Document:

Exhibit
10.1

    

    STOCK
PURCHASE AGREEMENT

    

    This STOCK PURCHASE AGREEMENT, dated as
of June 14, 2010 (this “Agreement”), by and
among Vertro, Inc., a Delaware corporation (the “Company”), and each
of the purchasers set forth on Schedule I hereto
(each, a “Purchaser” and
collectively, the “Purchasers”).

    

    Recital

    

    The Company wishes to sell to the
Purchasers, and the Purchasers wish to purchase from the Company, in the
aggregate, 657,895 shares of the Company’s common stock, $0.001 par value per
share (the “Common
Stock”), and with respect to each Purchaser, the amount of shares of
Common Stock as set forth on Schedule I hereto, upon the terms and subject to
the conditions hereinafter set forth.

    

    Statement of
Agreement

    

    In consideration of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows.

    

    Article
I –  Definitions

    

    Section
1.1.          General
Definitions.  As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings
indicated:

     

    “Affiliate” shall
mean, with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such
Person.  For the purposes of this definition, “control,” when used
with respect to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of “affiliated,” “controlling” and
“controlled”
have meanings correlative to the foregoing.

    

    “Board” shall mean the
Board of Directors of the Company.

    

    “Business 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 generally are
authorized or required by law or other government actions to close.

    

    “By-laws” shall mean,
unless the context in which such term is used otherwise requires, the By-laws of
the Company as in effect on the Closing Date.

    

    “Certificate of
Incorporation” shall mean, unless the context in which it is used shall
otherwise require, the Certificate of Incorporation of the Company as in effect
on the Closing Date.

    

    “Closing Date” shall
mean the date of the Closing.

    

    “Code” shall mean the
Internal Revenue Code of 1986, as amended, or any successor statute
thereto.

    

    “Commission” shall
mean the Securities and Exchange Commission or any similar agency then having
jurisdiction to enforce the Securities Act.

    

    “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder.

    

    “GAAP” shall mean
generally accepted accounting principles in effect within the United States,
consistently applied.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Governmental
Authority” shall mean the government of any nation, state, city, locality
or other political subdivision of any thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, regulation or compliance, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.

    

    “Lien” shall mean any
mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance, lien
(statutory or other), charge, claim, restriction or preference, priority, right
or other security interest or preferential arrangement of any kind or nature
whatsoever (excluding preferred stock and equity related
preferences).

    

    “Material Adverse
Effect” shall mean a material adverse effect on, or a material adverse
change in, or a group of such effects on or changes in (i) the assets, business,
properties, prospects, operations, or financial condition of the Company and its
Subsidiaries, taken as a whole, or (ii) the ability of the Company to perform
its obligations under this Agreement.

    

    “Permitted
Encumbrances” shall mean:

    

    (a)          Liens
for Taxes, assessments or other governmental charges which are not yet due and
payable or which are being contested in good faith with a reserve or other
appropriate provision having been made therefor;

     

    (b)          Liens
of landlords, carriers, warehousemen, mechanics, materialmen and other similar
liens imposed by law, which are incurred in the ordinary course of business for
sums not more than thirty (30) days delinquent or which are being contested in
good faith; provided that a reserve or other appropriate provision shall have
been made therefor and the aggregate amount of such Liens is less than
$100,000;

     

    (c)          Liens
incurred or deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations,
surety, stay, customs and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed
money);

     

    (d)          Deposits
in an aggregate amount not to exceed $100,000, made in the ordinary course of
business to secure liability to insurance carriers;

     

    (e)          Leases
or subleases granted to others not interfering in any material respect with the
business of the Company or any of its Subsidiaries; and

     

    (f)           Easements,
rights of way, restrictions and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the business of
the Company or any of its Subsidiaries.

     

    “Person” shall mean
any individual, firm, corporation, limited liability company, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, Governmental Authority or other entity of any kind, and shall include
any successor (by merger or otherwise) of such entity.

     

    “Purchaser Affiliate”
shall mean with respect to each Purchaser, any affiliate of such Purchaser (as
defined in Rule 405 under the Securities Act) and any Person who controls the
Purchaser or any affiliate of the Purchaser within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act.

    

    “Regulation D” shall
mean Regulation D promulgated under the Securities Act, as the same shall be in
effect at the time.

    

    “Rule 144” shall mean
Rule 144 promulgated under the Securities Act, as the same shall be in effect at
the time

    
      
         

      

      
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    “SEC Reports” shall
mean all forms, reports, statements and other documents (including, without
limitation, exhibits, annexes, supplements and amendments to such documents)
filed by the Company, or sent or made available by the Company to its security
holders, under the Exchange Act, the Securities Act, any national securities
exchange or quotation system or comparable Governmental Authority.

    

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

    

    “Short Sales” shall
mean all “short sales” as defined in Rule 200 under the Exchange
Act.

    

    “Subsidiary” shall
mean, with respect to any Person, a corporation or other entity of which 50% or
more of the voting power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person.  Unless otherwise
qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Company or of a
Subsidiary of the Company.

    

    Section
1.2           Accounting Terms; Financial
Statements. All accounting terms used herein and not expressly defined in
this Agreement shall have the respective meanings given to them in conformance
with GAAP.  Financial statements and other information furnished after
the date hereof pursuant to the Agreement shall be prepared in accordance with
GAAP as in effect at the time of such preparation.

     

    Section
1.3           Knowledge of the
Company.  All references to the knowledge of the Company or to
facts known by the Company shall mean knowledge of the Chief Executive Officer,
Chief Financial Officer or General Counsel of the Company after reasonable
inquiry.

     

    Article
II – Purchase and Sale of Shares

     

    Section
2.1           Purchase and Sale of
Shares.  Subject to the terms and conditions herein set forth,
the Company agrees to issue and sell to the Purchasers, and the Purchasers agree
to purchase from the Company, at the Closing, 657,895 shares of Common Stock
(the “Shares”)
for an aggregate purchase price of $250,000.10 (the “Purchase
Price”).  At the Closing, the Company shall deliver or cause to
be delivered to the Purchasers the Shares against payment by each Purchaser of a
certified or official bank check or wire transfer of the amount set forth on
Schedule I
hereto, net of the Permitted Expenses (as defined below).

     

    Section
2.2           Closing.  The
purchase and issuance of the Shares shall take place at a closing (the “Closing”)
simultaneously with the execution and delivery of this Agreement or on such
other date and time as the Parties may agree (the “Closing Date”) at the
offices of the Company, 143 Varick Street, New York, New York, provided that all
of the conditions set forth in Article VIII hereof, shall have been fulfilled or
waived in accordance herewith.

     

    Section
2.3           Exemption From
Registration.  The Company and the Purchasers are executing and
delivering this Agreement in accordance with and in reliance upon the exemption
from securities registration afforded by Section 4(2) of the Securities Act, and
the rules and regulations promulgated thereunder, and/or upon such other
exemption from the registration requirements of the Securities Act as may be
available with respect to any or all of the investments to be made
hereunder.

     

    Article
III – Representations and Warranties of the Company

     

    The Company hereby represents and
warrants to the Purchasers, as of the date hereof and the Closing Date (except
as set forth on the Schedule of Exceptions attached hereto with each numbered
Schedule corresponding to the section number herein), as follows:

    

    Section
3.1           Corporate Existence and
Power.   The Company and each of its Subsidiaries: (a) is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; (b) has all requisite corporate
power and authority to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently, or is
currently proposed to be, engaged; and (c) is duly qualified as a foreign
corporation, licensed and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, except to the extent that the failure to
so qualify would not have a Material Adverse Effect.  The Company has
the corporate power and authority to execute, deliver and perform its
obligations under the Agreement.

    
      
         

      

      
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    Section
3.2           Capitalization. The
authorized capital stock of the Company consists of 200,000,000 shares of Common
Stock, of which 34,438,657 shares of Common Stock are issued and outstanding,
and 500,000 shares of authorized Preferred Stock, of which no shares are issued
and outstanding.  All of such outstanding shares have been validly
issued and are fully paid and nonassessable. Except as disclosed in the SEC
Reports, no shares of Common Stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the
Company. Except as disclosed in the SEC Documents and on Schedule 3.2, as
of the date hereof, there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, except pursuant to the terms of an agreement between the Company
and the Purchaser. There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by this Agreement or
any related agreement or the consummation of the transactions described herein
or therein.

     

    Section
3.3          Corporate Authorization; No
Contravention.  The execution, delivery and performance by the
Company of this Agreement and the consummation of the transactions contemplated
hereby, (a) has been duly authorized by all necessary corporate action; (b) do
not and will not contravene the terms of the Certificate of Incorporation or
By-Laws of the Company or any amendment thereof or any federal, state, local or
foreign statute, rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations) applicable to the Company or any of
its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries are bound or affected; (c) do not and will not (i) conflict with,
contravene, result in any material violation or breach of or material default
under (with or without the giving of notice or the lapse of time or both), (ii)
create in any other Person a right or claim of termination or amendment, or
(iii) require any material modification or acceleration or cancellation of, any
contractual obligation of the Company or any of its Subsidiaries; and (d) do not
and will not result in the creation of any Lien (or obligation to create a Lien)
against any material property or asset of the Company or any of its
Subsidiaries, except, in all cases, for such conflicts, defaults, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect.

     

    Section
3.4           Binding
Effect.  This Agreement has been duly executed and delivered by
the Company, and this Agreement constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general
application.

     

    Section
3.5       Governmental
Authorization.  Neither the Company nor any of its Subsidiaries
is required under federal, state, foreign or local law, rule or regulation to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or Governmental Authority in order for it to
execute, deliver or perform any of its obligations under the Agreement or issue
and sell the Shares in accordance with the terms hereof (other than any filings,
consents and approvals which may be required to be made by the Company under
applicable state and federal securities laws, rules or regulations or any
registration provisions provided in the Registration Rights
Agreement).

