Document:

Exhibit 10.1 Securities Purchase Agreement

    
      

    

                                                                                                             
      Exhibit 10.1

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of April 11, 2007, among Startech Environmental Corporation, a Colorado
      corporation (the “Company”),
      and
      each purchaser identified on Schedule I attached hereto (each, including its
      successors and assigns, a “Purchaser”
and
      collectively the “Purchasers”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”)
      and Rule 506 promulgated thereunder, the Company desires to issue and sell
      to
      each Purchaser, and each Purchaser, severally and not jointly, desires to
      purchase from the Company, securities of the Company as more fully described
      in
      this Agreement.

     

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

     

    ARTICLE
      I.

    DEFINITIONS

     

    1.1  Definitions

     

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

     

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

     

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

     

    “Class
      A Warrant”
means
      a
      warrant in the form of Exhibit B to purchase shares of Common Stock of the
      Company at a Warrant Exercise Price of $3.40.

     

    “Class
      B Warrant”
means
      a
      warrant in the form of Exhibit B to purchase shares of Common Stock of the
      Company at a Warrant Exercise Price of $4.40. 

     

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

     

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

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Closing
      Price”
means
      on any particular date (a) the last reported closing price per share of
      Common Stock on such date on the Trading Market (as reported by Bloomberg L.P.
      at 4:15 PM (New York time)), or (b) if there is no such price on such date,
      then
      the closing price on the Trading Market on the date nearest preceding such
      date
      (as reported by Bloomberg L.P. at 4:15 PM (New York time)), or (c)  if the
      Common Stock is not then listed or quoted on the Trading Market and if prices
      for the Common Stock are then reported in the “pink sheets” published by Pink
      Sheets LLC (or a similar organization or agency succeeding to its functions
      of
      reporting prices), the most recent price per share of the Common Stock so
      reported, or (d) if the shares of Common Stock are not then publicly traded
      the fair market value of a share of Common Stock as determined by an appraiser
      selected in good faith by the Purchasers of a majority in interest of the Shares
      then outstanding.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, no par value per share, and any other class
      of
      securities into which such securities may hereafter be reclassified or changed
      into.

     

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

     

    “Disclosure
      Schedules”
means
      the Disclosure Schedules of the Company delivered concurrently herewith.

     

    “Effective
      Date”
means
      the date that the initial Registration Statement filed by the Company pursuant
      to the Registration Rights Agreement is first declared effective by the
      Commission.

     

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      or
      directors of the Company pursuant to any stock option agreements existing on
      the
      date of this Agreement or any other stock or option plan duly adopted by a
      majority of the non-employee members of the Board of Directors of the Company
      or
      a majority of the members of a committee of non-employee directors established
      for such purpose, (b) securities upon the exercise or exchange of or conversion
      of any Securities issued hereunder and/or other securities exercisable or
      exchangeable for or convertible into shares of Common Stock issued and
      outstanding on the date of this Agreement; provided
      that
      such securities have not been amended since the date of this Agreement to
      increase the number of such securities or to decrease the exercise, exchange
      or
      conversion price of any such securities, (c) securities issued pursuant to
      acquisitions or strategic transactions approved by a majority of the
      disinterested directors of the Company’s Board of Directors; provided
      any such
      issuance shall only be to a Person which is, itself or through its subsidiaries,
      an operating company in a business synergistic with the business of the Company
      and in which the Company 

     

     

    
      
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    receives
      benefits in addition to the investment of funds, but shall not include a
      transaction in which the Company is issuing securities primarily for the purpose
      of raising capital or to an entity whose primary business is investing in
      securities, and (d) shares of Common Stock issued to Cornell Capital Partners,
      L.P. (”Cornell”)
      pursuant to the Standby Equity Distribution Agreement (the “SEDA”)
      entered into on or about the date hereof between the Company and
      Cornell.

     

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

    

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

    

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

    

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

     

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

     

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

     

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

     

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

     

    “Per
      Share Purchase Price”
equals
      $2.40, subject to adjustment for reverse and forward stock splits, stock
      dividends, stock combinations and other similar transactions of the Common
      Stock
      that occur after the date of this Agreement.

     

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

     

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

     

    “Purchaser
      Party”
shall
      have the meaning ascribed to such term in Section 4.9.

     

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement among the Company and the Purchasers, in
      the
      form of Exhibit
      A
      attached
      hereto.

     

     

    
      
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    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale by the Purchasers of the Shares and
      the
      Warrant Shares. 

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Subsidiary”
means
      any subsidiary of the Company as set forth on Schedule
      3.1(a).

     

    “Trading
      Day”
means
      a
      day on which the Common Stock is traded on a Trading Market.

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the American Stock Exchange, the New York
      Stock Exchange, the Nasdaq Global Market, the Nasdaq Capital Market, or the
      National Association of Securities Dealers’ OTC Bulletin Board.

     

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

     

    “Warrants”
means
      the Class A Warrants and the Class B Warrants.

     

     

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

     

        
      ARTICLE II.  

    PURCHASE
      AND SALE

     

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

     

    2.2  Deliveries

     

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

     

    (i)  this
      Agreement duly executed by the Company;

     

    (ii)  a
      legal
      opinion of counsel to the Company, in the form of Exhibit
      B
      attached
      hereto; 

     

    (iii)  a
      copy of
      the irrevocable instructions to the Company’s transfer agent instructing the
      transfer agent to deliver a certificate evidencing a number of Shares equal
      to
      such Purchaser’s Subscription Amount divided by the Per Share Purchase Price,
      registered in the name of such Purchaser;

     

    (iv)  Warrants
      registered in the name of such Purchaser to purchase up to a number of shares
      of
      Common Stock set forth next to such Purchaser’s name in column (4) and (5) of
      Schedule I attached hereto; and

     

    (v)  the
      Registration Rights Agreement duly executed by the Company.

     

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

     

    (i)  this
      Agreement duly executed by such Purchaser;

     

    (ii)  such
      Purchaser’s Subscription Amount by wire transfer to the Company, as set forth
      above; and

     

    (iii)  the
      Registration Rights Agreement duly executed by such Purchaser.

     

     

    
      
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    2.3  Closing
      Conditions.

     

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

     

    (i)  the
      accuracy in all material respects when made and on the Closing Date of the
      representations and warranties of the Purchasers contained herein; 

     

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

     

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

     

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

     

    (i)  the
      accuracy in all material respects on the Closing Date of the representations
      and
      warranties of the Company contained herein;

     

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

     

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

     

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

     

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

     

     

    
      
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    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1  Representations
      and Warranties of the Company.
      

     

    Except
      as
      set forth in the SEC Documents or under the corresponding section of the
      Disclosure Schedules which Disclosure Schedules shall be deemed a part hereof
      and to qualify any representation or warranty otherwise made herein to the
      extent of such disclosure, the Company hereby makes the representations and
      warranties set forth below to each Purchaser:

     

    (a)  Subsidiaries.
      All of
      the direct and indirect subsidiaries of the Company are set forth on
Schedule
      3.1(a).
      The
      Company owns, directly or indirectly, all of the capital stock or other equity
      interests of each Subsidiary free and clear of any Liens, and all the issued
      and
      outstanding shares of capital stock of each Subsidiary are validly issued and
      are fully paid, non-assessable and free of preemptive and similar rights to
      subscribe for or purchase securities. 

     

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

     

    (c)  Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations hereunder and thereunder. The
      execution and delivery of each of the Transaction Documents by the Company
      and
      the consummation by it of the transactions contemplated hereby and thereby
      have
      been duly authorized by all necessary action on the part of the Company and
      no
      further action is required by the Company, its Board of Directors or its
      stockholders in connection therewith other than in connection with the Required
      Approvals. Each Transaction Document has been (or upon delivery will have been)
      duly executed by the Company and, when delivered in accordance with the terms
      hereof and thereof, will constitute the valid and binding obligation of the
      Company enforceable 

     

     

    
      
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    against
      the Company in accordance with its terms except (i) as limited by general
      equitable principles and applicable bankruptcy, insolvency, reorganization,
      moratorium and other laws of general application affecting enforcement of
      creditors’ rights generally, (ii) as limited by laws relating to the
      availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution provisions may
      be
      limited by applicable law.

     

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

     

    (e)  Filings,
      Consents and Approvals.
      The
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      in
      connection with the execution, delivery and performance by the Company of the
      Transaction Documents, other than (i) filings required pursuant to Section
      4.4
      of this Agreement and the Registration Rights Agreement, (ii) the filing with
      the Commission of the Registration Statement, (iii) application(s) to each
      applicable Trading Market for the listing of the Securities for trading thereon
      in the time and manner required thereby, and (iv) the filing of Form D with
      the
      Commission and such filings as are required to be made under applicable state
      securities laws (collectively, the “Required
      Approvals”).

     

    (f)  Issuance
      of the Securities.
      The
      Shares are duly authorized and, when issued and paid for in accordance with
      the
      applicable Transaction Documents, will be duly and validly issued, fully paid
      and nonassessable, free and clear of all Liens imposed by the Company other
      than
      restrictions on transfer provided for in the Transaction Documents. The Warrant
      Shares, when issued and paid for in accordance with the terms of the Transaction
      Documents, will be validly issued, fully paid and nonassessable, free and clear
      of all Liens imposed by the Company. The Company has reserved from
      its

     

     

    
      
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     duly
      authorized capital stock the maximum number of shares of Common Stock issuable
      pursuant to this Agreement and the Warrants.

     

    (g)  Capitalization.
      As of
      the date hereof, the authorized capital stock of the Company consists of
      800,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock,
      no
      par value (“Preferred
      Stock”)
      of
      which 21,465,919 shares of Common Stock and no shares of Preferred Stock are
      issued and outstanding. All of such outstanding shares have been validly issued
      and are fully paid and nonassessable. Except as set forth in the SEC Reports,
      the Company has not issued any capital stock since its most
      recently filed periodic report under the Exchange Act, other
      than pursuant to the exercise of stock options under the Company’s stock option
      plans, the issuance of shares of Common Stock to employees pursuant to the
      Company’s employee stock purchase plan and pursuant to the conversion or
      exercise of Common Stock Equivalents outstanding as of the date of the most
      recently filed periodic report under the Exchange Act. No Person has any right
      of first refusal, preemptive right, right of participation, or any similar
      right
      to participate in the transactions contemplated by the Transaction Documents.
      Except as set forth in the SEC Reports or as a result of the purchase and sale
      of the Securities, there are no outstanding options, warrants, script rights
      to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities, rights or obligations convertible into or exercisable or
      exchangeable for, or giving any Person any right to subscribe for or acquire,
      any shares of Common Stock, or contracts, commitments, understandings or
      arrangements by which the Company or any Subsidiary is or may become bound
      to
      issue additional shares of Common Stock or Common Stock Equivalents. The
      issuance and sale of the Securities will not obligate the Company to issue
      shares of Common Stock or other securities to any Person (other than the
      Purchasers) and will not result in a right of any holder of Company securities
      to adjust the exercise, conversion, exchange or reset price under any of such
      securities. All of the outstanding shares of capital stock of the Company are
      validly issued, fully paid and nonassessable, have been issued in compliance
      with all applicable federal and state securities laws, and none of such
      outstanding shares was issued in violation of any preemptive rights or similar
      rights to subscribe for or purchase securities. No further approval or
      authorization of any stockholder, the Board of Directors of the Company or
      others is required for the issuance and sale of the Securities. There are no
      stockholders agreements, voting agreements or other similar agreements with
      respect to the Company’s capital stock to which the Company is a party or, to
      the knowledge of the Company, between or among any of the Company’s
      stockholders.

