EXHIBIT 10. 1
SECURITIES PURCHASE AGREEMENT
     This Securities Purchase Agreement (this “Agreement”) is made and entered
into as of July 28, 2008, by and among Dolan Media Company, a Delaware
corporation (the “Company”), and the purchasers listed on Schedule A attached
hereto (collectively, the “Purchasers” and individually, a “Purchaser”).
     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 certain 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 the Purchasers agree
as follows
1. Purchase and sale
     1.1 Closing
     Subject to the terms and conditions of this Agreement, each Purchaser,
severally and not jointly, agrees to purchase, and the Company agrees to sell
and issue to each Purchaser, at the Closing (as defined below) the number of
shares of Common Stock, par value $0.001 per share (“Common Stock”), of the
Company (the “Shares”), for the aggregate purchase price (based on a per Share
price of $16.00) (the “Purchase Price”), set forth opposite such Purchaser’s
name on Schedule A attached hereto; provided, however, that if the issuance of
the aggregate number of Shares set forth on Schedule A without approval of the
Company’s stockholders would violate Section 312.03(c) of the Listed Company
Manual of the New York Stock Exchange (the “Exchange”), then (a) the aggregate
number of Shares issued and sold by the Company, and purchased by the
Purchasers, hereunder shall instead be reduced to equal 19.9% of the number of
shares of Common Stock issued and outstanding immediately prior to the issuance
of the Shares hereunder, (b) the number of Shares purchased by each Purchaser
shall be reduced on a pro rata basis based on the number of Shares set forth
opposite such Purchaser’s name on Schedule A so that the aggregate number of
Shares purchased by the Purchasers equals the number determined pursuant to
clause (a) and (c) the Purchase Price paid by each Purchaser for such Shares
shall be equal to such reduced number of Shares multiplied by the per Share
price of $16.00. The completion of the purchase and sale of the Shares (the
“Closing”) shall occur at the offices of Katten Muchin Rosenman LLP, counsel to
the Company, at 525 West Monroe Street, Suite 1900, Chicago, Illinois at 9:00
a.m. local time on the date the conditions to the Closing set forth in
Sections 1.3 (a), (b) and (c) are satisfied or, in the case of Sections 1.3(b)
and (c), waived or such other time and date as may be agreed by the parties (the
“Closing Date”).

 

--------------------------------------------------------------------------------

 

     1.2 Delivery of Shares
     At or prior to the Closing, the Company shall authorize its transfer agent
(the “Transfer Agent”) to issue to each Purchaser at the Closing one or more
stock certificates (in such denominations as such Purchaser shall reasonably
request, the “Certificates”) registered in the name of such Purchaser, or in
such nominee(s) names as designated by such Purchaser in writing, representing
the aggregate number of Shares being purchased by such Purchaser (as set forth
opposite such Purchaser’s name on Schedule A) or to electronically issue to each
Purchaser at the Closing such number of Shares being purchased by such Purchaser
through the Direct Registration System, against payment by such Purchaser of the
Purchase Price for such Shares (as set forth opposite such Purchaser’s name on
Schedule A) by wire transfer of immediately available funds to an account
designated in writing by the Company for such purpose.
     1.3 Closing Conditions
     (a) The respective obligations of the Company and the Purchasers to
complete the issuance, sale and purchase of the Shares at the Closing shall be
subject to the Company receiving a waiver from the lenders that are party, with
the Company, to the Second Amended and Restated Credit Agreement dated as of
August 8, 2007, as amended, that allows the Company to use the proceeds from the
sale of the Shares for purposes other than to pay down the outstanding
indebtedness thereunder.
     (b) The Company’s obligation to complete the issuance and sale of the
Shares to the Purchasers at the Closing shall be subject to the satisfaction of
the following conditions, any one or more of which may be waived by the Company,
in its sole discretion:
          (i) receipt by the Company of the full amount of the Purchase Price
for the Shares being purchased under this Agreement by wire transfer of
immediately available funds to an account designated in writing by the Company
for such purpose; and
          (ii) the representations and warranties made by the Purchasers in this
Agreement shall be true and correct in all material respects as of the Closing
Date as though made on and as of such date (except for representations and
warranties that speak as of a specific date, which shall be true and correct as
of such date), except to the extent that such representations and warranties are
already qualified as to materiality, in which case such representations and
warranties shall be true and correct in all respects, and each Purchaser shall
have performed in all material respects all agreements, covenants and
obligations required to be performed by it under this Agreement at or prior to
the Closing Date.
     (c) Each Purchaser’s obligation to purchase the Shares from the Company
shall be subject to the satisfaction of the following conditions, any one or
more of which may be waived by such Purchaser, in its sole discretion:
          (i) the representations and warranties made by the Company in this
Agreement shall be true and correct in all material respects as of the Closing
Date as though made on and as of such date (except for representations and
warranties that speak as of a specific date, which shall be true and correct as
of such date), except to the extent that such representations and warranties are
already qualified as to materiality, in which case such

2

--------------------------------------------------------------------------------

 

representations and warranties shall be true and correct in all respects, and
the Company shall have performed in all material respects all agreements,
covenants and obligations required to be performed by it under this Agreement at
or prior to the Closing Date;
          (ii) the Company shall have delivered to the Purchasers: (A) a
certificate executed on behalf of the Company by its chief executive officer or
chief financial officer, dated the Closing Date, in form and substance
reasonably satisfactory to the Purchasers, to the effect that the closing
condition set forth in Section 1.3(c)(i) has been satisfied as of the Closing
Date; (B) a secretary’s certificate, dated as of the Closing Date, certifying as
to (1) the resolutions adopted by the Company’s board of directors and/or any
committee thereof approving the transaction contemplated hereunder, (2) the
Company’s Amended and Restated Certificate of Incorporation and (3) the
Company’s Amended and Restated Bylaws, each as in effect at the Closing; and
(C) a certificate evidencing the incorporation and good standing of the Company
in the State of Delaware by the Secretary of State of Delaware as of a date
within ten (10) days prior to the Closing Date;
          (iii) the Shares shall have been duly listed, subject to notice of
issuance, on the Exchange;
          (iv) the Company shall cause to be delivered to the Purchasers and
Allen & Company LLC and Craig-Hallum Capital Group LLC, the placement agents, by
counsel to the Company a legal opinion pertaining to the matters set forth in
Appendix III attached hereto; and
          (v) the Company shall have delivered the Certificates or Distribution
Statements evidencing the Shares to the Purchasers.
2. Representations, Warranties and Covenants of the Company
     Except as set forth on the Schedule of Exceptions attached hereto as
Schedule B, the Company hereby represents and warrants to the Purchasers as
follows:
     2.1 Organization and Qualification
     The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its business as
described in the SEC Reports (as defined below), and has been duly qualified as
a foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, except where such
failure to be so qualified would not reasonably be expected to have a material
adverse effect on (a) the financial position, stockholders’ equity or results of
operations of the Company and its subsidiaries, taken as a whole, or (b) the
ability of the Company to consummate the transaction hereunder or perform its
obligations hereunder (a “Material Adverse Effect”); and each subsidiary of the
Company has been duly incorporated or organized, as the case may be, and is
validly existing as a corporation or limited liability company in good standing
under the laws of its jurisdiction of incorporation or organization, as the case
may be, except where the failure to be in such good standing would not
reasonably be expected to have a Material Adverse Effect.

