Document:

c51257_ex4b.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Unless this certificate is presented by an authorized representative of The Depository Trust Company (the “Depository”) to the issuer or its agent for
registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of the Depository and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. 

Unless and until it is exchanged in whole or in part for Debentures in definitive registered form, this registered Debenture may not be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee
of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. 

	No. 	 
	 
		
$2,500,000,000
	
	CUSIP:   	
36962G3M4
		 
		 

	
	ISIN: 	
US36962G3M40
		 
		 

	
	
    Common Code: 033091435		 
		 

	

GENERAL ELECTRIC CAPITAL CORPORATION 

6.375% Fixed to Floating Rate 

USD Subordinated Debenture due 2067 

PRINCIPAL AMOUNT: $2,500,000,000

MATURITY DATE:  November 15, 2067, subject to earlier redemption as set forth on the reverse of this Debenture. 

ISSUE DATE: November 15, 2007

INTEREST RATE: 

FIXED RATE: Until
    November 15, 2017, 6.375% per annum. 

FLOATING RATE:
      From and including November 15, 2017, an adjustable rate equal to 3-month
      LIBOR plus 2.289% per annum. 

INTEREST PAYMENT DATES:

FIXED RATE PERIOD: May 15 and November 15, commencing May 15, 2008 (each a “Fixed Interest Payment Date”); provided, however, that with respect to interest
accruing on this Debenture during the Fixed Rate Period, if any such Fixed Interest Payment Date is not a Business Day, then the payment of the interest payable on such date will be made on the next succeeding Business Day with the same force and
effect as if made on such Fixed Interest Payment Date (and without any interest or other payment in respect of any such delay). If a redemption date falling during the Fixed Rate Period is

not a Business Day, then payment of interest on such date
will be made on the next succeeding Business Day with the same force and effect
as it made on such redemption date (without any interest or other payment in
respect of such  delay). 

FLOATING RATE PERIOD:
    In respect of each Interest Period (as defined below) during the Floating
    Rate Period (as defined below), February 15, May 15, August 15, and November
    15, commencing February 15, 2018 (each a “Floating Interest Payment Date”;
  each Floating Interest Payment Date and Fixed Interest Payment Date is referred
  to herein as an “Interest
  Payment Date”); provided, however, that with
  respect to interest accruing on this Debenture during the Floating Rate Period,
  if any Floating Interest Payment Date is not a Business Day, then the Floating
  Interest  Payment Date will be the next succeeding Business Day unless such Business
  Day is in the next calendar month in which case such Floating Interest Payment
  Date shall be the Business Day immediately preceding such day. Notwithstanding
  the foregoing,  if the Maturity Date or earlier redemption date falling during
  the Floating Rate Period is not a Business Day, then payment of interest on such
  date will be made on the next succeeding Business Day with the same force and
  effect as if made on such  Maturity Date or redemption date (without any interest
  or other payment in respect of such delay).

DEFERRAL OF INTEREST: Scheduled interest payments on this Debenture may be deferred for a period of up to 10 consecutive years as provided on the reverse hereof. 

RECORD DATES: The Business Day prior to the relevant Interest Payment Date; provided, that if this Debenture is issued in definitive fully registered form, the Record Date shall be the fifteenth
calendar day before the relevant Interest Payment Date. 

GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (the “Company”), for value received, hereby promises to pay to Cede & Co., as nominee of The
Depository Trust Company, or its registered assigns, the principal amount set forth above on the Maturity Date set forth above, and to pay interest thereon when due (subject to the deferral and other provisions set forth on the reverse hereof), at
the interest rate described above, from and including the Issue Date of this Debenture, semi-annually in arrears with respect to interest accruing in the Fixed Rate Period and quarterly in arrears with respect to interest accruing in the Floating
Rate Period, as set forth herein, until the principal hereof has been paid or duly made available for payment. Interest will accrue, notwithstanding any permitted deferral of payment, from and including the most recent Interest Payment Date, or,
prior to the first Interest Payment Date, the Issue Date, to but excluding the next Interest Payment Date (without regard to any permitted deferral) or other date on which interest is due and payable in accordance with the terms of this Debenture by
redemption, acceleration or maturity (each such period, an “Interest Period”). The amount of interest payable under this Debenture shall be rounded to the nearest one cent, half of
one cent being rounded upwards. 

          The interest paid or provided for on any Interest Payment Date will be paid to Cede & Co. or such other Person in whose name this Debenture is registered at the close of business on the Record
Date next preceding such Interest Payment Date. In the event of a deferral of interest payments by the Company as set forth herein, all interest, including Additional Interest (as defined on the reverse hereof), then due shall be paid to the Person
in whose name this

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Debenture is registered at the close of business on the Record Date immediately prior to the Interest Payment Date at the end of the Extension Period (as defined on the reverse hereof). Notwithstanding the foregoing, payment of
interest due and payable at maturity or upon earlier redemption shall be made to the Holder entitled to payment of principal or redemption amount, as applicable. Payment of the principal of, premium, if any, and interest on this Debenture will be
made at the office of the Trustee, located at 101 Barclay Street, New York, New York, 10286 in the Borough of Manhattan, The City of New York, State of New York, in such coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that payment of interest on any Interest Payment Date (other than on the Maturity Date or date of earlier redemption)
may be made at the option of the Company by check mailed to the address of the Person entitled thereto as such address appears in the Debenture Register or, subject to Section 4.02 of the Indenture (as defined on the reverse hereof), at the option
of any Holder of $5,000,000 or more aggregate principal amount of Debentures, by wire transfer to an account that has been designated by such Person not less than fifteen days prior to the applicable Interest Payment Date. 

          This Debenture will rank pari passu with each other series of Debt Securities established under the Indenture (unless otherwise provided with
respect to such series of Debt Securities) and is subordinated to the Company’s Senior Indebtedness as set forth and to the extent provided in Article Fourteen of the Indenture. 

          This Debenture may be redeemed by the Company prior to the Maturity Date as provided on the reverse hereof and in the Indenture. 

          The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Debt
Securities to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 66 2/3% in aggregate principal amount of the Debt Securities of each affected series at the time Outstanding.
The Indenture also contains provisions permitting the registered Holders of a majority in aggregate principal amount of the Debentures at the time Outstanding, on behalf of the Holders of all Debentures, to waive certain defaults or noncompliance
under the Indenture and their respective consequences. Any such waiver shall be conclusive and binding upon Holders and upon all future Holders of this Debenture and of any Debenture issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent or waiver is made upon this Debenture. 

          No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Debenture at the time, place and rates, and in the currency herein prescribed. 

          The Debentures are issuable only in registered form without coupons in denominations of $5,000 or any amount in excess thereof which is an integral multiple of $1,000. As provided in the
Indenture and subject to certain limitations therein set forth, the Debentures are exchangeable for a like aggregate principal amount of Debentures, as requested by the Holder surrendering the same.

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          As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Debenture may be registered on the Debt Security register of the Company upon surrender of this
Debenture for registration of transfer at the office of the Company in the Borough of Manhattan, The City of New York, State of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and
registrar for the Debentures duly executed by, the Holder hereof or by his attorney duly authorized in writing, and thereupon one or more new Debentures of authorized denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Debenture is registered as the owner hereof for all purposes, whether or not this Debenture be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the contrary. 

          If an Event of Default with respect to this Debenture shall occur and be continuing, then, unless the principal of all the Debentures shall already be due and payable, the Trustee or the Holders of
not less than 25% in aggregate principal amount of the Outstanding Debentures may declare the principal of all the Debentures due and payable in the manner and with the effect provided in the Indenture. Upon any such declaration the principal amount
of and the accrued interest, including any Additional Interest (as defined on the reverse hereof), on all the Debentures shall become immediately due and payable.

          This Debenture shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been executed by manual signature of the Trustee under the Indenture.

          This Debenture is not a deposit in a depository institution and is not insured by the United States Federal Deposit Insurance Corporation, any other governmental agency or any other insurer.

          REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS DEBENTURE SET FORTH ON THE REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH ON THE FACE
OF THIS DEBENTURE. 

 

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          IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. 

	
[Seal]
		 

		 	
      GENERAL ELECTRIC CAPITAL
	
	 

		 

		 	
      CORPORATION
	
	 

	
	 

	
	 

		 

		 	By:   
		 
		 
	 

		 

		 	 
		 Name:
	
	 

		 

		 	 
		 Title:
	
	
Attest:  
		 

		 	 
		 

	
	 

		
Name:
		 	 
		 

	
	 

		
Title:
		 	 
		 

	

 

CERTIFICATE OF AUTHENTICATION

          This is one of the Debt Securities of the series designated therein referred to in the within-mentioned Indenture. 

Date of Authentication:

November 15, 2007 

	 	
      THE BANK OF NEW YORK,	
	 	             as Trustee		 
	 	 	 

		 
	 	 	 

		 
	 	By:  	 
	 
	 	 	 Authorized Signatory
		 

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(Reverse of Debenture)

     GENERAL ELECTRIC CAPITAL CORPORATION 

6.375% Fixed to Floating Rate USD Subordinated Debenture due 2067

          This Debenture is one of a duly authorized series of Debt Securities of the Company designated as its 6.375% Fixed to Floating Rate USD Subordinated Debentures due 2067 (each a “Debenture” and collectively, the “Debentures”) issued under an Indenture for Subordinated Debentures, dated as of September 1, 2006,
as supplemented (the “Indenture”), between the Company and The Bank of New York (as successor to JPMorgan Chase Bank, N.A.), as Trustee (said trustee and any successor trustee
herein referred to as the “Trustee”). The terms of this Debenture include those stated in the Indenture (and all indentures supplemental thereto) and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended. Reference is hereby made to the Indenture for a statement of the respective rights thereunder of the Company, the Trustee and the Holders of the Debentures and of other Debt
Securities issuable under the Indenture, and the terms upon which the Debentures are, and are to be, authenticated and delivered.  The definitions of terms in and the provisions of this Debenture shall modify and supplement the Indenture, solely
with respect to this Debenture, to the extent permitted under the Indenture. All terms not defined in this Debenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 

          After the completion of the issuance of which this Debenture is a part, the Company may, from time to time, create and issue additional Debt Securities of this series having the same terms and
conditions as the Debentures in all respects, except for issue date, issue price and, if applicable, the date from which interest shall accrue or first be paid.  Such additional Debt Securities will be consolidated with and will form a single series
with the Debentures. 

