Exhibit 10.41

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), is dated as of June 13,
2008, by and among Vyyo Inc., a Delaware corporation (the “Company”), and the
investors listed on the Schedule of Investors attached hereto as Exhibit A
(individually, an “Investor” and collectively, the “Investors”).

 

WHEREAS:

 

A.            The Company and each Investor is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “SEC”) under the
Securities Act.

 

B.            Each Investor, severally and not jointly, wishes to purchase, and
the Company wishes to sell, upon the terms and conditions stated in this
Agreement that aggregate principal amount of Senior Secured Convertible Notes,
in substantially the form attached hereto as Exhibit B (the “Convertible
Notes”), set forth opposite such Investor’s name on the Schedule of Investors
(as converted, collectively, the “Conversion Shares”).

 

C.            The Convertible Notes and the Conversion Shares issued pursuant to
this Agreement are collectively referred to herein as the “Securities.”

 

D.            Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering (i) the Convertible
Notes, (ii) an Amended and Restated Registration Rights Agreement substantially
in the form attached hereto as Exhibit C (the “Registration Rights Agreement”),
and (iii) a Guaranty and Security Agreement substantially in the form attached
hereto as Exhibit D (the “Guaranty and Security 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 Investors agree
as follows:

 

ARTICLE I
DEFINITIONS

 

1.1           DEFINITIONS.  IN ADDITION TO THE TERMS DEFINED ELSEWHERE IN THIS
AGREEMENT, THE FOLLOWING TERMS HAVE THE MEANINGS INDICATED:

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144 under the
Securities Act.

 

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“Business Day” means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to
remain closed.

 

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

 

“Closing Date” means the date and time of the Closing and shall be 10:00 a.m.,
New York City time, on June 13, 2008 (or such other date and time as is mutually
agreed to by the Company and each Investor).

 

“Collateral Agent” has the meaning assigned to such term in the Guaranty and
Security Agreement.

 

“Common Stock” means shares of the Company’s common stock, par value $0.0001 per
share.

 

“Conversion Shares” has the meaning set forth in the Preamble.

 

“Convertible Notes” has the meaning set forth in the Preamble.

 

“Eligible Market” means any of the New York Stock Exchange, the American Stock
Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or Nasdaq
Capital Market.

 

“Existing Notes” means, collectively, the GS Existing Note and the Syntek
Existing Note.

 

“GS Existing Note” means the Convertible Note in the principal amount of
$35,000,000, dated March 28, 2007, issued by the Company to Goldman Sachs
Investment Partners Master Fund, L.P. (“Goldman Sachs”).

 

“Guaranty and Security Agreement” has the meaning set forth in the Preamble.

 

“Insignificant Subsidiaries” means Vyyo Brasil Ltd. and SHDIP Ltd.

 

“Intellectual Property Rights” has the meaning set forth in Section 3.1(k).

 

“Investor Counsel” means Proskauer Rose LLP, counsel to the Investors.

 

“Knowledge,” including the phrase “to the Company’s knowledge,” and words of
similar import shall mean that which Davidi Gilo, Wayne H. Davis, Robert K.
Mills and Tashia L. Rivard know or should have known using the exercise of
reasonable due diligence.

 

“Lien” means any lien, charge, claim, security interest, encumbrance, right of
first refusal or other restriction.

 

“Material Adverse Effect” has the meaning set forth in Section 3.1(a).

 

“Material Permits” has the meaning set forth in Section 3.1(y).

 

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“Person” means any individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, or
joint stock company.

 

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

 

“Registration Rights Agreement” has the meaning set forth in the Preamble.

 

“Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and Rule 424,
respectively, promulgated by the SEC pursuant to the Securities Act, as such
Rules may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC having substantially the same effect as such Rule.

 

“SEC” has the meaning set forth in the Preamble.

 

“SEC Reports” has the meaning set forth in Section 3.1(h).

 

“Securities” has the meaning set forth in the Preamble.

 

“Solvent” shall mean, with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including contingent liabilities, of such Person;
(b) the present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probably liability of such Person on
its debts as they become absolute and matured; (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person’s property would constitute
an unreasonably small capital.  The amount of contingent liabilities (such as
litigation, guarantees and pension plan liabilities) at any time shall be
computed as the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can be reasonably be expected
to become an actual or matured liability.

 

“Syntek” means Syntek Capital AG.

 

“Syntek Existing Note” means that certain promissory note in the original
principal amount of $6,500,000, dated December 16, 2005, issued by the Company
to Syntek.

