, licensor or technology transferor is required
to pay such taxes to the appropriate Taxing Authority.  When property
is delivered, rights granted and/or services are provided or the benefit of
services occurs within jurisdictions in which collection and remittance of Taxes
by the service recipient, licensee or 

     

    
      
        
          
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    technology
transferee is required by law, the service recipient, licensee or technology
transferee shall have sole responsibility for payment of said Taxes to the
appropriate Taxing Authority.  In the event any Taxes are Recoverable
Taxes and the service provider, licensor or technology transferor does not
collect such Taxes from the service recipient, licensee or technology transferee
or pay such Taxes to the appropriate Governmental Entity on a timely basis, and
is subsequently audited by any Taxing Authority, liability of the service
recipient, licensee or technology transferee will be limited to the Tax
assessment for such Recoverable Taxes, with no reimbursement for penalty or
interest charges or other amounts incurred in connection
therewith.  Except as provided in Section 3.5(b), Taxes
other than Recoverable Taxes shall not be reimbursed by the service recipient,
licensee or technology transferee, and each Party is responsible for its own
respective income Taxes (including franchise and other Taxes based on net income
or a variation thereof), Taxes based upon gross revenues or receipts, and Taxes
with respect to general overhead, including but not limited to business and
occupation Taxes, and such Taxes shall not be Recoverable Taxes.

     

    (b) In the
event that the service recipient, licensee or technology transferee is
prohibited by Applicable Law from making payments to the service provider,
licensor or technology transferor unless the service recipient, licensee or
technology transferee deducts or withholds Taxes therefrom and remits such Taxes
to the local Taxing Authority, [***].

     

    3.6 Payment
Delay.  Notwithstanding anything to the contrary in this
Agreement, if requested by Micron by notice in accordance with Section 8.1, Joint
Venture Company will [***] until notified by Micron in accordance with Section
8.1.

     

    ARTICLE
4

    INTELLECTUAL
PROPERTY

     

    4.1 [***] IP or Patent
Rights.  Nothing in this Agreement [***]. The transfers of
technology by Micron to the Joint Venture Company hereunder
[***].  The Joint Venture Company shall [***].

     

    ARTICLE
5

    WARRANTIES;
DISCLAIMERS

     

    5.1 No Implied
Obligation.  Nothing contained in this Agreement shall be
construed as:

     

    (a) a
warranty or representation that any manufacture, sale, lease, use or other
disposition of any products based upon Transferred Technology or other
technology transferred hereunder will be free from infringement,
misappropriation or other violation of any Patent Rights, IP Rights or other
intellectual property rights of any Person;

     

    (b) an
agreement to bring or prosecute proceedings against Third Parties for
infringement, misappropriation or other violation of rights or conferring any
right to bring or prosecute proceedings against Third Parties for infringement,
misappropriation or other violation of rights; or

     

    
      
        
          
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    (c) conferring
any right to use in advertising, publicity, or otherwise, any trademark, trade
name or names, or any contraction, abbreviation or simulation thereof, of either
Party.

     

    5.2 DISCLAIMER.  THE
TRANSFERRED TECHNOLOGY OR OTHER TECHNOLOGY OR MATERIALS TRANSFERRED OR DEVELOPED
UNDER THIS AGREEMENT, OR (B) MANUFACTURE OR HAVE MANUFACTURED ANY PRODUCTS BASED
THEREON.  MICRON MAKES NO WARRANTY, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, THAT THE USE, PRACTICE OR COMMERCIAL EXPLOITATION [***].

     

    ARTICLE
6

    LIMITATION OF
LIABILITY

     

    6.1 LIMITATION OF
LIABILITY.  [***].

     

    ARTICLE
7

    TERM AND
TERMINATION

     

    7.1 Term.  If
the 2nd Closing
occurs, the term of this Agreement shall commence on the Effective Date and
continue in effect until terminated in accordance with this Agreement or any
other agreement to which the Parties are parties.  In the event the
2nd
Closing does not occur, this Agreement shall not take effect and neither Party
shall have any rights or obligations hereunder.

     

    7.2 Termination of this
Agreement.

     

    (a) This
Agreement shall terminate automatically if [***].

     

    (b) Micron
may terminate this Agreement by notice to the Joint Venture Company if the Joint
Venture Company commits a material breach of this Agreement and such breach
remains uncured for [***] of the breach from Micron.

     

    (c) The Joint
Venture Company may not terminate this Agreement for any reason, including
breach by Micron.

     

    7.3 Effects of
Termination.

     

    (a) Termination
of this Agreement shall not affect any of the Parties’ respective rights accrued
or obligations owed before termination.  In addition, the following
shall survive termination of this Agreement for any reason:  Articles 1, 3, 4, 5, 6 and 8 and Section
7.3.

     

    (b) Upon
termination of this Agreement, the Joint Venture Company shall:

     

    [***]

     

    
      
        
          
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    ARTICLE
8

    MISCELLANEOUS

     

    8.1 Notices.  All
notices and other communications hereunder shall be in writing and shall be
deemed given upon (a) transmitter’s confirmation of a receipt of a
facsimile transmission, (b) confirmed delivery by a standard overnight carrier
or when delivered by hand, or (c) delivery in person, addressed at the following
addresses (or at such other address for a party as shall be specified by like
notice):

     

    If to Joint Venture
Company:

    

    Inotera Memories, Inc.