Interest 

Fixed Rate

          During the period from and including the Issue Date of this Debenture to but excluding November 15, 2017 (the “Fixed Rate Period”),
this Debenture will bear interest on the outstanding principal amount hereof at an annual rate equal to 6.375%, payable semi-annually in arrears (subject to any permitted deferral) on each Interest Payment Date as set forth on the face hereof.

          During the Fixed Rate Period, interest will be calculated on the basis of a 360 day year comprised of twelve 30 day months. 

Floating Rate

          During the period from and including November 15, 2017 to but excluding November 15, 2067 (the “Floating Rate Period”), this
Debenture will bear interest on the outstanding principal amount hereof at an adjustable rate for each quarterly period equal to 3-month LIBOR plus 2.289% per annum, payable quarterly in arrears (subject to any permitted deferral) on each Interest
Payment Date as set forth on the face hereof. 

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          During the Floating Rate Period, the amount of interest for each day that this Debenture is Outstanding (the “Daily Interest Amount”) will be calculated by dividing the interest rate in effect by 360 and multiplying the result by the outstanding principal amount of this Debenture. The amount of interest payable with respect to each Interest Period in the
Floating Rate Period will be calculated by adding the Daily Interest Amounts for each day in such Interest Period. All percentages resulting from any interest rate calculation will be rounded upward or downward, as appropriate, to the next higher or
lower one hundred-thousandth of a percentage point.

Additional Interest

          Interest that is not paid on this Debenture on the applicable Interest Payment Date will bear additional interest (“Additional Interest”) at the then applicable rate per annum for this Debenture, compounded semi-annually during the Fixed Rate Period and quarterly during the Floating Rate Period. 

          The Trustee will act as paying agent (the “Paying Agent”) for the Debentures.

Calculation Agent

          Calculations relating to 3-month LIBOR will be made by a calculation agent (the “Calculation Agent”), an institution appointed by
the Company as the Company’s agent for this purpose. The Calculation Agent initially is The Bank of New York. The Company may appoint a different institution to serve as Calculation Agent from time to time after the Issue Date of this
Debenture, pursuant to the calculation agent agreement (the “Calculation Agreement”) with respect to this Debenture, dated as of September 15, 2006, between the Company and The
Bank of New York (as successor to JPMorgan Chase Bank, N.A.), as Calculation Agent for this Debenture, without the consent of Holders and without notifying Holders of the change. Absent manifest error, the calculations made pursuant to the
Calculation Agreement will be binding on the Company and each Holder of Debentures. 

Option to Defer Interest Payments

          So long as no Event of Default applicable to the Debentures has occurred and is continuing, the Company may defer all payment of interest on the Outstanding Debentures for a period (an
“Extension Period”) effective for interest accruing as of the first day of any Interest Period (the “Start Date”) and extending not longer than the earlier of (a) the tenth anniversary of the Start Date, and (b) the Maturity Date for the Debentures (such final date being herein referred to as the “Maximum
Extension Date”). No Extension Period shall end on a date other than an Interest Payment Date or the Maturity Date; provided that in connection with a redemption of the Debentures in whole, the Company may elect to
end an Extension Period on the applicable redemption date.  Until the end of any Extension Period for the Debentures (including any permitted extension thereof), no interest shall be due and payable thereon, except for interest due and payable on
the Start Date with respect to the prior Interest Period. To the extent permitted by applicable law, interest on deferred amounts will accrue during an Extension Period from the first Interest Payment Date following the Start Date and will be
compounded on subsequent Interest Payment Dates (semi-annually during the Fixed Rate Period or quarterly during the Floating Rate Period), at the then applicable rate of interest on this Debenture. On the Interest

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Payment Date falling at the end of an Extension Period as determined below (the “End Date”), the redemption date for all Outstanding Debentures, or the Maturity
Date, as applicable,  the Company will be obligated to pay all accrued and unpaid interest, including Additional Interest. Deferral for a new Extension Period (other than the extension of an existing Extension Period as described below) may occur
only if all amounts due and payable on the Debentures (including Additional Interest) in respect of any previous Extension Period have been paid in full on or after the End Date for such Extension Period. 

          The Company shall give the Trustee, for distribution to Holders of Debentures as of the immediately preceding Record Date, notice that the Company has elected to commence an Extension Period, such
notice to be given by the Company at least five but not more than fifteen days before the Interest Payment Date relating to the first Interest Period in the Extension Period during which interest will be deferred. Such notice shall specify the Start
Date and an End Date not later than the Maximum Extension Date; provided that the Company may elect to modify any End Date to an earlier or later date prior to the Maximum Extension Date in accordance with the terms set forth in the Indenture by
notice given to the Trustee for distribution to the Holders described above. Notwithstanding the foregoing, in the event that the amount of interest made available to the Paying Agent is not sufficient, or if no amount is made available, to pay
interest then due on any Interest Payment Date (including the End Date of an Extension Period) that is not a Maximum Extension Date, no funds shall be applied to payment of such interest by the Paying Agent and if the required amount is not provided
within five days after notice from the Trustee to the Company, the full amount of interest otherwise due and payable on such Interest Payment Date shall be (a) with respect to an Interest Payment Date that does not fall within an Extension Period,
deemed deferred (without any prior notice of deferral) with the preceding Interest Payment Date being the Start Date of an Extension Period having as its End Date the earlier of the next succeeding Interest Payment Date after such deemed deferral
and the Maximum Extension Date, or (b) with respect to an Interest Payment Date that is an End Date, deemed further deferred by an extension of the Extension Period (without any prior notice of modification of the Extension Period) to a new End Date
that shall be the earlier of the next Interest Payment Date and the Maximum Extension Date; provided, however, that the provisions of this sentence shall not apply to any interest that shall become due and payable solely by reason of a redemption of
the Debentures. In the event of any deferral or extension pursuant to clause (a) or (b) of the preceding sentence, notice shall be promptly given to the Holders of the Debentures as of the close of business on the immediately preceding Record Date
indicating the current amount and terms of any deferral, provided that the failure to give such notice shall not affect the rights of the Company hereunder, including, without limitation, the ability of the Company to defer interest as provided
herein. In the event a sufficient amount of interest is not made available to the Paying Agent on a particular Interest Payment Date (other than the Maximum Extension Date) on which payment is otherwise due, and appropriate amounts are not provided
in time to avoid initiating or extending an Extension Period, any partial amounts made available shall be delivered and held by the Trustee for application on the next date on which interest is due and payable under the terms of this Debenture or
returned to the Company at its direction. 

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Redemption

          This Debenture shall not be subject to redemption by the Holder or by the Company, except as provided below. 

          Subject to the provisions of Article Three of the Indenture, the Debentures may be redeemed by the Company at any time prior to November 15, 2017 in whole but not in part at the Company’s option
upon not less than 30 nor more than 60 days’ prior written notice mailed by first-class mail to the Trustee and to each Holder’s address, at the Make-Whole Redemption Amount (as defined below). Notwithstanding anything in the Indenture to
the contrary, notice of the foregoing redemption need not set forth the redemption amount but only the manner of calculation thereof.  The Company shall give the Trustee notice of the redemption amount promptly after the calculation thereof and the
Trustee shall have no responsibility for such calculation. 

          Subject to the provisions of Article Three of the Indenture, this Debenture may be redeemed, in whole or in part, at any time on and after November 15, 2017 at the Company’s option upon not less
than 30 nor more than 60 days’ prior written notice mailed by first-class mail to the Trustee and to each Holder’s registered address, at a redemption amount equal to 100% of the principal amount of this Debenture so redeemed, and accrued
and unpaid interest, including Additional Interest, if any, to but not including the redemption date, provided that if this Debenture is not redeemed in whole, at least $25 million aggregate principal amount of Debentures (excluding Debentures
held by the Company or any of the Company’s affiliates) must remain outstanding immediately after any such partial redemption. 

          Subject to the provisions of Article Three of the Indenture, if, at any time prior to November 15, 2017, a Tax Event occurs and is continuing, the Company will, within 90 days following the occurrence
of such Tax Event, elect to either (i) redeem the Debentures in whole (but not in part) on a date prior to November 15, 2017, upon not less than 30 nor more than 60 days’ prior written notice, mailed by first-class mail to the Trustee and to
each Holder’s registered address, at the Make–Whole Redemption Amount (a “Tax Event Redemption”) or (ii) allow the Debentures to remain Outstanding, provided that in the case of clause (i), if at the time there is available to the Company the opportunity to eliminate, within such 90-day period, the Tax Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similarly reasonable measure that in the Company’s sole judgment has or will cause no adverse effect on the Company, the Company will pursue such measure in lieu of redemption.

          Notwithstanding anything herein to the contrary, no redemption of the Debentures shall be made during an Extension Period other than a redemption in whole or in part on the End Date on which all
accrued and unpaid interest due and payable, including any Additional Interest, has been paid on all Outstanding Debentures for all Interest Periods terminating on or prior to the redemption date. 