     

    Section
3.6       Issuance of
Securities. The Shares to be issued at the Closing have been duly
authorized by all necessary corporate action and, when paid for or issued in
accordance with the terms hereof, shall be validly issued and outstanding, free
and clear of all liens, encumbrances and rights of refusal of any kind, and
fully paid and non-assessable.

    
      
         

      

      
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    Section
3.7       SEC Reports; Financial
Statements. The Common Stock of the Company is registered pursuant to
Section 12(b) of the Exchange Act.  Since December 31, 2007, the
Company has filed in a timely manner all SEC Reports required to be filed by it
with the Commission pursuant to the reporting requirements of the Exchange Act,
and the Company has disclosed to the Purchasers all events, facts or
circumstances that exist or have occurred on or prior to the date of this
Agreement that are required to be disclosed on a Form 8-K, but have not yet been
so reported on a Form 8-K or other SEC Report (provided, that no such disclosure
is required with respect to any event, fact or circumstances that requires
disclosure on a Form 8-K and is related to the transactions contemplated by this
Agreement).  At the times of their respective filings, each of the SEC
Reports filed since December 31, 2007 (or, if amended or superseded by a filing
prior to the Closing Date, then on the date of such filing), complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder and other federal, state
and local laws, rules and regulations applicable to such documents, and such SEC
Reports did 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.  As of their respective dates, the financial
statements of the Company included in the SEC Reports complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with 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).

     

     Section
3.8          No Material Adverse
Change.  Since March 31, 2010, the Company has not experienced
or suffered any Material Adverse Effect, except as disclosed in the SEC
Reports.

     

     Section
3.9          No Undisclosed
Liabilities. Except as disclosed in the SEC Reports, neither the Company
nor any of its Subsidiaries has incurred any liabilities, obligations, claims or
losses other than those incurred in the ordinary course of the Company’s or its
Subsidiaries respective businesses or which, individually or in the aggregate,
are not reasonably likely to have a Material Adverse Effect.

     

    Section
3.10         Title to Assets. Each
of the Company and the Subsidiaries has good and valid title to all of their
respective real and personal property reflected in the SEC Reports, free and
clear of any mortgages, pledges, charges, liens, security interests or other
encumbrances, except for Permitted Encumbrances and those that, individually or
in the aggregate, do not cause a Material Adverse Effect. Any material leases of
the Company and each of its Subsidiaries are valid and subsisting and in full
force and effect.

     

    Section
3.11         Actions Pending.
There is no action, suit, claim, investigation, arbitration, alternate dispute
resolution proceeding or other proceeding pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary which questions the
validity of this Agreement or any of the transactions contemplated hereby or any
action taken or to be taken pursuant hereto or thereto.  Except as set
forth in the SEC Reports, there is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other proceeding pending
or, to the knowledge of the Company, threatened against or involving the
Company, any Subsidiary or any of their respective properties or assets, which
individually or in the aggregate, would reasonably be expected, if adversely
determined, to have a Material Adverse Effect. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator or
Governmental Authority against the Company or any Subsidiary or any officers or
directors of the Company or Subsidiary in their capacities as such, which
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

     

     Section
3.12        Compliance with Law.
The business of the Company and the Subsidiaries has been and is presently being
conducted in accordance with all applicable federal, state and local
governmental laws, rules, regulations and ordinances, except such that,
individually or in the aggregate, the noncompliance therewith could not
reasonably be expected to have a Material Adverse Effect. The Company and each
of its Subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it unless the failure to
possess such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

    
      
         

      

      
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    Section
3.13        Taxes. The Company
and each of its Subsidiaries has timely filed or has valid extensions of the
time to file all material federal, state and other tax returns required by law
to be filed by it, has paid or made provisions for the payment of all taxes
shown to be due and all additional assessments, and adequate provisions have
been and are reflected in the financial statements of the Company and the
Subsidiaries for all current taxes and other charges to which the Company or any
Subsidiary is subject and which are not currently due and payable. The Company
has no knowledge of any additional assessments, adjustments or contingent tax
liability (whether federal or state) of any nature whatsoever, whether pending
or threatened against the Company or any Subsidiary for any period, nor of any
basis for any such assessment, adjustment or contingency, which if determined
adversely to the Company, would reasonably be expected to have a Material
Adverse Effect.

     

    Section
3.14         Brokers’ or Finders’
Fees. Except as set forth on Schedule 3.14, the Company has not employed
any broker or finder or incurred any liability for any brokerage or investment
banking fees, commissions, finders’ structuring fees, financial advisory fees or
other similar fees in connection with the transactions contemplated by this
Agreement.

     

    Section
3.15         Internal Accounting
Controls. The Company is in compliance in all material respects with all
provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of
the Closing Date. The Company and its Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms.  The Chief Executive
Officer and the Chief Financial Officer of the Company have signed, and the
Company has furnished to the Commission, all certifications required by Sections
302 and 906 of the Sarbanes-Oxley Act of 2002.

     

    Section
3.16         Securities Act. The
Company has complied and will comply with all applicable federal and state
securities laws in connection with the offer, issuance and sale of the Shares
hereunder.  Neither the Company nor anyone acting on its behalf,
directly or indirectly, has or will take any action that would require
registration under the Securities Act or applicable state securities laws of the
offer, sale or issuance of the Shares to the Purchasers.  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 any of the
Shares.

     

    Section
3.17         Disclosure. Except
for: (i) the existence of this Purchase Agreement, (ii) the contemplation of
sale of the Shares to the Purchasers, (iii) the consummation of the sale of the
Shares to the Purchasers and (iv) certain disclosures set forth or required in
Article III and the schedules thereto, the Company confirms that neither it nor
any other person acting on its behalf has provided the Purchasers or its agents
or counsel with any information that constitutes or might constitute material,
nonpublic information.

    

    Article
IV – Representations and Warranties of the Purchasers

     

    Each Purchaser, with respect to itself,
hereby represents and warrants to the Company as of the date hereof and as of
the Closing Date, as follows:

    

    Section
4.1           Organization and
Standing. The Purchaser is a limited liability company or a limited
liability limited partnership, as the case may be, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
formation.

    
      
         

      

      
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    Section
4.2           Authorization and
Power.  The Purchaser has the requisite power and authority to
enter into and perform its obligations under Agreement and to purchase the
Shares being sold to it hereunder.  The execution, delivery and
performance of the Agreement by the Purchaser and the consummation by it of the
transactions contemplated hereby (a) have been duly authorized by all necessary
limited liability company action, and (b) does not contravene the terms of the
organizational or governing documents of the Purchaser.  No further
consent or authorization of the Purchaser, its board of directors or other
governing body, or of its members, is required for the execution, delivery or
performance of the Agreement by the Purchaser. When executed and delivered by
the Purchaser, the Agreement shall constitute valid and binding obligation of
the Purchaser enforceable against the Purchaser in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditor’s rights and remedies or by other equitable principles of general
application.

     

    Section
4.3           Acquisition for
Investment.  The Purchaser is purchasing the Shares solely for
its own account and not with a view to or for sale in connection with a
distribution thereof.  The Purchaser does not have a present intention
to sell any of the Shares, nor a present arrangement (whether or not legally
binding) or intention to effect any distribution of any of the Shares to or
through any person or entity; provided, however, that by
making the representations herein, the Purchaser does not agree to hold the
Shares for any minimum or other specific term and reserves the right to dispose
of the Shares at any time in accordance with Federal and state securities laws
applicable to such disposition.  The Purchaser acknowledges and agrees
that certificates representing the Shares shall bear a legend to the following
effect:

     

    THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH
LAWS.

     

    Section
4.4           Purchaser
Status.  At the time Purchaser 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.  The Purchaser has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in the Shares. The Purchaser is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act and the
Purchaser is not a broker-dealer. The Purchaser acknowledges that an investment
in the Shares is speculative and involves a high degree of risk.

     

    Section
4.5           Access to
Information. The Purchaser acknowledges that it has reviewed the SEC
Reports, the Schedules to this Agreement and other information furnished by the
Company, and has been afforded (i) the opportunity to ask such questions as it
has deemed necessary of, and to receive answers from, representatives of the
Company concerning the terms and conditions of the offering of the Shares and
the merits and risks of investing in the Shares; (ii) the opportunity to access
to information about the Company and Subsidiaries and their respective financial
condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the opportunity to
obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed
investment decision with respect to Purchaser’s investment in the
Shares.

     

    Section
4.6           Rule
144.  The Purchaser understands that the Shares must be held
indefinitely unless such Shares are registered under the Securities Act or an
exemption from registration is available. The Purchaser acknowledges that the
Purchaser is familiar with Rule 144, and that the Purchaser has been advised
that Rule 144 permits resales only under certain circumstances. The Purchaser
understands that to the extent that Rule 144 is not available, such Purchaser
will be unable to sell any Shares without either registration under the
Securities Act or the existence of another exemption from such registration
requirement.

     

    Section
4.7           Certain Trading
Activities.  The Purchaser has not directly or indirectly, nor
has any Person acting on behalf of or pursuant to any understanding with the
Purchaser, engaged in any transactions in the securities of the Company
(including, without limitations, any Short Sales involving the Company’s
securities) since the earlier to occur of (a) the time that such Purchaser was
first contacted by or on behalf of the Company regarding an investment in the
Company, or (b) the 30th day prior to the date of this
Agreement.

    
      
         

      

      
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    Section
4.8           No General
Solicitation. The Purchaser acknowledges that the Shares were not offered
to the Purchaser by means of any form of general or public solicitation or
general advertising, or publicly disseminated advertisements or sales
literature, including (a) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media, or
broadcast over television or radio, or (b) any seminar or meeting to which such
Purchaser was invited by any of the foregoing means of
communications.