3

--------------------------------------------------------------------------------

 

     2.2 Capitalization
     (a) The authorized capital stock of the Company consists of 70,000,000
shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.001
per share.
     (b) As of June 30, 2008, the issued and outstanding capital stock of the
Company consists of 25,131,282 shares of Common Stock and the Company has 5,750
shares of issued Common Stock held in treasury. As of the date hereof, the
Company has not issued any other shares of capital stock since June 30, 2008.
All of the issued shares of Common Stock have been duly and validly authorized
and issued and are fully paid and non-assessable; and all of the issued shares
of capital stock, owned directly or indirectly by the Company, of each
subsidiary of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and, except as set forth in the SEC Reports, all
of the issued shares of capital stock of each such subsidiary are owned directly
or indirectly by the Company, free and clear of any liens, encumbrances,
equities or claims.
     (c) As of June 30, 2008, the Company has reserved (i) an aggregate of
1,360,207 shares of Common Stock for issuance upon the exercise of outstanding
stock options granted, and an additional 1,125,666 shares of Common Stock for
issuance in connection with future grants, under the Company’s 2007 Incentive
Compensation Plan and (ii) 900,000 shares of Common Stock for issuance under the
Company’s Employee Stock Purchase Plan. As of the date hereof, the Company has
not issued any other options since June 30, 2008.
     With the exception of the foregoing, there are no outstanding
subscriptions, options, warrants, convertible or exchangeable securities or
other rights granted by the Company, including, without limitation, pursuant to
a stockholders rights or “poison pill” plan, to purchase shares of Common Stock
or other securities of the Company and the Company is not party to any agreement
to issue any shares of Common Stock or any security convertible into or
exchangeable for Common Stock. There are no persons with registration or other
similar rights to have any securities registered for sale under the Registration
Statement (as defined below), except for such rights as may exist under the
Amended and Restated Registration Rights Agreement, dated as of September 1,
2004, among the Company and the several stockholders set forth therein.
     2.3 Issuance, Sale and Delivery of the Shares
     (a) The Shares to be issued and sold by the Company hereunder have been
duly and validly authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued, fully paid and
non-assessable and are free from all taxes, liens and charges with respect to
the issue thereof by the Company.
     (b) Subject to the accuracy of the Purchasers’ representations and
warranties in Section 3 of this Agreement, the Company’s offer, sale and
issuance of the Shares in conformity with the terms of this Agreement are exempt
from the registration requirements of Section 5 of the Securities Act and from
the registration or qualification requirements of the securities laws of any
applicable state.

4

--------------------------------------------------------------------------------

 

     2.4 Financial Statements
     The consolidated financial statements of the Company included in the SEC
Reports (as defined below) present fairly in all material respects the
consolidated financial position of the Company and its subsidiaries as of the
dates indicated and the results of their operations for the periods specified,
subject, in the case of unaudited interim financial statements, to normal
year-end adjustments. Except as otherwise stated in such SEC Reports, such
consolidated financial statements have been prepared in all material respects in
conformity with generally accepted accounting principles in the United States
applied on a consistent basis.
     2.5 No Material Change
     Since the date of the latest audited financial statements included in the
SEC Reports, other than as set forth or contemplated in the SEC Reports,
(a) neither the Company nor any of its subsidiaries has sustained any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree that is material to the Company and its
subsidiaries, taken as a whole, (b) there has not been any event, occurrence or
development that has had or would reasonably be expected to have a Material
Adverse Effect, (c) the Company has not declared, paid or made on its capital
stock any dividend or distribution and (d) the Company has not incurred any
material contingent obligation outside the ordinary course of business.
     2.6 No Defaults
     Neither the Company nor any of its subsidiaries is (a) in violation of its
certificate of incorporation, by-laws, limited liability company agreement or
other organizational documents, as applicable, or (b) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or any of
its properties are bound, except, in the case of clause (b), for defaults that
would not reasonably be expected to have a Material Adverse Effect.
     2.7 Labor Matters
     No union labor dispute with the employees of the Company or its
subsidiaries exists or, to the knowledge of the Company, is threatened that
would reasonably be expected to have a Material Adverse Effect.
     2.8 No Actions
     Other than as set forth in the SEC Reports, there are no legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any of its subsidiaries is
the subject that would reasonably be expected to have a Material Adverse Effect;
and, to the Company’s knowledge, no such proceedings are threatened by
governmental authorities or others. The foregoing includes, without limitation,
actions pending or, to the Company’s knowledge, threatened involving the prior
employment of any of the Company’s employees and their use in connection with
the Company’s business of any information or techniques allegedly proprietary to
any of their

5

--------------------------------------------------------------------------------

 

former employers. There is no action, suit, proceeding or investigation that the
Company or any of its subsidiaries currently intends to initiate that would
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its subsidiaries is in default with respect to any judgment, writ,
injunction, order or decree of any court or governmental authority applicable to
it that would reasonably be expected to have a Material Adverse Effect.
     2.9 Intellectual Property
          (a) The Company and each of its subsidiaries own or possess valid
rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses, know-how, software, systems and technology necessary for
the conduct of their respective businesses (“Intellectual Property”), except
where the failure to so own or possess such Intellectual Property rights would
not reasonably be expected to have a Material Adverse Effect, and the Company
and each of its subsidiaries have no reason to believe that the conduct of their
respective businesses will conflict with, and have not received any notice of
any claim of conflicts with, any such Intellectual Property rights of others
that would reasonably be expected to have a Material Adverse Effect.
          (b) The Intellectual Property is free and clear of all liens,
encumbrances or adverse claims, except such as are described in the SEC Reports
or such as do not materially affect the value of such Intellectual Property and
do not materially interfere with the use made of such Intellectual Property by
the Company and its subsidiaries.
          (c) All of the licenses, sublicenses, consent, royalty or other
agreements concerning Intellectual Property that is necessary for the conduct of
the business of the Company and its subsidiaries to which the Company or any of
its subsidiaries is a party (other than any agreements for generally available,
non-custom, off-the-shelf application programs) (collectively, “License
Agreements”) are valid and binding obligations of the Company or one or more of
its subsidiaries, as applicable, enforceable against the Company or such
applicable subsidiaries in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy or other similar laws
relating to, or affecting generally the enforcement of, creditors’ rights or
remedies, (ii) general principles of equity or (iii) applicable laws and
consideration of public policy relating to indemnification and contribution
provisions. Neither the Company nor any of its subsidiaries is in breach or
violation of any License Agreement, except as would not be reasonably expected
to have a Material Adverse Effect
     2.10 Permits
     The Company and each of its subsidiaries hold such licenses, certificates,
consents, orders, approvals, permits and other authorizations from governmental
authorities that are necessary to own or lease, as the case may be, and to
operate their respective properties and to carry on their respective business as
presently conducted, except for such licenses, certificates, consents, orders,
approvals, permits or other authorizations which the failure to hold would not
reasonably be expected to have a Material Adverse; the Company and each of its
subsidiaries has fulfilled and performed all obligations necessary to maintain
such licenses, certificates, consents, orders, approvals, permits and other
authorizations, except where the failure to so fulfill or perform such
obligations would not reasonably be expected to have a Material Adverse Effect.

6

--------------------------------------------------------------------------------

 

Except as disclosed in the SEC Reports, there is no pending or, to the knowledge
of the Company, threatened action, suit, proceeding or investigation that would
reasonably be expected to lead to the revocation, termination or suspension of
any such license, certificate, consent, order, approval, permit or other
authorization, except where such revocation, termination or suspension would not
reasonably be expected to have a Material Adverse Effect.
     2.11 Due Execution, Delivery and Performance
     (a) This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy or other similar laws
relating to, or affecting generally the enforcement of, creditors’ rights or
remedies, (ii) general principles of equity or (iii) applicable laws and
consideration of public policy relating to indemnification and contribution
provisions.
     (b) The issue and sale of the Shares by the Company under, and the
compliance by the Company with, this Agreement will not (a) result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the
property of the Company or any of its subsidiaries is subject, (b) result in any
violation of the provisions of the Certificate of Incorporation or By-laws of
the Company or (c) result in any violation of any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties except, in the
cases of (a) and (c), as would not be reasonably expected to have a Material
Adverse Effect; and no consent, approval, authorization, order, registration,
qualification or filing of or with any such court or governmental agency or body
or the Exchange is required to be obtained or made by the Company for the issue
and sale of the Shares by the Company hereunder, other than (i) the filing with
the Commission of the Registration Statement in accordance with the requirements
of Section 4.1, (ii) any filings required by state securities laws in accordance
with Section 4.1(k), (iii) the filing of a Notice of Sale of Securities on
Form D with the Commission under Regulation D of the Securities Act, (iv) the
filing with the Exchange of a supplemental listing application and approval of
the Exchange for the listing of the Shares thereon and (v) those that have been
made or obtained prior to the date of this Agreement.
     2.12 Properties
     The Company and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them and material to the Company and its subsidiaries, taken
as a whole, in each case free and clear of all liens, encumbrances and defects
except such as are described in the SEC Reports or such as do not materially
affect the value of such property and do not materially interfere with the use
made of such property by the Company and its subsidiaries; and any real property
and buildings held under lease by the Company and its subsidiaries and material
to the Company and its subsidiaries, taken as a whole, are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made of such property and buildings
by the Company and its subsidiaries.