     

    (h)  SEC
      Reports; Financial Statements.
      Except
      as set forth in the Disclosure Schedules, the Company has filed all reports,
      schedules, forms, statements and other documents required to be filed by it
      under the Securities Act and the Exchange Act, including pursuant to Section
      13(a) or 15(d) thereof, for the two years preceding the date hereof (or such
      shorter period as the Company was required by law or regulation to file such
      material) (the foregoing materials, including the exhibits thereto and documents
      incorporated by reference therein, being collectively referred to herein as
      the
“SEC
      Reports”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Reports prior to the expiration of any such extension. As
      of
      their respective dates, the SEC Reports complied in all material respects with
      the requirements 

     

     

    
      
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    of
      the
      Securities Act and the Exchange Act, as applicable, and none of the SEC Reports,
      when filed, contained any untrue statement of a material fact or omitted to
      state a material fact required to be stated therein or necessary in order to
      make the statements therein, in the light of the circumstances under which
      they
      were made, not misleading. The financial statements of the Company included
      in
      the SEC Reports comply in all material respects with applicable accounting
      requirements and the rules and regulations of the Commission with respect
      thereto as in effect at the time of filing. Such financial statements have
      been
      prepared in accordance with United States generally accepted accounting
      principles applied on a consistent basis during the periods involved
      (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP, and fairly present in all material respects the
      financial position of the Company and its consolidated subsidiaries as of and
      for the dates thereof and the results of operations and cash flows for the
      periods then ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments.

     

     

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

     

    (j)  Litigation.
      There
      is no action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company, threatened against or affecting
      the
      Company, any Subsidiary or any of their respective properties before or by
      any
      court, arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an “Action”)
      which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of the Transaction Documents or the Securities or (ii) would, if there
      were
      an unfavorable decision, have or reasonably be expected to result in a Material
      Adverse Effect. Neither the Company nor any Subsidiary, nor any director or
      officer thereof, is or has been the subject of any 

     

     

    
      
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    Action
      involving a claim of violation of or liability under federal or state securities
      laws or a claim of breach of fiduciary duty. There has not been, and to the
      knowledge of the Company, there is not pending or contemplated, any
      investigation by the Commission involving the Company or any current or former
      director or officer of the Company. The Commission has not issued any stop
      order
      or other order suspending the effectiveness of any registration statement filed
      by the Company or any Subsidiary under the Exchange Act or the Securities Act.
      

     

    (k)  Labor
      Relations.
      Neither
      the Company nor any of its Subsidiaries is involved in any labor dispute nor,
      to
      the knowledge of the Company or any of its Subsidiaries, is any such dispute
      threatened. None of the Company’s or its Subsidiaries’ employees is a member of
      a union and the Company and its Subsidiaries believe that their relations with
      their employees are good.

     

    (l)  Compliance.
      Neither
      the Company nor any Subsidiary (i) is in default under or in violation of (and
      no event has occurred that has not been waived that, with notice or lapse of
      time or both, would result in a default by the Company or any Subsidiary under),
      nor has the Company or any Subsidiary received notice of a claim that it is
      in
      default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws applicable to its business
      and all such laws that affect the environment, except in each case as would
      not
      have or reasonably be expected to result in a Material Adverse
      Effect.

     

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

     

    (n)  Title
      to Assets.
      The
      Company and the Subsidiaries have good and marketable title in fee simple to
      all
      real property owned by them that is material to the business of the Company
      and
      the Subsidiaries and good and marketable title in all personal property owned
      by
      them that is material to the business of the Company and the Subsidiaries,
      in
      each case free and clear of all Liens, except for Liens as do not materially
      affect the value of such property and do not materially interfere with the
      use
      made and proposed to be made of such property by the Company and the
      Subsidiaries and Liens for the payment of federal, state or other taxes, the
      payment of which is neither delinquent nor subject to penalties. Any real
      property and facilities held under lease by the Company and the Subsidiaries
      are
      held by them under valid, subsisting and enforceable leases with which the
      Company and the Subsidiaries are in compliance with such 

     

     

    
      
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    exceptions
      as are not material and do not interfere with the use made and proposed to
      be
      made of such property and buildings by the Company and its
      Subsidiaries.

     

    (o)  Patents
      and Trademarks.
      To the
      knowledge of the Company, the Company and the Subsidiaries have, or have
      adequate rights or licenses to use, all patents, patent applications,
      trademarks, trademark applications, service marks, trade names, trade secrets,
      inventions, copyrights, licenses and other intellectual property rights and
      similar rights necessary or material for use in connection with their respective
      businesses as described in the SEC Reports and which the failure to so have
      would have a Material Adverse Effect (collectively, the “Intellectual
      Property Rights”).
      Neither the Company nor any Subsidiary has received a notice (written or
      otherwise) that the Intellectual Property Rights used by the Company or any
      Subsidiary violates or infringes upon the rights of any Person. To the knowledge
      of the Company, all such Intellectual Property Rights are enforceable and there
      is no existing infringement by another Person of any of the Intellectual
      Property Rights. The Company and its Subsidiaries have taken reasonable security
      measures to protect the secrecy, confidentiality and value of all of their
      intellectual properties, except where failure to do so would not, individually
      or in the aggregate, reasonably be expected to have a Material Adverse
      Effect.

     

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

     

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

     

    (r)  Sarbanes-Oxley;
      Internal Accounting Controls.
      The
      Company is in material compliance with all provisions of the Sarbanes-Oxley
      Act
      of 2002 which are applicable to it as of the Closing Date. The
      Company and the Subsidiaries maintain a system of internal accounting controls
      sufficient to provide reasonable assurance that (i) 

     

     

    
      
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    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 Company’s certifying officers have evaluated the
      effectiveness of the Company’s disclosure controls and procedures as of the end
      of the period covered by the Company’s most recently filed periodic report under
      the Exchange Act (such date, the “Evaluation
      Date”).
      The
      Company presented in its most recently filed periodic report under the Exchange
      Act the conclusions of the certifying officers about the effectiveness of the
      disclosure controls and procedures based on their evaluations as of the
      Evaluation Date. Since the Evaluation Date, there have been no changes in the
      Company’s internal control over financial reporting (as such term is defined in
      the Exchange Act) that has materially affected, or is reasonably likely to
      materially affect, the Company’s internal control over financial
      reporting.

     

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

     

    (t)  Private
      Placement.
      Assuming the accuracy of the Purchasers representations and warranties set
      forth
      in Section 3.2, no registration under the Securities Act is required for the
      offer and sale of the Securities by the Company to the Purchasers as
      contemplated hereby. The issuance and sale of the Securities hereunder does
      not
      contravene the rules and regulations of the Trading Market.

     

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

     

    (v)  Registration
      Rights.
      Except
      as set forth in the Disclosure Schedules, other than each of the Purchasers,
      no
      Person has any right to cause the Company to effect the registration under
      the
      Securities Act of any securities of the Company.

     

     

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

     

    (x)  Disclosure.
      Except
      with respect to the terms and conditions of the transactions contemplated by
      the
      Transaction Documents, the Company confirms that, neither it nor any other
      Person acting on its behalf has provided any of the Purchasers or their agents
      or counsel with any information that it believes constitutes or might constitute
      material, non-public information. The Company understands and confirms that
      the
      Purchasers will rely on the foregoing representation in effecting transactions
      in securities of the Company. All disclosure furnished by or on behalf of the
      Company to the Purchasers regarding the Company, its business and the
      transactions contemplated hereby, including the Disclosure Schedules to this
      Agreement, with respect to the representations and warranties made herein are
      true and correct with respect to such representations and warranties and do
      not
      contain any untrue statement of a material fact or omit to state any material
      fact necessary in order to make the statements made therein, in light of the
      circumstances under which they were made, not misleading. The Company
      acknowledges and agrees that no Purchaser makes or has made any representations
      or warranties with respect to the transactions contemplated hereby other than
      those specifically set forth in Section 3.2 hereof.

     

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

     

    (z)  Solvency.
      The
      Company has no knowledge of any facts or circumstances which lead it to believe
      that it will file for reorganization or liquidation under the bankruptcy or
      reorganization laws of any jurisdiction within one year from the Closing Date.
      The SEC Reports set forth as of the dates thereof all outstanding secured and
      unsecured Indebtedness of the Company or any Subsidiary, or for which the
      Company or any Subsidiary has commitments. For the purposes of this Agreement,
      “Indebtedness”
shall
      mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations in respect
      of
      Indebtedness of

     

     

    
      
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    others,
      whether or not the same are or should be reflected in the Company’s balance
      sheet (or the notes thereto), except guaranties by endorsement of negotiable
      instruments for deposit or collection or similar transactions in the ordinary
      course of business; and (c) the present value of any lease payments
      in excess of $50,000 due under leases required to be capitalized in accordance
      with GAAP. Neither
      the Company nor any Subsidiary is in default with respect to any
      Indebtedness.

     

    (aa)  Tax
      Status.
      Except
      for matters that would not, individually or in the aggregate, have or reasonably
      be expected to result in a Material Adverse Effect, the Company and each
      Subsidiary has filed all necessary federal, state and foreign income and
      franchise tax returns and has paid or accrued all taxes shown as due thereon,
      and the Company has no knowledge of a tax deficiency which has been asserted
      or
      threatened against the Company or any Subsidiary, in each case except taxes
      being contested in good faith where an appropriate reserve has been
      established.

     

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

     

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

     

    (dd)  Reserved.

     

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

     

     

    
      
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    (ff)  Acknowledgement
      Regarding Purchasers’ Trading Activity; No Holding Period
      Representation.
      The
      Company expressly recognizes and acknowledges that any Shares or Warrant Shares
      obtained or acquired by the Purchasers pursuant to this Agreement or the
      Transaction Documents may be sold or otherwise traded by the Purchasers at
      any
      time in accordance with federal and state securities laws, and that the decision
      to trade such shares is within the sole discretion of the Purchasers.  The
      Purchasers have made no contrary representations to the Company with regard
      to
      any securities contemplated by, or obtained or acquired pursuant, to this
      Agreement or the Transaction Documents, or concerning or relating to the length
      of time it intends to hold any such security obtained or acquired. The Company
      acknowledges that such aforementioned trading activities by the Purchasers
      do
      not constitute a breach by the Purchasers of any of the Transaction
      Documents.

     

    (gg)  Manipulation
      of Price. 
      The Company has not, and to its knowledge no one acting on its behalf has,
      (i)
      taken, directly or indirectly, any action designed to cause or to result in
      the
      stabilization or manipulation of the price of any security of the Company to
      facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
      purchased, or, paid any compensation for soliciting purchases of, any of the
      Securities, or (iii) paid or agreed to pay to any Person any compensation for
      soliciting another to purchase any other securities of the Company.

     

    3.2  Representations
      and Warranties of the Purchasers

     

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

     

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

     

    (b)  Non-Contravention.
      The
      execution, delivery and performance of this Agreement by such Purchaser, and
      the
      consummation by such Purchaser of the transactions contemplated hereby, do
      not
      (i) contravene or conflict with the organizational documents of such Purchaser;
      (ii) constitute a violation of any provision of any federal, state, local or
      foreign law, rule, regulation, order or decree applicable to such

     

     

    
      
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     Purchaser;
      or (iii) constitute a default or require any consent under, give rise to any
      right of termination, cancellation or acceleration of, or to a loss of any
      material benefit to which such Purchaser is entitled under, or result in the
      creation or imposition of any lien, claim or encumbrance on any asset of the
      such Purchaser under any material contract to which such Purchaser is a party
      or
      any material permit, license or similar right relating to such Purchaser or
      by
      which such Purchaser may be bound or affected.

     

    (c)  Litigation.
      Such
      Purchaser is not a party to or subject to the provisions of, any order, writ,
      injunction, judgment or decree of any court or government agency or
      instrumentality that is reasonably likely to prevent, enjoin, alter, challenge
      or delay the consummation of the transactions contemplated by this Agreement.
      

     

    (d)  Own
      Account.
      Such
      Purchaser understands that the Securities are “restricted securities” and have
      not been registered under the Securities Act or any applicable state securities
      law and is acquiring the Securities as principal for its own account and not
      with a view to or for distributing or reselling such Securities or any part
      thereof in violation of the Securities Act or any applicable state securities
      law, has no present intention of distributing any of such Securities in
      violation of the Securities Act or any applicable state securities law and
      has
      no direct or indirect arrangement or understandings with any other persons
      to
      distribute or regarding the distribution of such Securities (this representation
      and warranty not limiting such Purchaser’s right to sell the Securities pursuant
      to the Registration Statement or otherwise in compliance with applicable federal
      and state securities laws) in violation of the Securities Act or any applicable
      state securities law. Such Purchaser is acquiring the Securities hereunder
      in
      the ordinary course of its business.