 

“Significant Subsidiary” has the meaning assigned thereto in Rule 1-02(w) of
Regulation S-X, including, but not limited to: Vyyo Ltd., a corporation duly
incorporated and existing under the laws of the state of Israel; Xtend Networks
Ltd., a corporation duly incorporated and existing under the laws of the state
of Israel; and Xtend Networks, Inc., a Delaware corporation.

 

“Subsidiary” means any Person in which the Company, directly or indirectly, owns
capital stock or holds an equity or similar interest.

 

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“Trading Day” means (a) any day on which the Common Stock is listed or quoted
and traded on its primary Trading Market, (b) if the Common Stock is not then
listed or quoted and traded on any Eligible Market, then a day on which trading
occurs on the Nasdaq Global Market (or any successor thereto), or (c) if trading
ceases to occur on the Nasdaq Global Market (or any successor thereto), any
Business Day.

 

“Trading Market” means the Nasdaq Global Market or any other Eligible Market, or
any national securities exchange, market or trading or quotation facility on
which the Common Stock is then listed or quoted.

 

“Transaction” means the transaction contemplated by the Transaction Documents.

 

“Transaction Documents” means this Agreement, the schedules and exhibits
attached hereto, the Convertible Notes, the Registration Rights Agreement, and
the Guaranty and Security Agreement.

 

ARTICLE II
PURCHASE AND SALE

 

2.1           CLOSING.

 

(A)           SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN ARTICLE V HEREIN,
AT THE CLOSING THE COMPANY SHALL ISSUE AND SELL TO EACH INVESTOR, AND EACH
INVESTOR SHALL, SEVERALLY AND NOT JOINTLY, PURCHASE FROM THE COMPANY, A
CONVERTIBLE NOTE IN THE AGGREGATE PRINCIPAL AMOUNT SET FORTH OPPOSITE SUCH
INVESTOR’S NAME ON EXHIBIT A HERETO UNDER THE HEADING “CONVERTIBLE NOTE
AMOUNT.”  THE DATE AND TIME OF THE CLOSING AND SHALL BE 10:00 A.M., NEW YORK
CITY TIME, ON THE CLOSING DATE.  THE CLOSING SHALL TAKE PLACE AT THE OFFICES OF
INVESTOR COUNSEL.

 

(B)           AT THE CLOSING, (I) EACH INVESTOR SHALL DELIVER OR CAUSE TO BE
DELIVERED TO THE COMPANY THE CASH PURCHASE PRICE SET FORTH OPPOSITE SUCH
INVESTOR’S NAME ON EXHIBIT A HERETO UNDER THE HEADING “CASH PURCHASE PRICE” IN
UNITED STATES DOLLARS AND IN IMMEDIATELY AVAILABLE FUNDS, BY WIRE TRANSFER TO AN
ACCOUNT DESIGNATED IN WRITING TO SUCH INVESTOR BY THE COMPANY FOR SUCH PURPOSE,
AND (II) THE OUTSTANDING PRINCIPAL UNDER THE GS EXISTING NOTE OR THE SYNTEK
EXISTING NOTE, AS THE CASE MAY BE, IN THE AMOUNT SET FORTH OPPOSITE SUCH
INVESTOR’S NAME ON EXHIBIT A HERETO UNDER THE HEADING “OUTSTANDING PRINCIPAL
AMOUNT OF EXISTING NOTES” SHALL BE DEEMED CANCELED (FOR THE AVOIDANCE OF DOUBT,
THE ACCRUED AND UNPAID INTEREST UNDER SUCH EXISTING NOTES WILL BE PAID BY THE
COMPANY TO THE INVESTORS IN ACCORDANCE WITH SECTION 4.6 HEREOF).

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

3.1           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  THE COMPANY HEREBY
REPRESENTS AND WARRANTS TO EACH INVESTOR THAT, EXCEPT AS SET FORTH IN THE SEC
REPORTS (AS HEREINAFTER DEFINED) OR IN THE SCHEDULE OF EXCEPTIONS ATTACHED AS
EXHIBIT E TO THIS AGREEMENT, WHICH EXCEPTIONS SHALL BE DEEMED TO BE PART OF THE
REPRESENTATIONS AND WARRANTIES MADE HEREUNDER, THE FOLLOWING REPRESENTATIONS ARE
TRUE AND COMPLETE AS OF THE DATE HEREOF.  THE SCHEDULE OF EXCEPTIONS SHALL BE
ARRANGED IN SECTIONS CORRESPONDING TO THE NUMBERED AND LETTERED