7

--------------------------------------------------------------------------------

 

     2.13 Compliance
     Each of the Company and its subsidiaries has conducted and is conducting
its business in compliance with all applicable federal, state and local
statutes, laws, rules, regulations, ordinances, codes, decisions, decrees,
directives and orders, except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect.
     2.14 Internal Controls and Disclosure Controls; Compliance with Sarbanes-
Oxley Act
     The Company maintains a system of internal accounting controls sufficient
to provide reasonable assurances that (A) transactions are executed in
accordance with management’s general or specific authorization; (B) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with U.S. generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in accordance
with management’s general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. Since
the end of the Company’s most recent audited fiscal year, except as disclosed in
its SEC Reports, there has been no change in the Company’s internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting. The
Company maintains disclosure controls and procedures (as such term is defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) that are effective and provide reasonable assurance that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Commission and accumulated and communicated to the Company’s management,
including its principal executive officer and its principal financial officer,
as appropriate, to allow timely decisions regarding required disclosure. Since
January 1, 2008, the Company has not received any notice or correspondence from
its auditors disclosing any material weakness in the design or operation of the
Company’s internal control over financial reporting. The Company is in
compliance in all material respects with the requirements of the Sarbanes-Oxley
Act of 2002 that are effective and applicable to the Company as of the date
hereof and the applicable rules and regulations promulgated by the Commission
thereunder that are effective and applicable to the Company as of the date
hereof.
     2.15 Use of Proceeds; Investment Company
     The Company intends to use the proceeds from the sale of the Shares for
acquisitions and, to the extent not used for acquisitions, for working capital
and general corporate purposes. The Company is not and, after giving effect to
the offering and sale of the Shares by the Company and the application of the
proceeds thereof, will not be an “investment company,” or a company controlled
by an ‘investment company,” as such term is defined in the Investment Company
Act of 1940, as amended.

8

--------------------------------------------------------------------------------

 

     2.16 Taxes
     All United States federal income tax returns of the Company and its
majority-owned subsidiaries required by law to be filed have been filed and all
taxes shown by such returns or otherwise assessed in connection therewith, which
are due and payable, have been paid, except assessments against which appeals
have been or will be promptly taken and as to which adequate reserves have been
provided. The Company and its subsidiaries have filed all other material tax
returns that are required to have been filed by them pursuant to applicable
state, local or other law, and have paid all material taxes due pursuant to such
returns or pursuant to any assessment received by the Company and its
subsidiaries, except for such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided. The charges,
accruals and reserves on the books of the Company in respect of any income and
corporation tax liability for any years not finally determined are adequate to
meet any assessments or re-assessments for additional income tax for any years
not finally determined.
     2.17 Insurance
     The Company and its majority-owned subsidiaries carry or are entitled to
the benefits of insurance, with financially sound and reputable insurers, in
such amounts and covering such risks as is generally maintained by companies of
established repute engaged in the same or similar business, and all such
insurance is in full force and effect. The Company has no reason to believe that
it or any subsidiary will not be able (a) to renew its existing insurance
coverage as and when such policies expire or (b) to obtain comparable coverage
from similar insurers as may be necessary or appropriate to conduct its business
as now conducted and at a cost that would not reasonably be expected to have a
Material Adverse Effect. Neither of the Company nor any majority-owned
subsidiary has been denied any insurance coverage that it has sought or for
which it has applied.
     2.18 Securities and Exchange Commission Filings
     Since becoming subject to the reporting requirements under Section 13 of
the Exchange Act, the Company has timely filed with or furnished to the
Securities and Exchange Commission (the “Commission”) all reports and other
documents required to be filed or furnished by the Company under the Exchange
Act (the reports and other documents that have been filed or furnished by the
Company with or to the Commission since the Company became subject to the
reporting requirements under Section 13 of the Exchange Act are referred to
herein as the “SEC Reports”). As of their respective filing dates, the SEC
Reports (i) complied in all material respects with the requirements of the
Exchange Act and (ii) did not contain any untrue statement of material fact or
omit a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
     2.19 No Integrated Offering
     Neither the Company nor any of its Affiliates has made, nor will the
Company or any of its Affiliates make, any offers or sales in any security or
has solicited nor will solicit any offers to buy any security under
circumstances that would require registration under the Securities Act of the
issuance of the Shares to the Purchasers or cause the issuance of the Shares to
the

9

--------------------------------------------------------------------------------

 

Purchasers to be integrated with any other issuance of the Company’s securities
for purposes of any registration requirement under the Securities Act.
     2.20 Listing of Shares
     So long as any Purchaser owns any of the Shares, the Company shall use its
reasonable efforts to maintain the listing of the Common Stock on the Exchange
or another national securities exchange. The Company has taken no action
designed to delist, or that is likely to have the effect of delisting, the
Common Stock from the Exchange. Except as set forth in its SEC Reports, the
Company is in compliance in all material respects with the listing requirements
of the Exchange applicable to the Company and has no knowledge of facts that
would reasonably be expected to lead to delisting or suspension of trading of
the Common Stock on the Exchange in the foreseeable future.
     2.21 Real Property Holding Corporation
     The Company is not a real property holding corporation within the meaning
of Section 897(c)(2) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
     2.22 Bank Holding Company Act
     Neither the Company nor any of its subsidiaries is subject to the Bank
Holding Company Act of 1956, as amended (the “BHCA”), and to regulation by the
Board of Governors of the Federal Reserve System (the “Federal Reserve”).
Neither the Company nor any of its subsidiaries owns or controls, directly or
indirectly, five percent (5%) or more of the outstanding shares of any class of
voting securities or twenty-five (25%) or more of the total equity of a bank or
any equity that is subject to the BHCA and to regulation by the Federal Reserve.
Neither the Company nor any of its subsidiaries exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.
     2.23 Shell Company Status
     The Company has never, prior to the date hereof, been an issuer described
in Rule 144(i)(1)(i) under the Securities Act.
3. Representations, Warranties and Covenants of the Purchasers
     Each Purchaser, severally and not jointly, represents, warrants and
covenants to the Company as follows:
     3.1 Securities Law Representations and Warranties
     (a) The Purchaser 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

10

--------------------------------------------------------------------------------

 

investment in the Shares, and has so evaluated the merits and risks of such
investment. The Purchaser is able to bear the economic risk of an investment in
the Shares and, at the present time, is able to afford a complete loss of such
investment. The Purchaser acknowledges that it has reviewed the SEC Reports and,
to the extent it has not provided the acknowledgement referred to in Section 8,
a confidential disclosure supplement and has been afforded (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning an investment in the Shares;
(ii) access to information about the Company and its subsidiaries and their
respective financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment. The Purchaser also acknowledges and understands that all information
presented was prepared by the Company and that Allen & Company LLC and
Craig-Hallum Capital Group LLC have not independently verified any such
information and make no representation as to the accuracy or completeness of any
such information or any other related disclosure materials or as to the current
condition or future performance of the Company. The Purchaser has independently
evaluated the merits of its decision to purchase Shares pursuant to this
Agreement, such decision has been independently made by the Purchaser and the
Purchaser confirms that it has only relied on the advice of its own business
and/or legal counsel in making such decision and not that of the Company,
Craig-Hallum Capital Group LLC or Allen & Company LLC.
     (b) The Purchaser is acquiring the number of Shares set forth opposite its
name on Schedule A in the ordinary course of its business and for its own
account (or for the account of its clients if the Purchaser is an investment
adviser acting in such capacity) for investment only, and has no present
intention of distributing any of the Shares nor any arrangement or understanding
with any other persons regarding the distribution of such Shares, other than as
would not be in violation of the Securities Act or any applicable state
securities laws.
     (c) The Purchaser has completed or caused to be completed and delivered to
the Company the Stock Certificate/Distribution Statement Questionnaire and the
Registration Statement Questionnaire, attached to this Agreement as Appendices I
and II, for use in preparation of the Certificates or Distribution Statements
(as defined below), any necessary filings required by applicable state
securities laws and the Registration Statement, and the answers to such
Questionnaires are true and correct in all material respects as of the date of
this Agreement and will be true and correct in all material respects as of the
effective date of the Registration Statement; provided that the Purchaser
(i) shall be obligated and entitled to update such information by providing
notice thereof to the Company before the effective date of such Registration
Statement and (ii) if it has not already delivered the completed Registration
Statement Questionnaire to the Company as of the date hereof, shall not be in
breach of this Section 3.1(c) so long as it delivers such completed Registration
Statement Questionnaire to the Company within five (5) days after the date
hereof, it being understood that the Company’s obligation to register such
Purchaser’s Shares hereunder is conditioned upon receipt of the completed
Registration Statement Questionnaire.
     (d) The Purchaser understands that no federal or state government or
governmental agency has passed on or made any recommendation or endorsement of
the Shares or the fairness