     

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

     

    (f)  Experience
      of Such Purchaser.
      Such
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Securities, and has so evaluated the merits and risks of such investment.
      Such Purchaser is able to bear the economic risk of an investment in the
      Securities and, at the present time, is able to afford a complete loss of such
      investment.

     

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

     

     

    
      
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    (h)  Short
      Sales and Confidentiality Prior To The Date Hereof.
      Other
      than the transaction contemplated hereunder, such Purchaser has not directly
      or
      indirectly, nor has any Person acting on behalf of or pursuant to any
      understanding with such Purchaser, executed any disposition, including Short
      Sales, in the securities of the Company during the period commencing
      from
      the time
      that such Purchaser first received a term sheet (written or oral) from the
      Company or any other Person setting forth the material terms of the transactions
      contemplated hereunder until the date hereof (“Discussion
      Time”).
      With
      respect to each Purchaser, neither
      the Purchaser nor any of its Affiliates have an open short position in the
      Common Stock of the Company, and each Purchaser agrees that it shall not, and
      that it will cause its Affiliates not to, engage in any Short Sales of or
      hedging transactions with respect to the Common Stock as long as they hold
      any
      Securities. Notwithstanding
      the foregoing, in the case of a Purchaser that is a multi-managed investment
      vehicle whereby separate portfolio managers manage separate portions of such
      Purchaser's assets and the portfolio managers have no direct knowledge of the
      investment decisions made by the portfolio managers managing other portions
      of
      such Purchaser's assets, the representation set forth above shall only apply
      with respect to the portion of assets managed by the portfolio manager that
      made
      the investment decision to purchase the Securities covered by this
      Agreement.

     

    (i)  Restricted
      Securities.
      Such
      Purchaser understands that the Securities have not been, and will not upon
      issuance be, registered under the Securities Act and such Purchaser will not
      sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any
      of
      the Securities unless (i) pursuant to an effective registration statement under
      the Securities Act, (ii) such Purchaser provides the Company with an opinion
      of
      counsel, in a form reasonably acceptable to the Company, to the effect that
      a
      sale, assignment or transfer of the Securities may be made without registration
      under the Securities Act and the transferee agrees to be bound by the terms
      and
      conditions of this Agreement, or (iii) such Purchaser provides the Company
      with
      reasonable assurances (in the form of seller and broker representation letters)
      that the Shares or the Warrant Shares, as the case may be, can be sold pursuant
      to (A) Rule 144 promulgated under the Securities Act, as such rule may be
      amended from time to time, or (B) Rule 144(k) promulgated under the Securities
      Act, in each case, following the applicable holding period set forth
      therein.

     

    ARTICLE
      IV.

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1  Transfer
      Restrictions.

     

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

     

     

    
      
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    bound
      by
      the terms of this Agreement and shall have the rights of a Purchaser under
      this
      Agreement and the Registration Rights Agreement.

     

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

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. 

     

    (c)  Other
      than certificates representing Shares or Warrant Shares held by Affiliates
      of
      the Company, certificates evidencing the Shares and Warrant Shares shall not
      contain any legend (including the legend set forth in Section 4.1(b)), (i)
      while
      a registration statement (including the Registration Statement) covering the
      resale of such security is effective under the Securities Act, (ii) following
      any sale of such Shares or Warrant Shares pursuant to Rule 144, (iii) if such
      Shares or Warrant Shares are eligible for sale under Rule 144(k), or (iv) if
      such legend is not required under applicable requirements of the Securities
      Act
      (including judicial interpretations and pronouncements issued by the staff
      of
      the Commission). The Company shall cause its counsel to issue a legal opinion
      to
      the Company’s transfer agent promptly after the Effective Date if required by
      the Company’s transfer agent to effect the removal of the legend hereunder. If
      all or any portion of a Warrant is exercised by a Purchaser that is not an
      Affiliate of the Company (a “Non-Affiliated
      Purchaser”)
      at a
      time when there is an effective registration statement to cover the resale
      of
      the Warrant Shares, such Warrant Shares shall be issued free of all legends.
      The
      Company agrees that following the Effective Date or at such time as such legend
      is no longer required under this Section 4.1(c), it will use its best efforts
      to, no later than three (3) Trading Days following the delivery by a
      Non-Affiliated Purchaser to the Company or the Company’s transfer agent of a
      certificate representing Shares or Warrant Shares, as the case may be, issued
      with a restrictive legend (such third Trading Day, the “Legend
      Removal Date”),
      deliver or cause to be delivered to such Non-Affiliated Purchaser a certificate
      representing such shares that is free from all restrictive and other legends.
      The Company may not make any notation on its records or give instructions to
      any
      transfer agent of the Company that expand the restrictions on transfer set
      forth
      in this Section. Certificates for Securities subject to legend removal hereunder
      shall be transmitted by the transfer agent of the Company to such Purchasers
      by
      crediting the account of such Purchaser’s prime broker with the Depository Trust
      Company

     

     

    
      
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    System.
      The Purchasers’ acknowledge that the Company’s agreement hereunder to remove all
      legends from Shares or Warrant Shares is not an affirmative statement or
      representation that such Shares or Warrant Shares are freely
      tradeable.

    

    (d)  Each
      Purchaser, severally and not jointly with the other Purchasers, agrees that
      the
      removal of the restrictive legend from certificates representing Securities
      as
      set forth in this Section 4.1 is predicated upon the Company’s reliance that the
      Purchaser will sell any Securities pursuant to either the registration
      requirements of the Securities Act, including any applicable prospectus delivery
      requirements, or an exemption therefrom, and that if Securities are sold
      pursuant to a Registration Statement, they will be sold in compliance with
      the
      plan of distribution set forth therein.

     

    4.2  Furnishing
      of Information

     

    .
      As long
      as any Purchaser owns Securities, the Company covenants to timely file (or
      obtain extensions in respect thereof and file within the applicable grace
      period) all reports required to be filed by the Company after the date hereof
      pursuant to the Exchange Act. As long as any Purchaser owns Securities, if
      the
      Company is not required to file reports pursuant to the Exchange Act, it will
      prepare and furnish to the Purchasers and make publicly available in accordance
      with Rule 144(c) such information as is required for the Purchasers to sell
      the
      Securities under Rule 144. The Company further covenants that it will take
      such
      further action as any holder of Securities may reasonably request, to the extent
      required from time to time to enable such Person to sell such Securities without
      registration under the Securities Act within the requirements of the exemption
      provided by Rule 144.

     

    4.3  Integration

     

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

     

    4.4  Securities
      Laws Disclosure; Publicity.
      The
      Company shall, by 4:00 p.m. Eastern time no later than two (2) Trading Days
      following the date hereof, issue a Current Report on Form 8-K, disclosing the
      material terms of the transactions contemplated hereby, and shall attach the
      Transaction Documents thereto. The Company and each Purchaser shall consult
      with
      each other in issuing any other press releases with respect to the transactions
      contemplated hereby, and neither the Company nor any Purchaser shall issue
      any
      such press release or otherwise make any such public statement without the
      prior
      consent of the Company, with respect to any press release of any Purchaser,
      or
      without the prior consent of each Purchaser, with respect to any press release
      of the Company, which consent shall not unreasonably be withheld or delayed,
      except if such disclosure is required by law, in which case the disclosing
      party
      shall promptly provide the other party with prior notice of such public
      statement or communication. Notwithstanding the foregoing, the Company shall
      not
      publicly disclose the name of any Purchaser, or include the name of any
      Purchaser in any filing with the Commission or any regulatory agency or Trading
      Market, without the prior written consent of such Purchaser, except

     

     

    
      
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    (i)
      as
      required by federal securities law in connection with (A) any registration
      statement contemplated by the Registration Rights Agreement and (B) the filing
      of final Transaction Documents (including signature pages thereto) with the
      Commission and (ii) to the extent such disclosure is required by law or Trading
      Market regulations, in which case the Company shall provide the Purchasers
      with
      prior notice of such disclosure permitted under this subclause
      (ii).

     

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

     

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

     

    4.7  Use
      of
      Proceeds. Except as set forth on Schedule 4.7 attached hereto, the Company
      shall use the net proceeds from the sale of the Securities hereunder for working
      capital purposes and not for the satisfaction of any portion of the Company’s
      debt (other than payment of trade payables in the ordinary course of the
      Company’s business and prior practices), to redeem any Common Stock or Common
      Stock Equivalents or to settle any outstanding litigation.

     

    4.8  Indemnification
      of Purchasers. Subject to the provisions of this Section 4.8, the Company
      will indemnify and hold each Purchaser and its directors, officers,
      shareholders, members, partners, employees and agents (and any other Persons
      with a functionally equivalent role of a Person holding such titles
      notwithstanding a lack of such title or any other title), each Person who
      controls such Purchaser (within the meaning of Section 15 of the Securities
      Act
      and Section 20 of the Exchange Act), and the directors, officers, shareholders,
      agents, members, partners or employees (and any other Persons with a
      functionally equivalent role of a Person holding such titles notwithstanding
      a
      lack of such title or any other title) of such controlling persons (each, a
      “Purchaser Party”) harmless from any and all losses, liabilities, obligations,
      claims, contingencies, damages, costs and expenses, including all judgments,
      amounts paid in settlements, court costs and reasonable attorneys’ fees and
      costs of investigation that any such Purchaser Party may suffer or incur as
      a
      result of or relating to (a) any breach of any of the representations,
      warranties, covenants or agreements made by the Company in this Agreement or
      in
      the other Transaction Documents or (b) any action instituted against a
      Purchaser, or any of them or their respective Affiliates, by any stockholder
      of
      the Company who is not an Affiliate of such Purchaser, with respect to any
      of
      the transactions contemplated by the Transaction Documents (unless such action
      is based upon a breach of such Purchaser’s representations, warranties or
      covenants under the Transaction Documents or any agreements or understandings
      

     

     

    
      
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    such
      Purchaser may have with any such stockholder or any violations by the Purchaser
      of state or federal securities laws or any conduct by such Purchaser which
      constitutes fraud, gross negligence, willful misconduct or malfeasance). If
      any
      action shall be brought against any Purchaser Party in respect of which
      indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
      promptly notify the Company in writing, and the Company shall have the right
      to
      assume the defense thereof with counsel of its own choosing reasonably
      acceptable to the Purchaser Party. Any Purchaser Party shall have the right
      to
      employ separate counsel in any such action and participate in the defense
      thereof, but the fees and expenses of such counsel shall be at the expense
      of
      such Purchaser Party except to the extent that (i) the employment thereof has
      been specifically authorized by the Company in writing, (ii) the Company has
      failed after a reasonable period of time following the Company’s receipt of
      written notice from the Purchaser Party to assume such defense and to employ
      counsel or (iii) in such action there is, in the reasonable opinion of such
      separate counsel, a material conflict on any material issue between the position
      of the Company and the position of such Purchaser Party, in which case the
      Company shall be responsible for the reasonable fees and expenses of no more
      than one such separate counsel. The Company will not be liable to any Purchaser
      Party under this Agreement (i) for any settlement by a Purchaser Party effected
      without the Company’s prior written consent, which shall not be unreasonably
      withheld or delayed; or (ii) to the extent, but only to the extent that a loss,
      claim, damage or liability is attributable to any Purchaser Party’s breach of
      any of the representations, warranties, covenants or agreements made by such
      Purchaser Party in this Agreement or in the other Transaction
      Documents.

     

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

     

    4.10  Listing
      of Common Stock.

     

    The
      Company hereby agrees to use its commercially reasonable efforts to maintain
      the
      listing or quotation of the Common Stock on a Trading Market, and if applicable,
      as soon as reasonably practicable following the Closing (but not later than
      the
      earlier of the Effective Date and the first anniversary of the Closing Date)
      to
      list all of the Shares and Warrant Shares on such Trading Market. The Company
      further agrees, if the Company applies to have the Common Stock traded on any
      other Trading Market, it will include in such application all of the Shares
      and
      Warrant Shares, and will take such other action as is necessary to cause all
      of
      the Shares and Warrant Shares to be listed on such other Trading Market as
      promptly as possible. The Company will take all action reasonably necessary
      to
      continue the listing and trading of its Common Stock on a Trading Market and
      will comply in all respects with the Company’s reporting, filing and other
      obligations under the bylaws or rules of the Trading Market.