    667, Fuhsing 3rd Road,

    Haw-Ya Technology Park Kueishan,
Taoyuan 333

    Taiwan, ROC

    Attention: Legal
Department

    Fax: +886 3 327 2988 ext
3385

    

    If to
Micron:             Micron

    8000 S. Federal Way

    Mail Stop 1-507

    Boise, ID 83716

    Attention: General
Counsel

    Fax: 208.368.4537

    

    8.2 Waiver.  The
failure at any time of a Party to require performance by the other Party of any
responsibility or obligation required by this Agreement shall in no way affect a
Party’s right to require such performance at any time thereafter, nor shall the
waiver by a Party of a breach of any provision of this Agreement by the other
Party constitute a waiver of any other breach of the same or any other provision
nor constitute a waiver of the responsibility or obligation itself.

     

    8.3 Assignment.  [***].

     

    8.4 Third Party
Rights.  Nothing in this Agreement, whether express or implied,
is intended or shall be construed to confer, directly or indirectly, upon or
give to any Person, other than the Parties hereto, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any covenant, condition
or other provision contained herein.

     

    8.5 Force
Majeure.  The Parties shall be excused from any failure to
perform any obligation hereunder to the extent such failure is caused by a Force
Majeure Event.

     

    8.6 Choice of
Law.  This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware, USA, without
giving effect to the principles of conflict of laws thereof.

     

      
        
          
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    8.7 Jurisdiction;
Venue.  Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement shall be brought in a state or federal court of competent jurisdiction
located in the State of California, USA, and each of the Parties to this
Agreement hereby consents and submits to the exclusive jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
Applicable Law, any objection which it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding which is brought in any such court has been
brought in an inconvenient forum.

     

    8.8 Headings.  The
headings of the Articles and Sections in this Agreement are provided for
convenience of reference only and shall not be deemed to constitute a part
hereof.

     

    8.9 Export
Control.  Each Party agrees that it will not
knowingly:  (a) export or re-export, directly or indirectly, any
technical data (as defined by the U.S. Export Administration Regulations)
provided by the other Party or (b) disclose such technical data for use in, or
export or re-export directly or indirectly, any direct product of such technical
data, including Software, to any destination to which such export or re-export
is restricted or prohibited by United States or non-United States law,
without obtaining prior authorization from the U.S. Department of Commerce and
other competent Government Entities to the extent required by Applicable
Laws.

     

    8.10 Entire
Agreement.  This Agreement, together with its Schedules and the
agreements and instruments expressly provided for herein, including the
applicable terms of any other agreements to which Micron and the Joint Venture
Company are a Party, constitute the entire agreement of the Parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral and written, between the Parties hereto with respect to the
subject matter hereof.

     

    8.11 Severability.  Should
any provision of this Agreement be deemed in contradiction with the laws of any
jurisdiction in which it is to be performed or unenforceable for any reason,
such provision shall be deemed null and void, but this Agreement shall remain in
full force in all other respects.  Should any provision of this
Agreement be or become ineffective because of changes in Applicable Laws or
interpretations thereof, or should this Agreement fail to include a provision
that is required as a matter of law, the validity of the other provisions of
this Agreement shall not be affected thereby.  If such circumstances
arise, the Parties hereto shall negotiate in good faith appropriate
modifications to this Agreement to reflect those changes that are required by
Applicable Law.

     

    8.12 Counterparts.  This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.

     

    <
Signature page follows >

    
      
        
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    IN
WITNESS WHEREOF, this Agreement has been executed as of the date first above
written.

     

    

    
      

    

    

    

      
        	 
      	
                MICRON
      TECHNOLOGY, INC

                 

              
	 
      	
                By:

              	
                /s/ D. Mark Durcan

              
	 
      	
                Name:

              	
                D.
      Mark Durcan

              
	 
      	
                Title:

              	
                President
      and Chief Operating Officer

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                INOTERA
      MEMORIES, INC.

                 

              
	 
      	
                By:

              	
                /s/ Charles Kau

              
	 
      	
                Name:

              	
                Charles
      Kau

              
	 
      	
                Title:

              	
                President

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Peter Bailey

              
	 
      	
                Name:

              	
                Peter
      Bailey

              
	 
      	
                Title:

              	
                Executive
      Vice President

              

      

    

    

    

    

    

    

    THIS IS THE SIGNATURE
PAGE FOR THE TECHNOLOGY TRANSFER AGREEMENT FOR 68-50NM PROCESS NODES ENTERED
INTO BY AND BETWEEN MICRON TECHNOLOGY AND THE JOINT VENTURE
COMPANY

    
 

    
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-thor.htm

    
      Exhibit
10.12

      SECURITIES PURCHASE
AGREEMENT

       

                  THIS
SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as of
September 22, 2008, by and among Thor United ("Thor") and Berkshire
International Finance ("Berkshire") (collectively the
“Sellers” and each,
individually a “Seller”), Harborview Master
Fund, LP ("Purchaser"),
 Axion International Holdings, Inc., a Colorado corporation, having its
principal place of business at 665 Martinsville Road, Suite 219, Basking Ridge,
New Jersey 07928 (the “Company”) and Feldman
Weinstein & Smith LLP (the "Escrow Agent").