          If less than all the Debentures are to be redeemed, the Company will give the Trustee notice not less than 60 days prior to the redemption date as to the aggregate principal amount of Debentures to be
redeemed, and the Trustee shall select or cause to be selected, in such manner

10

as in its sole discretion it shall deem appropriate and fair, the Debentures or portions thereof to be redeemed.  A Debenture may be redeemed in part only in a principal amount equal to an authorized denomination thereof.

Redemption Procedures

          If the Company gives a notice of redemption in respect of this Debenture (which notice will be irrevocable) then, by 12:00 noon, New York City time, on the Business Day prior to the redemption date,
subject to the provisions of Sections 3.02 and 4.04 of the Indenture in the case that the Company is acting as its own Paying Agent, the Company will deposit with the Paying Agent funds sufficient to pay such amount in respect of this Debenture and
will give such Paying Agent irrevocable instructions and authority to pay such amounts to the Holder of record of this Debenture upon surrender of this Debenture. 

          Notwithstanding any requirements or provisions to the contrary in the Indenture, if notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, all
rights of the Holder of the portion of this Debenture so called for redemption will cease, except the right of such Holder to receive the redemption amount, but without interest on such redemption amount.  In the event that any redemption date of
this Debenture is not a Business Day, then payment of the redemption amount will be made on the next succeeding day that is a Business Day with the same force and effect as if made on such redemption date (and without any interest or other payment
in respect of any such delay). In the event that payment of the redemption amount in respect of this Debenture is improperly withheld or refused and not made by the Company, interest on this Debenture will continue to accrue and compound from the
original redemption date to the date of payment.

Tax Treatment of this Debenture

          By acceptance of this Debenture, or a beneficial interest therein, the Holder and each beneficial owner of this Debenture agrees with the Company that this Debenture constitutes debt and that it will
treat this Debenture as debt for United States federal, state and local tax purposes. 

Governing Law

          This Debenture shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be construed in accordance with the laws of said State. 

Certain Definitions:

          “3-month LIBOR,” with respect to an Interest Period in the Floating Rate Period, means the rate (expressed as a percentage per
annum) for deposits in U.S. dollars for a three-month period that appears on Reuters Page LIBOR01 as of 11:00 a.m. (London time) on the second London Banking Day immediately preceding the first day of such Interest Period. If 3-month LIBOR cannot be
so determined, the Calculation Agent (after consultation with the Company) will select four major banks in the London interbank market. The Calculation Agent will request that the principal London offices of those four selected banks provide their
offered quotations to prime banks in the London interbank market at approximately 11:00 a.m., London time, on the second London Banking Day immediately preceding the first day of such Interest Period. These

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quotations will be for deposits in U.S. dollars for a three-month period beginning on the first day of such Interest Period.  Offered quotations must be based on a principal amount that is representative of a single transaction in
U.S. dollars in that market at the time. If two or more quotations are provided, 3-month LIBOR for the Interest Period will be the arithmetic mean of the quotations.  If fewer than two quotations are provided, the Calculation Agent (after
consultation with the Company) will select three rates quoted by three major banks in New York City, on the second London Banking Day immediately preceding the first day of such Interest Period. The rates quoted will be for loans in U.S. dollars to
leading European banks for a three-month period beginning on the first day of such Interest Period. Rates quoted must be based on a principal amount that is representative of a single transaction in U.S. dollars in that market at the time.  If fewer
than three New York City banks are quoting rates, 3-month LIBOR for the applicable Interest Period will be the same as for the immediately preceding Interest Period, or, in the case of the first Interest Period in the Floating Rate Period, 4.8975%
per annum. 

          “Business Day” means any day other than a Saturday or Sunday or any other day on which banking institutions are generally
authorized or obligated by law or regulation to close in The City of New York or, during the Floating Rate Period, in London, England. 

          “Comparable Treasury Issue” means the U.S. Treasury security selected by the Independent Investment Banker as having a maturity
comparable to the remaining term of this Debenture from the applicable redemption date to November 15, 2017 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt
securities of a maturity most closely corresponding to November 15, 2017. 

          “Comparable Treasury Price” means, with respect to any redemption date, (1) the average of five Reference Treasury Dealer
Quotations for such redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such
Reference Treasury Dealer Quotations. 

          “Independent Investment Banker” means one of the Reference Treasury Dealers selected by the Company, or if such firm is unwilling
or unable to serve as such, an independent investment and banking institution of national standing appointed by the Company. 

          “London Banking Day” means any day on which dealings in United States dollars are transacted or, with respect to any future date,
are expected to be transacted in the London interbank market.

          “Make-Whole Redemption Amount” means an amount equal to the greater of (a) 100% of the principal amount of this Debenture plus
accrued and unpaid interest, including deferred interest and Additional Interest, if any, to but excluding the redemption date and (b) the sum of: (i) the present value of the principal amount of this Debenture discounted from November 15, 2017, and
(ii) the present value of each interest payment that is payable (or but for any deferral would be payable) on an Interest Payment Date after such redemption date (exclusive of interest accrued to the redemption date) to and including November 15,
2017, discounted from the relevant Interest Payment Date, in the case of each of (i) and (ii) to the redemption date on a semi-annual compounded basis, at a rate equal to the sum of (x) the Treasury Rate plus (y) in the

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case of a Tax Event Redemption, 50 basis points, and, in the case of a redemption for any other reason, 30 basis points and (iii) the amount of any accrued and unpaid interest (including deferred interest and Additional Interest)
to but excluding the redemption date. 

          “Reference Treasury Dealer” means each of (1) Goldman, Sachs & Co., Lehman Brothers Inc., J.P. Morgan Securities Inc. and
Morgan Stanley & Co. Incorporated and their respective successors; provided, however, that if any of the foregoing shall cease
to be a primary U.S. government securities dealer in the United States (a “Primary Treasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer and (2)
one other Primary Treasury Dealer selected by the Company after consultation with the Independent Investment Banker. 

          “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average,
as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of the principal amount, quoted in writing to the Independent Investment Banker by such
Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date. 

          “Reuters Page LIBOR01” means the display page on Reuters (or any successor service) (“Reuters”) on page LIBOR01 or any successor page as may replace such page on such service for the purpose of displaying the London interbank offered rates of major banks for deposits in U.S. dollars.

          “Tax Action” means any of (a) an amendment to, change in or announced proposed change in the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or therein, (b) a judicial decision interpreting, applying, or clarifying such laws or regulations, (c) an administrative pronouncement or action that represents an
official position (including a clarification of an official position) of the governmental authority or regulatory body making such administrative pronouncement or taking such action, or (d) a threatened challenge asserted in connection with an audit
of the Company or any of the Company’s affiliates, or a threatened challenge asserted in writing against any other taxpayer that has raised capital through the issuance of securities that have substantial similarities to this Debenture, which
amendment or change is adopted or which proposed change, decision or pronouncement is announced or which action, clarification or threatened challenge occurs on or after the Issue Date of this Debenture. 

          “Tax Event” means that the Company shall have requested and received an opinion of nationally recognized independent tax counsel
experienced in such matters to the effect that as a result of a Tax Action there is more than an insubstantial risk that all or any portion of the interest payable by the Company with respect to the Debentures is not, or will not be, deductible as
accrued by the Company for United States federal income tax purposes. For purposes of this definition, the time when interest accrues shall be determined under the Internal Revenue Code of 1986, as amended, and the Treasury regulations thereunder,
all as in effect as of the Issue Date of this Debenture. 

13

           “Treasury Rate” means the yield, under the heading that represents the average for the week immediately prior to the applicable
redemption date, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication that is published weekly by the Board of Governors of the Federal Reserve System and that establishes yields
on actively traded U.S. Treasury securities adjusted to constant maturity under the caption “Treasury constant maturities,” for the maturity corresponding to the Comparable Treasury Issue (if there is no Comparable Treasury Issue with a
maturity within three months before or after November 15, 2017, yields for the two published maturities most closely corresponding to November 15, 2017 will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on
a straight line basis, rounding to the nearest month). If such release (or any successor release) is not published during the week preceding the applicable redemption date or does not contain such yields, “Treasury Rate” means the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.  The Treasury Rate will be calculated on the third Business Day preceding the redemption date. 

          The interest rate on the Debentures will in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general application. 

          References to “days” in this Debenture are to calendar days.

 

14

______________________________________ 

          The following abbreviations, when used in the inscription on the face of the within Debenture, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM - as tenants
    in common

TEN ENT - as tenants
by their entireties 

JT TEN - as joint tenants with
right of survivorship and not as tenants in common

	
UNIF GIFT MIN ACT -  
		 

		 
		
Custodian  
		 

		 
		
under
	
	 

		
(Cut)
		 
		 

		
(Minor)
		 
		 

	

	
Uniform Gifts to Minors Act  	 
	  		 (State)

Additional abbreviations may also be used though not in the above list. 

______________________________________ 

 

15

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers 

unto 

	 
	
	 
	 
	 
	 
	 
	 
	(Please insert social security or other identifying
    number of Assignee)
	 
	 
	 
	 
	 
	
(Name and address of Assignee, including zip code, must be printed or
	
	
typewritten.)
	
	 

	
	the within Debenture, and all rights thereunder, hereby
	    irrevocably constituting and appointing

	
	 
	 
	 

	
to transfer the said Debenture on the books of the Company, with full power of substitution in the premises.
	

Date: _____________

	 	
Signature:  
		 
	 	 
	 	 
	 	 
	 	
NOTICE: The signature to this assignment
	
	 	
must correspond with the name as it appears
	
	 	
upon the face of the within Debenture in every
	
	 	
particular, without alteration or enlargement or
	
	 	
any change whatever.
	

Signature(s) Guaranteed: _____________________________

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE GUARANTEE PROGRAM), PURSUANT
TO  S.E.C. RULE 17Ad-15. 