     

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

     

     

     

    
      
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     as
      the Purchasers acting in concert or as a group with respect to the purchase,
      disposition or voting of Securities or otherwise.

     

    4.12  Subsequent
      Equity Sales. From the date hereof until 90 days after the Effective Date,
      without the prior written consent of the Purchasers, neither the Company nor
      any
      Subsidiary shall issue shares of Common Stock or Common Stock Equivalents for
      a
      consideration per share less than $2.70, except for Exempt Issuances; provided,
      however, that the 90 day period set forth in this Section 4.14 shall be extended
      for the number of Trading Days during such period in which (i) trading in the
      Common Stock is suspended by any Trading Market, or (ii) following the Effective
      Date, the Registration Statement is not effective or the prospectus included
      in
      the Registration Statement may not be used by the Purchasers for the resale
      of
      the Shares and Warrant Shares, including pursuant to Section 3(r) of the
      Registration Rights Agreement.

     

    4.13  Rights
      of First Refusal. For
      a
      period of one year from the date hereof, if the Company intends to raise
      additional capital by the issuance or sale of capital stock of the Company,
      including without limitation shares of any class of common stock, any class
      of
      preferred stock, options, warrants or any Common Stock Equivalents (whether
      the
      offering is conducted by the Company, underwriter, placement agent or any third
      party) the Company shall be obligated to offer to the Purchaser such issuance
      or
      sale of capital stock, by providing in writing the principal amount of capital
      it intends to raise and outline of the material terms of such capital raise,
      prior to the offering or such issuance or sale of capital stock  to any
      third parties including, but not limited to, current or former officers or
      directors, current or former shareholders and/or investors of the Company,
      underwriters, brokers, agents or other third parties.  The Purchaser shall
      have five (5) business days from receipt of such notice of the sale or issuance
      of capital stock to accept or reject all or a portion of such capital raising
      offer.

     

    4.14  Delivery
      of Securities After Closing. The Company shall deliver, or cause to be
      delivered, the respective Securities purchased by each Purchaser to such
      Purchaser within three (3) Trading Days of the Closing Date.

     

    4.15  Form
      D; Blue Sky Filings. The Company agrees to timely file a Form D with respect
      to the Securities as required under Regulation D and to provide a copy thereof,
      promptly upon request of any Purchaser. The Company shall take such action
      as
      the Company shall reasonably determine is necessary in order to obtain an
      exemption for, or to qualify the Securities for, sale to the Purchasers at
      the
      Closing under applicable securities or “Blue Sky” laws of the states of the
      United States, and shall provide evidence of such actions promptly upon request
      of any Purchaser.

     

    4.16  Review
      of Public Disclosures. All SEC filings (including, without limitation, all
      filings required under the Exchange Act, which include Forms 10-Q, 10-K, and
      8-K, etc) and other public disclosures made by the Company, including, without
      limitation, all press releases, investor relations materials, and scripts of
      analysts meetings and calls, shall be reviewed and approved for release by
      the
      Company’s attorneys and, if containing financial information, the Company’s
      independent certified public accountants.

     

     

     

    
      
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    ARTICLE
      V. 

    MISCELLANEOUS

     

    5.1    Fees
      and Expenses.
      The
      Company shall deliver, prior to the Closing, a completed and executed copy
      of
      the Closing Statement, attached hereto as Annex A. Each of the Company and
      the
      Purchasers shall pay all costs and expenses incurred by such party in connection
      with the negotiation, investigation, preparation, execution and delivery of
      the
      Transaction Documents. The Company shall pay all transfer agent fees, stamp
      taxes and other taxes and duties levied in connection with the delivery of
      any
      Securities to the Purchasers. The Company shall pay Cornell Capital Partners,
      L.P. or its designees an origination as follows (i) Ninety Five Thousand Dollars
      ($95,000) shall be paid in immediately available funds directly from the
      proceeds of the Closing as set forth the Closing Statement, and (ii) One Hundred
      Thousand Dollars ($100,000) shall be paid by the issuance of shares of Common
      Stock of the Company (the “Origination Shares”) on the date hereof at a price of
      $2.40 per share. 

     

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

     

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

     

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

     

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

     

     

     

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

     

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

     

    5.8  Governing
      Law. All questions concerning the construction, validity, enforcement and
      interpretation of the Transaction Documents shall be governed by and construed
      and enforced in accordance with the internal laws of the State of New Jersey,
      without regard to the principles of conflicts of law thereof. Each party agrees
      that all legal proceedings concerning the interpretations, enforcement and
      defense of the transactions contemplated by this Agreement and any other
      Transaction Documents (whether brought against a party hereto or its respective
      affiliates, directors, officers, shareholders, employees or agents) shall be
      commenced exclusively in the state and federal courts sitting in Hudson County,
      New Jersey. Each party hereby irrevocably submits to the exclusive jurisdiction
      of the Superior Court of New Jersey, sitting in Hudson County and the United
      States District Court for the District of New Jersey sitting in Newark, New
      Jersey for the adjudication of any civil action asserted pursuant to this
      Paragraph (including with respect to the enforcement of any of the Transaction
      Documents), and hereby irrevocably waives, and agrees not to assert in any
      suit,
      action or proceeding, any claim that it is not personally subject to the
      jurisdiction of any such court, that such suit, action or proceeding is improper
      or is an inconvenient venue for such proceeding. The parties hereby waive all
      rights to a trial by jury. 

     

    5.9  Survival.
      The representations and warranties contained herein shall survive the Closing
      and the delivery of the Shares and Warrant Shares for a period of one year
      following the Effective Date.

     

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

     

    5.11  Severability.
      If any term, provision, covenant or restriction of this Agreement is held by
      a
      court of competent jurisdiction to be invalid, illegal, void or unenforceable,
      the remainder of the terms, provisions, covenants and restrictions set forth
      herein shall remain in full force and effect and shall in no way be affected,
      impaired or invalidated, and the parties hereto 

     

     

    
      
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    shall
      use
      their commercially reasonable efforts to find and employ an alternative means
      to
      achieve the same or substantially the same result as that contemplated by such
      term, provision, covenant or restriction. It is hereby stipulated and declared
      to be the intention of the parties that they would have executed the remaining
      terms, provisions, covenants and restrictions without including any of such
      that
      may be hereafter declared invalid, illegal, void or unenforceable.

     

    5.12  Rescission
      and Withdrawal Right. Notwithstanding anything to the contrary contained in
      (and without limiting any similar provisions of) any of the other Transaction
      Documents, whenever any Purchaser exercises a right, election, demand or option
      under a Transaction Document and the Company does not timely perform its related
      obligations within the periods therein provided, then such Purchaser may rescind
      or withdraw, in its sole discretion from time to time upon written notice to
      the
      Company, any relevant notice, demand or election in whole or in part without
      prejudice to its future actions and rights.

     

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

     

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

     

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

     

    5.16  Independent
      Nature of Purchasers’ Obligations and Rights. The obligations of each
      Purchaser under any Transaction Document are several and not joint with the
      obligations of any other Purchaser, and no Purchaser shall be responsible in
      any
      way for the performance or non-performance of the obligations of any other
      Purchaser under any Transaction Document. Nothing contained herein or in any
      other Transaction Document, and no action taken by any 

     

     

     

    
      
        26

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Purchaser
      pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
      an association, a joint venture or any other kind of entity, or create a
      presumption that the Purchasers are in any way acting in concert or as a group
      with respect to such obligations or the transactions contemplated by the
      Transaction Documents. Each Purchaser shall be entitled to independently protect
      and enforce its rights, including without limitation, the rights arising out
      of
      this Agreement or out of the other Transaction Documents, and it shall not
      be
      necessary for any other Purchaser to be joined as an additional party in any
      proceeding for such purpose. Each Purchaser has been represented by its own
      separate legal counsel in their review and negotiation of the Transaction
      Documents. The Company has elected to provide all Purchasers with the same
      terms
      and Transaction Documents for the convenience of the Company and not because
      it
      was required or requested to do so by the Purchasers.

     

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

     

    5.18  Construction.
      The parties agree that each of them and/or their respective counsel has reviewed
      and had an opportunity to revise the Transaction Documents and, therefore,
      the
      normal rule of construction to the effect that any ambiguities are to be
      resolved against the drafting party shall not be employed in the interpretation
      of the Transaction Documents or any amendments hereto.

     

    (Signature
      Pages Follow)

     

     

     

    
      
        27

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    

     

    
      	 	
              COMPANY:

            
	 	
              STARTECH
                ENVIRONMENTAL CORPORATION 

            
	 	 
	 	
              By:__________________      

            
	 	
              Name: Peter
                J. Scanlon

            
	 	
              Title: Chief
                Financial Officer

            
	 	 
	 	 
	 	 
	
              Address
                for Notice:

              Startech
                Environmental Corporation

              88
                Danbury Road, Suite 2A

              Wilton,
                CT 06897

              Attention:
                Peter Scanlon

              Telephone:
                (203) 762-2499

              Facsimile:
                (203) 761-0839

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

              Kramer
                Levin Naftalis & Frankel LLP

              1177
                Avenue of the Americas

              New
                York, NY 10036

              Attention:
                Scott S. Rosenblum, Esq.

              Telephone:
                (212) 715-9411 

              Facsimile:
                (212) 715-8411

            	 

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASER FOLLOWS]

     

     

     

     

     

    
      
        28

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    

    
      	 	
              PURCHASER:

            
	 	
              CORNELL
                CAPITAL PARTNERS, L.P. 

            
	 	 
	 	
              By:     
                Yorkville
                Advisors, LLC

            
	 	
              Its:      
                Investment
                Manager

            
	 	 
	 	 
	 	
              By: ____________________________

            
	 	
              Name: Mark
                Angelo

            
	 	
              Its:      
                Portfolio
                Manager

            

    

     

     

    
      
        29

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    SCHEDULE
      I

     

    SCHEDULE
      OF PURCHASERS

     

    

    

    
      	
              (1)

            	
              (2)

            	
              (3)

            	
              (4)

            	
              (5)

            	
              (6)

            
	
              Purchaser

            	
              Subscription
                Amount

            	
              Shares

            	
              Number
                of Warrant Shares

            	
              Legal
                Representative’s Address and Facsimile Number

            
	 	 	 	
              Class
                A Warrants

            	
              Class
                B Warrant

            	 
	 	 	 	 	 	 
	
              Cornell
                Capital Partners, L.P.

               

              101
                Hudson Street, Suite 3700

              Jersey
                City, NJ 07303

              Attention:
                Mark Angelo

              Telephone:
                (201) 985-8300

              Facsimile:
                (201) 985-8266

              Residence:
                Cayman Islands

            	
              $2,000,000

            	
              833,333

            	
              833,333

            	
              833,333

            	
              David
                Gonzalez, Esq.

              101
                Hudson Street, Suite 3700

              Jersey
                City, New Jersey 07302 

              Telephone:
                (201) 985-8300 

              Facsimile:
                (201) 985-8266

            
	 	 	 	 	 	 
	 	 	 	 	 	 

    

    

    

    
      
        30

      

      
        
        

        
          

        

      

      
        
        

      

    

    Annex
      A

     

    

    CLOSING
      STATEMENT

    

    Pursuant
      to the attached Securities Purchase Agreement, dated as of the date thereto,
      the
      Purchasers, for an aggregate purchase price of $2,000,000, shall purchase from
      Startech Environmental Corporation (the “Company”)
      833,333 shares of Common Stock and Warrants to purchase an aggregate of
      1,666,666 shares of Common Stock. All funds will be disbursed in accordance
      with
      this Closing Statement as follows:

    

    

    

      31Exhibit 10.2 Registration Rights Agreement

    
      

    
                                                                                                        
    Exhibit 10.2

     

    REGISTRATION
      RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT
      (this
“Agreement”),
      dated
      as of April 11, 2007, by and among STARTECH
      ENVIRONMENTAL CORPORATION,
      a
      Colorado corporation (the “Company”),
      and
      the undersigned Buyers listed on Schedule I attached hereto (each, a
“Buyer”
and
      collectively, the “Buyers”).