 

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SECTIONS AND SUBSECTIONS CONTAINED IN THIS SECTION 3, AND THE DISCLOSURES IN ANY
SECTION OR SUBSECTION OF THE SCHEDULE OF EXCEPTIONS SHALL QUALIFY OTHER SECTIONS
AND SUBSECTIONS IN THIS SECTION 3 ONLY TO THE EXTENT IT IS REASONABLY APPARENT
FROM A READING OF THE DISCLOSURE THAT SUCH DISCLOSURE IS APPLICABLE TO SUCH
OTHER SECTIONS AND SUBSECTIONS:

 

(A)           ORGANIZATION AND QUALIFICATION.  EACH OF THE COMPANY AND THE
SIGNIFICANT SUBSIDIARIES IS AN ENTITY DULY ORGANIZED, VALIDLY EXISTING AND IN
GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS INCORPORATION OR
ORGANIZATION (AS APPLICABLE), WITH THE REQUISITE LEGAL AUTHORITY TO OWN AND USE
ITS PROPERTIES AND ASSETS AND TO CARRY ON ITS BUSINESS AS CURRENTLY CONDUCTED. 
NEITHER THE COMPANY NOR ANY SIGNIFICANT SUBSIDIARY IS IN VIOLATION OF ANY OF THE
PROVISIONS OF ITS RESPECTIVE CERTIFICATE OR ARTICLES OF INCORPORATION, BYLAWS OR
OTHER ORGANIZATIONAL OR CHARTER DOCUMENTS.  EACH OF THE COMPANY AND THE
SIGNIFICANT SUBSIDIARIES IS DULY QUALIFIED TO DO BUSINESS AND IS IN GOOD
STANDING AS A FOREIGN CORPORATION OR OTHER ENTITY IN EACH JURISDICTION IN WHICH
THE NATURE OF THE BUSINESS CONDUCTED OR PROPERTY OWNED BY IT MAKES SUCH
QUALIFICATION NECESSARY, EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED OR IN GOOD
STANDING, AS THE CASE MAY BE, WOULD NOT REASONABLY BE EXPECTED TO INDIVIDUALLY
OR IN THE AGGREGATE, (I) MATERIALLY AND ADVERSELY AFFECT THE LEGALITY, VALIDITY
OR ENFORCEABILITY OF ANY TRANSACTION DOCUMENT, (II) HAVE OR RESULT IN A MATERIAL
ADVERSE EFFECT ON THE RESULTS OF OPERATIONS, ASSETS, BUSINESS OR FINANCIAL
CONDITION OF THE COMPANY AND THE SIGNIFICANT SUBSIDIARIES, TAKEN AS A WHOLE ON A
CONSOLIDATED BASIS OR (III) MATERIALLY AND ADVERSELY IMPAIR THE COMPANY’S
ABILITY TO PERFORM FULLY ON A TIMELY BASIS ITS OBLIGATIONS UNDER ANY OF THE
TRANSACTION DOCUMENTS (ANY OF (I), (II) OR (III), A “MATERIAL ADVERSE EFFECT”).

 

(B)           SUBSIDIARIES.  OTHER THAN THE SIGNIFICANT SUBSIDIARIES AND THE
INSIGNIFICANT SUBSIDIARIES, THE COMPANY HAS NO OTHER DIRECT OR INDIRECT
SUBSIDIARIES.  THE COMPANY OWNS, DIRECTLY OR INDIRECTLY, ALL OF THE CAPITAL
STOCK OR COMPARABLE EQUITY INTERESTS OF EACH SUBSIDIARY FREE AND CLEAR OF ANY
LIEN (EXCEPT AS CONTEMPLATED BY THE GUARANTY AND SECURITY AGREEMENT), AND ALL
THE ISSUED AND OUTSTANDING SHARES OF CAPITAL STOCK OR COMPARABLE EQUITY INTEREST
OF EACH SUBSIDIARY ARE VALIDLY ISSUED AND ARE FULLY PAID, NON-ASSESSABLE AND
FREE OF PREEMPTIVE AND SIMILAR RIGHTS.  NONE OF THE INSIGNIFICANT SUBSIDIARIES
(I) CARRIES ON ANY SUBSTANTIVE BUSINESS OPERATIONS OR ACTIVITIES OR (II) HAS
ASSETS OR LIABILITIES IN EXCESS OF $50,000.