     

    Section
4.9           Independent Investment
Decision.  The Purchaser has independently evaluated the merits
of its decision to purchase Shares pursuant to the Agreement.  The
Purchaser has not relied on the business or legal advice of the Company or any
of its agents, counsel or Affiliates in making its investment decision
hereunder, and confirms that none of such Persons has made any representations
or warranties to such Purchaser in connection with the transactions contemplated
by the Agreement other than as contained therein.

     

    Section
4.10         Exemption From
Registration. The Purchaser understands that the Shares are being offered
and sold in reliance on a transactional exemption from the registration
requirements of federal and state securities laws and the Company is relying
upon the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in order to
determine the applicability of such exemptions and the suitability of the
Purchaser to acquire the Shares. The Purchaser understands that no Governmental
Authority has passed upon or made any recommendation or endorsement of the
Shares.

     

    Section
4.11         Certain Fees. The
Purchaser has not employed any broker or finder or incurred any liability for
any brokerage or investment banking fees, commissions, finders’ structuring
fees, financial advisory fees or other similar fees in connection with the
transactions contemplated by this Agreement.

     

    Section
4.12         No Agreements. The
Purchaser has not agreed to act with any other Person for the purpose of
acquiring, holding, voting or disposing of the Shares purchased hereunder for
purposes of Section 13(d) of the Exchange Act, and the Purchaser is acting
independently with respect to its investment in the Shares.

     

    Article
V – Survival of Representations, Warranties and Agreements

    

    Section
5.1           Survival.  All
covenants, agreements, representations and warranties made by the Company and
the Purchasers herein shall survive the execution of this Agreement, the
delivery to the Purchasers of the Shares being purchased, and the payment
therefore for a period of three (3) years from the Closing
Date.  Notwithstanding the previous sentence, the obligations of the
Company pursuant to Article VI and VII of this Agreement shall survive until the
end of the Registration Period, as such term is defined in Section 6.1(b) of
this Agreement, and the obligations pursuant to Article IX shall survive
indefinitely.

    

    Article
VI – Registration of the Shares

    

    Section
6.1           Registrable
Securities.  As used herein
the terms “Registrable
Securities” and “Registrable Security”
means the Shares, and any shares of Common Stock issued or issuable, from time
to time, upon any reclassification, share combination, share subdivision, stock
split, stock dividend, merger, consolidation, or similar transaction or event as
a distribution on, in exchange for, or with respect to any of the Shares,
including the Penalty Shares, if any; provided, however, that with respect to
any Registrable Security, such security shall cease to be a Registrable Security
after June 11, 2013, or when, as of the date of determination, (i) such
Registrable Security has been sold by Purchasers, or (ii) it is freely tradeable
without limitation on the number of Shares transferable by the holder thereof
pursuant to an exemption from registration provided by Rule 144 promulgated
under the Securities Act.  Notwithstanding anything contained herein
to the contrary, the rights of the Purchasers under this Section 6.1 may be
assigned by the Purchasers to any of their respective Purchaser Affiliates to
which either Purchaser has transferred or sold any of its Shares, provided such
Purchaser Affiliates agree to be bound to the terms and obligations of this
Agreement.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    Section
6.2           Resale Registration
Statement.  After Closing, the Company shall prepare and file
with the Commission a registration statement as soon as practicable covering the
Purchasers’ Registrable Securities (the “Resale Registration
Statement”).  Subject to receipt of necessary information from
the Purchasers, the Company shall use its best efforts to prepare and file with
the Commission the Resale Registration Statement within forty- five (45) days
after the Closing Date on Form S-3 or such other form as may be available and
required.  The Company shall use its best efforts to have the Resale
Registration Statement declared effective under the Securities Act by the
Commission within one-hundred and twenty (120) days after the Closing Date. Upon
the effectiveness of the Resale Registration Statement, the Company will use
best efforts to keep the Resale Registration Statement open until the earlier to
occur of: (i) the date as of which all such Registrable Securities are sold by
the Purchasers and any Affiliates who were transferred rights under this
Agreement, or (ii) the date as of which such Registrable Securities are freely
tradeable pursuant to Rule 144 of the Securities Act and in connection therewith
all legends on any such Registrable Securities have been removed (the “Registration
Period”). The Company shall bear all of the expense of the Resale
Registration Statement.

    

    Section
6.3          Other
Obligations.

     

    (a)          The
Company shall prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to the Resale Registration Statement
and the prospectus used in connection with the Resale Registration Statement,
which prospectus is to be filed pursuant to Rule 424 promulgated under the
Securities Act, as may be necessary to keep the Resale Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company covered by the Resale Registration
Statement until such time as all of such Registrable Securities shall have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in the Resale Registration
Statement.

     

    (b)          The
Company shall furnish to the Purchasers without charge, (i) at least one
copy of such Resale Registration Statement as declared effective by the
Commission and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, all exhibits and
each preliminary prospectus, (ii) one copy of the final prospectus included
in such Resale Registration Statement and all amendments and supplements thereto
(or such other number of copies as such Purchasers may reasonably request) and
(iii) such other documents as such Purchasers may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Purchasers.

     

    (c)          The
Company shall use best efforts to (i) register and qualify the Registrable
Securities covered by a Registration Statement under such other securities or
“blue sky” laws of such jurisdictions in the United States as the Purchasers
reasonably request, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (w) make any
change to its Certificate of Incorporation or By-laws, (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 6.3(c), (y) subject itself to general taxation in
any such jurisdiction, or (z) file a general consent to service of process
in any such jurisdiction. The Company shall promptly notify the Purchasers of
the receipt by the Company of any notification with respect to the suspension of
the registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.

     

    (d)         As
promptly as practicable after becoming aware of such event or development, the
Company shall notify the Purchasers in writing of the happening of any event as
a result of which the prospectus included in the Resale Registration Statement,
as then in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and promptly prepare a supplement or amendment
to such Resale Registration Statement to correct such untrue statement or
omission, and deliver one copy of such supplement or amendment to the
Purchasers. The Company shall also promptly notify the Purchasers in writing (i)
when a prospectus or any prospectus supplement or post-effective amendment has
been filed, and when the Resale Registration Statement or any post-effective
amendment has become effective (notification of such effectiveness shall be
delivered to the Purchasers by facsimile on the same day of such effectiveness),
(ii) of any request by the SEC for amendments or supplements to the Resale
Registration Statement or related prospectus or related information, and
(iii) of the Company’s reasonable determination that a post-effective
amendment to the Resale Registration Statement would be
appropriate.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (e)         
The Company shall use its best efforts to prevent the issuance of any stop order
or other suspension of effectiveness of the Resale Registration Statement, or
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction within the United States of America and, if such an
order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify the Purchasers of the
issuance of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such
purpose.

     

    Section
6.4           Failure to Register.
The Company and the Purchasers agree that in the event that the Resale
Registration Statement has not been declared effective within 120 days after the
Closing Date (a “Registration
Default”), for each 30-day period, or portion thereof, during which the
Registration Default remains uncured (each, a “Penalty Period”), the
Company shall issue or pay, as applicable, to each Purchaser for each Penalty
Period 5% of the aggregate purchase price paid by such Purchaser for the Shares
(provided, that for purposes of this calculation, such aggregate purchase price
amount shall be proportionately reduced to the extent that such Purchaser has
sold or transferred (other than to an Affiliate) all or a portion of the Shares
prior to the beginning of the Penalty Period, including, but not limited to, in
a transaction covered by Rule 144 of the Securities Act), payable in validly
issued, fully paid and nonassessable shares of Common Stock (valued at the
average closing price of the Common Stock for the three trading days ending on
the last trading day of such Penalty Period) (the “Penalty Shares”) or
cash, or a combination thereof, at the option of the Company; provided, however,
that the maximum aggregate payment of cash, or issuance of Penalty Shares to
Purchaser, or a combination thereof, as the case may be, in respect of a
Registration Default shall not exceed 50% of the aggregate purchase price paid
by such Purchaser for the Shares and provided further, that if the issuance of
Penalty Shares by the Company would result in the Company being required by
Nasdaq rules or other applicable rules to obtain the approval of the Company’s
stockholders, then the Company shall pay cash rather than issue Penalty Shares
to the extent needed to avoid such stockholder approval. The Company shall
deliver the Penalty Shares or cash payment to each Purchaser by the seventh
business day after the end of each Penalty Period. Notwithstanding anything to
the contrary herein, the issuance of Penalty Shares or cash as provided in this
Section 6.4 shall be each Purchaser’s exclusive remedy in the event of any
Registration Default; provided, however, that if the foregoing remedy is deemed
unenforceable by a court of competent jurisdiction then the Purchasers shall
have all other remedies available at law or equity.