11

--------------------------------------------------------------------------------

 

or suitability of the investment in the Shares nor have such authorities passed
upon or endorsed the merits of the offering of the Shares.
     (e) The Purchaser is an “accredited investor” within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.
     (f) The Purchaser understands that (i) the offer and sale of the Shares to
the Purchaser have not been and are not being registered under the Securities
Act or any state securities laws, (ii) the availability of such exemption
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and the Purchaser hereby consents to such
reliance and (iii) the Shares may not be offered for sale, sold, assigned,
pledged, transferred or otherwise disposed of unless (A) subsequently registered
under the Securities Act or (B) the Purchaser shall have delivered to the
Company (x) an opinion of counsel, in a generally acceptable form, to the effect
that such Shares to be offered for sale, sold, assigned, pledged, transferred or
otherwise disposed of may be so offered for sale, sold, assigned, pledged,
transferred or otherwise disposed of pursuant to an exemption from such
registration or (y) written assurance, reasonably acceptable to the Company,
that such Shares to be offered for sale, sold, assigned, pledged, transferred or
otherwise disposed of may be so offered for sale, sold, assigned, pledged,
transferred or otherwise disposed of pursuant to Rule 144 of the Securities Act.
 
     (g) The Purchaser understands that the Certificates representing the Shares
purchased by it hereunder or the distribution statements for Shares that are
issued electronically through the Direct Registration System (the “Distribution
Statements”), until the occurrence of an event described in
Section 3.1(f)(iii)(A) or (B), shall bear a restrictive legend in substantially
the following form (and a stop-transfer order may be placed against transfer of
such Shares):
THE SECURITIES REPRESENTED BY THIS [CERTIFICATE] [DISTRIBUTION STATEMENT] HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTED FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (C) WRITTEN ASSURANCE, REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED PURSUANT TO RULE
144 OF SAID ACT.
The Company agrees to cause such legend and stop transfer order to be removed
from the Certificates or Distribution Statements representing the applicable
Shares of a Purchaser upon the occurrence of an event described in
Section 3.1(f)(iii)(A), subject to the Purchaser’s satisfaction of its covenant
in Section 3.2(a), or 3.1(f)(iii)(B) and to use its reasonable best

12

--------------------------------------------------------------------------------

 

efforts to facilitate the prompt delivery of such Certificates or Distribution
Statements by its transfer agent without such legend and to enable such
Certificates or Distribution Statements to be in such denominations and
registered in such names as the Purchasers may reasonably request.
Notwithstanding anything to the contrary in this Section 3.1(g), the Company
shall have no obligation to remove such legend from such Certificates or
Distribution Statements upon the occurrence of an event described in
Section 3.1(f)((iii)(B) unless the Shares represented thereby (i) are being
transferred as contemplated therein and are no longer subject to restrictions on
transfer under the Securities Act or (ii) if not then being so transferred, are
freely tradable without volume restrictions or current public information
requirements pursuant to Rule 144(b)(1) of the Securities Act.
     (h) The Purchaser is not purchasing the Shares as a result of any
advertisement, article, notice or other communication regarding the Shares
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.
     (i) During the thirty (30) days immediately prior to the date hereof,
neither the Purchaser nor any Affiliate of the Purchaser that (x) had knowledge
of the transaction contemplated hereby, (y) has or shares discretion relating to
Purchaser’s investments or trading or information concerning the Purchaser’s
investments, including in respect of the Shares, or (z) is subject to the
Purchaser’s review or input concerning such Affiliate’s investments or trading
(collectively, “Trading Affiliates”) has, directly or indirectly, effected or
agreed to effect any short sale, whether or not against the box, established any
“put equivalent position” (as defined in Rule 16a-1(h) under the Exchange Act)
with respect to the Common Stock, granted any other right (including, without
limitation, any put or call option) with respect to the Common Stock or with
respect to any security that includes, relates to or derived any significant
part of its value from the Common Stock or otherwise sought to hedge its
position in the Common Stock (each, a “Prohibited Transaction”). Prior to the
filing of the Current Report on Form 8-K described in Section 15, the Purchaser
shall not, and shall cause its Trading Affiliates not to, engage, directly or
indirectly, in a Prohibited Transaction. “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 (the term “control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of any person, whether through the
ownership of voting securities, by contract or otherwise).
     3.2 Resales of Shares
     (a) To the extent the Purchaser sells Shares pursuant to the Registration
Statement, the Purchaser covenants that such sale of Shares will be made in
accordance with the Registration Statement, including the plan of distribution
set forth therein. The Purchaser acknowledges and agrees that Shares purchased
by it hereunder are not transferable on the books of the Company pursuant to a
resale under the Registration Statement unless the Shares are sold in accordance
with the Registration Statement.
     (b) The Purchaser further covenants (i) to notify the Company of any
changes to the information regarding the Purchaser or its plan of distribution
in the Registration Statement or the Prospectus or any amendment or supplement
thereto or any free-writing prospectus and (ii)

13

--------------------------------------------------------------------------------

 

upon the request of the Company, to notify the Company how many Shares the
Purchaser still owns at the time of such request.
     3.3 Due Execution, Delivery and Performance
     (a) This Agreement has been duly authorized, executed and delivered by the
Purchaser and constitutes a valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy or other similar laws
relating to, or affecting generally the enforcement of, creditors’ rights or
remedies, (ii) general principles of equity or (iii) applicable laws and
consideration of public policy relating to indemnification and contribution
provisions.
     (b) The purchase of the Shares by the Purchaser, and the compliance of the
Purchaser with, this Agreement, will not (i) result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Purchaser is a party or by which the Purchaser is bound or to which
any of the property of the Purchaser is subject, (ii) result in any violation of
the provisions of the certificate of incorporation, by-laws, limited liability
company agreement, partnership agreement or other applicable organizational
documents of the Purchaser or (iii) result in any violation of any statute or
any order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Purchaser or any of its properties except, in the cases of
(i) and (iii), as would not be reasonably expected to have a material adverse
effect on the ability of the Purchaser to consummate the transaction hereunder
or comply with its obligations hereunder; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required to be obtained by the Purchaser for the
purchase of the Shares by the Purchaser hereunder.
     3.4 Organization
     The Purchaser is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with the requisite
corporate, limited liability or partnership power and authority to enter into
and to consummate the transaction contemplated hereunder.
     3.5 Investment Structure
     (a) Immediately after the Closing, the Purchaser, together with its
“ultimate parent entity” and the entities included within such ultimate parent
entity (within the meaning of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended), (i) shall own 10% or less of the issued and outstanding
shares of Common Stock and (ii) has no intention of participating in the
formulation, determination or the direction of the Company’s basic business
decisions.
     (b) If the Purchaser is, or is purchasing on behalf of, an investment fund
or investment company (a “Fund”) and the investment manager, investment advisor
or other person that controls investment decisions of the Fund also is the
investment manager, investment advisor or other person that controls investment
decisions for other investment funds or investment companies that own shares of
Common Stock, the Fund is separately managed from such other investment funds
and investment companies (i.e., decisions are made with respect to the Fund
based on (x) the Fund’s investment objectives and not those of such other
investment