     

    WHEREAS:

     

    This
      Agreement is made pursuant to the Securities Purchase Agreement, dated as of
      the
      date hereof between the Company and each Purchaser (the “Securities
      Purchase Agreement”).

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and the Buyers hereby agree as
      follows:

     

    1.  DEFINITIONS.

     

    Capitalized
      terms used and not otherwise defined herein that are defined in the Securities
      Purchase Agreement shall have the meanings given such terms in the Securities
      Purchase Agreement. As used in this Agreement, the following terms shall have
      the following meanings:

     

    (a)  “Effectiveness
      Deadline”
means,
      subject to Section 2(d) hereof, with respect to the initial Registration
      Statement required to be filed hereunder, the 120th calendar day following
      the
      date hereof (or the 150th
      calendar
      day following the date hereof if the Registration Statement receives a “full
      review” by the Commission) and, with respect to any additional Registration
      Statements which may be required pursuant to Section 3(c), the 120th calendar
      day following the date on which the Company first knows, or reasonably should
      have known, that such additional Registration Statement is required hereunder;
      provided, however, in the event the Company is notified by the Commission that
      one of the above Registration Statements will not be reviewed or is no longer
      subject to further review and comments, the Effectiveness Deadline as to such
      Registration Statement shall be the fifth Trading Day following the date on
      which the Company is so notified if such date precedes the dates required above;
      provided,
      that, if
      the Effectiveness Deadline falls on a Saturday,
      Sunday or any other day which shall be a legal holiday or a day on which the
      Commission is authorized or required by law or other government actions to
      close, the Effectiveness
      Deadline shall
      be
      the following Trading Day.

     

    (b)  “Filing
      Deadline”
means,
      subject to Section 2(d) hereof, the 45th calendar day following the date hereof
      and, with respect to any additional Registration Statements which may be
      required pursuant to Section 3(c), the 30th day following the date on which
      the
      Company first knows, or reasonably should have known that such additional
      Registration Statement is required hereunder; provided,
      that,
      if the Filing Deadline falls on a Saturday,
      Sunday or any other day which shall be a legal holiday or a day on which the
      Commission is authorized or required by law or other government actions to
      close, the Filing
      Deadline shall
      be
      the following Trading Day.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)  “Person”
means
      a
      corporation, a limited liability company, an association, a partnership, an
      organization, a business, an individual, a governmental or political subdivision
      thereof or a governmental agency.

     

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

     

    (e)  “Registrable
      Securities”
means
      all of (i) the Shares issuable, (ii) the Warrant Shares issuable, (iii) the
      Origination Shares, (iv) any additional shares issuable in connection with
      any
      anti-dilution provisions in the Warrants (without giving effect to any
      limitations on exercise set forth in the Warrant) and (v) any shares of Common
      Stock issued or issuable upon any stock split, dividend or other distribution,
      recapitalization or similar event with respect to the foregoing.

     

    (f)  “Registration
      Statement”
means
      the registration statements required to be filed hereunder and any additional
      registration statements contemplated by Section 3(c), including (in each case)
      the Prospectus, amendments and supplements to such registration statement or
      Prospectus, including pre- and post-effective amendments, all exhibits thereto,
      and all material incorporated by reference or deemed to be incorporated by
      reference in such registration statement.

     

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

     

    2.  REGISTRATION.

     

    (a)  On
      or
      prior to each Filing Deadline, the Company shall prepare and file with the
      SEC a
      Registration Statement on Form S-1 or SB-2 (or, if the Company is then eligible,
      on Form S-3) covering the resale all of the Registrable Securities. The
      Registration Statement prepared pursuant hereto shall register for resale of
      all
      of the Registrable Securities. The Registration Statement shall contain the
      “Plan
      of Distribution”
section
      in substantially the form attached hereto as Exhibit
      A.
      The
      Company shall use its commercially reasonable efforts to have the Registration
      Statement declared effective by the SEC as soon as practicable, but in no event
      later than the Effectiveness Deadline. By 9:30 am on the date no later than
      two
      (2) Trading Days following the date of effectiveness, the Company shall file
      with the SEC in accordance with Rule 424 under the 1933 Act the final Prospectus
      to be used in connection with sales pursuant to such Registration Statement.
      The
      Company shall use its commercially reasonable efforts to cause the Registration
      Statement to remain effective until all of the Registrable Securities have
      been
      sold or may be sold without volume restrictions pursuant to Rule 144(k), as
      determined by the counsel to the Company pursuant to a written opinion letter
      to
      such effect, addressed and 

     

     

    
      
        2

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    acceptable
      to the Company’s transfer agent and reasonably acceptable to the affected
      Holders (“Registration
      Period”).
      Prior
      to the filing of the Registration Statement with the SEC, the Company shall
      furnish a draft of the Registration Statement to the Buyers for their review
      and
      comment. The Buyers shall furnish comments on the Registration Statement to
      the
      Company within twenty-four (24) hours of the receipt thereof from the
      Company.

     

    (b)  Failure
      to File or Obtain Effectiveness of the Registration Statement.
      If: (i)
      a Registration Statement is not filed on or prior to its Filing Deadline (if
      the
      Company files a Registration Statement without affording the Holders the
      opportunity to review and comment on the same as required by Section 3(a),
      the
      Company shall not be deemed to have satisfied this clause (i)), or (ii) the
      Company fails to file with the SEC a request for acceleration in accordance
      with
      Rule 461 promulgated under the Securities Act, within five Trading Days of
      the
      date that the Company is notified (orally or in writing, whichever is earlier)
      by the SEC that a Registration Statement will not be “reviewed,” or not subject
      to further review, or (iii) a Registration Statement filed or required to be
      filed hereunder is not declared effective by the SEC by its Effectiveness
      Deadline, or (iv) after the effectiveness, a Registration Statement ceases
      for
      any reason to remain continuously effective as to all Registrable Securities
      for
      which it is required to be effective (other than as permitted by Section 3(r)
      hereof), or the Holders are otherwise not permitted to utilize the Prospectus
      therein to resell such Registrable Securities for more than 30 consecutive
      calendar days or more than an aggregate of 40 calendar days during any 12-month
      period (which need not be consecutive calendar days) (any such failure or breach
      being referred to as an “Event”),
      then
      in addition to any other rights the holders of the Shares may have hereunder
      or
      under applicable law, on each such Event date and on each monthly anniversary
      of
      each such Event date (if the applicable Event shall not have been cured by
      such
      date) until the applicable Event is cured, the Company shall pay to each holder
      of Shares an amount in cash, as partial liquidated damages (“Liquidated
      Damages”)
      and
      not as a penalty, equal to 1.0% of the aggregate purchase price paid by such
      holder pursuant to the Securities Purchase Agreement for any Shares then held
      by
      such holder; provided,
      however, that in the event the Commission does not permit all of the Registrable
      Securities to be included in the Registration Statement because of its
      application of Rule 415, Liquidated Damages payable pursuant to this Section
      2(b) shall be payable by the Company based on 1.0% of the amount of the holder’s
      purchase price paid by such holder pursuant to the Securities Purchase Agreement
      for any Shares then held by such holder that corresponds to the number of such
      holder’s Registrable Securities permitted to be registered by the Commission in
      such Registration Statement pursuant to Rule 415. The parties agree that (1)
      the
      Company shall not be liable for Liquidated Damages under this Agreement with
      respect to any Warrants or Warrant Shares and (2) the maximum aggregate
      Liquidated Damages payable to a holder of Shares under this Agreement shall
      be
      twelve percent (12%) of the aggregate Purchase Price paid by such holder
      pursuant to the Securities Purchase Agreement. The partial Liquidated Damages
      pursuant to the terms hereof shall apply on a daily pro-rata basis for any
      portion of a month prior to the cure of an Event. Notwithstanding any other
      provision of this Section 2(b), in the event that two or more Events are
      occurring simultaneously during any period, in no event will Liquidated Damages
      be payable to any Buyer with respect to more than one Event during such
      period.

     

    (c)  Liquidated
      Damages.
      The
      Company and the Buyer hereto acknowledge and agree that the sums payable under
      subsection 2(b) above shall constitute liquidated damages and not penalties
      and
      are in addition to all other rights of the Buyer, including the right to call
      a

     

     

    
      
        3

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    default.
      The parties further acknowledge that (i) the amount of loss or damages likely
      to
      be incurred is incapable or is difficult to precisely estimate, (ii) the amounts
      specified in such subsections bear a reasonable relationship to, and are not
      plainly or grossly disproportionate to, the probable loss likely to be incurred
      in connection with any failure by the Company to obtain or maintain the
      effectiveness of a Registration Statement, (iii) one of the reasons for the
      Company and the Buyer reaching an agreement as to such amounts was the
      uncertainty and cost of litigation regarding the question of actual damages,
      and
      (iv) the Company and the Buyer are sophisticated business parties and have
      been
      represented by sophisticated and able legal counsel and negotiated this
      Agreement at arm’s length. 

     

    (d)  Rule
      415.
      Notwithstanding anything to the contrary set forth in this Section 2, in the
      event the Commission does not permit the Company to register all of the
      Registrable Securities in the Registration Statement because of the Commission’s
      application of Rule 415, the Company shall register in the Registration
      Statement such number of Registrable Securities as is permitted by the
      Commission, provided,
      however, that the number of Registrable Securities to be included in such
      Registration Statement or any subsequent registration statement shall be
      determined in the following order: (i) first, the shares of Common Stock issued
      pursuant to the Securities Purchase Agreement shall be registered on a pro
      rata
      basis among the holders of the Common Stock, (ii) second, the shares of Common
      Stock issuable upon exercise of the Warrants shall be registered on a pro rata
      basis among the holders of the Warrants and (iii) third, any other securities
      listed on Schedule
      10(b)
      attached
      hereto. In the event the Commission does not permit the Company to register
      all
      of the Registrable Securities in the initial Registration Statement, the Company
      shall use its commercially reasonable efforts to file subsequent Registration
      Statements to register the Registrable Securities that were not registered
      in
      the initial Registration Statement as promptly as possible and in a manner
      permitted by the Commission. For purposes of this Section 2(d), “Filing
      Deadline” means
      with respect to each subsequent Registration Statement filed pursuant hereto,
      the
      later
      of (i) sixty (60) days following the sale of substantially all of the
      Registrable Securities included in the initial Registration Statement or any
      subsequent Registration Statement and (ii) six (6) months following the
      effective date of the initial Registration Statement or any subsequent
      Registration Statement, as applicable, or such earlier date as permitted by
      the
      Commission;
      provided,
      that,
      if the Filing Deadline falls on a Saturday,
      Sunday or any other day which shall be a legal holiday or a day on which the
      Commission is authorized or required by law or other government actions to
      close, the Filing
      Deadline shall
      be
      the following Trading Day.
      For
      purposes of this Section 2(b), “Effectiveness Deadline” means with respect to
      each subsequent Registration Statement filed pursuant hereto, the earlier of
      (A)
      the
      one hundred twentieth (120th)
      day
      following the filing date of such Registration Statement or (B) in
      the
      event the Company is notified by the Commission that such Registration Statement
      will not be reviewed or is no longer subject to further review and comments,
      the
      Effectiveness Deadline as to such Registration Statement shall be the fifth
      Trading Day following the date on which the Company is so notified; provided,
      that,
      if the Effectiveness Deadline falls on a Saturday,
      Sunday or any other day which shall be a legal holiday or a day on which the
      Commission is authorized or required by law or other government actions to
      close, the Effectiveness
      Deadline shall
      be
      the following Trading Day.