     

    Section
6.5           Failure to Maintain
Registration Statement.  If, on any day after the effective
date of the Resale Registration Statement and up until the conclusion of the
Registration Period, sales of all of the Registrable Securities required to be
included on such Resale Registration Statement that have not already been sold
by Purchasers pursuant to the Resale Registration Statement cannot be made
pursuant to such Resale Registration Statement (as a result of the failure to
keep such Resale Registration Statement effective or the Company’s failure to
register a sufficient number of shares of Common Stock), and Rule 144 of the Act
is not available to Purchaser as a result of Purchaser’s failure to maintain
current public information as set forth in Rule 144 of the Act  (each,
a “Maintenance
Failure”), and such Maintenance Failure has not been cured within 60 days
of the date of such Maintenance Failure, then, as partial relief for the damages
to any holder by reason of any such delay in or reduction of its ability to sell
the Shares (which remedy shall not be exclusive of any other remedies available
at law or in equity), for each 30-day period, or portion thereof, during which
such uncured Maintenance Failure continues to remain uncured (each, a “Maintenance Penalty
Period”), the Company shall pay to each Purchaser of Registrable
Securities who has not already sold all of the Shares elating to such Resale
Registration Statement an amount equal to 5% of the aggregate purchase price
paid by such Purchaser for the Shares (provided, that for purposes of this
calculation, such aggregate purchase price amount shall be proportionately
reduced to the extent that Purchaser has sold or transferred (other than to an
Affiliate) all or a portion of the Shares prior to the beginning of the
Maintenance Penalty Period, including, but not limited to, in a transaction
covered by Rule 144 of the Securities Act), payable in validly issued, fully
paid and nonassessable shares of Common Stock (valued at the average closing
price of the Common Stock for the three trading days ending on the last trading
day prior to the start of the Maintenance Failure period or each such thirtieth
day period thereafter) (the “Maintenance Failure Penalty
Shares”) or cash, or a combination thereof, at the option of the Company;
provided, however that the maximum aggregate payment of cash, or issuance of
Maintenance Failure Penalty Shares to Purchaser, or a combination thereof, as
the case may be, in respect of any uncured Maintenance Failure shall not exceed,
when aggregated with any penalties paid pursuant to Section 6.4, 75% of the
aggregate purchase price paid by such Purchaser for the Shares and provided
further, that if the issuance of Maintenance Failure Penalty Shares by the
Company would result in the Company being required by Nasdaq rules or other
applicable rules to obtain the approval of the Company’s stockholders, then the
Company shall pay cash rather than issue Penalty Shares to the extent needed to
avoid such stockholder approval.  The Company shall deliver the
Maintenance Failure Penalty Shares or cash payment to each Purchaser by seventh
business day after the end of each Maintenance Penalty Period.  The
payments to which a holder shall be entitled pursuant to Sections 6.4 and 6.5
are referred to as “Registration Delay
Payments.”   In the event the Company fails to make
Registration Delay Payments in a timely manner, such Registration Delay Payments
shall bear interest at the rate of one and one-half percent (1.5%) per month
(prorated for partial months) until paid in full.

    
      
         

      

      
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    Article
VII – Covenants

    

    Section
7.1           Registration and
Listing. The Company shall cause its Common Stock to continue to be
registered under Sections 12(b) or 12(g) of the Exchange Act, to comply in all
respects with its reporting and filing obligations under the Exchange Act, to
comply with all requirements related to any registration statement filed
pursuant to this Agreement, and to not take any action or file any document
(whether or not permitted by the Securities Act or the rules promulgated
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under the Exchange Act or Securities Act,
except as permitted herein. Subject to the terms of the Agreement, the Company
further covenants that it will take such further action as the Purchasers may
reasonably request, all to the extent required from time to time to enable the
Purchasers to sell the Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 promulgated under
the Securities Act, including without limitation: (i) instructing its counsel to
issue (at the Company’s cost) any requisite legal opinions as promptly as
possible, but in any event within two business days and (ii) instructing its
transfer agent to promptly as possible remove all restrictive legends as
promptly as possible, but in any event within one business day of receiving all
reasonably requested documentation.

     

    Section
7.2           Compliance with Laws.
The Company shall comply, and cause each Subsidiary to comply, with all
applicable laws, rules, regulations and orders, noncompliance with which would
be reasonably likely to have a Material Adverse Effect.

     

    Section
7.3           Reporting Status. So
long as the Purchasers (or their Affiliates) beneficially own any of the Shares,
the Company shall timely file all reports required to be filed with the
Commission pursuant to the Exchange Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.

     

    Section
7.4           Legend Removal; Rule
144.  In the event that the Registrable Securities are sold by
the Purchasers or their Affiliates in a manner that complies with an exemption
from registration and enables such stock to be subsequently freely tradable, the
Company will promptly instruct its counsel (at its expense) to issue to the
transfer agent an opinion permitting removal of the legend.

     

    Article
VIII – Conditions to Closing

    

    Section
8.1          Conditions Precedent to the
Obligation of the Company to Close and to Sell the Shares.  The
obligation hereunder of the Company to close and issue and sell the Shares to
the Purchasers at the Closing is subject to the satisfaction or waiver, at or
before the Closing of the conditions set forth below. These conditions are for
the Company’s sole benefit and may be waived by the Company at any time in its
sole discretion.

     

    (a)          Accuracy of the Purchasers’
Representations and Warranties.  The representations and
warranties of the Purchasers shall be true and correct in all material 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 are expressly made as of a
particular date, which shall be true and correct in all material respects as of
such date.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (b)        
 Performance by
the Purchasers.  The Purchasers 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 Purchasers at or prior to the Closing Date.

     

    (c)       
  No
Injunction. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or Governmental Authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this
Agreement.

     

    (d)          Delivery of Purchase
Price. The Purchase Price for the Shares to be purchased at the Closing
shall have been delivered to the Company on the Closing Date.

     

    (e)          Delivery of this
Agreement. This Agreement shall have been duly executed and delivered by
the Purchasers to the Company.

     

    Section
8.2           Conditions Precedent to the
Obligation of the Purchasers to Close and to Purchase the Shares. The
obligation hereunder of the Purchasers to purchase the Shares and consummate the
transactions contemplated by this Agreement at the Closing is subject to the
satisfaction or waiver, at or before the Closing, of each of the conditions set
forth below. These conditions are for the Purchasers’ sole benefit and may be
waived by the Purchasers at any time in their sole discretion.

     

    (a)          Accuracy of the Company’s
Representations and Warranties. Each of the representations and
warranties of the Company in this Agreement shall be true and correct in all
material respects as of the Closing Date, except for representations and
warranties that speak as of a particular date, which shall be true and correct
in all material respects as of such date.

     

    (b)          Performance by the
Company. The Company 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 Company at or prior
to the Closing Date.

     

    (c)          No Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or Governmental
Authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.

     

    (d)          No Proceedings or
Litigation.  No action, suit or proceeding before any
arbitrator or any Governmental Authority shall have been commenced, and no
investigation by any Governmental Authority shall have been threatened, against
the Company or any Subsidiary, or any of the officers, directors or affiliates
of the Company or any Subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.

     

    (e)          Delivery of this
Agreement. The Company shall have duly executed and delivered to the
Purchasers this Agreement.

     

    (f)           Material Adverse
Effect. No Material Adverse Effect shall have occurred.

     

    Article
IX — Indemnification

    

    Section
9.1          General
Indemnity.

     

    (a)          The
Company agrees to indemnify and hold harmless the Purchasers and Purchasers’
Affiliates from and against any and all losses, liabilities, deficiencies,
costs, damages and expenses (including, without limitation, reasonable
attorneys’ fees, charges and disbursements) incurred by the them as a result of
(i) any inaccuracy in or breach of the representations, warranties or covenants
made by the Company herein, or (ii) any untrue statement of a material fact
contained in the Resale Registration Statement; provided, however, that the
Company shall not be liable under this Section 9.1 to an indemnified party: (a)
to the extent that it is finally judicially determined that such losses,
liabilities, deficiencies, costs, damages and expenses resulted primarily from
the willful misconduct or gross negligence of such indemnified party or (b) to
the extent that it is finally judicially determined that such losses,
liabilities, deficiencies, costs, damages and expenses resulted primarily from
the breach by any indemnified party of any representation, warranty, covenant or
other agreement of such indemnified party contained in this
Agreement.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (b)          The
Purchasers agrees to indemnify and hold harmless the Company and its Affiliates
from and against any and all losses, liabilities, deficiencies, costs, damages
and expenses (including, without limitation, reasonable attorneys’ fees, charges
and disbursements) incurred by the them as a result of (i) any inaccuracy in or
breach of the representations, warranties or covenants made by the Purchasers
herein, or (ii) any untrue statement of a material fact contained in the Resale
Registration Statement if such untrue statement was made in reliance upon and in
conformity with written information furnished by the Purchasers specifically
for  use in preparation of the Resale Registration Statement; provided, however, that the
Purchasers shall not be liable under this Section 9.1 to an indemnified party:
(a) to the extent that it is finally judicially determined that such losses,
liabilities, deficiencies, costs, damages and expenses resulted primarily from
the willful misconduct or gross negligence of such indemnified party or (b) to
the extent that it is finally judicially determined that such losses,
liabilities, deficiencies, costs, damages and expenses resulted primarily from
the breach by any indemnified party of any representation, warranty, covenant or
other agreement of such indemnified party contained in this
Agreement.

     

    Section
8.2           Indemnification
Procedure.  Any party entitled to indemnification under this
Article IX (an “indemnified party”)
will give written notice to the indemnifying party of any matter giving rise to
a claim for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article IX except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnifying party a conflict of interest between it
and the indemnified party exists with respect to such action, proceeding or
claim (in which case the indemnifying party shall be responsible for the
reasonable fees and expenses of one separate counsel for the indemnified
parties), to assume the defense thereof with counsel reasonably satisfactory to
the indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim.  In any event, unless and until the
indemnifying party elects in writing to assume and does so assume the defense of
any such claim, proceeding or action, the indemnified party’s costs and expenses
arising out of the defense, settlement or compromise of any such action, claim
or proceeding shall be losses subject to indemnification
hereunder.  The indemnified party shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the indemnified party which
relates to such action or claim.  The indemnifying party shall keep
the indemnified party fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto.  If the
indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense.  The indemnifying party
shall not be liable for any settlement of any action, claim or proceeding
effected without its prior written consent.  Notwithstanding anything
in this Article IX to the contrary, the indemnifying party shall not, without
the indemnified party’s prior written consent, settle or compromise any claim or
consent to entry of any judgment in respect thereof which imposes any future
obligation on the indemnified party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party of a release from all liability in respect of such
claim.  The indemnification obligations to defend the indemnified
party required by this Article IX shall be made by periodic payments of the
amount thereof during the course of investigation or defense, as and when bills
are received or expense, loss, damage or liability is incurred, so long as the
indemnified party shall refund such moneys if it is ultimately determined by a
court of competent jurisdiction that such party was not entitled to
indemnification.