 

(C)           AUTHORIZATION; ENFORCEMENT.  THE COMPANY HAS THE REQUISITE
CORPORATE AUTHORITY TO ENTER INTO AND TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY EACH OF THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY AND
OTHERWISE TO CARRY OUT ITS OBLIGATIONS HEREUNDER AND THEREUNDER.  THE EXECUTION
AND DELIVERY OF EACH OF THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY BY THE
COMPANY AND THE CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION ON THE PART OF THE
COMPANY AND NO FURTHER CONSENT OR ACTION IS REQUIRED BY THE COMPANY, ITS BOARD
OF DIRECTORS OR ITS STOCKHOLDERS.  EACH OF THE TRANSACTION DOCUMENTS TO WHICH IT
IS A PARTY HAS BEEN (OR UPON DELIVERY WILL BE) DULY EXECUTED BY THE COMPANY AND
IS, OR WHEN DELIVERED IN ACCORDANCE WITH THE TERMS HEREOF, WILL CONSTITUTE, THE
VALID AND BINDING OBLIGATION OF THE COMPANY ENFORCEABLE AGAINST THE COMPANY IN
ACCORDANCE WITH ITS TERMS, EXCEPT AS MAY BE LIMITED BY (I) APPLICABLE
BANKRUPTCY, INSOLVENCY, REORGANIZATION OR OTHER LAWS OF GENERAL APPLICATION
RELATING TO OR AFFECTING THE ENFORCEMENT OF CREDITORS RIGHTS GENERALLY, AND
(II) THE EFFECT OF RULES OF LAW GOVERNING THE AVAILABILITY OF SPECIFIC
PERFORMANCE AND OTHER EQUITABLE REMEDIES.

 

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(D)           NO CONFLICTS.  THE EXECUTION, DELIVERY AND PERFORMANCE OF THE
TRANSACTION DOCUMENTS BY THE COMPANY AND THE CONSUMMATION BY THE COMPANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY DO NOT, AND WILL NOT, (I) CONFLICT
WITH OR VIOLATE ANY PROVISION OF THE COMPANY’S OR ANY SIGNIFICANT SUBSIDIARY’S
CERTIFICATE OR ARTICLES OF INCORPORATION, BYLAWS OR OTHER ORGANIZATIONAL OR
CHARTER DOCUMENTS, (II) CONFLICT WITH, OR CONSTITUTE A DEFAULT (OR AN EVENT THAT
WITH NOTICE OR LAPSE OF TIME OR BOTH WOULD BECOME A DEFAULT) UNDER, OR GIVE TO
OTHERS ANY RIGHTS OF TERMINATION, AMENDMENT, ACCELERATION OR CANCELLATION (WITH
OR WITHOUT NOTICE, LAPSE OF TIME OR BOTH) OF, ANY AGREEMENT, CREDIT FACILITY,
DEBT OR OTHER INSTRUMENT (EVIDENCING A COMPANY OR SIGNIFICANT SUBSIDIARY DEBT OR
OTHERWISE) OR OTHER UNDERSTANDING TO WHICH THE COMPANY OR ANY SIGNIFICANT
SUBSIDIARY IS A PARTY OR BY WHICH ANY PROPERTY OR ASSET OF THE COMPANY OR ANY
SIGNIFICANT SUBSIDIARY IS BOUND, OR AFFECTED, EXCEPT TO THE EXTENT THAT SUCH
CONFLICT, DEFAULT, TERMINATION, AMENDMENT, ACCELERATION OR CANCELLATION RIGHT
WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT OR
(III) RESULT IN A VIOLATION OF ANY LAW, RULE, REGULATION, ORDER, JUDGMENT,
INJUNCTION, DECREE OR OTHER RESTRICTION OF ANY COURT OR GOVERNMENTAL AUTHORITY
TO WHICH THE COMPANY OR A SIGNIFICANT SUBSIDIARY IS SUBJECT (INCLUDING FEDERAL
AND STATE SECURITIES LAWS AND REGULATIONS AND THE RULES AND REGULATIONS OF ANY
SELF-REGULATORY ORGANIZATION TO WHICH THE COMPANY OR ITS SECURITIES ARE
SUBJECT), OR BY WHICH ANY PROPERTY OR ASSET OF THE COMPANY OR A SIGNIFICANT
SUBSIDIARY IS BOUND OR AFFECTED, EXCEPT TO THE EXTENT THAT SUCH VIOLATION WOULD
NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