     

    3.  RELATED
      OBLIGATIONS.

     

     

     

    
      
        4

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (a)  The
      Company shall, not less than two (2) Trading Days prior to the filing of each
      Registration Statement and not less than one (1) Trading Day prior to the filing
      of any related amendments and supplements to all Registration Statements (except
      for annual reports on Form 10-K or Form 10-KSB), furnish to each Buyer copies
      of
      all such documents proposed to be filed, which documents (other than those
      incorporated or deemed to be incorporated by reference) will be subject to
      the
      reasonable and prompt review of such Buyers. The Company shall not file a
      Registration Statement or any such Prospectus or any amendments or supplements
      thereto to which the Buyers shall reasonably object in good faith; provided
      that,
      the Company is notified of such objection in writing no later than two (2)
      Trading Days after the Buyers have been so furnished copies of a Registration
      Statement; and provided
      further,
      if such Buyer shall object to any filing, the Filing Deadline and the
      Effectiveness Deadline shall be extended until the Trading Day after the date
      that the last such objection is withdrawn and a notice to that effect is given
      to the Company and no Liquidated Damages shall be payable to any Buyer pursuant
      to the provisions of Section 2(b) hereof for any month (prorated for periods
      totaling less than 30 days) prior to the Trading Day after the last such
      objection is withdrawn and notice thereof given to the Company.

     

    (b)  The
      Company shall (i) prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to a Registration Statement and
      the
      Prospectus used in connection with such Registration Statement, which prospectus
      is to be filed pursuant to Rule 424 promulgated under the Securities Act, as
      may
      be necessary to keep such Registration Statement effective at all times during
      the Registration Period, and prepare and file with the SEC such additional
      Registration Statements in order to register for resale under the Securities
      Act
      all of the Registrable Securities; (ii) cause the related Prospectus to be
      amended or supplemented by any required Prospectus supplement (subject to the
      terms of this Agreement), and as so supplemented or amended to be filed pursuant
      to Rule 424; (iii) respond as promptly as reasonably practicable to any comments
      received from the SEC with respect to a Registration Statement or any amendment
      thereto and as promptly as reasonably practicable provide the Buyers true and
      complete copies of all correspondence from and to the SEC relating to a
      Registration Statement (provided that the Company may excise any information
      contained therein which would constitute material non-public information as
      to
      any Buyer which has not executed a confidentiality agreement with the Company);
      and (iv) comply with the provisions of the Securities Act with respect to the
      disposition of all Registrable Securities of the Company covered by such
      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 such Registration
      Statement. In the case of amendments and supplements to a Registration Statement
      which are required to be filed pursuant to this Agreement (including pursuant
      to
      this Section 3(b)) by reason of the Company’s filing a report on Form 10-KSB,
      Form 10-QSB or Form 8-K or any analogous report under the Securities Exchange
      Act of 1934, as amended (the “Exchange
      Act”),
      the
      Company shall incorporate such report by reference into the Registration
      Statement, if applicable, or shall file such amendments or supplements with
      the
      SEC on the same day on which the Exchange Act report is filed which created
      the
      requirement for the Company to amend or supplement the Registration Statement.
      

     

    (c)  If
      during
      the Registration Period, the number of Registrable Securities at any time
      exceeds the number of shares of Common Stock then registered in a Registration
      Statement, other than pursuant to Section 2(d) hereof, then the Company shall
      file as soon as 

     

     

    
      
        5

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    reasonably
      practicable but in any case prior to the applicable Filing Deadline, an
      additional Registration Statement covering the resale by the Buyers of not
      less
      than 120% of the number of such Registrable Securities.

     

    (d)  The
      Company shall furnish to each Buyer whose Registrable Securities are included
      in
      any Registration Statement upon such Buyer’s written request, without charge,
      (i) at least one (1) copy of such Registration Statement as declared effective
      by the SEC and any amendment(s) thereto, including financial statements and
      schedules, all documents incorporated therein by reference, all exhibits and
      each preliminary prospectus, (ii) ten (10) copies of the final prospectus
      included in such Registration Statement and all amendments and supplements
      thereto (or such other number of copies as such Buyer may reasonably request)
      and (iii) such other documents as such Buyer may reasonably request from time
      to
      time in order to facilitate the disposition of the Registrable Securities owned
      by such Buyer.

     

    (e)  The
      Company shall use its commercially reasonable 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 any Buyer reasonably requests, (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 reasonably 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 articles 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 3(d), (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 each Buyer
      who holds Registrable Securities 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.

     

    (f)  As
      promptly as reasonably practicable after becoming aware of such event or
      development, the Company shall notify each Buyer in writing of the happening
      of
      any event as a result of which the Prospectus included in a 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 Registration Statement to correct such untrue statement or omission,
      and
      deliver ten (10) copies of such supplement or amendment to each Buyer upon
      such
      Buyer’s written request. The Company shall also promptly notify each Buyer in
      writing (i) when a Prospectus or any Prospectus supplement or post-effective
      amendment has been filed, and when a Registration Statement or any
      post-effective amendment has become effective (notification of such
      effectiveness shall be delivered to each Buyer by facsimile on the same day
      of
      such effectiveness), (ii) of any request by the SEC for amendments or
      supplements to a Registration 

     

     

    
      
        6

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Statement
      or related prospectus or related information, and (iii) of the Company’s
      reasonable determination that a post-effective amendment to a Registration
      Statement would be appropriate.

     

    (g)  The
      Company shall use its commercially reasonable efforts to prevent the issuance
      of
      any stop order or other suspension of effectiveness of a 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 each Buyer who holds
      Registrable Securities being sold 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.

     

    (h)  If,
      after
      the execution of this Agreement, a Buyer believes, after consultation with
      its
      legal counsel, that it could reasonably be deemed to be an underwriter of
      Registrable Securities, at the request of any Buyer, the Company shall furnish
      to such Buyer, on the date of the effectiveness of the Registration Statement
      and thereafter from time to time on such dates as a Buyer may reasonably request
      (i) a letter, dated such date, from the Company’s independent certified public
      accountants in form and substance as is customarily given by independent
      certified public accountants to underwriters in an underwritten public offering,
      and (ii) an opinion, dated as of such date, of counsel representing the Company
      for purposes of such Registration Statement, in form, scope and substance as
      is
      customarily given in an underwritten public offering, addressed to the
      Buyers.

     

    (i)  If,
      after
      the execution of this Agreement, a Buyer believes, after consultation with
      its
      legal counsel, that it could reasonably be deemed to be an underwriter of
      Registrable Securities, at the request of any Buyer, the Company shall make
      available for inspection by (i) any Buyer and (ii) one (1) firm of
      accountants or other agents retained by the Buyers (collectively, the
“Inspectors”)
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the “Records”),
      as
      shall be reasonably deemed necessary by each Inspector, and cause the Company’s
      officers, directors and employees to supply all information which any Inspector
      may reasonably request; provided, however, that each Inspector shall agree,
      and
      each Buyer hereby agrees, to hold in strict confidence and shall not make any
      disclosure (except to a Buyer) or use any Record or other information which
      the
      Company determines in good faith to be confidential, and of which determination
      the Inspectors are so notified, unless (a) the disclosure of such Records is
      necessary to avoid or correct a misstatement or omission in any Registration
      Statement or is otherwise required under the Securities Act, (b) the release
      of
      such Records is ordered pursuant to a final, non-appealable subpoena or order
      from a court or government body of competent jurisdiction, or (c) the
      information in such Records has been made generally available to the public
      other than by disclosure in violation of this or any other agreement of which
      the Inspector and the Buyer has knowledge. Each Buyer agrees that it shall,
      upon
      learning that disclosure of such Records is sought in or by a court or
      governmental body of competent jurisdiction or through other means, give prompt
      notice to the Company and allow the Company, at its expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, the Records deemed confidential.

     

     

    
      
        7

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (j)  The
      Company shall hold in confidence and not make any disclosure of information
      concerning a Buyer provided to the Company unless (i) disclosure of such
      information is necessary to comply with federal or state securities laws, (ii)
      the disclosure of such information is necessary to avoid or correct a
      misstatement or omission in any Registration Statement, (iii) the release of
      such information is ordered pursuant to a subpoena or other final,
      non-appealable order from a court or governmental body of competent
      jurisdiction, or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this Agreement or any other
      agreement. The Company agrees that it shall, upon learning that disclosure
      of
      such information concerning a Buyer is sought in or by a court or governmental
      body of competent jurisdiction or through other means, give prompt written
      notice to such Buyer and allow such Buyer, at the Buyer’s expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, such information.

     

    (k)  The
      Company shall use its commercially reasonable efforts either to cause all the
      Registrable Securities covered by a Registration Statement (i) to be listed
      on
      each securities exchange on which securities of the same class or series issued
      by the Company are then listed, if any, if the listing of such Registrable
      Securities is then permitted under the rules of such exchange or (ii) the
      inclusion for quotation on the National Association of Securities Dealers,
      Inc.
      OTC Bulletin Board for such Registrable Securities. The Company shall pay all
      fees and expenses in connection with satisfying its obligation under this
      Section 3(j).

     

    (l)  The
      Company shall cooperate with each Buyer who holds Registrable Securities being
      offered and, to the extent applicable, to facilitate the timely preparation
      and
      delivery of certificates (not bearing any restrictive legend) representing
      the
      Registrable Securities to be offered pursuant to a Registration Statement and
      enable such certificates to be in such denominations or amounts, as the case
      may
      be, as the Buyers may reasonably request and registered in such names as the
      Buyers may request.

     

    (m)  The
      Company shall use its commercially reasonable efforts to cause the Registrable
      Securities covered by the applicable Registration Statement to be registered
      with or approved by such other governmental agencies or authorities as may
      be
      necessary to consummate the disposition of such Registrable
      Securities.

     

    (n)  The
      Company shall make generally available to its security holders as soon as
      practical, but not later than ninety (90) days after the close of the period
      covered thereby, an earnings statement (in form complying with the provisions
      of
      Rule 158 under the Securities Act) covering a twelve (12) month period beginning
      not later than the first day of the Company’s fiscal quarter next following the
      effective date of the Registration Statement.

     

    (o)  The
      Company shall otherwise use its commercially reasonable efforts to comply with
      all applicable rules and regulations of the SEC in connection with any
      registration hereunder.

     

    (p)  Within
      two (2) business days after a Registration Statement which covers Registrable
      Securities is declared effective by the SEC, the Company shall deliver, and
      shall cause legal counsel for the Company to deliver, to the transfer agent
      for
      such Registrable Securities (with copies to the Buyer whose Registrable
      Securities are included in such 

     

     

     

    
      
        8

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Registration
      Statement) confirmation that such Registration Statement has been declared
      effective by the SEC in the form attached hereto as Exhibit
      C.

     

    (q)  The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate disposition by each Buyer of Registrable Securities pursuant to
      a
      Registration Statement.

     

    (r)  If
      (i)
      there is material non-public information regarding the Company which the
      Company's Board of Directors (the "Board")
      determines not to be in the Company's best interest to disclose and which the
      Company is not otherwise required to disclose, (ii) there is a significant
      business opportunity (including, but not limited to, the acquisition or
      disposition of assets (other than in the ordinary course of business) or any
      merger, consolidation, tender offer or other similar transaction) available
      to
      the Company which the Board determines not to be in the Company's best interest
      to disclose, or (iii) the Company is required to file a post-effective amendment
      to the Registration Statement to incorporate the Company’s quarterly and annual
      reports and audited financial statements on Forms 10-Q and 10-K, then the
      Company may (x) postpone or suspend filing of a registration statement for
      a
      period not to exceed thirty (30) consecutive days or (y) postpone or suspend
      effectiveness of a registration statement for a period not to exceed twenty
      (20)
      consecutive days; provided that the Company may not postpone or suspend
      effectiveness of a registration statement under this Section 3(r) for more
      than
      forty-five (45) days in the aggregate during any three hundred sixty (360)
      day
      period; provided,
      however,
      that no
      such postponement or suspension shall be permitted for consecutive twenty (20)
      day periods arising out of the same set of facts, circumstances or
      transactions.