    
      
         

      

      
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    Article
X — Miscellaneous

    

    Section
10.1         Fees and
Expenses.  Except as otherwise set forth in this Agreement,
each party shall pay the fees and expenses of its advisors, 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; provided, however, that the Company agrees to reimburse the
Purchasers for their actual legal fees and expenses up to a maximum of $10,000
(the “Permitted
Expenses”) (and in no event shall the Company be liable for any fees and
expenses, including Permitted Expenses, in excess of such $10,000
maximum).

     

    Section
10.2         Entire Agreement;
Amendment. This Agreement contains the entire understanding and agreement
of the parties with respect to the matters covered hereby and, except as
specifically set forth herein, neither the Company nor either Purchaser make any
representation, warranty, covenant or undertaking with respect to such matters,
and they supersede all prior understandings and agreements with respect to said
subject matter, all of which are merged herein.  No provision of this
Agreement may be waived or amended other than by a written instrument signed by
the Company or the Purchasers.

     

    Section
10.3         Notices. Any notice,
demand, request, waiver or other communication required or permitted to be given
hereunder shall be in writing and shall be effective (a) upon hand delivery by
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

     

    
      
        
          	
                  If
      to the Company:

                	 
      	
                  Vertro,
      Inc.

                  143
      Varick Street

                  New
      York, New York 10013

                  Facsimile
      No.: (212) 809-0926

                  Attention:  John
      B. Pisaris

                
	 
      	 
      	 
      
	
                  with
      copies (which copies

                  shall
      not constitute notice

                  to
      the Company) to:

                	 
      	
                  Porter,
      Wright, Morris & Arthur, LLP

                  41
      South High Street, Suite 2800

                  Columbus,
      Ohio  43215

                  Facsimile
      No.: (614) 227-2100

                  Attention:
      William J. Kelly, Jr., Esq.

                
	 
      	 
      	 
      
	
                  If
      to the Purchasers:

                	 
      	
                  Red
      Oak Partners, LLC

                  654
      Broadway, Suite 5

                  New
      York, New York 10012

                  Facsimile
      No.:  (646) 390-6784

                  Attention:  David
      Sandberg

                   

                  Pinnacle
      Fund, LLLP

                  c/o
      Pinnacle Partners, LLC

                  32065
      Castle Court, Suite 100

                  Evergreen,
      CO 80439

                
	 
      	 
      	 
      
	
                  with
      copies (which copies

                  shall
      not constitute notice

                  to
      the Purchaser) to:

                	 
      	
                  Becker
      Law Group

                  1178
      Broadway, Suite 331

                  New
      York, New York 10001

                  Facsimile
      No.: (646) 390-8000

                  Attention:
      David Becker, Esq.

                

        

      

    

    

    Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.

    

    Section
10.4         Waivers.  No
waiver by either party 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 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 accruing to it
thereafter.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    Section
10.5         Headings. The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose and
shall not be deemed to limit or affect any of the provisions
hereof.

     

    Section
10.6         Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of the parties hereto.

     

    Section
10.7         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
10.8         Governing Law. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Delaware, without giving effect to any of the conflicts of
law principles which would result in the application of the substantive law of
another jurisdiction.

     

    Section
10.9         Counterparts.  Electronic
transmissions or retransmissions of images of any executed original document
shall be deemed to be the same as the delivery of an executed
original.  At the request of any party hereto, the other parties
hereto shall confirm such electronic transmissions by executing duplicate
original documents and delivering the same to the requesting party or
parties.  This Agreement may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement, it being understood that all parties need
not sign the same counterpart.

     

    Section
10.10       Severability. The
provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.

     

    Section
10.11       Further Assurances.
From and after the date of this Agreement, upon the request of the Purchasers or
the Company, the Company and the Purchasers shall execute and deliver such
instruments, documents and other writings and perform such further acts as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.

     

    Section
10.12       No Strict
Construction.  The parties hereto have participated jointly in
the negotiation and drafting of this Agreement.  In the event an
ambiguity or question of intent or interpretation arises under any provision of
this Agreement, this Agreement shall be construed as if drafted jointly by the
parties thereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.

    

    [Signature
Page Follows]

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties hereto
have caused this Securities Purchase Agreement to be duly executed by their
respective authorized officers as of the date first above written.

    

    
      
        
          
            	 
      	
                    VERTRO,
      INC.

                  
	 
      	 
      
	 
      	
                    By:

                  	
                    /s/ Peter A. Corrao

                  
	 
      	 
      	
                    Name:
      Peter A. Corrao

                  
	 
      	 
      	
                    Title:
      President & Chief Executive Officer

                  
	 	 	 
	 
      	
                    PURCHASERS:

                  
	 
      	 
      
	 
      	
                    RED
      OAK FUND, LP

                  
	 
      	 
      
	 
      	
                    By: its general
      partner, Red Oak
      Partners, LLC

                  
	 
      	 
      
	 
      	
                    By:

                  	
                    /s/ David Sandberg

                  
	 
      	 
      	
                    Name:  David
      Sandberg

                  
	 
      	 
      	
                    Title:    Managing
      Member

                  
	 
      	 
      
	 
      	
                    PINNACLE
      FUND, LLLP

                  
	 
      	 
      
	 
      	
                    By: its general
      partner, Red Oak
      Partners, LLC

                  
	 
      	 
      
	 
      	
                    By:

                  	
                    /s/ David Sandberg

                  
	 
      	 
      	
                    Name:  David
      Sandberg

                  
	 
      	 
      	
                    Title:    Managing
      Member

                  

          

        

      

    

     

    
      [Signature
Page to Stock Purchase Agreement]

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    SCHEDULE
I

    PURCHASERS

    

    
      
        
          
            	
                    Name

                  	 	
                    Number of Shares

                  	 	 	
                    Purchase Price

                  	 	 	
                    Less Permitted Expense

                  	 	 	
                    Payment to Company

                  	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Red
      Oak Fund, LP

                  	 	 	394,737	 	 	$	150,000.10	 	 	$	10,000	 	 	$	140,000.10	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Pinnacle
      Fund, LLLP

                  	 	 	263,158	 	 	$	100,000.00	 	 	 	0	 	 	$	100,000.00	 

          

        

      

    

    
      
         

      

      
        S-1

        
          

        

      

      
         

      

    

    Schedule
3.2

    

    There are
3,926,305 shares subject to issuance pursuant to either (i) outstanding awards,
or (ii) awards available for grant under the Company’s 1999 Stock Inventive
Plan, 2004 Stock Inventive Plan or 2006 Stock Award and Incentive
Plan.

    

    The
Company may issue shares, subject to the terms and conditions of that Reserve
Equity Financing Agreement, dated May 10, 2010, by and between the Company and
AGS Capital Group, LLC, as described in the Company’s Current Report on Form
8-K, dated May 10, 2010, and filed with the Commission on May 11,
2010.

    
      
         

      

      
        S-2

        
          

        

      

      
         

      

    

    Schedule
3.14

    
      
      

    

     

    America’s
Growth Capital, LLC has been the Company’s placement agent and fees are payable
to such entity under the Company’s Agreement with such entity.

    
      
         

      

      
        S-3Unassociated Document

    EXHIBIT
10.4

     

    
    

     

    
      
        
          
            	 	 	 
	
                    JAMES W.
      JOHNSTON 

                    Chairman of the
      Board

                  	 	
                    1284 N.
      TELEGRAPH ROAD

                    MONROE,
      MICHIGAN 48162-3390

                    PHONE:
      (734) 242-1444

                  

          

        

      

    

     

    

    June 11,
2010

     

    Kurt L.
Darrow

    

    

    La-Z-Boy
Incorporated (the “Company”) considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its shareholders. In this connection, the Company
recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control may arise and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment of the Company
and its shareholders. The Company further recognizes that it is absolutely vital
to the Company to retain well-qualified executives and to assure itself of
continuity of management in considering any actual or threatened change of
control of the Company.

    

    For the
above reasons, the Board of Directors of the Company (the "Board") has
determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the Company's management to
their assigned duties without distraction in circumstances arising from the
possibility of a change in control of the Company. In particular, the Board
believes that it is important, should the Company or its shareholders receive a
proposal for transfer of control of the Company, that you be able to assess and
advise the Company and its shareholders and to take such other action regarding
such proposal as the Board might determine to be appropriate, without being
influenced by the uncertainties of your own situation.

    

    In order
to induce you to remain in the employ of the Company, this letter agreement
(sometimes called the “Agreement”), which has been approved by the Board, sets
forth the severance benefits which the Company agrees will be provided to you in
the event your employment with the Company is terminated subsequent to a "change
in control" of the Company under the circumstances described below.

    

    
      	
              1.  

            	
              Agreement to Provide
      Services; Right to
Terminate.

            

    

    

    
      	
              (i)  

            	
              Except
      as otherwise provided in paragraph (ii) below, the Company or you may
      terminate your employment at any time, subject to the Company's providing
      the benefits hereinafter specified in accordance with the terms
      hereof.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              (ii)  

            	
              In
      the event a tender offer or exchange offer is made by a Person (as
      hereinafter defined) for more than 30% of the combined voting power of the
      Company's outstanding common stock, you agree that you will not leave the
      employ of the Company (other than as a result of Disability, as that term
      is hereinafter defined) and will continue to render your employment
      services until such tender offer or exchange offer has been abandoned or
      terminated or a change in control of the Company, as defined in Section 3
      hereof, has occurred. For purposes of this Agreement, the term "Person"
      shall mean and include any individual, corporation, partnership, group,
      association or other "person", as such term is used in Section 14(d) of
      the Securities Exchange Act of 1934 (the "Exchange Act"), other than the
      Company, a wholly-owned subsidiary of the Company or any employee benefit
      plan(s) sponsored by the Company. 

            

    

    

    
      	
              2.  

            	
              Term of
      Agreement.