 

(E)           AUTHORIZATION OF SECURITIES.  THE SECURITIES ARE DULY AUTHORIZED
AND, WHEN ISSUED AND PAID FOR IN ACCORDANCE WITH THE TRANSACTION DOCUMENTS, WILL
BE DULY AND VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, FREE AND CLEAR OF ALL
LIENS AND SHALL NOT BE SUBJECT TO PREEMPTIVE OR SIMILAR RIGHTS OF STOCKHOLDERS. 
UPON ISSUANCE OR CONVERSION IN ACCORDANCE WITH THE CONVERTIBLE NOTES, THE
CONVERSION SHARES WILL BE VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE AND FREE
FROM ALL PREEMPTIVE OR SIMILAR RIGHTS, TAXES, LIENS AND CHARGES WITH RESPECT TO
THE ISSUE THEREOF, WITH THE HOLDERS BEING ENTITLED TO ALL RIGHTS ACCORDED TO A
HOLDER OF CONVERSION SHARES.  AS OF THE CLOSING, THE COMPANY SHALL HAVE RESERVED
FROM ITS DULY AUTHORIZED CAPITAL STOCK THE NUMBER OF CONVERSION SHARES ISSUABLE
UPON CONVERSION OF THE CONVERTIBLE NOTES (WITHOUT TAKING INTO ACCOUNT ANY
LIMITATIONS ON THE CONVERSION, OR REDEMPTION OF THE CONVERTIBLE NOTES SET FORTH
IN THE CONVERTIBLE NOTES).

 

(F)            CAPITALIZATION.  THE AGGREGATE NUMBER OF SHARES AND TYPE OF ALL
AUTHORIZED, ISSUED AND OUTSTANDING CLASSES OF CAPITAL STOCK, OPTIONS AND OTHER
SECURITIES OF THE COMPANY (WHETHER OR NOT PRESENTLY CONVERTIBLE INTO OR
EXERCISABLE OR EXCHANGEABLE FOR SHARES OF CAPITAL STOCK OF THE COMPANY) IS SET
FORTH IN SCHEDULE 3.1(F) HERETO.  ALL OUTSTANDING SHARES OF CAPITAL STOCK ARE
DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE AND HAVE BEEN
ISSUED IN COMPLIANCE WITH SECTION 5 OF THE SECURITIES ACT.  THE COMPANY HAS NOT
ISSUED ANY OTHER OPTIONS, WARRANTS, SCRIPT RIGHTS TO SUBSCRIBE TO, CALLS OR
COMMITMENTS OF ANY CHARACTER WHATSOEVER RELATING TO, OR SECURITIES, RIGHTS OR
OBLIGATIONS CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE FOR, OR ENTERED INTO
ANY AGREEMENT GIVING ANY PERSON ANY RIGHT TO SUBSCRIBE FOR OR ACQUIRE, ANY
SHARES OF COMMON STOCK, OR SECURITIES OR RIGHTS CONVERTIBLE OR EXCHANGEABLE INTO
SHARES OF COMMON STOCK.  EXCEPT FOR CUSTOMARY ADJUSTMENTS AS A RESULT OF STOCK
DIVIDENDS, STOCK SPLITS, COMBINATIONS OF SHARES, REORGANIZATIONS,
RECAPITALIZATIONS, RECLASSIFICATIONS OR OTHER SIMILAR EVENTS, THERE ARE NO
ANTI-DILUTION OR PRICE ADJUSTMENT PROVISIONS CONTAINED IN ANY SECURITY ISSUED BY
THE COMPANY (OR IN ANY AGREEMENT PROVIDING RIGHTS TO SECURITY HOLDERS) AND THE
ISSUANCE AND SALE OF THE SECURITIES WILL NOT OBLIGATE THE COMPANY TO ISSUE
SHARES OF COMMON STOCK OR OTHER

 

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SECURITIES TO ANY PERSON (OTHER THAN THE INVESTORS) AND WILL NOT RESULT IN A
RIGHT OF ANY HOLDER OF SECURITIES TO ADJUST THE EXERCISE, CONVERSION, EXCHANGE
OR RESET PRICE UNDER SUCH SECURITIES.  TO THE KNOWLEDGE OF THE COMPANY, NO
PERSON OR GROUP OF RELATED PERSONS BENEFICIALLY OWNS (AS DETERMINED PURSUANT TO
RULE 13D-3 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE
ACT”)), OR HAS THE RIGHT TO ACQUIRE, BY AGREEMENT WITH OR BY OBLIGATION BINDING
UPON THE COMPANY, BENEFICIAL OWNERSHIP OF IN EXCESS OF 5% OF THE OUTSTANDING
COMMON STOCK, IGNORING FOR SUCH PURPOSES ANY LIMITATION ON THE NUMBER OF SHARES
OF COMMON STOCK THAT MAY BE OWNED AT ANY SINGLE TIME.