       

      WHEREAS, the Sellers are holders of the Company’s 13% Secured Convertible
Debentures in the aggregate principal amount of $600,000 due <?xml:namespace
prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />March 30,
2009 with a conversion price as of the date hereof equal to $0.40, subject to
adjustment therein (the “Debentures”).

       

      WHEREAS, Sellers desire to sell to Purchaser and Purchaser desires to
purchase from Sellers $325,000 principal amount of the Debentures, together with
a six month option to purchase an additional aggregate of $275,000 principal
amount of Debentures from the Sellers, on the basis of the representations,
warranties and agreements contained in this Agreement, and upon the terms but
subject to the conditions set forth herein.

       

      WHEREAS, Sellers desire to assign to Purchaser and Purchaser desires to
assume from Sellers, all of their rights as a holder of the
Debentures.

       

      NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the adequacy of which is hereby acknowledged, the
parties hereto agree as follows:

       

      Section 1.  Purchase and Option of
Debentures and Option.

       

                            
(a)           
Purchase and
Sale.  Sellers hereby agree to sell to Purchaser, and Purchaser
agrees to purchase from Sellers, an aggregate of $325,000 principal amount of
the Debentures, of which Thor will sell $225,000 principal amount and Berkshire
shall sell $100,000 principal amount (“Purchased Debentures”). 
The aggregate purchase price for the Purchased Debentures shall be $487,500 (the
"Purchase Price"). 

       

                           
(b)           
Conversion of
Purchased Debentures.  Subject to and conditioned upon the Company
and Sellers complying with all of their obligations hereunder, the Purchaser
hereby agrees to convert the Purchased Debentures into 812,500 shares of common
stock of the Company (“Common
Stock” and such shares, the “Converted Shares”).  On
the Closing Date (as defined below), the Company shall deliver the Converted
Shares electronically and free of legend or resale restrictions to the Purchaser
through The Depository Trust Company (“DTC”) to ________________,
Account Number ___________, account name: ________________.

       

                            
(c)           
Issuance of New
Debenture.  As additional consideration to the Purchaser, and
because the Company shall directly and indirectly benefit from the transactions
contemplated hereunder, and as a material inducement for the Purchaser to enter
into this Agreement, the Company shall issue to the Purchaser a convertible
debenture with a principal amount equal to $162,500, a conversion price equal to
$1.50, otherwise in the form of the Debentures as amended in accordance with
this Agreement (the “New
Debenture”).  

       

                           
(d)           
Closing.  The date and
time of the Closing (the "Closing Date") shall be 10:00
a.m., New York City time, on the date all of the conditions set forth in Section
2 hereof are satisfied, (or such other time as the parties may agree) after
notification of satisfaction or waiver of the conditions to the closing set
forth in Section 2 below at the office of the Escrow Agent.

       

                            
(e)           
Form of
Payment.  On the Closing Date, each of the Sellers and Purchaser
shall instruct the Escrow Agent to transfer to each Seller that part of the
aggregate Purchase Price set forth opposite such Seller’s name on column (7) of
the Securities Schedule attached hereto for the Purchased Debentures by wire
transfer of immediately available funds in accordance with each Seller’s written
wire instructions.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

                            
(f)           
Grant of
Option.  The Sellers hereby grant to the Purchaser an option (the
“Option”) to purchase
all or any part of the balance of the Debenture with an aggregate principal
amount of $275,000 outstanding (“Remaining Debentures”) for a
purchase price (the “Option
Price”) equal to, in the aggregate for the entire Remaining Debentures
(pro-rata if partial exercise) of $423,076 together with interest accrued
thereon as of the Exercise Date (as defined below).  The Option shall be
exercisable from the date hereof until April 1, 2010 (the “Option Period”).  The
Option shall be exercised by written notice (the “Exercise Notice”) by the
Purchaser to the Sellers by overnight delivery of such notice within the Option
Period.  If the Purchaser exercises the Option in part, each Seller’s
obligation to transfer the Remaining Debenture hereunder shall be pro-rata to
the other Seller.  “Exercise Date” shall mean the
date the Exercise Notice is deposited with a nationally recognized overnight
courier for next business day delivery to the Sellers.  Subject to the
delivery of the Option Price as set forth below, for all purposes, the
assignment of the Remaining Debentures covered by the Exercise Notice shall be
deemed to have occurred on the Exercise Date, and Purchaser shall be deemed to
be the holder and beneficial owner of such Remaining Debentures as of the
Exercise Date.  During the Option Period, the Sellers shall not convert,
offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or
enter into any transaction which is designed to, or might reasonably be expected
to, result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the Sellers or any
affiliate of the Sellers or any person in privity with the Sellers or any
affiliate of the undersigned), directly or indirectly, or establish or increase
a put equivalent position or liquidate or decrease a call equivalent position
within the meaning of Section 16 of the Securities and Exchange Act of 1934, as
amended (“Exchange
Act”), with respect to, any Remaining Debentures or shares underlying the
Remaining Debentures  Beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act.

       

                    
(g)                       
Escrow.  