14

--------------------------------------------------------------------------------

 

funds and investment companies and (y) fiduciary duties owed by the investment
manager, investment advisor or other person that controls investment decisions
to the Fund). Except to the extent the Purchaser is an investment manager,
investment advisor or other person that controls investment decisions for
investment funds or investment companies that are so separately managed and own
shares of Common Stock, the Purchaser beneficially owns, and immediately prior
to the Closing will own, less than 5% of the issued and outstanding shares of
Common Stock.
4. Covenants and indemnification
     4.1 Form D Filing; Registration and Listing of Shares
     The Company shall:
     (a) file in a timely manner a Notice of Sale of Securities on Form D
relating to the sale of the Shares under this Agreement, pursuant to
Regulation D under the Securities Act;
     (b) promptly hereafter file with the Exchange a supplemental listing
application for the listing of, and otherwise use its reasonable best efforts to
list, subject to notice of issuance, the Shares on the Exchange;
     (c) no later than the 45th day following the Closing Date, prepare and file
with the Commission a Registration Statement on Form S-3 (or, if the Company is
not eligible to use Form S-3 by the end of such 45-day period, then on Form S-1)
registering under the Securities Act the resale of the Shares from time to time
by the Purchasers (the “Registration Statement”);
     (d) use its reasonable best efforts to cause the Commission to declare the
Registration Statement effective on or before 120 days after the Closing Date
(the “Effective Date”), unless the Commission notifies the Company that such
Registration Statement shall not be subject to review, in which case the
Effective Date shall be no later than ten (10) days after such notification;
     (e) in the event that the Registration Statement is not declared effective
by the Commission by the Effective Date, the use of the Registration Statement
is suspended for use by the Company pursuant to Section 4.2(a) (so long as the
applicable untrue statement or omission was not made in reliance upon and in
conformity with information furnished to the Company by or on behalf of a
Purchaser expressly for use in the Registration Statement) or pursuant to, and
beyond the time periods set forth in, Section 4.2(b) or the Commission issues a
stop order suspending the effectiveness of the Registration Statement (each, an
“Event”), pay to each Purchaser liquidated damages in an amount equal to 0.25%
of the Purchase Price paid by such Purchaser pursuant to this Agreement with
respect to Shares still then held by such Purchaser for each full week after the
Effective Date that the Registration Statement is not declared effective by the
Commission, for each full week the use of the Registration Statement is
suspended for use by the Company pursuant to Section 4.2(a) or pursuant to, and
beyond the time periods set forth in, Section 4.2(b) or for each full week the
use of the Registration Statement is suspended for use by the Commission, in
each case up until such time as such Shares may be resold by such

15

--------------------------------------------------------------------------------

 

Purchaser without registration and without regard to any volume limitations by
reason of Rule 144 under the Securities Act; provided, however, that in no event
shall such liquidated damages paid by the Company to a Purchaser exceed 8% of
the Purchase Price paid by such Purchaser pursuant to this Agreement with
respect to such Shares still then held by such Purchaser; and provided, further,
that the Company shall pay such liquidated damages for an Event within 15 days
after each full week that such Event continues;
     (f) notify the Purchasers promptly (i) when the Company has been notified
by the Commission whether or not the Registration Statement or a post-effective
amendment thereto will be subject to review by the Commission, (ii) if reviewed,
when the Company has been notified by the Commission that the Registration
Statement or a post-effective amendment thereto will not be subject to further
review and (iii) upon the Registration Statement or any post-effective amendment
thereto being declared effective by the Commission;
     (g) use its reasonable best efforts to prevent the issuance of any stop
order or other suspension of effectiveness of a Registration Statement, or the
suspension of the qualification of any of the Shares for sale in any
jurisdiction contemplated by Section 4.1(k) and, if such an order or suspension
is issued, to promptly obtain the withdrawal of such order or suspension and to
notify each Purchaser who holds Shares of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose;
     (h) permit the Purchasers to (i) review the Registration Statement at least
two (2) business days prior to its filing with the Commission and all amendments
and supplements thereto (except for filings with the Commission incorporated by
reference into the Registration Statement) at least one (1) business day prior
to their filing with the Commission and (ii) provide comments with respect to
disclosure therein regarding the Purchasers or the plan of distribution of the
Shares;
     (i) prepare and file with the Commission such amendments and supplements to
the Registration Statement and the Prospectus and take such other action, if
any, as may be necessary to keep the Registration Statement current and
effective at all times until the earlier of the date on which (i) the Shares may
be resold by the Purchasers without registration and without regard to any
volume limitations or current public information requirements by reason of
Rule 144 under the Securities Act and (ii) all of the Shares have been resold
pursuant to the Registration Statement or Rule 144 under the Securities, at
which point the Company shall no longer be required to keep the Registration
Statement effective. The Registration Statement shall (i) comply in all material
respects with the requirements of the Securities Act and the Exchange Act
applicable thereto, including, without limitation, applicable requirements of
the Securities Act and Exchange Act regarding financial statements to be
included or incorporated by reference in the Registration Statement and (ii) not
contain any such untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that the foregoing shall not apply to the
extent any such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of a Purchaser expressly for use in the
Registration Statement;

16

--------------------------------------------------------------------------------

 

     (j) furnish to each Purchaser whose Shares are included in the Registration
Statement, without charge to such Purchaser, (i) promptly after the same is
prepared and filed with the Commission, one copy of the Registration Statement
and all amendments and supplements thereto (except for filings with the
Commission incorporated by reference into the Registration Statement) and (ii)
upon the effectiveness of the Registration Statement, such number of copies of
the Prospectus and all amendments and supplements thereto as such Purchaser may
reasonably request to the extent necessary to facilitate the disposition of the
Shares;
     (k) from time to time take such action as necessary to qualify the Shares
for offering and sale under the securities laws of such states as may be
reasonably requested by the Purchasers; provided that in connection therewith
the Company shall not be required to file any general consent to service of
process or to qualify as a foreign corporation in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject; and
     (l) bear all expenses in connection with the procedures in paragraphs
(a) through (k) of this Section 4.1 and the registration of the Shares pursuant
to the Registration Statement, but excluding fees and expenses of counsel for
the Purchasers and any commissions or other amounts payable to brokers and any
transfer taxes relating to Shares sold by the Purchasers.
     4.2 Registration; Rule 144 Information
     (a) The Company shall promptly notify the Purchasers if it determines, in
good faith following consultation with its Board of Directors or a committee
thereof, that an event has happened as a result of which the Registration
Statement or the Prospectus (as defined below) includes an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing (which notice shall not disclose the content of any
applicable material, non-public information). Upon receipt of such notice, the
Purchasers will suspend their use of the Prospectus until such time as an
amendment or supplement to the Registration Statement or the Prospectus or a
free writing prospectus has been filed by the Company and any such amendment to
the Registration Statement is declared effective by the Commission, or until
such time as the Company has filed an appropriate report with the Commission
pursuant to the Exchange Act, in each case to correct such misstatement or
omission. Subject to Section 4.2(b), the Company shall use its reasonable best
efforts to prepare and file with the Commission any such amendment, supplement,
free writing prospectus or report, as the case may be, within 30 days after
delivering such notice to the Purchasers. If the Company determines that a
post-effective amendment to the Registration Statement is necessary to correct
such misstatement or omission, the Company shall use its reasonable best efforts
to cause the Commission to declare such post-effective amendment effective
within 60 days after its filing date.
     (b) In addition to the foregoing provisions of Section 4.2(a), the Company
may, upon written notice to the Purchasers (which notice shall not disclose the
content of the applicable material, non-public information), suspend the use of
the Prospectus for up to 60 days in any 12-month period based on the reasonable
determination of the Company’s Board of Directors or a committee thereof that
there is a significant and bona fide business purpose for