16exh10-1_spa.htm

     

    
      

      

    

     

     

     

     

     

     

     

     

    EXHIBIT
      10.1

     

    SECURITIES
      PURCHASE AGREEMENT

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”) is dated as of November
      5, 2007 among PetroHunter Energy Corporation, a Maryland corporation (the
“Company”), and each purchaser identified on the signature pages 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: (a) capitalized
      terms
      that are not otherwise defined herein have the meanings given to such terms
      in
      the Debentures (as defined herein), and (b) the following terms have the
      meanings set forth in this Section 1.1:

     

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

     

    “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 York are authorized or required by law or other governmental
      action to close.

     

    “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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Collateral
      Pledge and Security Agreement” means the Collateral Pledge and Security
      Agreement, dated the date hereof, between the Company and Bruce Lazier as
      Collateral Agent, in the form of Exhibit D attached hereto.

     

    “Commission”
      means the Securities and Exchange Commission.

     

    “Common
      Stock” means the common stock of the Company, par value $0.001 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.

     

    “Company
      Counsel” means Dill Dill Carr Stonbraker & Hutchings, P.C., with offices
      located at 455 Sherman Street, Suite 300, Denver, Colorado
      80203-4404.

     

    “Conversion
      Price” shall have the meaning ascribed to such term in the
      Debentures.

     

    “Debentures”
      means the Series A 8.5% Convertible Debentures due, subject to the terms
      therein, 5 years from their date of issuance, issued by the Company to the
      Purchasers hereunder, in the form of Exhibit A attached
      hereto.

     

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

     

    “Discussion
      Time” shall have the meaning ascribed to such term in Section
      3.2(f).

     

    “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.

     

    “Evaluation
      Date” shall have the meaning ascribed to such term in Section
      3.1(r).

     

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

     

    “Exempt
      Issuance” means the issuance of (a) shares of Common Stock or options to
      employees, officers or directors of the Company pursuant to any stock or option
      plan duly adopted for such purpose by a majority of the members of the Board
      of
      Directors of the Company or a majority of the members of a committee of
      directors established for such purpose by the Board of Directors of the Company,
      (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

     

    
      
        
           

        

        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    amended
      since the date of this Agreement to increase the number of such securities
      or to
      decrease the exercise, exchange or conversion price of such securities, and
      (c)
      securities issued pursuant to acquisitions or strategic transactions approved
      by
      a majority of the disinterested directors of the Company, provided that any
      such
      issuance shall only be to a Person which is, itself or through its subsidiaries,
      an operating company in a business synergistic with the business of the Company
      and in which the Company receives benefits in addition to the investment of
      funds, but shall not include a transaction in which the Company is issuing
      securities primarily for the purpose of raising capital or to an entity whose
      primary business is investing in securities.

     

    “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(z).

     

    “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).

     

    “Maximum
      Rate” shall have the meaning ascribed to such term in Section
      5.17.

     

    “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
      4.11.

     

    “Registration
      Rights Agreement” means the Registration Rights Agreement, dated the date
      hereof, among the Company and the Purchasers, in the form of Exhibit B
      attached hereto.

     

    “Registration
      Statement” means a registration statement meeting the requirements set forth
      in the Registration Rights Agreement and covering the resale of the Underlying
      Shares by each Purchaser as provided for in the Registration Rights
      Agreement.

     

    
      
        
           

        

        
        

      

      
        3

        
          

        

      

      
        
        

      

    

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

     

    “Required
      Minimum” means, as of any date, the maximum aggregate number of shares of
      Common Stock then issued or potentially issuable in the future pursuant to
      the
      Transaction Documents, including any Underlying Shares issuable upon exercise
      or
      conversion in full of all Warrants and Debentures (including Underlying Shares
      issuable as payment of interest), ignoring any conversion or exercise limits
      set
      forth therein, and assuming that the Conversion Price is at all times on and
      after the date of determination 75% of the then Conversion Price on the Trading
      Day immediately prior to the date of determination.

     

    “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 Debentures, the Warrants, the Warrant Shares and the Underlying
      Shares.

     

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

     

    “Short
      Sales” means 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
      Debentures and Warrants purchased hereunder as specified below such Purchaser’s
      name on the signature page 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 Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
      Select Market, the New York Stock Exchange or the OTC Bulletin
      Board.

     

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

     

    
      
        
           

        

        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Transfer
      Agent” means Empire Stock Transfer Inc. and a facsimile number of (702)
      974-1444, and any successor transfer agent of the Company.

     

    “Underlying
      Shares” means the shares of Common Stock issued and issuable upon conversion
      or redemption of the Debentures and upon exercise of the Warrants and issued
      and
      issuable in lieu of the cash payment of interest on the Debentures in accordance
      with the terms of the Debentures.

     

    “VWAP”
      means, for any date, the price determined by the first of the following clauses
      that applies: (a) if the Common Stock is then listed or quoted on a Trading
      Market, the daily volume weighted average price of the Common Stock for such
      date (or the nearest preceding date) on the Trading Market on which the Common
      Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
      Day from 9:30 a.m.  New York City time to 4:02 p.m. New York City
      time); (b) if the OTC Bulletin Board is not a Trading Market, the volume
      weighted average price of the Common Stock for such date (or the nearest
      preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
      listed or quoted on the OTC Bulletin Board 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 bid price per share of the Common Stock so reported; or
      (d) in all other cases, the fair market value of a share of Common Stock as
      determined by an independent appraiser selected in good faith by the Purchaser
      and reasonably acceptable to the Company, the fees and expenses of which shall
      be paid by the Company.

     

    “Warrants”
      means, collectively, the Common Stock purchase warrants delivered to the
      Purchasers at the Closing in accordance with Section 2.2(a) hereof, which
      Warrants shall be exercisable immediately and have a term of exercise equal
      to 5
      years, in the form of Exhibit C attached hereto.

     

    “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 each Purchaser, severally
      and not jointly, agrees to purchase up to an aggregate of $10,000,000 in
      principal amount of the Debentures.  Each Purchaser shall deliver to
      the Company, via wire transfer or a certified check, immediately available
      funds
      equal to its Subscription Amount and the Company shall deliver to each Purchaser
      its respective Debenture and a Warrant, as determined pursuant to Section
      2.2(a), and the Company and each Purchaser shall deliver the other items set
      forth in Section 2.2 deliverable 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 Company Counsel or such other location as the parties shall mutually
      agree.

     

    
      
        
           

        

        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    2.2  Deliveries.

     

    (a)  On
      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
      Debenture with a principal amount equal to such Purchaser’s Subscription Amount,
      registered in the name of such Purchaser;

     

    (iii) 
a
      Warrant
      registered in the name of such Purchaser to purchase up to a number of shares
      of
      Common Stock equal to 100% of  such Purchaser’s Subscription Amount divided
      by the initial Conversion Price, with an exercise price equal to $0.25, subject to adjustment
      therein;

     

    (iv)  the
      Registration Rights Agreement duly executed by the Company; and

     

    (v)  the
      Collateral Pledge and Security Agreement duly executed by the
      Company.

    

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

     

    
      	
              (i)    
                  

            	
              this
                Agreement duly executed by such
                Purchaser;

            

    

     

    (ii)  such
      Purchaser’s Subscription Amount by wire transfer to the Company;
      and

     

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

     

    2.3  Closing
      Conditions.

     

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

     

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

     

    (ii)  all
      obligations, covenants and agreements of 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.

     

    
      
        
           

        

        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (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 when made and 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 L.P. 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 Debentures at the Closing.

     

    (c)           If
      at the Closing Date the exercise price of the Warrants shall be set at a price
      that exceeds $0.30 per share, the Purchasers shall have the option to rescind
      this Agreement with no further obligation to the Company.

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1       Representations
      and Warranties of the Company.  Except as set forth under the
      corresponding section of the disclosure schedules delivered to the Purchasers
      concurrently herewith (the “Disclosure Schedules”) which Disclosure Schedules
      shall be deemed a part hereof, the Company hereby makes the representations
      and
      warranties set forth below to each PurchaserExcept as set forth in the
      Disclosure Schedules which Disclosure Schedules shall be deemed a part hereof
      and shall qualify any representation or otherwise made herein to the extent
      of
      the disclosure contained in the corresponding section of the Disclosure
      Schedules, the Company hereby makes the following representations and warranties
      to each Purchaser:

     

    (a)  Subsidiaries.  All
      of the direct and indirect subsidiaries of the Company are set forth on
Schedule 3.1(a).  Except as 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 of the issued and outstanding shares of 

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

      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.  If the Company has no subsidiaries, all other references
        to the Subsidiaries or any of them in the Transaction Documents shall be
        disregarded.

    

     

    (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,
      prospects 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 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 and the consummation by the Company of
      the
      other transactions contemplated hereby and thereby do not and will not: (i)
      conflict with or 

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

      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) the filing with the Commission of the Registration Statement, (ii) the
      notice and/or application(s) to each applicable Trading Market for the issuance
      and sale of the Securities and the listing of the Underlying Shares for trading
      thereon in the time and manner required thereby and (iii) 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 Securities are duly authorized and, when
      issued and paid for in accordance with the applicable Transaction Documents,
      will be duly and validly issued, fully paid and nonassessable, free and clear
      of
      all Liens imposed by
      the
      Company other than restrictions on transfer provided for in the Transaction
      Documents.  The Underlying Shares, when issued in accordance with the
      terms of the Transaction Documents, will be validly issued, fully paid and
      nonassessable, free and clear of all Liens imposed by the
      Company.  The Company has reserved from its duly authorized capital
      stock a number of shares of Common Stock for issuance of the Underlying Shares
      at least equal to the Required Minimum on the date hereof.