     

    4.  OBLIGATIONS
      OF THE BUYERS.

     

    (a)  Each
      Buyer agrees that, upon receipt of any notice from the Company of the happening
      of any event of the kind described in Section 3(f) or Section 3(r), such Buyer
      will immediately discontinue disposition of Registrable Securities pursuant
      to
      any Registration Statement covering such Registrable Securities until such
      Buyer’s receipt of the copies of the supplemented or amended prospectus
      contemplated by Section 3(f) or Section 3(r) or receipt of notice that no
      supplement or amendment is required or notice from the Company that the Buyer
      may dispose of its Registrable Securities pursuant to the Registration
      Statement. Notwithstanding anything to the contrary, the Company shall cause
      its
      transfer agent to deliver unlegended certificates for shares of Common Stock
      to
      a transferee of a Buyer in accordance with the terms of the Securities Purchase
      Agreement in connection with any sale of Registrable Securities with respect
      to
      which a Buyer has entered into a contract for sale prior to the Buyer’s receipt
      of a notice from the Company of the happening of any event of the kind described
      in Section 3(f) or Section 3(r) and for which the Buyer has not yet
      settled.

     

    (b)  Each
      Buyer covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it or an exemption therefrom
      in connection with sales of Registrable
      Securities pursuant to the Registration Statement.

     

    (c)  The
      Company may require each Buyer to furnish to the Company information regarding
      such Buyer and the distribution of such Registrable Securities as is required
      by
      law to be disclosed in the Registration Statement, prospectus, or any amendment
      or 

     

     

    
      
        9

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    supplement
      thereto, and such Buyer agrees to furnish such information to the Company within
      a reasonable time after receiving such request.

     

    5.  EXPENSES
      OF REGISTRATION.

     

    All
      expenses incurred in connection with registrations, filings or qualifications
      pursuant to Sections 2 and 3, including, without limitation, all registration,
      listing and qualifications fees, printers, legal (with respect to the Company
      and not any Buyer) and accounting fees shall be paid by the Company.

     

    6.  INDEMNIFICATION.

     

    With
      respect to Registrable Securities which are included in a Registration Statement
      under this Agreement:

     

    (a)  To
      the
      fullest extent permitted by law, the Company will, and hereby does, indemnify,
      hold harmless and defend each Buyer, the directors, officers, partners,
      employees, agents, representatives of, and each Person, if any, who controls
      any
      Buyer within the meaning of the Securities Act or the Exchange Act (each, an
      “Indemnified
      Person”),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
      expenses, joint or several (collectively, “Claims”),
      incurred in investigating, preparing or defending any action, claim, suit,
      inquiry, proceeding, investigation or appeal taken from the foregoing by or
      before any court or governmental, administrative or other regulatory agency,
      body or the SEC, whether pending or threatened, whether or not an indemnified
      party is or may be a party thereto (“Indemnified
      Damages”),
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon: (i) any untrue statement or alleged untrue statement of
      a
      material fact in a Registration Statement or any post-effective amendment
      thereto or in any filing made in connection with the qualification of the
      offering under the securities or other “blue sky” laws of any jurisdiction in
      which Registrable Securities are offered (“Blue
      Sky Filing”),
      or
      the omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading; (ii) any
      untrue statement or alleged untrue statement of a material fact contained in
      any
      final prospectus (as amended or supplemented, if the Company files any amendment
      thereof or supplement thereto with the SEC) or the omission or alleged omission
      to state therein any material fact necessary to make the statements made
      therein, in light of the circumstances under which the statements therein were
      made, not misleading; or (iii) any violation or alleged violation by the Company
      of the Securities Act, the Exchange Act, any other law, including, without
      limitation, any state securities law, or any rule or regulation there under
      relating to the offer or sale of the Registrable Securities pursuant to a
      Registration Statement (the matters in the foregoing clauses (i) through (iii)
      being, collectively, “Violations”).
      The
      Company shall reimburse the Buyers and each such controlling person promptly
      as
      such expenses are incurred and are due and payable, for any legal fees or
      disbursements or other reasonable expenses incurred by them in connection with
      investigating or defending any such Claim. Notwithstanding anything to the
      contrary contained herein, the indemnification agreement contained in this
      Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
      out of or based upon a Violation which occurs in reliance upon and in conformity
      with information furnished in writing to the Company by such 

     

     

    
      
        10

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Indemnified
      Person expressly for use in connection with the preparation of the Registration
      Statement or any such amendment thereof or supplement thereto; (y) shall not
      be
      available to the extent such Claim is based on a failure of the Buyer to deliver
      or to cause to be delivered the prospectus made available by the Company, if
      such prospectus was timely made available by the Company pursuant to Section
      3(c); and (z) shall not apply to amounts paid in settlement of any Claim if
      such settlement is effected without the prior written consent of the Company,
      which consent shall not be unreasonably withheld. Such indemnity shall remain
      in
      full force and effect regardless of any investigation made by or on behalf
      of
      the Indemnified Person and shall survive the transfer of the Registrable
      Securities by the Buyers pursuant to Section 9 hereof.

     

    (b)  In
      connection with a Registration Statement, each Buyer agrees to severally and
      not
      jointly indemnify, hold harmless and defend, to the same extent and in the
      same
      manner as is set forth in Section 6(a), the Company, each of its directors,
      each
      of its officers, employees, representatives, or agents and each Person, if
      any,
      who controls the Company within the meaning of the Securities Act or the
      Exchange Act (each an “Indemnified
      Party”),
      against any Claim or Indemnified Damages to which any of them may become
      subject, under the Securities Act, the Exchange Act or otherwise, insofar as
      such Claim or Indemnified Damages arise out of or is based upon any Violation,
      in each case to the extent, and only to the extent, that such Violation occurs
      in reliance upon and in conformity with written information furnished to the
      Company by such Buyer expressly for use in connection with such Registration
      Statement; and, subject to Section 6(d), such Buyer will reimburse any legal
      or
      other expenses reasonably incurred by them in connection with investigating
      or
      defending any such Claim; provided, however, that the indemnity agreement
      contained in this Section 6(b) and the agreement with respect to contribution
      contained in Section 7 shall not apply to amounts paid in settlement of any
      Claim if such settlement is effected without the prior written consent of such
      Buyer, which consent shall not be unreasonably withheld; provided, further,
      however, that the Buyer shall be liable under this Section 6(b) for only that
      amount of a Claim or Indemnified Damages as does not exceed the net proceeds
      to
      such Buyer as a result of the sale of Registrable Securities pursuant to such
      Registration Statement. Such indemnity shall remain in full force and effect
      regardless of any investigation made by or on behalf of such Indemnified Party
      and shall survive the transfer of the Registrable Securities by the Buyers
      pursuant to Section 9. Notwithstanding anything to the contrary contained
      herein, the indemnification agreement contained in this Section 6(b) with
      respect to any prospectus shall not inure to the benefit of any Indemnified
      Party if the untrue statement or omission of material fact contained in the
      prospectus was corrected and such new prospectus was delivered to each Buyer
      prior to such Buyer’s use of the prospectus to which the Claim
      relates.

     

    (c)  Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually satisfactory to the
      indemnifying party and the Indemnified Person or the Indemnified Party, as
      the
      case may be; provided, however, that an Indemnified Person or Indemnified Party
      shall have the right to retain its own counsel with the 

     

     

    
      
        11

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    fees
      and
      expenses of not more than one (1) counsel for such Indemnified Person or
      Indemnified Party to be paid by the indemnifying party, if, in the reasonable
      opinion of counsel retained by the indemnifying party, the representation by
      such counsel of the Indemnified Person or Indemnified Party and the indemnifying
      party would be inappropriate due to actual or potential differing interests
      between such Indemnified Person or Indemnified Party and any other party
      represented by such counsel in such proceeding. The Indemnified Party or
      Indemnified Person 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 or Indemnified Person which
      relates to such action or claim. The indemnifying party shall keep the
      Indemnified Party or Indemnified Person fully apprised at all times as to the
      status of the defense or any settlement negotiations with respect thereto.
      No
      indemnifying party shall be liable for any settlement of any action, claim
      or
      proceeding effected without its prior written consent; provided, however, that
      the indemnifying party shall not unreasonably withhold, delay or condition
      its
      consent. No indemnifying party shall, without the prior written consent of
      the
      Indemnified Party or Indemnified Person, consent to entry of any judgment or
      enter into any settlement or other compromise which does not include as an
      unconditional term thereof the giving by the claimant or plaintiff to such
      Indemnified Party or Indemnified Person of a release from all liability in
      respect to such claim or litigation. Following indemnification as provided
      for
      hereunder, the indemnifying party shall be subrogated to all rights of the
      Indemnified Party or Indemnified Person with respect to all third parties,
      firms
      or corporations relating to the matter for which indemnification has been made.
      The failure to deliver written notice to the indemnifying party within a
      reasonable time of the commencement of any such action shall not relieve such
      indemnifying party of any liability to the Indemnified Person or Indemnified
      Party under this Section 6, except to the extent that the indemnifying party
      is
      prejudiced in its ability to defend such action.

     

    (d)  The
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills are received or Indemnified Damages are incurred.

     

    (e)  The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of action or similar right of the Indemnified Party or Indemnified Person
      against the indemnifying party or others, and (ii) any liabilities the
      indemnifying party may be subject to pursuant to the law.

     

    7.  CONTRIBUTION.

     

    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided, however, that: (i) no seller of
      Registrable Securities guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the Securities Act) shall be entitled to
      contribution from any seller of Registrable Securities who was not guilty of
      fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
      Securities shall be limited in amount to the net amount of proceeds received
      by
      such seller from the sale of such Registrable Securities.

     

     

    
      
        12

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    8.  REPORTS
      UNDER THE EXCHANGE ACT.

     

    With
      a
      view to making available to the Buyers the benefits of Rule 144 promulgated
      under the Securities Act or any similar rule or regulation of the SEC that
      may
      at any time permit the Buyers to sell securities of the Company to the public
      without registration (“Rule
      144”)
      the
      Company agrees to use its commercially reasonable efforts to:

     

    (a)  make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144;

     

    (b)  file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the Securities Act and the Exchange Act so long as the Company
      remains subject to such requirements (it being understood that nothing herein
      shall limit the Company’s obligations under Section 4(c) of the Securities
      Purchase Agreement) and the filing of such reports and other documents as are
      required by the applicable provisions of Rule 144; and

     

    (c)  furnish
      to each Buyer so long as such Buyer owns Registrable Securities, promptly upon
      request, (i) a written statement by the Company that it has complied with the
      reporting requirements of Rule 144, the Securities Act and the Exchange Act,
      (ii) a copy of the most recent annual or quarterly report of the Company and
      such other reports and documents so filed by the Company, and (iii) such other
      information as may be reasonably requested to permit the Buyers to sell such
      securities pursuant to Rule 144 without registration.

     

    9.  AMENDMENT
      OF REGISTRATION RIGHTS.

     

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and Buyers who
      then
      hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
      or
      waiver effected in accordance with this Section 9 shall be binding upon
      each Buyer and the Company. No such amendment shall be effective to the extent
      that it applies to fewer than all of the holders of the Registrable Securities.
      No consideration shall be offered or paid to any Person to amend or consent
      to a
      waiver or modification of any provision of any of this Agreement unless the
      same
      consideration also is offered to all of the parties to this
      Agreement.

     

    10.  MISCELLANEOUS.

     

    (a)  A
      Person
      is deemed to be a holder of Registrable Securities whenever such Person owns
      or
      is deemed to own of record such Registrable Securities or owns the right to
      receive the Registrable Securities. If the Company receives conflicting
      instructions, notices or elections from two (2) or more Persons with respect
      to
      the same Registrable Securities, the Company shall act upon the basis of
      instructions, notice or election received from the registered owner of such
      Registrable Securities.

     

    (b)  No
      Piggyback on Registrations.
      Except
      as set forth on Schedule
      10(b)
      attached
      hereto, neither the Company nor any of its security holders (other than the
      Buyers in such capacity pursuant hereto) may include securities of the Company
      in the initial Registration 

     

     

    
      
        13

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Statement
      other than the Registrable Securities. The Company shall not file any other
      registration statements until the initial Registration Statement required
      hereunder is declared effective by the SEC, provided that this Section 10(b)
      shall not prohibit the Company from filing amendments to registration statements
      already filed.