       

                   
(i)         Purchaser and the Sellers
hereby appoint the Escrow Agent to serve in such capacity hereunder. 
Simultaneously with the execution and delivery of this Agreement, Purchaser,
shall promptly cause a wire transfer of immediately available funds (U.S.
dollars) in an amount representing the Purchase Price, to be paid to an escrow
account of the Escrow Agent set forth on Exhibit
A attached hereto (the aggregate amounts received being held in
escrow by the Escrow Agent are referred to herein as the “Escrow Amount”). 
Simultaneously with the execution and delivery of this Agreement, Sellers shall
promptly deliver to the Escrow Agent the Debentures and at least five undated
stock powers duly manually endorsed for transfer in blank (the "Stock Powers") and the Company
shall deliver to Escrow Agent the New Debentures registered in the name of the
Purchaser and the instructions to the Company’s transfer agent (Computershare)
to deliver the Converted Shares pursuant to Section 1(b).  The Escrow Agent
shall hold the Escrow Amount, Debentures, New Debentures and Stock Powers in
escrow in accordance with Section 1(g)(ii) and (iii) below.  The Company
expressly waivers and requirement that the stock powers contain any signature
guarantee or other third-party evidence of authenticity, and agrees to accept
the same from the Escrow Agent “as-is” as delivered to the Escrow Agent by the
Sellers.

       

                   
(ii)        The Escrow Agent shall hold the
Escrow Amount, the Stock Powers, the Debentures and the New Debentures delivered
to the Escrow Agent pursuant to Section 1(g)(i) of this Agreement, in escrow in
accordance with and subject to this Agreement until the receipt of written
instructions signed by the Sellers, the Purchaser and the Company that the
conditions to the Closing have been satisfied (the "Release Instructions"). 
Upon receipt of the Release Instructions, the Escrow Agent shall release to
Sellers that part of the Escrow Amount constituting the Purchase Price set forth
opposite Sellers’ name on column (7) of the Securities Schedule attached hereto
in accordance with written wire transfer instructions received from Sellers, and
shall release to Purchaser the New Debenture.  The Escrow Agent shall
deliver the Debentures to the Company and the Company will cancel the Purchased
Debentures and re-issue certificates for the Remaining Debentures back to the
Escrow Agent.   Upon notice (the "Delivery Confirmation") from
the Escrow Agent that the Escrow Amount, the Debentures, the New Debentures and
 the Stock Powers have been delivered to the Escrow Agent, the Purchaser
together with the Sellers and the Company shall deliver the Release
Instructions.  If Purchaser fails to deliver the Release Instructions to
the Escrow Agent within 3 business days after delivery by the Escrow Agent to
Purchaser of the Delivery Confirmation, the Sellers may, at their option, direct
the Escrow Agent to deliver to the Sellers the Stock Power and the Debentures
and if the Sellers deliver such instruction, contemporaneously with the delivery
of the foregoing to the Sellers, the Escrow Agent shall deliver to Purchaser the
Escrow Amount.  If the Sellers fail to deliver the Release Instructions to
the Escrow Agent within 3 business days after the Escrow Agent has delivered the
Delivery Confirmation to the Sellers, Purchaser may instruct the Escrow Agent to
deliver to the Purchaser the Escrow Amount and if Purchaser delivers such
instruction, contemporaneously with the delivery of the foregoing to Purchaser,
the Escrow Agent shall deliver to the Sellers the Stock Power and the
Debentures.

       

      (iii)       Upon delivery of an Exercise
Notice to the Sellers, the Purchaser shall deliver a copy of such notice to the
Escrow Agent and deliver the Option Price for the Remaining Debenture covered by
such Exercise Notice to the Escrow Agent in United States Dollars in immediate
available funds within three (3) business days following the Exercise
Date.  Upon receipt of an Exercise Notice, the Escrow Agent shall submit
the Remaining Debentures to the Company and the Company shall re-issue a
certificate for the Remaining Debentures covered by the Exercise Notice
registered in the name of the Purchaser, free and clear of any claim, pledge,
charge, lien and any other encumbrance whatsoever, and re-issue the balance of
the Remaining Debentures, if any, in the name of the Sellers.  Upon receipt
by the Escrow Agent of the Remaining Debentures subject to the Exercise Notice
registered in the name of the Purchasers, the Escrow Agent shall release the
Remaining Debentures so purchased to the Purchaser and the Option Price to the
Sellers.  The exercise of the Option shall be applied pro-rata to Sellers
according to the outstanding principal amount of Remaining Debentures then held
by the Sellers.  Following the Option Period, provided that the Escrow
Agent has received no Exercise Notice during such period unless such Exercise
Notices were honored in full, the Escrow Agent shall return the balance of the
Remaining Debentures not subject to an Exercise Notice to the
Sellers.

       

      (iv)       It is expressly understood that
the Escrow Agent acts hereunder as an accommodation to the Purchaser and the
Sellers and as a depository only and is not responsible or liable in any manner
whatsoever for the sufficiency, correctness, genuineness or validity of any
instrument deposited with it, or for the form of execution of such instruments
or for the identity, authority or right of any person executing or depositing
the same or for the terms and conditions of any instrument pursuant to which the
Escrow Agent or the parties may act.  