 

(G)           CONSENTS.  NONE OF THE COMPANY NOR ANY OF ITS SIGNIFICANT
SUBSIDIARIES IS REQUIRED TO OBTAIN ANY CONSENT, AUTHORIZATION OR ORDER OF, OR
MAKE ANY FILING OR REGISTRATION WITH, ANY COURT, GOVERNMENTAL AGENCY OR ANY
REGULATORY OR SELF-REGULATORY AGENCY OR ANY OTHER PERSON IN ORDER FOR IT TO
EXECUTE, DELIVER OR PERFORM ANY OF ITS OBLIGATIONS UNDER OR CONTEMPLATED BY THE
TRANSACTION DOCUMENTS, IN EACH CASE IN ACCORDANCE WITH THE TERMS HEREOF OR
THEREOF.  ALL CONSENTS, AUTHORIZATIONS, ORDERS, FILINGS AND REGISTRATIONS (WHICH
THE COMPANY IS REQUIRED TO OBTAIN PURSUANT TO THE PRECEDING SENTENCE) HAVE BEEN
OBTAINED OR EFFECTED, OR WILL HAVE BEEN OBTAINED OR EFFECTED, ON OR PRIOR TO THE
CLOSING DATE, EXCEPT TO THE EXTENT THAT FAILURE TO OBTAIN SUCH CONSENT WOULD NOT
BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT, AND THE COMPANY AND ITS
SIGNIFICANT SUBSIDIARIES ARE UNAWARE OF ANY FACTS OR CIRCUMSTANCES THAT MIGHT
PREVENT THE COMPANY FROM OBTAINING OR EFFECTING ANY OF THE REGISTRATION,
APPLICATION OR FILINGS PURSUANT TO THE PRECEDING SENTENCE.

 

(H)           SEC REPORTS; FINANCIAL STATEMENTS.  THE COMPANY HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY IT UNDER THE EXCHANGE ACT, INCLUDING PURSUANT TO
SECTION 13(A) OR 15(D) THEREOF, FOR THE TWELVE MONTHS PRECEDING THE DATE HEREOF
(THE FOREGOING MATERIALS (TOGETHER WITH ANY MATERIALS FILED BY THE COMPANY UNDER
THE EXCHANGE ACT, WHETHER OR NOT REQUIRED) BEING COLLECTIVELY REFERRED TO HEREIN
AS THE “SEC REPORTS” AND, TOGETHER WITH THIS AGREEMENT AND THE SCHEDULES TO THIS
AGREEMENT, THE “DISCLOSURE MATERIALS”) ON A TIMELY BASIS.  AS OF THEIR
RESPECTIVE DATES, THE SEC REPORTS COMPLIED IN ALL MATERIAL RESPECTS WITH THE
REQUIREMENTS OF THE SECURITIES ACT AND THE EXCHANGE ACT AND THE RULES AND
REGULATIONS OF THE SEC PROMULGATED THEREUNDER, AND NONE OF THE SEC REPORTS, WHEN
FILED, CONTAINED ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITTED TO STATE A
MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE
STATEMENTS THEREIN, IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE
MADE, NOT MISLEADING.  THE FINANCIAL STATEMENTS OF THE COMPANY INCLUDED IN THE
SEC REPORTS COMPLY IN ALL MATERIAL RESPECTS WITH APPLICABLE ACCOUNTING
REQUIREMENTS AND THE RULES AND REGULATIONS OF THE SEC WITH RESPECT THERETO AS IN
EFFECT AT THE TIME OF FILING.  SUCH FINANCIAL STATEMENTS HAVE BEEN PREPARED IN
ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES APPLIED
ON A CONSISTENT BASIS DURING THE PERIODS INVOLVED (“GAAP”), EXCEPT AS MAY BE
OTHERWISE SPECIFIED IN SUCH FINANCIAL STATEMENTS OR THE NOTES THERETO, AND
FAIRLY PRESENT IN ALL MATERIAL RESPECTS THE FINANCIAL POSITION OF THE COMPANY
AND ITS CONSOLIDATED SUBSIDIARIES AS OF AND FOR THE DATES THEREOF AND THE
RESULTS OF OPERATIONS AND CASH FLOWS FOR THE PERIODS THEN ENDED EXCEPT AS MAY BE
INDICATED IN THE NOTES THERETO AND EXCEPT, IN THE CASE OF INTERIM STATEMENTS,
FOR THE ABSENCE OF FOOTNOTES AND AS PERMITTED BY FORM 10-Q, SUBJECT, IN THE CASE
OF UNAUDITED STATEMENTS, TO NORMAL, YEAR-END AUDIT ADJUSTMENTS.