     

    (g)  Capitalization.  The
      capitalization of the Company is as set forth on Schedule 3.1(g), which
Schedule 3.1(g) shall also include the number of shares of Common Stock
      owned beneficially, and of record, by Affiliates of the Company as of the date
      hereof.  Except as set forth in Schedule 3.1(g), 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 employee 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 

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

      report
        under the Exchange Act.  Except as set forth on Schedule 3.1(g)
        and as a result of the purchase and sale of the Securities, there are no
        outstanding options, warrants, scrip 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 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.  The Company has filed all reports,
      schedules, forms, statements and other documents required to be filed by the
      Company 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”).  As of their respective dates,
      the SEC Reports complied in all material respects with the requirements 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.  Since the date of the latest audited financial
      statements included within the SEC Reports, except as specifically disclosed
      in
      a subsequent SEC 

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

      Report
        filed prior to the date hereof, (i) there has been no event, occurrence or
        development that has had or that could 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 Trading Day prior to the date that this
        representation is made.

    

     

    (j)  Litigation.  Except
      as set forth on Schedule 3.1(j), 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)
      could, 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 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.  No material labor dispute exists or, to the knowledge
      of the Company, is imminent with respect to any of the employees of the Company
      which could reasonably be expected to result in a Material Adverse
      Effect.  None of the Company’s or its Subsidiaries’ employees is a
      member of a union that relates to such employee’s relationship with the Company,
      and neither the Company or any of its Subsidiaries is a party to a collective
      bargaining agreement, and the Company and its Subsidiaries believe that their
      relationships with their employees are good.  No executive officer, to
      the knowledge of the Company, is, or is now expected to be, in violation of
      any
      material term of any employment contract, confidentiality, disclosure or
      proprietary information agreement or non-competition agreement, or any other
      contract or agreement 

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

      or
        any
        restrictive covenant, and the continued employment of each such executive
        officer does not subject the Company or any of its Subsidiaries to any liability
        with respect to any of the foregoing matters.  The Company and its
        Subsidiaries are in compliance with all applicable U.S. federal, state, local
        and foreign laws and regulations relating to employment and employment
        practices, terms and conditions of employment and wages and hours, except
        where
        the failure to be in compliance could not, individually or in the aggregate,
        reasonably be expected to have a Material Adverse Effect.

    

     

    (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 could
      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 could 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.  Except as set forth in Schedule 3.1(n) of the
      Disclsoure Schedule, 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.

     

    (o)  Patents
      and Trademarks.  The Company and the Subsidiaries have, or have
      rights 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 

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

      could
        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 could 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.  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 for (i) payment of salary or consulting
      fees for services rendered, (ii) reimbursement for expenses incurred on behalf
      of the Company and (iii) 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) 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, 

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

      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.  Other than the brokerage or finder’s fees which are set
      forth on Schedule 3.1(s), 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 do 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 of 1940, as
      amended.

     

    (v)  Listing
      and Maintenance Requirements.  The Company’s 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 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.

     

    (w)  Application
      of Takeover Protections.  The Company and its board of directors
      have taken all necessary action, if any, in order to render inapplicable any
      

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

      control
        share acquisition, business combination, poison pill (including any distribution
        under a rights agreement) or other similar anti-takeover provision under
        the
        Company’s certificate of incorporation (or similar charter documents) or the
        laws of its state of incorporation that is or could become applicable to
        the
        Purchasers as a result of the Purchasers and the Company fulfilling their
        obligations or exercising their rights under the Transaction Documents,
        including without limitation as a result of the Company’s issuance of the
        Securities and the Purchasers’ ownership of the Securities.

    

     

    (x)  Disclosure.  Except
      with respect to the material 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, nonpublic 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,
      is
      true and correct and does 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 press releases disseminated by the Company during the
      twelve months preceding the date of this Agreement taken as a whole do not
      contain any untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary in order to make the statements,
      in
      light of the circumstances under which they were made and when 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, 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
      provision of any Trading Market on which any of the securities of the Company
      are listed or designated.

     

    (z)  Solvency.  Based
      on the financial condition of the Company as of the Closing Date after giving
      effect to the receipt by the Company of the proceeds from the sale of the
      Securities hereunder, (i) the fair saleable value of the Company’s assets
      exceeds the amount that will be required to be paid on or in respect of the
      Company’s existing debts and other liabilities (including known contingent
      liabilities) as they mature; (ii) the Company’s assets do not constitute
      unreasonably small capital to carry on its business as now conducted and as
      proposed to be conducted including its capital needs taking into account the
      particular capital requirements of the business conducted by the Company, and
      projected capital requirements and capital availability thereof; and (iii)
      the
      current cash flow of the Company, together with the proceeds the Company would
      

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

      receive,
        were it to liquidate all of its assets, after taking into account all
        anticipated uses of the cash, would be sufficient to pay all amounts on or
        in
        respect of its liabilities when such amounts are required to be
        paid.  The Company does not intend to incur debts beyond its ability
        to pay such debts as they mature (taking into account the timing and amounts
        of
        cash to be payable on or in respect of its debt).  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.  Schedule 3.1(z) sets 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” means (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
        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.

     

    (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.  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)  Accountants.  The
      Company’s accounting firm is set forth on Schedule 3.1(dd) of the
      Disclosure Schedule.  To the knowledge and belief of the Company, such
      accounting firm (i) is a registered public accounting firm as required by the
      Exchange Act 

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

      and
        (ii)
        shall express its opinion with respect to the financial statements to be
        included in the Company’s Annual Report on Form 10-K for the year ended December
        31, 2006.

    

     

    (ee)  No
      Disagreements with Accountants and Lawyers.  Except as set forth
      on Schedule 3.1(ee) of the Disclosure Schedule, there are no
      disagreements of any kind presently existing, or reasonably anticipated by
      the
      Company to arise, between the Company and the accountants and lawyers formerly
      or presently employed by the Company.

     

    (ff)  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.

     

    (gg)  Acknowledgment
      Regarding Purchasers’ Trading Activity.  Anything in this
      Agreement or elsewhere herein to the contrary notwithstanding (except for
      Sections 3.2(f) and 4.16 hereof), it is understood and acknowledged by the
      Company (i) that none of the Purchasers have been asked to agree, nor has any
      Purchaser agreed, to desist from purchasing or selling, long and/or short,
      securities of the Company, or “derivative” securities
      based on securities issued by the Company or to hold the Securities for any
      specified term; (ii) that past or future open market or other transactions
      by
      any Purchaser, including Short Sales, and specifically including, without
      limitation, Short Sales or “derivative” transactions, before or after the
      closing of this or future private placement transactions, may negatively impact
      the market price of the Company’s publicly-traded securities; (iii) that any
      Purchaser, and counter-parties in “derivative” transactions to which any such
      Purchaser is a party, directly or indirectly, presently may have a “short”
position in the Common Stock, and (iv) that each Purchaser shall not be deemed
      to have any affiliation with or control over any arm’s length counter-party in
      any “derivative” transaction.  The Company further understands and
      acknowledges that (a) one or more Purchasers may engage in hedging activities
      at
      various times during the period that the Securities are outstanding, including,
      without limitation, during the periods that the value of the Underlying Shares
      deliverable with respect to Securities are being determined and (b) such hedging
      activities (if any) could reduce the value of the existing stockholders' equity
      interests in the Company at and after the time that the hedging activities
      are
      being conducted.  The Company acknowledges that such aforementioned hedging
      activities do not constitute a breach of any of the Transaction
      Documents.

     

    
      
        
        

      

      
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    (hh)  Regulation
      M Compliance.  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 of the Company or (iii) paid
      or
      agreed to pay to any Person any compensation for soliciting another to purchase
      any other securities of the Company, other than, in the case of clauses (ii)
      and
      (iii), compensation paid to the Company’s placement agent in connection with the
      placement of the Securities.

     

    3.2  Representations
      and Warranties of the Purchasers.  Each Purchaser, for itself and
      for no other Purchaser hereby, 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)  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.

     

    (c)  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 or 

     

     

    
      
        
        

      

      
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      converts
        any Debentures it will be either: (i) an “accredited investor” as defined in
        Rule 501 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.

    

     

    (d)  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.

     

    (e)  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.

     

    (f)  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 transaction, 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”).  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.  Other than to other Persons party to this Agreement, such
      Purchaser has maintained the confidentiality of all disclosures made to it
      in
      connection with this transaction (including the existence and terms of this
      transaction).

     

     

    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 

     

     

    
      
        
        

      

      
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      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 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,
      of a legend on any of the Securities in the following form:

     

    [NEITHER]
      THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE]
      [CONVERTIBLE]] HAS [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.  THIS SECURITY [AND THE SECURITIES ISSUABLE
      UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION
      WITH
      A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

     

    The
      Company acknowledges and agrees that a Purchaser may from time to time pledge
      pursuant to a bona fide margin agreement with a registered broker-dealer or
      grant a security interest in some or all of the Securities to a financial
      institution that is an “accredited investor” as defined in Rule 501(a) under the
      Securities Act and who agrees to be bound by the provisions of this Agreement
      and the Registration Rights Agreement and, if required under the terms of such
      arrangement, such Purchaser may transfer pledged or secured Securities to the
      pledgees or secured parties.  Such a pledge or transfer would not be
      subject to approval of the Company and no legal opinion of legal counsel of
      the
      pledgee, secured party or pledgor shall be required in connection
      therewith.  Further, no notice shall be required of such
      pledge.  At the appropriate Purchaser’s expense, the Company will
      execute and deliver such reasonable documentation as a pledgee or secured party
      of Securities may reasonably request in connection with a pledge or transfer
      of
      the Securities, including, if the Securities are subject to registration
      pursuant to the Registration Rights Agreement, the preparation and filing of
      any
      required prospectus supplement under Rule 424(b)(3) under the Securities Act
      or
      other applicable provision of the Securities Act to appropriately amend the
      list
      of Selling Stockholders thereunder.