            

    

    

    This
Agreement shall commence on June 11, 2010, and shall continue in effect until
December 31, 2010; provided, however, that commencing on January 1, 2011 and
each January 1 thereafter, the term of this Agreement shall automatically be
extended for one additional year unless at least 90 days prior to such January
1st date, the Company or you shall have given notice that this Agreement shall
not be extended; and provided, further, that this Agreement shall continue in
effect for a period of thirty-six (36) months beyond the term provided herein if
a change in control of the Company, as defined in Section 3 hereof, shall have
occurred during such term. Notwithstanding anything in this Section 2 to the
contrary, this Agreement shall terminate if you or the Company terminates your
employment prior to a change in control of the Company, as defined in Section 3
hereof.

    

    
      	
              3.  

            	
              Change in
      control.

            

    

    For
purposes of this Agreement, a "change in control" of the Company shall mean a
change in the ownership or effective control of the Company or in the ownership
of a substantial portion of the assets of the Company, as more fully described
in attached Exhibit A, which shall be interpreted in accordance with Code
§409A(a)(2)(A)(v) and regulations and other guidance thereunder.

    Notwithstanding
anything in the foregoing to the contrary, no change in control shall be deemed
to have occurred for purposes of this Agreement by virtue of any transaction
which results in you, or a group of Persons which includes you acquiring,
directly or indirectly, 30% or more of the combined voting power of the
Company's Voting Securities.

    

    
      	
              4.  

            	
              Termination Following
      change in control.

            

    

    

    If any of
the events described in Section 3 hereof constituting a change in control of the
Company shall have occurred, you shall be entitled to the benefits provided in
paragraphs (iii) and (iv) of Section 5 hereof upon the termination of your
employment within thirty-six (36) months after such event, unless such
termination is (a) because of your death, (b) by the Company for Cause or
Disability (c) by you other than for Good Reason (as all capitalized terms are
hereinafter defined) or unless (d) such termination does not constitute a
“Separation from Service” as described in attached Exhibit B.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              (i)  

            	
              Disability.
      Termination by the Company of your employment based on "Disability" shall
      mean termination due to the fact that you (i) are unable to engage in any
      substantial gainful activity by reason of any medically determinable
      physical or mental impairment which can be expected to result in death or
      can be expected to last for a continuous period of not less than 12
      months, or (ii) is by reason of any medically determinable physical or
      mental impairment which can be expected to result in death or can be
      expected to last for a continuous period of not less than 12 months,
      receiving income replacement benefits for a period of not less than 3
      months under an accident and health plan covering Employees of the
      Company, provided that this definition shall be interpreted in accordance
      with Code §409A(a)(2)(A)(v) and regulations and other guidance
      thereunder.  Notwithstanding (i) and (ii), you shall be deemed
      to have a Disability when determined to be totally disabled by the Social
      Security Administration. 

            

    

    

    
      	
              (ii)  

            	
              Cause.
      Termination by the Company of your employment for "Cause" shall mean
      termination upon (a) the willful and continued failure by you to perform
      substantially your duties with the Company (other than any such failure
      resulting from your incapacity due to physical or mental illness) after a
      demand for substantial performance is delivered to you by the duly
      authorized representative of the Compensation Committee of the Board which
      specifically identifies the manner in which such executive believes that
      you have not substantially performed your duties, or (b) the willful
      engaging by you in illegal conduct which is materially and demonstrably
      injurious to the Company. For purposes of this paragraph (ii), no act, or
      failure to act, on your part shall be considered "willful" unless done, or
      omitted to be done, by you in bad faith and without reasonable belief that
      your action or omission was in, or not opposed to, the best interests of
      the Company. Any act, or failure to act, based upon authority given
      pursuant to a resolution duly adopted by the Board or based upon the
      advice of counsel for the Company shall be conclusively presumed to be
      done, or omitted to be done, by you in good faith and in the best
      interests of the corporation. Notwithstanding the foregoing, you shall not
      be deemed to have been terminated for Cause unless and until there shall
      have been delivered to you a copy of a resolution duly adopted by the
      affirmative vote of not less than three-quarters of the entire membership
      of the Board at a meeting of the Board called and held for the purpose
      (after reasonable notice to you and an opportunity for you, together with
      your counsel, to be heard before the Board), finding that in the good
      faith opinion of the Board you were guilty of the conduct set forth above
      in (a) or (b) of this paragraph (ii) and specifying the particulars
      thereof in detail.

            

    

    

    
      	
              (iii)  

            	
              Good Reason.
      Termination by you of your employment for "Good Reason" shall mean
      termination based on: 

            

    

    

    
      	
              (A)  

            	
              an
      adverse change in your status or position(s) as a corporate officer of the
      Company as in effect immediately prior to the change in control,
      including, without limitation, any adverse change in your status or
      position as a result of a material diminution in your duties or
      responsibilities (other than, if applicable, any such change directly
      attributable to the fact that the Company is no longer publicly-owned) or
      the assignment to you of any duties or responsibilities which, in your
      reasonable judgment, are inconsistent with such status or position(s), or
      any removal of you from or any failure to reappoint or reelect you to such
      position(s) (except in connection with the termination of your employment
      for Cause or Disability or as a result of your death or by you other than
      for Good Reason);

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (B)  

            	
              a
      reduction by the Company in your compensation as in effect immediately
      prior to the change in control;

            

    

    

    
      	
              (C)  

            	
              the
      failure by the Company to continue in effect any Plan (as hereinafter
      defined) in which you are participating at the time of the change in
      control of the Company (or Plans providing you with at least substantially
      similar benefits) other than as a result of the normal expiration of any
      such Plan in accordance with its terms as in effect at the time of the
      change in control, or the taking of any action, or the failure to act, by
      the Company which would adversely affect your continued participation in
      any of such Plans on at least as favorable a basis to you as is the case
      on the date of the change in control or which would materially reduce your
      benefits in the future under any of such Plans or deprive you of any
      material benefit enjoyed by you at the time of the change in
      control;

            

    

    

    
      	
              (D)  

            	
              the
      failure by the Company to provide and credit you with the number of paid
      vacation days to which you are then entitled in accordance with the
      Company's normal vacation policy as in effect immediately prior to the
      change in control;

            

    

    

    
      	
              (E)  

            	
              the
      Company's requiring you to be based anywhere other than where your office
      is located immediately prior to the change in control except for required
      travel on the Company's business to an extent substantially consistent
      with the business travel obligations which you undertook on behalf of the
      Company prior to the change in
control;

            

    

    

    
      	
              (F)  

            	
              the
      failure by the Company to obtain from any Successor (as hereinafter
      defined) the assent to this Agreement contemplated by Section 6
      hereof;

            

    

    

    
      	
              (G)  

            	
              any
      purported termination by the Company of your employment which is not
      effected pursuant to a Notice of Termination satisfying the requirements
      of paragraph (iv) below (and, if applicable, paragraph (ii) above); and
      for purposes of this Agreement, no such purported termination shall be
      effective or

            

    

    

    
      	
              (H)  

            	
              any
      refusal by the Company to continue to allow you to attend to matters or
      engage in activities not directly related to the business of the Company
      which, prior to the change in control, you were permitted by the Board to
      attend to or engage in, including without limiting the foregoing, serving
      on the Boards of Directors of other companies or
  entities.

            

    

    

    For
purposes of this Agreement, "Plan" shall mean any compensation plan such as an
incentive, stock option or restricted stock plan or any employee benefit plan
such as a savings, pension, profit sharing, medical, disability, accident, life
insurance plan or a relocation plan or policy or any other plan, program or
policy of the Company intended to benefit employees.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              (iv)  

            	
              Notice of
      Termination. Any purported termination by the Company or by you
      following a change in control shall be communicated by written Notice of
      Termination to the other party hereto. For purposes of this Agreement, a
      "Notice of Termination" shall mean a notice which shall indicate the
      specific termination provision in this Agreement relied upon.
    

            

    

    

    
      	
              (v)  

            	
              Date of
      Termination. "Date of Termination" following a change in control
      shall mean (a) if your employment is to be terminated for Disability,
      thirty (30) days after Notice of Termination is given (provided that you
      shall not have returned to the performance of your duties on a full-time
      basis during such thirty (30) day period), (b) if your employment is to be
      terminated by the Company for Cause or by you pursuant to Sections
      4(iii)(F) and 6 hereof or for any other Good Reason, the date specified in
      the Notice of Termination, or (c) if your employment is to be terminated
      by the Company for any reason other than Cause, the date specified in the
      Notice of Termination, which is no event shall be a date earlier than
      ninety (90) days after the date on which a Notice of Termination is given,
      unless an earlier date has been expressly agreed to by you in writing
      either in advance of, or after, receiving such Notice of Termination. In
      the case of termination by the Company of your employment for Cause, if
      you have not previously expressly agreed in writing to the termination,
      then within thirty (30) days after receipt by you of the Notice of
      Termination with respect thereto, you may notify the Company that a
      dispute exists concerning the termination, in which event the Date of
      Termination shall be the date set either by mutual written agreement of
      the parties or by the arbitrators in a proceeding as provided in Section
      15 hereof. During the pendency of any such dispute, the Company will
      continue to pay you your full compensation in effect just prior to the
      time the Notice of Termination is given and until the dispute is resolved
      in accordance with Section 15. 

            

    

    

    
      	
              5.  

            	
              Compensation Upon
      Termination or During Disability; Other
  Agreements.

            

    

    

    During
any period following a change in control that you fail to perform your duties as
a result of incapacity due to physical or mental illness, you shall continue to
receive your salary at the rate then in effect and any benefits or awards under
any Plans shall continue to accrue during such period, to the extent not
inconsistent with such Plans, until your employment is terminated pursuant to
and in accordance with paragraphs 4(i) and 4(v) hereof.  Thereafter,
your benefits shall be determined in accordance with the Plans then in
effect.