17

--------------------------------------------------------------------------------

 

such suspension, such as pending corporate developments and public filings with
the SEC. Notwithstanding anything else to the contrary in Section 4.2(a), the
Company shall in no event be required to disclose the business purpose for which
it has suspended the use of the Prospectus pursuant to this Section 4.2(b) if
the Company determines in its good faith judgment that the business purpose
should remain confidential.
     (c) The Company shall notify each Purchaser (i) of any request by the
Commission for an amendment or any supplement to the Registration Statement or
the Prospectus, or any other information request by any other governmental
agency directly relating to the offering of the Shares, and (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of the
Prospectus or the initiation or threat of any proceeding for that purpose.
     (d) Until the earlier of (i) the date on which the Shares may be resold by
the Purchasers without registration and without regard to any public information
requirements and volume limitations by reason of Rule 144 under the Securities
Act and (ii) all of the Shares have been sold pursuant to the Registration
Statement or Rule 144 under the Securities Act, the Company shall file and
furnish all reports and other documents required to be filed or furnished by it
under Section 13, 14 or 15 of the Exchange Act so long as it is subject to such
requirements.
     (e) Neither the Company nor any of its subsidiaries shall identify any
Purchaser as an underwriter in any public disclosure or filing with the
Commission or the Exchange or any other securities exchange or market without
the prior consent of such Purchaser; provided, however, that the Company,
without the consent of such Purchaser, can disclose in the Registration
Statement, the Prospectus or any amendment or supplement thereto or any
free-writing prospectus related thereto that such Purchaser “may be deemed an
underwriter within the meaning of the Securities Act”; and provided further,
that if the Commission requires disclosure in the Registration Statement, the
Prospectus or any amendment or supplement thereto or any free-writing prospectus
related thereto that a Purchaser “is an underwriter within the meaning of the
Securities Act” or if a Purchaser is a registered broker-dealer, controls or is
controlled by a registered broker-dealer, or is an affiliate of a registered
broker-dealer other than due solely to its being under common control with a
registered broker-dealer that was not involved in the purchase, and will not be
involved in the ultimate sale, of the Shares, such Purchaser acknowledges that
its Shares will be included in the Registration Statement only if it consents to
disclosure in the Registration Statement, the Prospectus or any amendment or
supplement thereto or any free-writing prospectus related thereto that it “is an
underwriter within the meaning of the Securities Act” and if it fails to provide
such consent and its Shares are not included in the Registration Statement, the
Company shall not be deemed in breach of this Agreement and shall not be
required to pay any penalties hereunder.
     4.3 [INTENTIONALLY OMITTED]
     4.4 SEC Filings
     Each Purchaser covenants and agrees to timely file with the Commission all
filings required to be filed by such Purchaser pursuant to the Exchange Act,
including, without

18

--------------------------------------------------------------------------------

 

limitation, pursuant to Sections 13(d) and 16(a) of the Exchange Act, in
connection with its ownership of the Shares.
     4.5 Indemnification
          4.5.1 Indemnification by the Company
     Subject to Section 4.5.5, the Company agrees to indemnify and hold harmless
each of the Purchasers, such Purchaser’s officers, directors, trustees,
partners, members, employees and agents, and each person, if any, who controls
or is under common control with any Purchaser within the meaning of the
Securities Act (each, a “Purchaser Indemnitee”), against any losses, claims,
damages, liabilities or expenses, joint or several, to which such Purchaser
Indemnitees may become subject, under the Securities Act, the Exchange Act, or
any other federal or state statutory law or regulation, or at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are based upon
(a) any untrue statement or alleged untrue statement of any material fact
contained or incorporated by reference in the Registration Statement, or in the
prospectus related thereto, in the form first filed with the Commission pursuant
to Rule 424(b) under the Securities Act or filed as part of the Registration
Statement at the time of effectiveness if no Rule 424(b) filing is required (the
“Prospectus”), or any amendment or supplement to the Registration Statement or
Prospectus or any related free-writing prospectus, or arise out of or are based
upon the omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary to make the statements in any of
them, in light of the circumstances under which they were made, not misleading,
(b) any inaccuracy in the representations and warranties of the Company
contained in this Agreement or (c) any failure of the Company to comply with its
covenants and agreements under this Agreement, and, subject to this Section 4.5,
will reimburse each Purchaser Indemnitee for reasonable legal and other expenses
as such expenses are incurred by such Purchaser Indemnitee or controlling person
in connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action; provided, however,
that the Company will not be liable in any such case to a Purchaser Indemnitee
to the extent that any such loss, claim, damage, liability or expense arises out
of or is based upon (i) an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, the Prospectus,
any amendment or supplement thereto or any related free-writing prospectus in
reliance upon and in conformity with information furnished to the Company by or
on behalf of a Purchaser expressly for use in the Registration Statement, the
Prospectus or any amendment or supplement thereto, (ii) the failure of a
Purchaser to comply with its covenants and agreements contained in this
Agreement, (iii) the inaccuracy of any representations and warranties made by a
Purchaser in this Agreement or (iv) any untrue statement or omission of a
material fact required to make such statement not misleading in any Prospectus
or supplement thereto or related free-writing prospectus that is corrected in
any subsequent supplement thereto or related free-writing prospectus that was
delivered to the applicable Purchaser a reasonable amount of time before the
pertinent sale or sales by such Purchaser.

19

--------------------------------------------------------------------------------

 

          4.5.2 Indemnification by the Purchaser
     Subject to Section 4.5.5, each Purchaser will severally and not jointly
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of the Securities Act, against any
losses, claims, damages, liabilities or expenses to which the Company, each of
its directors, each of its officers who signed the Registration Statement or
controlling person may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Purchaser), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon (i) any failure on the part
of such Purchaser to comply with its covenants and agreements contained in this
Agreement, (ii) the inaccuracy of any representations and warranties made by
such Purchaser in this Agreement or (iii) any untrue or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto or free-writing prospectus related thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, and only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of such Purchaser expressly for use
therein and such Purchaser will, subject to this Section 4.5, reimburse the
Company, each of its directors, each of its officers who signed the Registration
Statement and each controlling person for reasonable legal and other expenses as
such expenses are incurred by the Company, each of its directors, each of its
officers who signed the Registration Statement and each controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
the Purchaser shall not be liable for any such untrue or alleged untrue
statement or omission or alleged omission of which the Purchaser has delivered
to the Company in writing a correction of such untrue statement or omission of a
material fact a reasonable amount of time before the occurrence of the
transaction from or upon which such loss, claim, damage, liability or expense
arose or was based.
          4.5.3 Indemnification Procedure
     (a) Promptly after receipt by an indemnified party under this Section 4.5
of notice of the threat or commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 4.5, promptly notify the indemnifying party in writing of the
claim; but the omission so to notify the indemnifying party will not relieve it
from any liability which it may have to any indemnified party for contribution
or otherwise under the indemnity agreement contained in this Section 4.5 to the
extent it is not prejudiced as a result of such failure.
     (b) In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an indemnifying
party, the

20

--------------------------------------------------------------------------------

 

indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, which approval shall
not be unreasonably withheld, delayed or conditioned, the indemnifying party
will not be liable to such indemnified party under this Section 4.5 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless:
          (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
approved by such indemnifying party representing all of the indemnified parties
who are parties to such action); or
          (ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of action, in each of which cases
the reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party.
          The indemnifying party shall not be liable for any settlement of any
proceeding, in respect of which indemnification or contribution may be sought
hereunder, effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. The indemnifying party shall
not settle any proceeding, in respect of which indemnification or contribution
may be sought hereunder, without the written consent of the indemnified party
unless such settlement releases the indemnified party from all liability arising
out of such procedure and does not include a statement as to or an admission of
fault or culpability by or on behalf of the indemnified party.
          4.5.4 Contribution
     If the indemnification provided for in this Section 4.5 is required by
clause (a) of Section 4.5.1 or clause (iii) of Section 4.5.2 but is for any
reason held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party under this Section 4.5 in respect to any losses, claims,
damages, liabilities or expenses referred to in this Agreement, then each
applicable indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of any losses, claims, damages, liabilities
or expenses referred to in this Agreement in such proportion as is appropriate
to reflect the relative fault of the Company and the Purchaser in connection
with the statements or omissions, the inaccuracies in the representations and

21

--------------------------------------------------------------------------------

 

warranties in this Agreement or the breach of covenants and agreements in this
Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations.
     The relative fault of the Company and each Purchaser shall be determined by
reference to, among other things, whether the untrue or alleged statement of a
material fact or the omission or alleged omission to state a material fact or
the inaccurate or the alleged inaccurate representation or warranty relates to
information supplied by the Company or by such Purchaser and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 4.5.3, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in Section 4.5.3 with respect to the notice of the threat
or commencement of any threat or action shall apply if a claim for contribution
is to be made under this Section 4.5.4; provided, however, that no additional
notice shall be required with respect to any threat or action for which notice
has been given under Section 4.5 for purposes of indemnification. The Company
and each Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 4.5.4 were determined solely by pro rata allocation
(even if the Purchasers were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in this paragraph. Notwithstanding the provisions of
this Section 4.5.4, no Purchaser shall be required to contribute any amount in
excess of the amount by which the total gross proceeds received by it from the
sale of the Shares exceeds the amount of any damages that such Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Purchasers’ obligations to contribute pursuant
to this Section 4.5 are several and not joint.
          4.5.5 Limits on Liability
     In no event shall the aggregate liability of a Purchaser under this
Section 4.5 exceed the gross proceeds received by such Purchaser as a result of
the sale of Shares pursuant to the Registration Statement.
5. Broker’s Fee
     The Purchasers acknowledge that the Company intends to pay to Allen &
Company LLC and Craig-Hallum Capital Group LLC, the placement agents, a fee in
respect of the sale of the Shares to the Purchasers. Other than the foregoing
payment to Allen & Company LLC and Craig-Hallum Capital Group LLC, each of the
parties to this Agreement hereby represents that, on the basis of any actions
and agreements by it, there are no other brokers or finders entitled to
compensation in connection with the sale of the Shares to the Purchasers. The
Company shall indemnify and hold harmless the Purchasers from and against all
fees, commissions or other payments owing by the Company to Allen & Company LLC,
Craig-Hallum Capital Group LLC or any other person or firm acting on behalf of
the Company hereunder.