     

    (c)  Piggy-Back
      Registrations.
      If at
      any time during the Registration Period there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the SEC a registration statement relating
      to
      an offering for its own account or the account of others under the Securities
      Act of any of its equity securities, other than on Form S-4 or Form S-8 (each
      as
      promulgated under the Securities Act) or their then equivalents relating to
      equity securities to be issued solely in connection with any acquisition of
      any
      entity or business or equity securities issuable in connection with the stock
      option or other employee benefit plans, then the Company shall send to each
      Buyer a written notice of such determination and, if within fifteen (15) days
      after the date of such notice, any such Buyer shall so request in writing,
      the
      Company shall include in such registration statement all or any part of such
      Registrable Securities such Buyer requests to be registered; provided,
      however,
      that,
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 10(c) that are eligible for resale pursuant to Rule
      144(k) promulgated under the Securities Act or that are the subject of a then
      effective Registration Statement.

     

    (d)  Notices.
      Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one (1) business day after deposit with a nationally recognized
      overnight delivery service, in each case properly addressed to the party to
      receive the same. The addresses and facsimile numbers for such communications
      shall be:

     

    
      	
              If
                to the Company, to:

            	
              Startech
                Environmental Corporation

            
	 	
              88
                Danbury Road, Suite 2A

            
	 	
              Wilton,
                CT 06897

            
	 	
              Attention:    
                Peter
                J. Scanlon

            
	 	
              Telephone:  
                (203)
                762-2499 

            
	 	
              Facsimile:     
                (203)
                761-0839 

            
	 	 
	
              With
                Copy to:

            	
              Kramer
                Levin Naftalis & Frankel LLP

            
	 	
              1177
                Avenue of the Americas

            
	 	
              New
                York, NY 10036

            
	 	
              Attention:    
                Scott
                S. Rosenblum, Esq.

            
	 	
              Telephone:  
                (212)
                715-9411

            
	 	
              Facsimile:     
                (212)
                715-8411 

            
	 	 

    

     

    If
      to an
      Buyer, to its address and facsimile number on the Schedule of Buyers attached
      hereto, with copies to such Buyer’s representatives as set forth on the Schedule
      of Buyers or to such other address and/or facsimile number and/or to the
      attention of such other person as the recipient party has specified by written
      notice given to each other party five (5) days prior to the effectiveness of
      such change. Written confirmation of receipt (A) given by the recipient of
      such

     

     

    
      
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    notice,
      consent, waiver or other communication, (B) mechanically or electronically
      generated by the sender’s facsimile machine containing the time, date, recipient
      facsimile number and an image of the first page of such transmission or (C)
      provided by a courier or overnight courier service shall be rebuttable evidence
      of personal service, receipt by facsimile or receipt from a nationally
      recognized overnight delivery service in accordance with clause (i), (ii) or
      (iii) above, respectively.

     

    (e)  Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

     

    (f)  The
      laws
      of the State of New Jersey shall govern all issues concerning the relative
      rights of the Company and the Buyers as its stockholders. All other questions
      concerning the construction, validity, enforcement and interpretation of this
      Agreement shall be governed by the internal laws of the State of New Jersey,
      without giving effect to any choice of law or conflict of law provision or
      rule
      (whether of the State of New Jersey or any other jurisdiction) that would cause
      the application of the laws of any jurisdiction other than the State of New
      Jersey. Each party hereby irrevocably submits to the non-exclusive jurisdiction
      of the Superior Courts of the State of New Jersey, sitting in Hudson County,
      New
      Jersey and federal courts for the District of New Jersey sitting Newark, New
      Jersey, for the adjudication of any dispute hereunder or in connection herewith
      or with any transaction contemplated hereby or discussed herein, and hereby
      irrevocably waives, and agrees not to assert in any suit, action or proceeding,
      any claim that it is not personally subject to the jurisdiction of any such
      court, that such suit, action or proceeding is brought in an inconvenient forum
      or that the venue of such suit, action or proceeding is improper. Each party
      hereby irrevocably waives personal service of process and consents to process
      being served in any such suit, action or proceeding by mailing a copy thereof
      to
      such party at the address for such notices to it under this Agreement and agrees
      that such service shall constitute good and sufficient service of process and
      notice thereof. Nothing contained herein shall be deemed to limit in any way
      any
      right to serve process in any manner permitted by law. If any provision of
      this
      Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
      or unenforceability shall not affect the validity or enforceability of the
      remainder of this Agreement in that jurisdiction or the validity or
      enforceability of any provision of this Agreement in any other jurisdiction.
      EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
      TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

     

    (g)  This
      Agreement shall inure to the benefit of and be binding upon the permitted
      successors and assigns of each of the parties hereto.

     

    (h)  The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    (i)  This
      Agreement may be executed in identical counterparts, each of which shall be
      deemed an original but all of which shall constitute one and the same agreement.
      This Agreement, once executed by a party, may be delivered to the other party
      hereto by facsimile

     

     

    
      
        15

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    transmission
      or by e-mail delivery of a “.pdf” format data file of a copy of this Agreement
      bearing the signature of the party so delivering this Agreement.

     

    (j)  Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    (k)  The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent and no rules of strict construction
      will
      be applied against any party.

     

    (l)  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.

     

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
        16

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their signature page to this Registration
      Rights Agreement to be duly executed as of the date first above
      written.

     

    
      	 	
              COMPANY:

            
	 	
              STARTECH
                ENVIRONMENTAL CORPORATION

            
	 	 
	 	
              By:_____________________________      

            
	 	
              Name: Peter
                J. Scanlon

            
	 	
              Title:
                Chief Financial Officer 

            
	 	 

    

    

     

     

     

     

    
 

    
      
        17

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their signature page to this Registration
      Rights Agreement to be duly executed as of the date first above
      written.

     

    
      	 	
              BUYER:

            
	 	
              CORNELL
                CAPITAL PARTNERS, L.P.

            
	 	 
	 	
              By: Yorkville
                Advisors, LLC

            
	 	
              Its: Investment
                Manager

            
	 	 
	 	 
	 	
              By:___________________      

            
	 	
              Name: Mark
                Angelo

            
	 	
              Title: Portfolio
                Manager

            

    

    

    

    

    

    
      
        18

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS

     

    

    
      	
              Buyer

            	
              Address/Facsimile
                

              Number
                of Buyer

            	
              Address/Facsimile
                

              Number
                of Buyer’s Representative

            
	 	 	 
	 	 	 
	
              Cornell
                Capital Partners, L.P.

            	
              101
                Hudson Street - Suite 3700

            	
              101
                Hudson Street - Suite 3700

            
	 	
              Jersey
                City, NJ 07303

            	
              Jersey
                City, NJ 07303

            
	 	
              Facsimile: (201)
                985-8266

            	
              Facsimile: (201)
                985-8266

            
	 	 	
              Attention:
                David Gonzalez, Esq.

            
	 	 	 
	 	 	 
	 	 	 

    

    

    

     

    

    
      
        
          19

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      A

     

    Plan
      of Distribution

     

    Each
      Selling Stockholder (the “Selling
      Stockholders”)
      of the
      common stock and any of their pledgees, assignees and successors-in-interest
      may, from time to time, sell any or all of their shares of common stock on
      the
      __________ or any other stock exchange, market or trading facility on which
      the
      shares are traded or in private transactions. These sales may be at fixed or
      negotiated prices. A Selling Stockholder may use any one or more of the
      following methods when selling shares:

     

    
      	· 
               	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	· 
               	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	·
                	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

     

    
      	·
                	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	· 
               	
              privately
                negotiated transactions;

            

    

     

    
      	·
                	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	·
                	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or otherwise;
                

            

    

     

    
      	· 
               	
              a
                combination of any such methods of sale;
                or

            

    

     

    
      	·
                	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities
      Act”),
      if
      available, rather than under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the Selling Stockholders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, but,
      except as set forth in a supplement to this Prospectus, in the case of an agency
      transaction not in excess of a customary brokerage commission in compliance
      with
      NASDR Rule 2440; and in the case of a principal transaction a markup or markdown
      in compliance with NASDR IM-2440. 

     

     

    
      
        20

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the Common
      Stock in the course of hedging the positions they assume. The Selling
      Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales. In such event, any commissions
      received by such broker-dealers or agents and any profit on the resale of the
      shares purchased by them may be deemed to be underwriting commissions or
      discounts under the Securities Act. Each Selling Stockholder has informed the
      Company that it does not have any written or oral agreement or understanding,
      directly or indirectly, with any person to distribute the Common Stock. In
      no
      event shall any broker-dealer receive fees, commissions and markups which,
      in
      the aggregate, would exceed eight percent (8%).

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares. The Company has agreed to indemnify
      the Selling Stockholders against certain losses, claims, damages and
      liabilities, including liabilities under the Securities Act. 

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder. In addition, any securities
      covered by this prospectus which qualify for sale pursuant to Rule 144 under
      the
      Securities Act may be sold under Rule 144 rather than under this prospectus.
      There is no underwriter or coordinating broker acting in connection with the
      proposed sale of the resale shares by the Selling Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume limitations by reason of Rule 144(k) under the
      Securities Act or any other rule of similar effect or (ii) all of the shares
      have been sold pursuant to this prospectus or Rule 144 under the Securities
      Act
      or any other rule of similar effect. The resale shares will be sold only through
      registered or licensed brokers or dealers if required under applicable state
      securities laws. In addition, in certain states, the resale shares may not
      be
      sold unless they have been registered or qualified for sale in the applicable
      state or an exemption from the registration or qualification requirement is
      available and is complied with.

     

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution. In addition, the Selling Stockholders will be subject to
      applicable provisions of the Exchange Act and the rules and regulations
      thereunder, 

     

     

    
      
        21

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    
      including
        Regulation M, which may limit the timing of purchases and sales of shares
        of the
        common stock by the Selling Stockholders or any other person. We will make
        copies of this prospectus available to the Selling Stockholders and have
        informed them of the need to deliver a copy of this prospectus to each purchaser
        at or prior to the time of the sale (including by compliance with Rule 172
        under
        the Securities Act).

    

     

     

     

     

    
      
        22

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    EXHIBIT
      C

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    

    Attention: 

    

    
      	 	
              Re:

            	
              STARTECH
                ENVIRONMENTAL
                CORPORATION

            

    

    

    Ladies
      and Gentlemen:

    

    We
      are
      counsel to Startech Environmental Corporation, a Colorado corporation (the
      “Company”),
      and
      have represented the Company in connection with that certain Securities Purchase
      Agreement (the “Securities
      Purchase Agreement”)
      entered into by and among the Company and the Buyers named therein
      (collectively, the “Buyers”)
      pursuant to which the Company issued to the Buyers shares of its Common Stock,
      no par value (the “Common
      Stock”).
      Pursuant to the Purchase Agreement, the Company also has entered into a
      Registration Rights Agreement with the Buyers (the “Registration
      Rights Agreement”)
      pursuant to which the Company agreed, among other things, to register the
      Registrable Securities (as defined in the Registration Rights Agreement) under
      the Securities Act of 1933, as amended (the “Securities
      Act”).
      In
      connection with the Company’s obligations under the Registration Rights
      Agreement, on ____________ ____, the Company filed a Registration Statement
      on
      Form ________ (File No. 333-_____________) (the “Registration
      Statement”)
      with
      the Securities and Exchange Commission (the “SEC”)
      relating to the Registrable Securities which names each of the Buyers as a
      selling stockholder there under.

     

    In
      connection with the foregoing, we advise you that a member of the SEC’s staff
      has advised us by telephone that the SEC has entered an order declaring the
      Registration Statement effective under the Securities Act at [ENTER
      TIME OF EFFECTIVENESS]
      on
[ENTER
      DATE OF EFFECTIVENESS]
      and we
      have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
      any stop order suspending its effectiveness has been issued or that any
      proceedings for that purpose are pending before, or threatened by, the SEC
      and
      the Registrable Securities are available for resale under the Securities Act
      pursuant to the Registration Statement.

     

    Very
      truly yours,

    

    [Law
      Firm]

    

    By:____________________      

    

    cc: [LIST
      NAMES OF BUYERS]

     

     

    
23

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