       

      (v)        The Escrow Agent shall no
have duties or responsibilities except those set forth in this Agreement and
shall incur no liability, other than by its own gross negligence, willful
misconduct or fraud, in acting upon any signature, notice, request, waiver,
consent, receipt or other paper or document believed by the Escrow Agent to be
genuine, and the Escrow Agent may assume that any person purporting to give it
any notice on behalf of any party in accordance with the provisions hereof has
been duly authorized to do so.  The Purchaser and the Sellers acknowledge
that the Escrow Agent is acting solely as a stakeholder at their request and
that the Escrow Agent shall not be liable for any action taken by Escrow Agent
in good faith and believed by Escrow Agent to be authorized or within the rights
or powers conferred upon Escrow Agent by this Agreement and shall not be under
any duty to give the property held by Escrow Agent hereunder any greater degree
of care beyond what Escrow Agent gives its own similar property. The Purchaser
and the Sellers hereby jointly and severally agree to indemnify and save the
Escrow Agent harmless from and against any and all loss, damage, claims,
liabilities, judgments and other costs and expenses of every kind and nature
which may be incurred by the Escrow Agent (including attorneys' fees) by reason
of its acceptance of, and its performance under, this Agreement unless caused by
the gross negligence, willful misconduct or fraud of the Escrow Agent. 
Absent the Escrow Agent's gross negligence, willful misconduct or fraud, the
Escrow Agent shall be automatically released from all responsibility and
liability under this Agreement upon the Escrow Agent's distribution of the
Escrow Amount and the Purchased Preferred Shares and the Purchased Warrants in
accordance with the provisions of this Agreement. 

       

      (vi)       This Agreement sets forth
exclusively the duties of the Escrow Agent with respect to any and all matters
pertinent thereto and no implied duties or obligations shall be read into this
Agreement. 

       

      (vii)      The Sellers and the Company
acknowledge that Escorw Agent represents the Purchaser on other legal matters
and has represented the Purchaser in connection with this Agreement, and each
the Sellers and the Company expressly waive any actual or potential conflict of
interest which may be caused by such representation or such dual roles of the
Escrow Agent.

       

      (viii)     The provisions of this Section 1(g) shall
survive any termination of this Agreement.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      Section 2.  Closing Conditions

       

                            
(a)           
Conditions to
Seller's Obligation to Sell.

       

                  The
obligation of Sellers hereunder to sell the Debentures to Purchaser on the
Closing Date is subject to the satisfaction, on or before the Closing Date, of
each of the following conditions, provided ,
that these conditions are for Sellers’ sole benefit and may be waived by the
Sellers at any time in its sole discretion by providing Purchaser with prior
written notice thereof:

       

                 
(i)         Contemporaneously with the
Closing, the Purchaser shall have delivered to the Escrow Agent that part of the
aggregate Purchase Price set forth opposite each Seller's name on column (7) of
the Securities Schedule attached hereto by wire transfer of immediately
available funds pursuant to wire instructions provided by such
Seller.

       

      (ii)        The representations and
warranties of Purchaser shall be true and correct in all material respects
(other than representations and warranties that are already qualified by
materiality which shall be true and correct in all respects) as of the date when
made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date which shall be
true as of such specified date), and Purchaser shall have performed, satisfied
and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by Purchaser at or prior to the Closing Date.

       

                           
(b)           
Conditions to
Purchaser's Obligation to Purchase.

       

                  The
obligation of Purchaser hereunder to purchase the Debentures on the Closing Date
is subject to the satisfaction, on or before the Closing Date, of each of the
following conditions, provided, that these
conditions are for Purchaser's sole benefit and may be waived by Purchaser at
any time in its sole discretion by providing Seller with prior written notice
thereof: 

       

                 
(i)         On or prior to the Closing
Date, Sellers shall have delivered to the Escrow Agent the Stock Power and the
Debentures being purchased in such Closing and the Company shall have delivered
the New Debentures.

       

      (ii)        The representations and
warranties of each Seller shall be true and correct in all material respects
(other than representations and warranties that are already qualified by
materiality which shall be true and correct in all respects) as of the date when
made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date which shall be
true as of such specified date), and each Seller shall have performed, satisfied
and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by each Seller at or prior to the Closing Date.

       

      (iii)       The Company shall have
irrevocably instructed its transfer agent to transfer the Converted Shares to
the DTC account of the Purchaser pursuant to Section 1(b) and provided a copy of
such instructions to the Escrow Agent.

       

      (iv)       All Debentures shall have been
amended as set forth in Section 2(c)(i).

       

      (v)        No debt of the Company
shall be subject to a security interest in any of the Company’s
assets.

       

                            
(c)           
Conditions
to Company’s Obligations.

       

                  The
obligation of Company hereunder to issue the new Debenture and Warrants on the
Closing Date is subject to the satisfaction, on or before the Closing Date, of
each of the following conditions:

                 
(i)         Subject to the closing of
the transaction herein, the Sellers agree (x) that the Remaining Debentures
shall be amended to reduce the interest rate thereon from 13% to 7%, to extend
the term of such Debentures to March 31, 2011; and (y) that all security
interests held to secure payment of the Debentures shall be terminated effective
as of the Closing Date (collectively, the “Debenture Amendments”);

       

      (ii)        ADH Ventures LLC (“ADH”),
on or before the Closing Date, (x) shall have converted so much of the Company’s
13% Debentures which it holds in the aggregate principal amount of $667,435 as
is permissible in accordance with the terms of such Debenture, subject to
reduction of the conversion price thereunder to $.30; (y) shall have agreed to
convert the remaining principal balance of such Debenture at such time as it is
permissible for it to do so in accordance with its terms; and (z) shall have
agreed to the Debenture Amendments;

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      Section 3.  Sellers’ Representations and
Warranties. 
Each Seller hereby represents, warrants and covenants, severally and not
jointly, to Purchaser as follows as of the date hereof:

       

                            
(a)           
Seller is an entity duly organized and validly existing under the
laws of the jurisdiction of its formation.