 

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(I)            TERMINATION OF REGISTRATION.  THE COMPANY FILED
FORM 15-12(G) (THE “CERTIFICATION AND NOTICE OF TERMINATION”) WITH THE SEC ON
APRIL 24, 2008.  AS OF APRIL 24, 2008, THE COMPANY SATISFIED THE REQUIREMENTS OF
THE CERTIFICATION AND NOTICE OF TERMINATION.  THE CERTIFICATION AND NOTICE OF
TERMINATION COMPLIED IN ALL MATERIAL RESPECTS WITH THE REQUIREMENTS OF THE
EXCHANGE ACT AND THE RULES AND REGULATIONS OF THE SEC PROMULGATED THEREUNDER.

 

(J)            NO ADVERSE CHANGES.  SINCE FEBRUARY 14, 2008, (I) THERE HAS BEEN
NO EVENT, OCCURRENCE OR DEVELOPMENT THAT, INDIVIDUALLY OR IN THE AGGREGATE, HAS
HAD OR THAT WOULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT,
(II) THE COMPANY HAS NOT INCURRED ANY MATERIAL LIABILITIES OTHER THAN (A) TRADE
PAYABLES AND ACCRUED EXPENSES INCURRED IN THE ORDINARY COURSE OF BUSINESS
CONSISTENT WITH PAST PRACTICE AND (B) LIABILITIES NOT REQUIRED TO BE REFLECTED
IN THE COMPANY’S FINANCIAL STATEMENTS PURSUANT TO GAAP OR REQUIRED TO BE
DISCLOSED IN FILINGS MADE WITH THE SEC, (III) THE COMPANY HAS NOT ALTERED ITS
METHOD OF ACCOUNTING OR THE IDENTITY OF ITS AUDITORS, (IV) THE COMPANY HAS NOT
DECLARED OR MADE ANY DIVIDEND OR DISTRIBUTION OF CASH OR OTHER PROPERTY TO ITS
STOCKHOLDERS, IN THEIR CAPACITIES AS SUCH, OR PURCHASED, REDEEMED OR MADE ANY
AGREEMENTS TO PURCHASE OR REDEEM ANY SHARES OF ITS CAPITAL STOCK (EXCEPT FOR
REPURCHASES BY THE COMPANY OF SHARES OF CAPITAL STOCK HELD BY EMPLOYEES,
OFFICERS, DIRECTORS, OR CONSULTANTS PURSUANT TO AN OPTION OF THE COMPANY TO
REPURCHASE SUCH SHARES UPON THE TERMINATION OF EMPLOYMENT OR SERVICES) AND
(V) THE COMPANY HAS NOT ISSUED ANY EQUITY SECURITIES TO ANY OFFICER, DIRECTOR OR
AFFILIATE, EXCEPT PURSUANT TO EXISTING COMPANY STOCK-BASED PLANS.

 