     

    (c)  Certificates
      evidencing the Underlying Shares shall not contain any legend (including the
      legend set forth in Section 4.1(b) hereof): (i) while a registration statement
      

     

    
      
        
        

      

      
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      (including
        the Registration Statement) covering the resale of such security is effective
        under the Securities Act, or (ii) following any sale of such Underlying Shares
        pursuant to Rule 144, or (iii) if such Underlying Shares are eligible for
        sale
        under Rule 144(k), or (iv) if such legend is not required under applicable
        requirements of the Securities Act (including judicial interpretations and
        pronouncements issued by the staff of the Commission). The Company shall
        cause
        its counsel to issue a legal opinion to the Transfer Agent promptly after
        the
        Effective Date if required by the Transfer Agent to effect the removal of
        the
        legend hereunder.  If all or any portion of a Debenture or Warrant is
        converted or exercised (as applicable) at a time when there is an effective
        registration statement to cover the resale of the Underlying Shares, or if
        such
        Underlying Shares may be sold under Rule 144(k) or if such legend is not
        otherwise required under applicable requirements of the Securities Act
        (including judicial interpretations and pronouncements issued by the staff
        of
        the Commission) then such Underlying 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, no later than three Trading Days following the delivery by a Purchaser
        to
        the Company or the Transfer Agent of a certificate representing Underlying
        Shares, as applicable, issued with a restrictive legend (such third Trading
        Day,
        the “Legend Removal Date”), deliver or cause to be delivered to such
        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 the Transfer Agent that enlarge the
        restrictions on transfer set forth in this Section.  Certificates for
        Underlying Shares subject to legend removal hereunder shall be transmitted
        by
        the Transfer Agent to the Purchasers by crediting the account of the Purchaser’s
        prime broker with the Depository Trust Company System.

    

     

    (d)        
      In addition to such Purchaser’s other available remedies, the Company shall pay
      to a Purchaser, in cash, as partial liquidated damages and not as a penalty,
      for
      each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on
      the
      date such Securities are submitted to the Transfer Agent) delivered for removal
      of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day
      (increasing to $20 per Trading Day 5 Trading Days after such damages have begun
      to accrue) for each Trading Day after the Legend Removal Date until such
      certificate is delivered without a legend.  Nothing herein shall limit
      such Purchaser’s right to pursue actual damages for the Company’s failure to
      deliver certificates representing any Securities as required by the Transaction
      Documents, and such Purchaser shall have the right to pursue all remedies
      available to it at law or in equity including, without limitation, a decree
      of
      specific performance and/or injunctive relief.

     

    (e)  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.

     

    
      
        
        

      

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

     

    4.3  Furnishing
      of Information.  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.

     

    4.4  Integration.  The
      Company shall not sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities in a
      manner that would require the registration under the Securities Act of the
      sale
      of the Securities to 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.

     

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

     

    4.6  Securities
      Laws Disclosure; Publicity.  The Company shall, by 9:30 a.m. (New
      York City time) on the Trading Day following the date hereof, issue a Current
      Report on Form 8-K disclosing the material terms of the transactions
      contemplated hereby and attaching the Transaction Documents as exhibits
      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 

     

     

     

    
      
        
        

      

      
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      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 (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
        clause
        (ii).

    

     

    4.7  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.

     

    4.8  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 acting on
      its
      behalf will provide any Purchaser or its agents or counsel with any information
      that the Company believes constitutes material non-public information, unless
      prior thereto such Purchaser shall have executed a written agreement regarding
      the confidentiality and use of such information.  The Company
      understands and confirms that each Purchaser shall be relying on the foregoing
      representations in effecting transactions in securities of the
      Company.

     

    4.9  Use
      of
      Proceeds.  Except as set forth on Schedule 4.9 attached
      hereto, the Company shall use the net proceeds from the sale of the Securities
      hereunder for working capital purposes and shall not use such proceeds 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), the redemption of any Common Stock or Common
      Stock Equivalents or the settlement of any outstanding litigation.

     

    4.10  Reimbursement.  If
      any Purchaser becomes involved in any capacity in any Proceeding by or against
      any Person who is a stockholder of the Company (except as a result of sales,
      pledges, margin sales and similar transactions by such Purchaser to or with
      any
      other stockholder), solely as a result of such Purchaser’s acquisition of the
      Securities under this Agreement, the Company will reimburse such Purchaser
      for
      its reasonable legal and other expenses (including the cost of any investigation
      preparation and travel in connection therewith) incurred in connection
      therewith, as such expenses are incurred.  The reimbursement
      obligations of the Company under this paragraph shall be in addition to any
      liability which the Company may otherwise have, shall extend upon the same
      terms
      and conditions to any Affiliates of the Purchasers who are actually named in
      such action, proceeding or investigation, and partners, directors, agents,
      employees and controlling persons (if any), as the case may be, of the
      Purchasers and any such Affiliate, and shall be binding upon and inure to the
      benefit of any 

     

     

    
      
        
        

      

      
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      successors,
        assigns, heirs and personal representatives of the Company, the Purchasers
        and
        any such Affiliate and any such Person.  The Company also agrees that
        neither the Purchasers nor any such Affiliates, partners, directors, agents,
        employees or controlling persons shall have any liability to the Company
        or any
        Person asserting claims on behalf of or in right of the Company solely as
        a
        result of acquiring the Securities under this Agreement.

    

     

    4.11  Indemnification
      of Purchasers.  Subject to the provisions of this Section 4.11,
      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 person (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 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 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.

     

    
      
        
        

      

      
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    4.12  Reservation
      and Listing of Securities.

     

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

     

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

     

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

     

    4.13  Equal
      Treatment of Purchasers.  No consideration shall be offered or
      paid to any Person to amend or consent to a waiver or modification of any
      provision of any of the Transaction Documents unless the same consideration
      is
      also offered to all of the parties to the Transaction
      Documents.  Further, the Company shall not make any payment of
      principal or interest on the Debentures in amounts which are disproportionate
      to
      the respective principal amounts outstanding on the Debentures at any applicable
      time.  For clarification purposes, this provision constitutes a
      separate right granted to each Purchaser by the Company and negotiated
      separately by each Purchaser, and is intended for the Company to treat the
      Purchasers as a class and shall not in any way be construed as the Purchasers
      acting in concert or as a group with respect to the purchase, disposition or
      voting of Securities or otherwise.

     

    4.14  Short
      Sales and Confidentiality After The Date Hereof.  Each Purchaser
      severally and not jointly with the other Purchasers covenants that neither
      it
      nor any Affiliate acting on its behalf or pursuant to any understanding with
      it
      will execute any Short Sales during the period commencing at the Discussion
      Time
      and ending at the time that the transactions contemplated by this Agreement
      are
      first publicly announced as described in Section 4.6.  Each Purchaser,
      severally and not jointly with the other Purchasers, covenants that until such
      time as the transactions contemplated by this Agreement are publicly disclosed
      by the Company as described in Section 4.6, such Purchaser will maintain the
      confidentiality of all disclosures made to it in connection with this
      transaction (including the existence and terms of this
      transaction).  Each Purchaser understands and acknowledges, severally
      and not jointly with any other Purchaser, that the Commission currently takes
      the position that coverage of short sales of shares of the Common Stock “against
      the box” prior to the Effective Date of the Registration Statement with the
      Securities is a violation of Section 5 of the Securities Act, as set forth
      in
      Item 65, Section A, of the Manual of Publicly Available Telephone
      Interpretations, dated July 1997, 

     

     

    
      
        
        

      

      
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      compiled
        by the Office of Chief Counsel, Division of Corporation
        Finance.  Notwithstanding the foregoing, no Purchaser makes any
        representation, warranty or covenant hereby that it will not engage in Short
        Sales in the securities of the Company after the time that
        the transactions contemplated by this Agreement are first publicly announced
        as
        described in Section 4.6.  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
        covenant 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.

    

     

    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  Security.  Payment
      of the Debentures shall be secured by a first lien on the Company’s Australia
      assets, as evidenced by the Collateral Pledge and Security Agreement delivered
      at Closing.  Further, upon the earlier to occur of (a) nine months
      from the Closing Date, or (b) the Company’s sale of a partial interest in its
      Piceance Basin assets, the Purchasers shall be granted a subordinated lien
      against the Company’s remaining Piceance Basin assets as additional security for
      the payment of the Debentures.

     

     

    ARTICLE
      IV.

    MISCELLANEOUS

     

    5.1  Termination. 
      This Agreement may be terminated by any Purchaser, as to such Purchaser’s
      obligations hereunder only and without any effect whatsoever on the obligations
      between the Company and the other Purchasers, by written notice to the other
      parties, if the Closing has not been consummated on or before November 30,
      2007;
provided, however, that such
      termination will not affect the right of any party to sue for any breach by
      the
      other party (or parties).

     

    5.2  Fees
      and Expenses.  Except as expressly set forth in the Transaction
      Documents to the contrary, each party shall pay the fees and expenses of its
      advisers, counsel, accountants and other experts, if any, and all other expenses
      incurred by such party incident to the negotiation, preparation, execution,
      delivery and performance of this Agreement.  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.

     

    5.3  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 

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

      respect
        to such matters, which the parties acknowledge have been merged into such
        documents, exhibits and schedules.

    

     

    5.4  Notices.  Any
      and all notices or other communications or deliveries required or permitted
      to
      be provided hereunder shall be in writing and shall be deemed given and
      effective on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile 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, (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.

     

    5.5  Amendments;
      Waivers.  No provision of this Agreement may be waived, modified,
      supplemented 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.

     

    5.6  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.

     

    5.7  Successors
      and Assigns.  This Agreement shall be binding upon and inure to
      the benefit of the parties and their successors and permitted
      assigns.  The Company may not assign this Agreement or any rights or
      obligations hereunder without the prior written consent of 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.”