       

                           
(b)           
Seller has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement.  This Agreement has been
duly and validly authorized, executed and delivered on behalf of Seller and
shall constitute the legal, valid and binding obligation of Seller enforceable
against it in accordance with its terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.

       

                            
(c)           
The execution, delivery and performance by Seller of this Agreement
and the consummation by Seller of the transactions contemplated hereby will not
(a) result in a violation of the organizational documents of Seller, (b)
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 Seller is a party, or (c) result in a violation
of any law, rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to Seller, except in the case of clauses (b)
and (c) above, for such conflicts, defaults, rights or violations which would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of Seller to perform its obligations
hereunder.

       

                           
(d)           
No consent, approval, permit, order, notification, waiver
(including any waiver of a right of first refusal) or authorization of, or any
exemption from registration, declaration or filing with, any person
(governmental or private) is required in connection with the execution, delivery
and performance by Seller of this Agreement or the consummation by Seller of the
transactions contemplated hereby.  There is no agreement, other than this
Agreement, to sell all or any portion of the Debentures and no person has a
right of co-sale or tag-along right that would be triggered hereby. 

       

                            
(e)           
Seller has good and valid title to the Debentures free and clear of
lien, mortgage, security interest, pledge, charge or encumbrance of any kind
("Liens"). 
Delivery of the Debentures to Purchaser will pass to Purchaser good and valid
title to the Debentures, free and clear of Liens other than those of Purchaser
or under securities laws.

       

                            
(f)           
Seller is acting solely for Seller's own account, and has made
Seller's own independent decision to enter into this Agreement and as to whether
this Agreement is appropriate or proper for Seller based upon Seller's own
judgment and upon advice of such advisors as Seller deems necessary. 
Seller acknowledges and agrees that Seller is not relying, and has not relied,
upon any communication (written or oral) of Purchaser or any affiliate, employee
or agent of Purchaser with respect to the legal, accounting, tax or other
implications of this Agreement and that Seller has conducted Seller's own
analyses of the legal, accounting, tax and other implications hereof and
thereof; it being understood that information and explanations related to the
terms and conditions of this Agreement shall not be considered investment advice
or a recommendation to enter into this Agreement.  Seller acknowledges that
neither Purchaser nor any affiliate, employee or agent of Purchaser is acting as
a fiduciary for or an advisor to Seller in respect of this
Agreement.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

                           
(g)           
There is no action, suit, claim, proceeding, inquiry or
investigation before or by any court, public board, government agency or self
regulatory organization or body pending or, to the knowledge of Seller,
threatened against or affecting Seller that could reasonably be expected to have
a material adverse affect on the ability of Seller to perform its obligations
hereunder.

       

      (h)        Seller has taken no action that would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated
hereby.  

       

      (i)         Neither
the Seller nor any of its affiliates is an officer, director or a “beneficial
owner” of more than 10% of the shares of Common Stock (as defined for purposes
of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”)).  Neither Seller nor any of its
affiliates is, (a) effecting or seeking, offering or proposing (whether publicly
or otherwise) to effect, or cause or participate in or in any way assist any
other person to effect or seek, offer or propose (whether publicly or otherwise)
to effect or participate in, (i) any material acquisition of any securities (or
beneficial ownership thereof) or assets of the Company or any of its
subsidiaries out of the ordinary course of business , (ii) any tender or
exchange offer, merger or other business combination involving the Company or
any of its subsidiaries, (iii) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect to the Company or
any of its subsidiaries, or (iv) any “solicitation” of “proxies” (as such terms
are used in the proxy rules of the Securities and Exchange Commission) or
consents to vote any voting securities of the Company; (b) forming, joining or
in any way participating in a “group” (as defined under the 1934 Act) with
respect to the Company with respect to the matters set forth in (a) above; (c)
otherwise acting, alone or in concert with others, to seek to control or
influence the management, Board of Directors or policies of the Company; or (d)
entering into any discussions or arrangements with any third party with respect
to any of the foregoing.  The Purchased Debentures have been continuously
held by the Seller for a period of at least twelve (12) months as of the date
hereof.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      Section 4.  Purchaser Representations and
Warranties.  Purchaser hereby represents and warrants to each Seller
as follows:

       

                            
(a)           
Purchaser is an entity duly organized and validly existing under
the laws of the jurisdiction of its formation.

       

                           
(b)           
Purchaser understands that, the Debenture and the New Debentures
have not been and are not being registered under the Securities Act of 1933, as
amended (the "Securities
Act") or any state securities laws, and may not be offered for sale,
sold, assigned or transferred unless subsequently registered thereunder or an
exemption from such registration is available.

       

                            
(c)           
Purchaser has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement.  This Agreement has been
duly and validly authorized, executed and delivered on behalf of Purchaser and
shall constitute the legal, valid and binding obligation of Purchaser
enforceable against it in accordance with its terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.