    

    
      	
              (i)  

            	
              If
      your employment shall be terminated for Cause following a change in
      control of the Company, the Company shall pay you your salary through the
      Date of Termination at the rate in effect just prior to the time a Notice
      of Termination is given plus any benefits or awards (including both the
      cash and stock components) which pursuant to the terms of any Plans have
      been earned or become payable, but which have not yet been paid to you.
      Thereupon the Company shall have no further obligations to you under this
      Agreement.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              (ii)  

            	
              Subject
      to Section 8 hereof, if, within thirty-six (36) months after a change in
      control of the Company shall have occurred as defined in Section 3 above,
      your employment by the Company shall be terminated (a) by the Company
      other than for Cause, Disability, or death or (b) by you for Good Reason,
      then, by no later than the fifth day following the Date of Termination
      (except as otherwise provided), you shall be entitled, without regard to
      any contrary provision of any Plan, to the benefits provided
      below:

            

    

    

    
      	
              (A)  

            	
              the Company shall pay your
      salary through the Date of Termination at the rate in effect just prior to
      the time a Notice of Termination is given plus any benefits or awards
      (including both the cash and stock components) which pursuant to the terms
      of any Plans have been earned or become payable, but which have not yet
      been paid by you; and

            

    

    

    
      	
              (B)  

            	
              as severance pay and in lieu of
      any further salary for periods subsequent to the Date of Termination, the
      Company shall pay to you an amount in cash equal to three (3) times the
      sum of (i) your annualized salary at the rate in effect at the Date of
      Termination and (ii) an amount equal to the average bonus paid you in the
      previous three (3) years.

            

    

    

    
      	
              (iii)  

            	
              Following
      a change in control of the Company, unless you are terminated for Cause,
      Disability, or death or you terminate your employment other than for Good
      Reason, the Company shall maintain in full force and effect, for the
      continued benefit of you and your dependents for a period terminating on
      the earliest of (a) thirty-six (36) months after the Date of Termination,
      (b) the commencement date of equivalent benefits from a new employer or
      (c) your normal retirement date under the terms of the La-Z-Boy
      Incorporated Retirement Contribution and Profit Sharing Plan (or any
      successor or substitute plan or plans of the Company put into effect prior
      to a change in control), all insured and self-insured employee welfare
      benefits plans in which you were entitled to participate immediately prior
      to the Date of Termination, provided that your continued participation is
      possible under the general terms and provisions of such Plans (and any
      applicable funding media) and you continue to pay an amount equal to your
      regular contribution under such Plans for such
      participation.  If permitted by applicable law, right to
      continuation coverage pursuant to COBRA will run concurrently with such
      continued participation provided by the Company.  If the terms
      of the Company’s medical and dental plans do not permit your continued
      participation after the termination of your employment and you elect to
      continue medical or dental coverage as provided for by COBRA, the Company
      will, for the lesser of 36 months or the period during which you maintain
      such COBRA continuation coverage, pay the difference between the cost of
      your COBRA premiums for medical and dental insurance and the normal
      employee contribution for such coverage.  Such payments will be
      made by the Company in accordance with its normal schedule for premium
      payments in accordance with the applicable plan.  (You may
      thereafter have the right under COBRA to continue such insurance at your
      expense for the remaining months of your eligibility.)  You will
      be responsible for any tax on such benefits or payments made by the
      Company. If, at the end of thirty-six (36) months after the Termination
      Date, you have not reached your normal retirement date and you have not
      previously received or are not then receiving equivalent benefits from a
      new employer, the Company shall arrange to enable you to convert your and
      your dependents' coverage under such Plans to individual policies or
      programs upon the same terms as employees of the Company may apply for
      such conversions.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              (iv)  

            	
              Except
      as specifically provided herein, the amount of any payment provided for in
      this Section 5 shall not be reduced, offset or subject to recovery by the
      Company by reason of any compensation earned by you as the result of
      employment by another employer after the Date of Termination, or
      otherwise.

            

    

    

    

    Certain
Section 409A Rules.

    

    (a)
Specified Employee. Notwithstanding any provision of this Agreement to the
contrary, if you are a Specified Employee, any payment or benefit under this
Agreement that constitutes deferred compensation subject to Section 409A of the
Code and for which the payment event is a Separation from Service shall not be
made or provided before the date that is six months after the date of your
Separation from Service. Any payment or benefit that is delayed pursuant to
these Rules shall be made or provided on the first business day of the seventh
month following the month in which the your Separation from Service occurs. With
respect to any cash payment delayed pursuant to these Rules, the first payment
shall include interest, at the Wall Street Journal Prime Rate published in the
Wall Street Journal on the Separation from Service date of (or the previous
business day if such date is not a business day), for the period from the date
the payment would have been made but for these Rules through the date payment is
made. These Rules shall apply to the extent required to avoid your incurrence of
any additional tax or interest under Section 409A of the Code.

    

    (b)
Reimbursement and In-Kind Benefits. Notwithstanding any provision of this
Agreement to the contrary, with respect to in-kind benefits provided or expenses
eligible for reimbursement under this Agreement which are subject to Section
409A of the Code, (i) the benefits provided or the amount of expenses eligible
for reimbursement during any calendar year shall not affect the benefits
provided or expenses eligible for reimbursement in any other calendar year,
except as otherwise provided in Treas. Reg. §1.409A-3(i)(1)(iv)(B), and (ii) the
reimbursement of an eligible expense shall be made as soon as practicable after
your request for such reimbursement (subject to (a), above), but not later than
the December 31 following the calendar year in which the expense was
incurred.

    

    (c)
“Specified Employee” shall mean a specified employee as defined in Section 409A
of the Code as of the date of a Separation from Service.

    

    (d)  Interpretation
and Construction. This Agreement is intended to comply with Section 409A of the
Code and shall be administered, interpreted and construed in accordance
therewith to avoid the imposition of additional tax under Section 409A of the
Code.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              6.  

            	
              Successors; Binding
      Agreement.

            

    

    

    
      	
              (i)  

            	
              Upon
      your written request, the Company will seek to have any Successor (as
      hereinafter defined), by agreement in form and substance satisfactory to
      you, assent to the fulfillment by the Company of its obligations under
      this Agreement. Failure of the Company to obtain such assent at least
      three (3) business days prior to the time a Person becomes a Successor (or
      where the Company does not have at least three (3) business days advance
      notice that a Person may become a Successor, within one (1) business day
      after having notice that such Person may become or has become a Successor)
      shall constitute Good Reason for termination by you of your employment
      and, if a change in control of the Company has occurred, shall entitle you
      immediately to the applicable benefits provided in Section 5 hereof upon
      delivery by you of a Notice of Termination. For purposes of this
      Agreement, "Successor" shall mean any Person that succeeds to, or has the
      practical ability to control (either immediately or with the passage of
      time), the Company's business directly, by merger or consolidation, or
      indirectly, by purchase of the Company's Voting Securities, all or
      substantially all of its assets or
otherwise.

            

    

    

    
      	
              (ii)  

            	
              This
      Agreement shall inure to the benefit of and be enforceable by your
      personal or legal representatives, executors, administrators, successors,
      heirs, distributees, devisees and legatees. If you should die while any
      amount would still be payable to you hereunder if you had continued to
      live, all such amounts, unless otherwise provided herein, shall be paid in
      accordance with the terms of this Agreement to your devisee, legatee or
      other designee or, if there be no such designee, to your
      estate.

            

    

    

    
      	
              (iii)  

            	
              For
      purposes of this Agreement, the "Company" shall include any corporation or
      other entity which is the surviving or continuing entity in respect of any
      merger, consolidation or form of business combination in which the Company
      ceases to exist.

            

    

    

    
      	
              7.  

            	
              Fees and Expenses;
      Mitigation.

            

    

    

    
      	
              (i)  

            	
              The
      Company shall pay all reasonable legal fees and related expenses incurred
      by you in connection with this Agreement following a change in control of
      the Company, including, without limitation, (a) all such fees and
      expenses, if any, incurred in contesting or disputing any such termination
      or incurred by you in seeking advice with respect to the matters set forth
      in Section 8 hereof or (b) your seeking to obtain or enforce any right or
      benefit provided by this Agreement.

            

    

    

    
      	
              (ii)  

            	
              You
      shall not be required to mitigate the amount of any payment the Company
      becomes obligated to make to you in connection with this Agreement, by
      seeking other employment or
otherwise.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              8.  

            	
              Taxes.

            

    

    

    
      	
              (i)  

            	
              All
      payments to be made to you under this Agreement will be subject to
      required withholding of federal, state and local income and employment
      taxes.

            

    

    

    
      	
              (ii)  

            	
              Notwithstanding
      any other provision of this Agreement, if any of the payments or benefits
      received or to be received by you pursuant to this Agreement, when taken
      together with payments and benefits provided to you under any other plans,
      contracts, or arrangements with the Company or its subsidiaries (the
      “Total Payments”), will be subject to any excise tax imposed under Code
      Section 4999 (together with any interest or penalties, the “Excise Tax”),
      then such Total Payments shall be reduced to the extent necessary so that
      no portion thereof will be subject to the Excise Tax; provided, however,
      that if you would receive in the aggregate greater value (as determined
      under Code Section 280G and the regulations thereunder) on an after tax
      basis if the Total Payments were not subject to such reduction, then no
      such reduction shall be made.  In effectuating the reduction
      described above, if applicable, the Company will first reduce or eliminate
      the payments and benefits provided under this Agreement.  All
      calculations required to be made under this Section will be made by the
      Company’s independent public accountants, subject to the right of your
      representative to review the same.  If the Company’s independent
      public accountants refuse to make the required determinations, then such
      determinations will be made by an independent accounting firm with
      national reputation reasonably selected by the Company.  As a
      result of the uncertainty in the application of the Internal Revenue Code,
      it is possible that the Company will in good faith make payments to you
      that it should not make.  In the event of such overpayment, the
      Company shall have no further liability or obligation to you for any
      resulting excise taxes, interest, or penalty that you are required to
      pay.