22

--------------------------------------------------------------------------------

 

6. Notices
     All notices, requests, consents and other communications under this
Agreement shall be in writing and deemed effective upon receipt, shall be
delivered personally, by first-class registered or certified mail, confirmed
facsimile or nationally recognized overnight express courier, and shall be
delivered as addressed as follows:

  (a)   if to the Company, to:

Dolan Media Company
1200 Baker Building
706 Second Avenue South
Minneapolis, Minnesota
Attention: James Dolan
Telephone: (612) 317-9425
Facsimile: (612) 317-9434
     with a copy to:
Katten Muchin Rosenman LLP
525 West Monroe Street
Suite 1900
Chicago, Illinois 60661
Attention: Walter S. Weinberg
                    Adam R. Klein
Telephone: (312) 902-5200
Facsimile: (312) 902-1600
or to such other person or at such other address or facsimile number as the
Company shall designate to the Purchaser in writing in accordance herewith; and
     (b) if to a Purchaser, at its address or facsimile number as set forth on
the signature page to this Agreement, or at such other address or facsimile
number as may have been furnished to the Company in writing in accordance
herewith.
7. Modification; Amendment; Termination
     (a) This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and each of the Purchasers.
     (b) This Agreement may be terminated as to any Purchaser, at the option of
such Purchaser upon written notice to the Company, and as to all of the
Purchasers, at the option of the Company upon written notice to the Purchasers,
at any time after September 30, 2008 (the “Termination Date”) but prior to the
Closing Date if the Closing has not occurred on or before the Termination Date
(so long as the failure of the Closing to occur by the Termination Date is not
due to such terminating Purchaser’s or, if the Company is terminating, the
Company’s breach of its representations, warranties or covenants herein).
Sections 4.5 and 6 through 15 shall survive termination of this Agreement.

23

--------------------------------------------------------------------------------

 

8. Entire Agreement
     This Agreement, including the Schedules and Appendices attached hereto,
supersedes all other prior oral or written agreements between the parties with
respect to the matters discussed herein (other than the confidentiality
agreement entered into by the Company and each Purchaser and, if applicable, the
acknowledgment from such Purchaser to the Company regarding certain material,
non-public information) and, along with such confidentiality agreement and
acknowledgment, contains the entire understanding with respect to the matters
covered herein.
9. Headings
     The headings of the various sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be part of this
Agreement.
10. Severability
     If any provision contained in this Agreement should be held to be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby.
11. Governing Law; Jurisdiction
     This Agreement shall be governed by and construed in accordance with the
laws of the state of Delaware and the federal law of the United States of
America, without giving effect to any choice of law or conflict of law provision
or rule that would cause the application of the laws of any other jurisdiction.
Nothing herein shall affect the right of the Purchasers to serve process in any
manner permitted by law or limit the right of the Purchasers to bring
proceedings against the Company in the competent courts of any jurisdiction or
jurisdictions.
12. Counterparts
     This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party to this Agreement and delivered to
the other parties. Facsimile transmission or email transmission of any .pdf of
any signed original document will be deemed the same as delivery of an original.
13. Successors and Assigns
     This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns; provided that a Purchaser
may not assign its rights or obligations hereunder without the consent of the
Company.
14. No Third-Party Beneficiaries
     Except as provided in Section 4, this Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.

24

--------------------------------------------------------------------------------

 

15. Publicity
     The Purchasers acknowledge that the Company will file with the Commission
within four (4) business days after the execution of this Agreement a Current
Report on Form 8-K describing the transaction hereunder and containing this
Agreement as an exhibit thereto. Except as required by law or the Exchange, the
Company shall not identify any Purchaser in a press release describing the
transaction hereunder without the prior consent of such Purchaser.
16. Subsidiary
     As used herein, the term “subsidiary” shall mean any entity in which the
Company, directly or indirectly, owns 50% or more of the outstanding capital
stock, equity or similar interest.
[Signature pages follow]

25

--------------------------------------------------------------------------------

 

     In Witness Whereof, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                  Dolan Media Company    
 
           
 
  By:   /s/ James P. Dolan    
 
           
 
  Name:   James P. Dolan    
 
           
 
  Its:   Chairman, President and Chief Executive Officer    
 
           
 
                TCS Capital, LP    
 
           
 
  By:   Unknown    
 
           
 
           
 
  Its:        
 
           
 
           
 
  By:   Unknown    
 
           
 
           
 
  Name:        
 
           
 
           
 
  Title:        
 
           
 
                Address: c/o TCS Capital Management, LLC    
 
           
 
      888 Seventh Avenue, Suite 1504    
 
           
 
      New York, NY 10019    
 
                Facsimile: (212) 621-8790    

 

--------------------------------------------------------------------------------

 

                  TCS Capital II, LP    
 
           
 
  By:   Unknown    
 
           
 
           
 
  By:   Unknown    
 
           
 
           
 
  Its:        
 
           
 
           
 
  Name:        
 
           
 
           
 
  Title:        
 
           
 
                Address: c/o TCS Capital Management, LLC    
 
           
 
      888 Seventh Avenue, Suite 1504    
 
           
 
      New York, NY 10019    
 
                Facsimile: (212) 621-8790    
 
                TCS Capital Investments, LP    
 
           
 
  By:   Unknown    
 
           
 
           
 
  Its:        
 
           
 
           
 
  By:   Unknown    
 
           
 
           
 
  Name:        
 
           
 
           
 
  Title:        
 
           
 
                Address: c/o TCS Capital Management, LLC    
 
           
 
      888 Seventh Avenue, Suite 1504    
 
           
 
      New York, NY 10019    
 
                Facsimile: (212) 621-8790    

 

--------------------------------------------------------------------------------

 

                  Shannon River Partners II LP    
 
           
 
  By:   Unknown    
 
           
 
           
 
  Name:        
 
           
 
           
 
  Title:        
 
           
 
                Address: 800 Third Avenue, 30th Floor    
 
           
 
      New York, NY 10022    
 
                Facsimile: (212) 192-8106    
 
                Shannon River Partners LP    
 
           
 
  By:   Unknown    
 
           
 
           
 
  Name:        
 
           
 
           
 
  Title:        
 
           
 
                Address: 800 Third Avenue, 30th Floor    
 
           
 
      New York, NY 10022    
 
                Facsimile: (212) 192-8106    
 
                Shannon River Partners Ltd.    
 
           
 
  By:   Unknown    
 
           
 
           
 
  Name:        
 
           
 
           
 
  Title:        
 
           
 
                Address: 800 Third Avenue, 30th Floor    
 
           
 
      New York, NY 10022    
 
                Facsimile: (212) 192-8106    

 

--------------------------------------------------------------------------------

 

                  Doonbeg Fund LP    
 
           
 
  By:   Unknown    
 
           
 
           
 
  Name:        
 
           
 
           
 
  Title:        
 
           
 
                Address: c/o Shannon River Partners    
 
           
 
      800 Third Avenue, 30th Floor    
 
           
 
      New York, NY 10022    
 
                Facsimile: (212) 192-8106    
 
                Atlas Master Fund, Ltd.    
 