       

                           
(d)           
The execution, delivery and performance by Purchaser of this
Agreement and the consummation by Purchaser of the transactions contemplated
hereby will not (a) result in a violation of the organizational documents of
Purchaser, (b) 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 Purchaser is a party, or (c) result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to Purchaser, except in
the case of clauses (b) and (c) above, for such conflicts, defaults, rights or
violations which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of Purchaser to
perform its obligations hereunder.

       

                            
(e)           
Purchaser (a) is a sophisticated person with respect to the sale of
the Debentures and the New Debentures; (b) has adequate information concerning
the business and financial condition of the Company to make an informed decision
regarding the purchase of the Debentures and the New Debentures; and (c) has
independently and without reliance upon the Sellers, and based on such
information as Purchaser has deemed appropriate, made its own analysis and
decision to enter into this Agreement, except that Purchaser has relied upon
each Seller’s express representations, warranties and covenants in this
Agreement.  Purchaser acknowledges that neither Seller has given Purchaser
any investment advice, credit information or opinion on whether the purchase of
the Debentures and the New Debentures is prudent.

       

                            
(f)           
There is no action, suit, claim, proceeding, inquiry or
investigation before or by any court, public board, government agency or
self-regulatory organization or body pending or, to the knowledge of Purchaser,
threatened against or affecting Purchaser that could reasonably be expected to
have a material adverse affect on the ability of Purchaser to perform its
obligations hereunder.

       

                           
(g)           
Purchaser is purchasing the Debentures and the New Debentures
 solely for its own account and not with a view to the distribution or
resale of the Debentures and the New Debentures or its rights thereunder except
pursuant to a registration statement declared effective under, or an exemption
from the registration requirements of, the Securities Act.

       

                           
(h)           
Purchaser is an "accredited investor" (as defined in Regulation D
under the Securities Act) and has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
transaction contemplated herein, and it is able to bear the economic risk of
such purchase.

       

                             
(i)           
Purchaser understands that the Debentures and the New Debentures
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities
laws.

       

                             
(j)           
Purchaser understands that the New Debentures shall bear
appropriate restrictive legends.

       

                           
(k)           
Purchaser has taken no action that would give rise to any claim by
any person for brokerage commissions, finder's fees or similar payments relating
to this Agreement or the transactions contemplated hereby.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      Section 5.  Company Representations and
Warranties.  The Company hereby represents and warrants as
follows:

       

                            
(a)           
Company and its subsidiaries are an entities duly organized and
validly existing under the laws of the jurisdiction of their
formation.

       

                           
(b)           
The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement.  This Agreement
has been duly and validly authorized, executed and delivered on behalf of the
Company and shall constitute the legal, valid and binding obligation of the
Company enforceable against it in accordance with its terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.

       

                            
(c)           
The execution, delivery and performance by Company of this
Agreement and the consummation by Company of the transactions contemplated
hereby will not (a) result in a violation of the organizational documents of
Company, (b) 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 Company is a party, or (c) result in
a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to Company, except in the case of
clauses (b) and (c) above, for such conflicts, defaults, rights or violations
which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of Company to perform its
obligations hereunder.

       

                           
(d)           
No consent, approval, permit, order, notification, waiver
(including any waiver of a right of first refusal) or authorization of, or any
exemption from registration, declaration or filing with, any person
(governmental or private) is required in connection with the execution, delivery
and performance by Company of this Agreement or the consummation by Company of
the transactions contemplated hereby.  There is no agreement, other than
this Agreement, to sell all or any portion of the Debentures and no person has a
right of co-sale or tag-along right that would be triggered hereby. 

       

                            
(e)           
Company is acting solely for Company's own account, and has made
Company's own independent decision to enter into this Agreement and as to
whether this Agreement is appropriate or proper for Company based upon Company's
own judgment and upon advice of such advisors as Company deems necessary. 
Company acknowledges and agrees that Company is not relying, and has not relied,
upon any communication (written or oral) of Purchaser or any affiliate, employee
or agent of Purchaser with respect to the legal, accounting, tax or other
implications of this Agreement and that Company has conducted Company's own
analyses of the legal, accounting, tax and other implications hereof and
thereof; it being understood that information and explanations related to the
terms and conditions of this Agreement shall not be considered investment advice
or a recommendation to enter into this Agreement.  Company acknowledges
that neither Purchaser nor any affiliate, employee or agent of Purchaser is
acting as a fiduciary for or an advisor to Company in respect of this
Agreement.

       

                            
(f)           
There is no action, suit, claim, proceeding, inquiry or
investigation before or by any court, public board, government agency or self
regulatory organization or body pending or, to the knowledge of Company,
threatened against or affecting Company that could reasonably be expected to
have a material adverse affect on the ability of Company to perform its
obligations hereunder.

       

                           
(g)           
Company has taken no action that would give rise to any claim by
any person for brokerage commissions, finder's fees or similar payments relating
to this Agreement or the transactions contemplated hereby.

       

                           
(h)           
The New Debentures 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 imposed by the Company other
than restrictions on transfer provided for in this Agreement.  The shares
underlying the New Debentures, when issued in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable, free and clear
of all Liens imposed by the Company other than restrictions on transfer provided
for in this Agreement.  The Company has reserved from its duly authorized
capital stock a number of shares of Common Stock for issuance pursuant to the
New Debentures.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      Section 6.  Covenants.  Sellers, for good and
valuable consideration, effective as of the Closing Date, hereby assign,
transfer, convey and deliver to Purchaser all of its right, title and interest
in and to the Purchased Debentures, and agree to take such actions in the future
that are reasonably requested by the Purchaser to effect the foregoing, and to
give effect to any exercise of the Option by the Purchaser. 