     

    5.8  No
      Third-Party Beneficiaries.  This Agreement is intended for the
      benefit of the parties hereto and their respective successors and permitted
      assigns and is not for the benefit of, nor may any provision hereof be enforced
      by, any other Person, except as otherwise set forth in Section
      4.11.

     

    5.9  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
      Colorado, 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 

     

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

      in
        the
        state and federal courts sitting in the City of Denver.  Each party
        hereby irrevocably submits to the exclusive jurisdiction of the state and
        federal courts sitting in the City of Denver for the adjudication of any
        dispute
        hereunder or in connection herewith or with any transaction contemplated
        hereby
        or discussed herein (including with respect to the enforcement of any of
        the
        Transaction Documents), and hereby irrevocably waives, and agrees not to
        assert
        in any suit, action or proceeding, any claim that it is not personally subject
        to the jurisdiction of any such court, that such suit, action or proceeding
        is
        improper or is an inconvenient venue for such proceeding.  Each party
        hereby irrevocably waives personal service of process and consents to process
        being served in any such suit, action or proceeding by mailing a copy thereof
        via registered or certified mail or overnight delivery (with evidence of
        delivery) to such party at the address in effect for notices to it under
        this
        Agreement and agrees that such service shall constitute good and sufficient
        service of process and notice thereof.  Nothing contained herein shall
        be deemed to limit in any way any right to serve process in any other manner
        permitted by law.  The parties hereby waive all rights to a trial by
        jury.  If either party shall commence an action or proceeding to
        enforce any provisions of the Transaction Documents, then the prevailing
        party
        in such action or proceeding shall be reimbursed by the other party for its
        reasonable attorneys’ fees and other costs and expenses incurred with the
        investigation, preparation and prosecution of such action or
        proceeding.

    

     

    5.10  Survival.  The
      representations and warranties shall survive the Closing and the delivery of
      the
      Securities for the applicable statue of limitations.

     

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

     

    5.12  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 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.

     

    5.13  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

     

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

      whole
        or
        in part without prejudice to its future actions and rights; provided,
however, in the case of a rescission of a conversion of a Debenture
        or
        exercise of a Warrant, the Purchaser shall be required to return any shares
        of
        Common Stock delivered in connection with any such rescinded conversion or
        exercise notice.

    

     

    5.14  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.  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.

     

    5.15  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.

     

    5.16  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.

     

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

     

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

      maximum
        contract rate of interest allowed by law will be the Maximum Rate applicable
        to
        the Transaction Documents from the effective date forward, unless such
        application is precluded by applicable law.  If under any
        circumstances whatsoever, interest in excess of the Maximum Rate is paid
        by the
        Company to any Purchaser with respect to indebtedness evidenced by the
        Transaction Documents, such excess shall be applied by such Purchaser to
        the
        unpaid principal balance of any such indebtedness or be refunded to the Company,
        the manner of handling such excess to be at such Purchaser’s
        election.

    

     

    5.18  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 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.

     

    5.19  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.

     

    5.20  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)

     

    
      
        
        

        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    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.

     

    
      	
              PETROHUNTER
                ENERGY CORPORATION

               

               

            	
              Address
                for Notice:

            
	
              By:__________________________________________

                   Name:

                   Title:

               

            	
              1875
                Lawrence Street

              Suite
                1400

              Denver,
                Colorado 80202

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

              Dill
                Dill Carr Stonbraker & Hutchings, P.C.

              455
                Sherman Street, Suite 300

              Denver,
                Colorado 80203-4404

              Attention:
                Fay M. Matsukage

               

            	 

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASER FOLLOWS]

     

    
      
        
        

        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    [PURCHASER
      SIGNATURE PAGES TO PHUN SECURITIES PURCHASE AGREEMENT]

    

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

     

    Name
      of
      Purchaser: ________________________________________________________

     

    Signature
      of Authorized Signatory of Purchaser:
      __________________________________

     

    Name
      of
      Authorized Signatory:
      ____________________________________________________

     

    Title
      of
      Authorized Signatory:
      _____________________________________________________

     

    Email
      Address of Purchaser:
      ________________________________________________

     

    Facsimile
      Number of Purchaser:
      ________________________________________________

    

    Address
      for Notice of Purchaser:

    

    

    

    

    Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

    

     

    

    Subscription
      Amount: $ _____________

    

    Warrant
      Shares: _________________

    

     

    

    EIN
      Number:  [PROVIDE THIS UNDER SEPARATE
      COVER]

    

    [SIGNATURE
      PAGES CONTINUE]

     

     

    32

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    
      PETROHUNTER
        ENERGY CORPORATION.

      SCHEDULE
        3.1(a) TO SECURITIES PURCHASE AGREEMENT

      Subsidiaries

      

      PetroHunter
        Operating Company, a Maryland corporation – owned 100%

      

      PetroHunter
        Heavy Oil Ltd., a Nevada corporation – owned 100% by PetroHunter Operating
        Company, a wholly-owned subsidiary of PetroHunter Energy
        Corporation

      

      PetroHunter
        Australia Ltd., a Nevada corporation – owned 100%

      

      Australia
        PetroHunter Ltd., a British Columbia corporation – owned 100%

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      PETROHUNTER
        ENERGY CORPORATION

      SCHEDULE
        3.1(g) TO SECURITIES PURCHASE AGREEMENT

      Capitalization

      

      Authorized:          500,000,000
        shares of common stock, with a par value of $0.001 per share

      1,000,000
        shares of preferred stock,
        with a par value of $0.001 per share

      

      Issued
        and outstanding: 314,148,841 shares of common stock as of November 5,
        2007

       

      Shares
        issued since last periodic report under the Exchange Act:  39,200,000
        shares

    

     

    Commitments:  39,200,000 shares of common
      stock

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    

    
      	
               

            	
              Shares
                owned by Affiliates as of November 5,
                2007:

            

    

     

    
      	
               

               

              Name

            	
              Number
                of 

              Shares

              Owned

            	
               

              Nature
                of 

              Ownership

            	
               

               

              Stock
                Options Owned*

            
	
              Thomas
                S. Ahlbrandt

            	
              0 
                 

            	 	
              750,000
                @ $2.10 expiring 8/11/2011

              500,000
                @ $1.11 expiring 5/2/2012

              250,000
                @ $0.50 expiring 5/21/2012

              250,000
                @ $0.20 expiring 10/17/2012

            
	
              David
                E. Brody

            	
              200,000  
                

            	
              Direct

            	
              750,000
                @ $2.10 expiring 8/11/2011

              1,000,000
                @ $0.50 expiring 5/21/2012

              350,000
                @ $0.20 expiring 10/17/2012

            
	
              Marc
                A. Bruner

            	
              113,000,000  
                

            	
              By
                MAB Resources LLC

            	
              3,000,000
                @ $0.50 expiring 8/10/2010

            
	
              Marc
                A. Bruner

            	
              2,000,000  
                

            	
              By
                BioFibre Technology International, Inc.

            	 
	
              Jim
                Bob Byrd

            	
              175,000  
                

            	
              Direct

            	
              500,000
                @ $2.10 expiring 8/11/2011

              250,000
                @ $0.50 expiring 5/21/2012

              275,000
                @ $0.20 expiring 10/17/2012

            
	
              Charles
                B. Crowell

            	
              0  
                

            	 	
              500,000
                @ $1.38 expiring 2/7/2012

              1,000,000
                @ $0.49 expiring 7/2/2012

            
	
              Carmen
                J. Lotito

            	
              100,000  
                

            	
              By
                spouse

            	
              2,000,000
                @ $0.50 expiring 8/10/2010

              750,000
                @ $2.10 expiring 8/11/2011

              500,000
                @ $0.50 expiring 5/21/2012

              250,000
                @ $0.20 expiring 10/17/2012

            
	
              Lyle
                Nelson

            	
              40,000  
                

            	
              Direct

            	
              750,000
                @ $2.10 expiring 8/11/2011

              250,000
                @ $0.50 expiring 5/21/2012

              265,000
                @ $0.20 expiring 10/17/2012

            
	
              Martin
                B. Oring

            	
              0  
                

            	 	
              750,000
                @ $0.19 expiring 9/21/2012

              100,000
                @ $0.20 expiring 10/17/2012

            
	
              Lori
                Rappucci

            	
              0  
                

            	 	
              500,000
                @ $0.19 expiring 10/15/2012

              100,000
                @ $0.20 expiring 10/17/2012

            
	
              Matthew
                R. Silverman

            	
              46,000  
                

              154,000  
                

            	
              Direct

              IRA
                Account

            	
              500,000
                @ $1.38 expiring 2/7/2012

              100,000
                @ $0.20 expiring 10/17/2012

            
	
              Kyle
                WhiteJohnson

            	
              0  
                

            	 	
              100,000
                @ $2.10 expiring 8/11/2011

              100,000
                @ $0.50 expiring 5/21/2012

              350,000
                @ $0.20 expiring 10/17/2012

            
	
              Anthony
                K. Yeats

            	
              0  
                

            	 	
              500,000
                @ $2.10 expiring 8/11/2011

              100,000
                @ $0.50 expiring 5/21/2012

              100,000
                @ $0.20 expiring 10/17/2012

            

    

    _____________

    *These
      options are subject to vesting requirements.