           
 
  By:   Unknown    
 
           
 
           
 
  Name:        
 
           
 
           
 
  Title:        
 
           
 
                Address: 135 E. 57th Street, 27th Floor    
 
           
 
      New York, NY 10022    
 
                Facsimile: (212) 808 2301    

 

--------------------------------------------------------------------------------

 

                  Altairis Offshore    
 
                By: Polar Securities Inc., as authorized agent    
 
           
 
  By:   Unknown    
 
           
 
           
 
  Name:        
 
           
 
           
 
  Title:        
 
           
 
                Address: 372 Bay Street, 21st Floor    
 
           
 
      Toronto, Ontario M5H 2W9    
 
           
 
  Facsimile:(416) 367-0564    
 
                Altairis Offshore Levered    
 
           
 
  By:   Unknown    
 
           
 
           
 
  Name:        
 
           
 
           
 
  Title:        
 
           
 
                Address: 372 Bay Street, 21st Floor    
 
           
 
      Toronto, Ontario M5H 2W9    
 
                Facsimile:(416) 367-0564    

 

--------------------------------------------------------------------------------

 

                  Gerlach & Co.    
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Its:        
 
     
 
   
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Name:        
 
     
 
   
 
           
 
  Title:        
 
     
 
   
 
                Address: c/o William Blair & Company, LLC    
 
           
 
      222 W. Adams Street    
 
           
 
      Chicago, IL 60606    
 
           
 
      Attn: Christy Oleson and Rick Smirl    
 
                Facsimile: (312) 577-0908
   

                  Calhoun & Co
FFC City of Dearborn Policemen and Firemen Revised Retirement Systems    
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Its:        
 
     
 
   
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Name:        
 
     
 
   
 
           
 
  Title:        
 
     
 
   
 
                Address: c/o William Blair & Company, LLC    
 
           
 
      222 W. Adams Street    
 
           
 
      Chicago, IL 60606    
 
           
 
      Attn: Christy Oleson and Rick Smirl    
 
                Facsimile: (312) 577-0908
   

 

--------------------------------------------------------------------------------

 

                  Calhoun & Co
FFC City of Dearborn General Employees Retirement Systems    
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Its:        
 
     
 
   
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Name:        
 
     
 
   
 
           
 
  Title:        
 
     
 
   
 
                Address: c/o William Blair & Company, LLC    
 
           
 
      222 W. Adams Street    
 
           
 
      Chicago, IL 60606    
 
           
 
      Attn: Christy Oleson and Rick Smirl    
 
                Facsimile: (312) 577-0908
   

                  William Blair Small Cap Growth Fund    
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Its:        
 
     
 
   
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Name:        
 
     
 
   
 
           
 
  Title:        
 
     
 
   
 
                Address: c/o William Blair & Company, LLC    
 
           
 
      222 W. Adams Street    
 
           
 
      Chicago, IL 60606    
 
           
 
      Attn: Christy Oleson and Rick Smirl    
 
                Facsimile: (312) 577-0908
   

 

--------------------------------------------------------------------------------

 

                  Maril & Co.
FFC Hartmarx Retirement Income Trust    
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Its:        
 
     
 
   
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Name:        
 
     
 
   
 
           
 
  Title:        
 
     
 
   
 
                Address: c/o William Blair & Company, LLC    
 
           
 
      222 W. Adams Street    
 
           
 
      Chicago, IL 60606    
 
           
 
      Attn: Christy Oleson and Rick Smirl    
 
                Facsimile: (312) 577-0908
   

                  Booth & Co.
FFC Rush University Medical Center Endowment Account    
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Its:        
 
     
 
   
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Name:        
 
     
 
   
 
           
 
  Title:        
 
     
 
   
 
                Address: c/o William Blair & Company, LLC    
 
           
 
      222 W. Adams Street    
 
           
 
      Chicago, IL 60606    
 
           
 
      Attn: Christy Oleson and Rick Smirl    
 
                Facsimile: (312) 577-0908
   

 

--------------------------------------------------------------------------------

 

                  Booth & Co.
FFC Rush University Medical Center Pension and Retirement    
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Its:        
 
     
 
   
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Name:        
 
     
 
   
 
           
 
  Title:        
 
     
 
   
 
                Address: c/o William Blair & Company, LLC    
 
           
 
      222 W. Adams Street    
 
           
 
      Chicago, IL 60606    
 
           
 
      Attn: Christy Oleson and Rick Smirl    
 
                Facsimile: (312) 577-0908
   

 

--------------------------------------------------------------------------------

 

                  T. ROWE PRICE ASSOCIATES, INC.,
Investment Advisor to and on behalf of the Purchasers that are Participating
Funds and Accounts on Attachment A    
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Name:        
 
     
 
   
 
           
 
  Title:   Vice President    
 
           
 
  and        
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Name:        
 
     
 
   
 
           
 
  Title:   Vice President         Address: T. Rowe Price Associates, Inc.    
 
      100 East Pratt Street    
 
      Batimore, MD 21202    
 
      Attn: Darrell N. Braman, Vice President    
 
                Facsimile: 410-345-6575    

 

--------------------------------------------------------------------------------

 

                  GLG North American Opportunity Fund    
 
           
 
  By:   GLG Partners LP, its Investment Manager    
 
           
 
  By:   GLG Inc., Authorized Signatory    
 
           
 
  By:   Unknown    
 
     
 
   
 
           
 
  Name:        
 
     
 
   
 
           
 
  Title:        
 
     
 
   
 
                Address: GLG North American Opportunity Fund    
 
      Walker House    
 
      87 Mary Street, George Town    
 
      Grand Cayman KY1-9002    
 
      Cayman Islands      
 
      With a copy to: GLG Partners LP    
 
      One Curzon Street    
 
      London W1J 5HB    
 
      United Kingdom    
 
     
 
                Facsimile:+44 20 7016 7000    

 

--------------------------------------------------------------------------------

 

SCHEDULE A
PURCHASERS

                      NUMBER OF SHARES     AGGREGATE   PURCHASER   BEING
PURCHASED     PURCHASE PRICE  
TCS Capital, LP
    79,200     $ 1,267,200  
TCS Capital II, LP
    432,600     $ 6,921,600  
TCS Capital Investments, LP
    725,700     $ 11,611,200  
Shannon River Partners II LP
    216,000     $ 3,456,000  
Shannon River Partners LP
    51,000     $ 816,000  
Shannon River Partners Ltd.
    113,000     $ 1,808,000  
Doonbeg Fund LP
    20,000     $ 320,000  
Atlas Master Fund, Ltd.
    100,000     $ 1,600,000  
Altairis Offshore
    153,500     $ 2,456,000  
Altairis Offshore Levered
    296,500     $ 4,744,000  
Gerlach & Co.
    28,587     $ 457,392  
Calhoun & Co
    6,925     $ 110,800  
FFC City of Dearborn Policemen and Firemen Revised Retirement Systems
               
Calhoun & Co
    3,375     $ 54,000  
FFC City of Dearborn General Employees Retirement Systems
               
William Blair Small Cap Growth Fund
    429,146     $ 6,866,336  
Maril & Co.
    8,240     $ 131,840  
FFC Hartmarx Retirement Income Trust
               
Booth & Co.
    10,756     $ 172,096  
FFC Rush University Medical Center Endowment Account
               
Booth & Co.
    12,971     $ 207,536  
FFC Rush University Medical Center Pension and Retirement
               
T. Rowe Price New Horizons Fund, Inc.
    340,000     $ 5,440,000  
City of New York Deferred Compensation Plan
    9,800     $ 156,800  
- NYC 457/401K Small Cap Account
               
T. Rowe Price New Horizons Trust
    9,800     $ 156,800  
T. Rowe Price U.S. Equities Trust
    1,500     $ 24,000  
T. Rowe Price Media & Telecommunications Fund, Inc.
    420,000     $ 6,720,000  
TD Mutual Funds — TD Entertainment & Communications Fund
    31,400     $ 502,400  
GLG North American Opportunity Fund
    500,000     $ 8,000,000  
 
           
TOTAL
    4,000,000     $ 64,000,000  

--------------------------------------------------------------------------------

 

SCHEDULE B
SCHEDULE OF EXCEPTIONS
Section 2.9 Intellectual Property
Section 2.16 Taxes

 

--------------------------------------------------------------------------------

 

APPENDICES
Appendix I Stock Certificate/Distribution Statement Questionnaire Form
Appendix II Registration Statement Questionnaire for Selling Stockholders
Appendix III Form of Legal Opinion