       

                 
The Company agrees that all accrued but unpaid interest on the Purchased
Debentures through the Closing Date remain obligations of the Company to the
Sellers. 

       

      Section 7.  Notices.  Any notices,
consents, waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have
been delivered:  (a) upon receipt, when delivered personally; (b) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (c) one business day after deposit with an overnight courier service, in each
case properly addressed to the party to receive the same.  The addresses
and facsimile numbers for such communications shall be:

       

      If to Purchaser:

       

      Divash Capital Partners LLC

       

      44 Heather Hill Lane

       

      Woodcliff Lake, NJ 07677

       

      Telephone: 201-307-1230
Facsimile:
201-307-0567
Attention: Steven C. Berger   

       

       

      with a copy (for informational purposes only) to:

       

      Feldman Weinstein & Smith LLP

       

      420 Lexington Avenue

       

      New York, New York 10170

       

      Telephone:  (212) 931-8704
Facsimile: 
(212) 401-4741

       

      Attention:  Robert F. Charron

       

      If to Sellers:

       

      Thor Asset
Management USA, LLC

       

      551 fifth
Avenue, Suite 2020

       

      New York, NY
10017

       

      c/o Peter
Kambolin

       

      Managing
Director

       

       

       

      Berkshire
International Finance, Inc.

       

      100 King
Street West

       

      37th Floor

       

      Toronto, ON
M5X 1C9

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      with a
copy (for informational purposes only) to:

       

       

       

      If to Escrow Agent:

       

      Feldman Weinstein & Smith LLP

       

      420 Lexington Avenue

       

      New York, New York 10170

       

      Telephone:  (212) 931-8704
Facsimile: 
(212) 401-4741

       

      Attention:  Robert F. Charron

       

      If to Company:

       

      Axion International Holdings,
Inc.                                                                      
665 Martinsville Road, Suite 219     
                                                            Basking
Ridge, New Jersey 07928

       

                  With a
copy to:

       

      Silverman
Sclar Shin & Byrne PLLC

       

      381 Park
Avenue South, 16th
Floor

       

      New York,
New York

       

      Tel: 
212-779-8600

       

      Fax:
212-779-8858

       

      Attn: Peter
R. Silverman

       

       

       

      Written confirmation of receipt
(A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by Seller's
facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission or (C) provided by an overnight
courier service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from an overnight courier service in accordance with clause
(a) or (c) above, respectively.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      Section 8.  Governing Law; Submission to
Jurisdiction.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.  Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of 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 to such
party at the address for such 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.  EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

       

      Section 9.  Entire Agreement; Amendments.
This Agreement supersedes all other prior oral or written agreements among
Purchaser, the Sellers, their affiliates and Persons acting on their behalf with
respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Sellers nor Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters.  No
provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought. 

       

      Section 10.  Severability.
 If any provision of this Agreement is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the
parties.  The parties will endeavor in good faith negotiations to replace
the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).

       

      Section 11.  Headings.  The headings
of this Agreement are for convenience of reference and shall not form part of,
or affect the interpretation of, this Agreement.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      Section 12  No Strict Construction. 
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.

       

      Section 13  No Third Party
Beneficiaries.  This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not
for the benefit of, nor may any provision hereof be enforced by, any other
person.  

       

      Section 14  Further Assurances. 
Each party shall use its commercially reasonable efforts to do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as any other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

       

      Section 15  Successors.  This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Purchased Preferred
Shares, Purchased Warrants or Purchased Put Options. 

       

      Section 16  Survival.  Unless this
Agreement is terminated by mutual consent of the Sellers and Purchaser, the
representations and warranties of Sellers and Purchaser contained in Section 3
and 4 shall survive the Closing Date and the delivery and exercise of the
Option, as applicable, through the date that is one year after the Closing Date.

       

       [The remainder of the page is intentionally left
blank]

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

    IN WITNESS
WHEREOF, Purchaser, Sellers and the Escrow Agent have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.

     

    
      	
              tHOR UNITED

               

              By:    /s/
      Oleg
      Batrachenko                                   
       
 Name: Oleg Batrachenko

               

                      
      Title:   Director

               

            
	
              BERKSHIRE INTERNATIONAL
      FINANCE

               

              By:    /s/
      John
      Figlioni                                     
            
 Name: John
      Figlioni

               

                         
      Title: 

               

            
	
              DIVASH CAPITAL
      PARTNERS LLC 

              By:    /s/
      Steven C.
      Berger                         
                 
      
 Name: Steven C.
      Berger

               

                      
      Title:   Managing Member

               

            
	
              FELDMAN WEINSTEIN & SMITH
      LLP, as
      Escrow Agent

               

              By:  /s/ Joseph A.
      Smith                                 
       
Name:
      Joseph A. Smith

               

              Title:  Authorized
      Signatory

               

            

    

     

     

    Axion International HOLDINGS,
Inc.

     

    By:  /s/
James
Kerstein                                       
 
Name: 

     

    Title:

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