            

    

    

    
      	
              9.  

            	
              Survival.
      

            

    

    

    The
respective obligations of, and benefits afforded to, the Company and you as
provided in Sections 5, 6(ii), 7, 8, 13, and 15 of this Agreement shall survive
termination of this Agreement.

    

    
      	
              10.  

            	
              Notice.

            

    

    

    For the
purposes of this Agreement, notices and all other communications provided for in
the Agreement shall be in writing and shall be deemed to have been duly given
when sent by electronic mail or when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid and addressed, in the
case of the Company, to the address set forth on the first page of this
Agreement or, in the case of the undersigned employee, to the most current
address he has provided to the Company on its records, provided that all notices
to the Company shall be directed to the attention of the duly authorized
representative of the Compensation Committee of the Board, with a copy to the
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              11.  

            	
              Miscellaneous.
      

            

    

    

    No
provision of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in a writing signed by you and
the duly authorized representative of the Compensation Committee of the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or of compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement.  The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Michigan.

    

    
      	
              12.  

            	
              Full
      Settlement. 

            

    

    

    The
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
circumstances, including without limitation any setoff, counterclaim,
recoupment, defense or other right which the Company may have against
you.

    

    
      	
              13.  

            	
              Confidential
      Information. 

            

    

    

    You agree
that you will hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to the Company or
any of its affiliated companies, and their respective businesses, which shall
have been obtained by you during your employment by the Company or any of its
affiliated companies and which shall not be public knowledge. After termination
of your employment with the Company you shall not, without the prior written
consent of the Company, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 13 constitute a
basis for deferring or withholding any amounts otherwise payable to you under
this Agreement.

    

    
      	
              14.  

            	
              Validity.
      

            

    

    

    The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

    

    
      	
              15.  

            	
              Arbitration.
      

            

    

    

    You and
the Company agree that final and binding arbitration is and will be the sole and
exclusive remedy and forum for resolving any dispute or claim between you and
the Company arising out of this Agreement, including:

    

    
      	
              (i)  

            	
              The
      Company's termination of your employment;
and/or

            

    

    

    
      	
              (ii)  

            	
              Any
      dispute or claim concerning or arising out of whether your termination was
      for “Cause” or for
      “Good Reason.”

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    You have
a right to appeal your dispute to arbitration. The arbitrator will be selected
by mutual agreement. If the arbitrator is not selected by mutual agreement, then
the arbitrator will be selected from a panel of experienced labor and employment
arbitrators supplied by the American Arbitration Association (AAA). The parties
will alternatively strike names from the AAA panel until one name (the
Arbitrator) remains. The arbitrator will decide the time and place of a hearing,
which will be conducted according to AAA Rules. At the arbitration hearing, you
will have the opportunity to rebut the evidence presented by the Company and you
may present witnesses and evidence to support your case. The arbitrator will
decide, in writing, the resolution of the dispute.

    

    The
Company will be responsible for its and your own costs including attorney fees.
If you decide to be represented by an attorney, you must notify the Company at
least one month before the arbitration hearing. If you do not choose to be
represented by an attorney, then the Company will not be represented by an
attorney.

    

    This
arbitration procedure and the decision of the arbitrator is your exclusive
remedy in case of discharge, and is final and binding on both the Company and
you and is fully enforceable in court. If this letter correctly sets forth our
agreement on the subject matter hereof, kindly sign and return to the Company
the enclosed copy of this letter which will then constitute our agreement on
this subject.

    

    This
letter agreement replaces the letter agreement you and La-Z-Boy Incorporated
entered into on or about November 17, 2008 (“Prior Agreement”).  By
signing below, you acknowledge that the Prior Agreement is terminated as of the
date and time this Agreement takes effect.

    

    [Signatures
on next page]

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    Sincerely,

    

    LA-Z-BOY
INCORPORATED

    

    

    ______________________________

    By:  James
W. Johnston

    Chairman
of the Board

    

    

    

    Agreed to
June 11, 2010.

    

    

    

    ______________________________

    Kurt L.
Darrow

    President
and Chief Executive Officer

    La-Z-Boy Incorporated

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    Exhibit
A

    Change in
control

    

    “Change
in control” means any change required to be reported in Item 6(e) of Schedule
14A of Regulation 14A issued under the Securities Exchange Act of 1934 (the
“Exchange Act”) that qualifies as a change in control event pursuant to Code
§409A.  A “change in control event” pursuant to Code §409A includes
the occurrence of a change in the ownership of the Company (as defined in Reg.
§1.409A-3 (i)(5)(v)), a change in effective control of the Company (as defined
in Reg. §1.409A-3(i)(5)(vi)), or a change in the ownership of a substantial
portion of the assets of the Company (as defined in Reg. §1.409A-3(i)(5)(vii),
and, in particular, any one or more of the following events:

    

    a. A
change in ownership of the Company in which any one person, or more than one
person acting as a group acquires beneficial ownership of stock of the Company
that, together with stock held by such person or group, constitutes more than 50
percent of the total fair market value or total voting power of the stock of the
Company; provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition by the Company, or (ii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or by any corporation
controlled by the Company.

    

    b. A
change in the effective control of the Company, pursuant to which
either:

    

    (i)Any
one person, or more than one person acting as a group acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) beneficial ownership of stock of the Company possessing
30 percent or more of the total voting power of the stock of the
Company.

    

    (ii)A
majority of members of the Company’s board of directors is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Company’s board of directors before the date of
the appointment or election.

    

    c. A
change in the ownership of a substantial portion of the Company’s assets
pursuant to which any one person, or more than one person acting as a group
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that
have a total gross fair market value equal to or more than 40 percent of the
total gross fair market value of all of the assets of the Company immediately
before such acquisition or acquisitions.  As used herein, gross fair
market value means the value of the assets of the Company, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with such assets.  However, there is no change in control
event under this paragraph  when there is a transfer to a related
person as described in Reg. §1.409A-3(i)(5)(vii)(B)

    

    However,
a change in control shall not include a merger of the Company with another
entity, a consolidation involving the Company, or the sale of all or
substantially all of the assets or equity interests of the Company to another
entity if, in any such case, (a) the holders of equity securities of the Company
immediately prior to such event beneficially own immediately after such event
equity securities of the resulting entity entitled to more than fifty percent of
the votes then eligible to be cast in the election of directors (or comparable
governing body) of the resulting entity in substantially the same proportions
that they owned the equity securities of the Company immediately prior to such
event or (b) the persons who were members of the Board immediately prior to such
event constitute at least a majority of the board of directors of the resulting
entity immediately after such event.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    For
purposes of this definition:

    

    (A)
“Beneficial owner” (or “beneficial ownership”) includes ownership by attribution
as provided in Reg. §1.409A.

    

    (B) Where
applicable, “person” means a person as defined in Section 3(a)(9) of Securities
Exchange Act of 1934, as amended (the “Exchange Act”);

    

    (C)
“Acting as a group” means so acting within the meaning of the applicable portion
of Reg. §1.409A-3(i)(5).  Persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.  If a person, including an entity, owns stock in
both corporations that enter into a merger, consolidation, purchase or
acquisition of stock, or similar transaction, such shareholder is considered to
be acting as a group with other shareholders only with respect to the ownership
in that corporation before the transaction giving rise to the change and not
with respect to the ownership interest in the other
corporation.  Where applicable, “group” means a group as described in
Rule 13d-5 promulgated under the Exchange Act or any successor
regulation.

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
B

    Separation
From Service

    

    A
Separation From Service occurs on the date upon which a Participant is no longer
an Employee of the Company, as determined in accordance with Code §409A and
Treasury Regulations promulgated thereunder.

    

    For
purposes of this Plan, an Employee separates from service with the Company if
the Employee dies, retires or otherwise has a termination of employment with the
Company.  However, the employment relationship is treated as
continuing intact while the Employee is on military leave, sick leave, or other
bona fide leave of absence (such as temporary employment by the government) if
the period of such leave does not exceed six months, or if longer, so long as
the Employee’s right to reemployment with the Company is provided either by
statute or by contract. If the period of leave exceeds six months and the
Employee’s right to reemployment is not provided either by statute or by
contract, the employment relationship is deemed to terminate on the first date
immediately following such six-month period.

    

    Whether a
termination of employment has occurred is determined based on the facts and
circumstances. Where an Employee either actually or purportedly continues in the
capacity as an Employee, such as through the execution of an employment
agreement under which the Employee agrees to be available to perform services if
requested, but the facts and circumstances indicate that neither the Company nor
the Employee intended for the Employee to provide more than insignificant
services to the Company, an Employee will be treated as having a Separation From
Service.  For purposes of the preceding sentence, the Company and
Employee will not be treated as having intended for the Employee to provide
insignificant services where the Employee continues to provide services at an
annual rate that is at least equal to 20 percent of the services rendered, on
average, during the immediately preceding three full calendar years of
employment (or, if employed less than three years, such lesser period) and the
annual remuneration for such services is at least equal to 20 percent of the
average annual remuneration earned during the final three full calendar years of
employment (or, if less, such lesser period). Where an Employee continues to
provide services to the Company in a capacity other than as an Employee, a
Separation From Service will not be deemed to have occurred if such former
Employee is providing services at an annual rate that is 50 percent or more of
the services rendered, on average, during the immediately preceding three full
calendar years of employment (or if employed less than three years, such lesser
period) and the annual remuneration for such services is 50 percent or more of
the annual remuneration earned during the final three full calendar years of
employment (or if less, such lesser period). For purposes of this paragraph, the
annual rate of providing services is determined based upon the measurement used
to determine the Company’s base compensation (for example, amounts of time
required to earn salary, hourly wages, or payments for specific
projects).

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