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
               

            	
               

            

    

     

    
      Outstanding
        stock options* as of November 5, 2007:

       

    

    
      	
              Number
                of Shares

            	
              Exercise
                Price

            	
              Expiration
                Date

            
	
              9,000,000

            	
              0.50

            	
              08/10/2010

            
	
              11,845,000

            	
              2.10

            	
              08/11/2011

            
	
              1,000,000

            	
              1.38

            	
              02/07/2012

            
	
              500,000

            	
              1.11

            	
              05/02/2012

            
	
              670,000

            	
              0.70

            	
              05/21/2012

            
	
              9,895,000

            	
              0.50

            	
              05/21/2012

            
	
              1,000,000

            	
              0.49

            	
              07/02/2012

            
	
              850,000

            	
              0.19

            	
              09/21/2012

            
	
              500,000

            	
              0.19

            	
              10/15/2012

            
	
              2,410,000

            	
              0.20

            	
              10/17/2012

            
	
              37,670,000

            	 	 

    

    ________________

    *These
      options are subject to vesting requirements.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
               

            	
               

            

    

    
      Outstanding
        warrants as of November 5, 2007:

    
      	
               

              Holder

            	
              Number
                of Shares

            	
               

              Exercise
                Price

            	
              Expiration
                Date

            
	
              Private
                placement investors

            	
              34,442,500

            	
              1.00

            	
              __-__-2011

            
	
              Global
                Project Finance AG

            	
              4,600,000

            	
              2.10

            	
              01-09-2012

            
	
              Global
                Project Finance AG

            	
              800,000

            	
              1.77

            	
              01-09-2012

            
	
              Global
                Project Finance AG

            	
              800,000

            	
              1.45

            	
              01-09-2012

            
	
              Global
                Project Finance AG

            	
              1,600,000

            	
              1.30

            	
              01-09-2012

            
	
              Global
                Project Finance AG

            	
              200,000

            	
              1.39

            	
              01-09-2012

            
	
              Global
                Project Finance AG

            	
              600,000

            	
              1.39

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              2,000,000

            	
              1.01

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              1,200,000

            	
              1.00

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              600,000

            	
              0.89

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              200,000

            	
              0.84

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              400,000

            	
              0.78

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              600,000

            	
              0.68

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              400,000

            	
              0.67

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              800,000

            	
              0.64

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              400,000

            	
              0.63

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              200,000

            	
              0.60

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              600,000

            	
              0.58

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              200,000

            	
              0.52

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              140,000

            	
              0.42

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              200,000

            	
              0.38

            	
              05-21-2012

            
	
              Global
                Project Finance AG

            	
              80,000

            	
              0.31

            	
              05-21-2012

            
	 	
              51,062,500

            	 	 

    

    

    This
      table does not include five-year warrants to purchase shares of common stock
      at
      $0.35 per share to be issued as compensation to placement agents, at the rate
      of
      40,000 warrants for each $1,000,000 placed.

    

     

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    PETROHUNTER
      ENERGY CORPORATION

    SCHEDULE
      3.1(i) TO SECURITIES PURCHASE AGREEMENT

    Material
      Changes

    

    Sale
      of
      heavy oil assets in Montana and Utah pursuant to that certain Purchase and
      Sale
      Agreement between PetroHunter Heavy Oil Ltd. and Pearl Exploration and
      Production Ltd., dated effective October 1, 2007.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    PETROHUNTER
      ENERGY CORPORATION

    SCHEDULE
      3.1(j) TO SECURITIES PURCHASE AGREEMENT

    Litigation

    

    Bronco
      Drilling Company, Inc. (“Bronco”), Dawn Trucking Company (“Dawn”), and BJ
      Services Company (“BJ”) have commenced litigation against PetroHunter to
      preserve mechanics liens claims against the Company and assert claims for
      amounts owed for services rendered in connection with the Company’s operations
      in Garfield and Rio Blanco Counties, Colorado.  The Australian law
      firm of Minter Ellison has commenced a collection action in Australia to collect
      legal fees owed by the Company for services rendered related to the Company’s
      Australian assets and operations.  The Company has reached a
      settlement with Bronco and Dawn, and is negotiating settlements with BJ and
      Minter Ellison, and expects to resolve all lien claims and  litigation
      by applying a portion of the proceeds from the Pearl transaction (see Schedule
      3.1(i)) to these debts.

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    PETROHUNTER
      ENERGY CORPORATION

    SCHEDULE
      3.1(n) TO SECURITIES PURCHASE AGREEMENT

    Title
      to
      Assets

    

    SUMMARY
      OF LIENS ON PETROHUNTER ENERGY CORPORATION

    As
      of November 5, 2007

    

    
      	 	
              Company

            	
              Amount
                Owed

            	
              Properties
                /Wells

            
	
              1.

            	
              Baker
                Hughes Oilfield Operations, Inc.

            	
              $76,198.92

            	
              Lake
                16-21, Harold Anderson 4-21, Furr Hagen 6-22D, Furr Hagen 6-22B,
                Furr
                9-22D, Furr 9-22B, and Furr 16-22B

            
	
              2.

            	
              BJ
                Services Company

            	
              $169,744.23

            	
              Harold-Anderson
                #4-21 & Lake #16-21

            
	
              3.

            	
              Black
                Hills Trucking, Inc.

            	
              $176,173.00

            	
              Furr
                #7-22D

            
	
              4.

            	
              Brad’s
                Electrical Service, Inc.

            	
              $56,741.43

            	
              Lake
                16-21, Anderson 13-10, Harold Anderson 4-21, Anderson 6-16, &
                Furr-Hagen 6-22B (F-1)

            
	
              5.

            	
              Bronco
                Drilling Company, Inc.

            	
              $4,059,440.58

            	
              Colorado
                Properties

            
	
              6.

            	
              Colorado
                Tubulars / Aztec Pipe LLC

            	
              $344,186.06

            	
              Furr
                #16-22B and Furr #9-22D

            
	
              7.

            	
              Dawn
                Trucking Company

            	
              $217,852.00

            	
              Anderson
                Fee 6-16 & Lake 16-13

            
	
              8.

            	
              Henderson
                Equipment Sales and Rental, Inc.

            	
              $83,150.46

            	
              Anderson
                #13-10, Lake #16-21, Harold Anderson #4-21, Anderson #6-16, and Lake
                #6-22.

            
	
              9.

            	
              Minter
                Ellison

            	
              $190,000.00

            	
              N/A

            
	
              10.

            	
              Nevis
                Energy Services, Inc

            	
              $869,785.34

            	
              Buckskin
                Mesa #6-16, Anderson 13-10, Lake #16-21, and Harold Anderson
                #4-21.

            
	
              11.

            	
              R&W
                Rental, Inc.

            	
              $185,608.50

            	
              Furr
                15-22D, Furr A11-15D, Furr A11-15B, Furr 10-22B, Furr 7-22D, Anderson
                6-16, Furr 15-22B, Furr 10-22D, Anderson 13-10, Furr 9-22D, Furr
                16-22D,
                Furr 9-22B, Furr 16-22B, Lake 16-21, Harold Anderson 4-21, Furr 6-22D
                and
                Furr Hagen 6-22B.

            
	
              12.

            	
              Scientific
                Drilling International, Inc.

            	
              $986,915.63

            	
              Furr
                9-22B, Furr 9-22D, Furr 16-22B, Furr 16-22D, Furr Hagen 6-22B, and
                Hagen
                6-22D

            
	
              13.

            	
              Wood
                Group Pressure Control, LP

            	
              $291,313.41

            	
              Anderson
                13-10, Anderson 6-16, Furr 10-22B, Furr 10-22D, Furr 15-22B, Furr
                15-22D,
                Furr 16-22B, Furr-16-22D, Furr 9-22B, Furr 9-22D, Furr 7-22D, Furr
                Hagen
                6-22B, Furr Hagen 6-22D, Harold Anderson 4-21, and Lake
                16-21.

            

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    PETROHUNTER
      ENERGY CORPORATION

    SCHEDULE
      3.1(s) TO SECURITIES PURCHASE AGREEMENT

    Certain
      Fees

    

    With
      respect to the financing which is the subject this Securities Purchase
      Agreement, PetroHunter Energy Corporation agrees to pay a cash commission of
      up
      to 6% and broker’s warrants of up to 4% of the amount sold by the broker or
      agent to the extent permissible by applicable laws.

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    PETROHUNTER
      ENERGY CORPORATION

    SCHEDULE
      3.1(z) TO SECURITIES PURCHASE AGREEMENT

    Solvency

    

    
      	
              Note
                to MAB Resources LLC

            	 	$	
              12,530,000

            	 
	
              Notes
                to Bruner Family Trust

            	 	 	
              275,000

            	 
	
              Note
                to Flatiron Capital

            	 	 	
              116,929

            	 
	
              Note
                to Gustavson

            	 	 	
              250,000

            	 
	
              Note
                to Carnavon*

            	 	 	
              400,000

            	 
	
              Notes
                to Global Project Finance AG

            	 	 	
              32,050,000

            	 
	
              Stock
                subscriptions to be refunded

            	 	 	
              75,000

            	 
	 	 	$	
              45,696,929

            	 

_____________

    *
      in
      default

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    PETROHUNTER
      ENERGY CORPORATION

    SCHEDULE
      3.1(dd) TO SECURITIES PURCHASE AGREEMENT

    Accountants

    

    Hein
      & Associates LLP, Denver, Colorado

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    PETROHUNTER
      ENERGY CORPORATION

    SCHEDULE
      3.1(ee) TO SECURITIES PURCHASE AGREEMENT

    No
      Disagreements with Lawyers or Accountants

    

     

    In
      August
      2007, the Australian-based law firm of Minter Ellison filed an action in the
      Supreme Court of Victoria for PetroHunter’s failure to pay legal fees in the
      approximate amount of US$225,000.  PetroHunter and Minter Ellison
      reached a partial settlement in September, and PetroHunter made payments to
      Minter Ellison in September and October 2007 to reduce the
      balance.  As referenced in Schedule 3.1(j), PetroHunter intends to
      reach full settlement and make full payment to Minter Ellison prior to any
      further proceedings taking place in the pending action.  In such case,
      the action would be dismissed.

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