(K)           INTELLECTUAL PROPERTY.  TO THE COMPANY’S KNOWLEDGE, THE COMPANY
AND THE SUBSIDIARIES OWN, POSSESS, LICENSE OR HAVE OTHER RIGHTS TO USE ALL
FOREIGN AND DOMESTIC PATENTS, PATENT APPLICATIONS, REEXAMS, REISSUES, DIVISIONAL
CONTINUATIONS, OR ANY PATENT OR APPLICATION CLAIMING PRIORITY THEREFROM,
INCLUDING ANY PATENT THAT MAY BE ISSUED AS A RESULT OF AN INTERFERENCE ACTION,
TRADE AND SERVICE MARKS, TRADE AND SERVICE MARK REGISTRATIONS, TRADE NAMES,
COPYRIGHTS, LICENSES, INVENTIONS, TRADE SECRETS, TECHNOLOGY, INTERNET DOMAIN
NAMES, KNOW-HOW AND OTHER INTELLECTUAL PROPERTY (COLLECTIVELY, THE “INTELLECTUAL
PROPERTY RIGHTS”) NECESSARY FOR THE CONDUCT OF THEIR RESPECTIVE BUSINESSES
DESCRIBED IN THE SEC REPORTS, EXCEPT WHERE SUCH VIOLATIONS OR INFRINGEMENTS
WOULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT,
(A) THERE ARE NO RIGHTS OF THIRD PARTIES TO ANY SUCH INTELLECTUAL PROPERTY
RIGHTS; (B) TO THE COMPANY’S KNOWLEDGE, THERE IS NO INFRINGEMENT BY THIRD
PARTIES OF ANY SUCH INTELLECTUAL PROPERTY RIGHTS; (C) THERE IS NO PENDING OR, TO
THE COMPANY’S KNOWLEDGE, THREATENED ACTION, SUIT, PROCEEDING OR CLAIM BY OTHERS
CHALLENGING THE COMPANY’S AND ITS SIGNIFICANT SUBSIDIARIES’ RIGHTS IN OR TO ANY
SUCH INTELLECTUAL PROPERTY RIGHTS, AND THE COMPANY IS UNAWARE OF ANY FACTS WHICH
WOULD FORM A REASONABLE BASIS FOR ANY SUCH CLAIM; (D) THERE IS NO PENDING OR, TO
THE COMPANY’S KNOWLEDGE, THREATENED ACTION, SUIT, PROCEEDING OR CLAIM BY OTHERS
CHALLENGING THE VALIDITY OR SCOPE OF ANY SUCH INTELLECTUAL PROPERTY RIGHTS AND
(E) THERE IS NO PENDING OR, TO THE COMPANY’S KNOWLEDGE, THREATENED ACTION, SUIT,
PROCEEDING OR CLAIM BY OTHERS THAT THE COMPANY AND ITS SUBSIDIARIES INFRINGE OR
OTHERWISE VIOLATE ANY PATENT, TRADEMARK, COPYRIGHT, TRADE SECRET OR OTHER
PROPRIETARY RIGHTS OF OTHERS, AND THE COMPANY IS UNAWARE OF ANY OTHER FACT WHICH
WOULD FORM A REASONABLE BASIS FOR ANY SUCH CLAIM.  ALL OF THE LICENSES AND
SUBLICENSES AND CONSENT, ROYALTY OR OTHER AGREEMENTS CONCERNING INTELLECTUAL
PROPERTY RIGHTS WHICH ARE NECESSARY FOR THE CONDUCT OF THE COMPANY’S BUSINESS AS
CURRENTLY CONDUCTED TO WHICH THE COMPANY OR THE SIGNIFICANT SUBSIDIARY IS A
PARTY OR BY WHICH ANY OF THEIR RESPECTIVE ASSETS ARE BOUND (OTHER THAN GENERALLY
COMMERCIALLY AVAILABLE, NON-CUSTOM, OFF-THE-SHELF SOFTWARE APPLICATION PROGRAMS
HAVING A RETAIL ACQUISITION PRICE OF LESS THAN $25,000 PER LICENSE)
(COLLECTIVELY, “LICENSE AGREEMENTS”) ARE VALID AND BINDING OBLIGATIONS OF THE
COMPANY OR THE SIGNIFICANT SUBSIDIARIES, AS THE CASE MAY BE

 

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AND, TO THE COMPANY’S KNOWLEDGE, THE OTHER PARTIES THERETO, ENFORCEABLE IN
ACCORDANCE WITH THEIR RESPECTIVE TERMS, EXCEPT TO THE EXTENT THAT ENFORCEMENT
THEREOF MAY BE LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION,
MORATORIUM, FRAUDULENT CONVEYANCE OR OTHER SIMILAR LAWS AFFECTING THE
ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY, AND THERE EXISTS NO EVENT OR
CONDITION WHICH WILL RESULT IN A MATERIAL VIOLATION OR BREACH OF OR CONSTITUTE
(WITH OR WITHOUT DUE NOTICE OR LAPSE OF TIME OR BOTH) A DEFAULT BY THE COMPANY
UNDER SUCH LICENSE AGREEMENTS.

 

(L)            TAX MATTERS.  THE COMPANY AND EACH SIGNIFICANT SUBSIDIARY (I) HAS
TIMELY PREPARED AND FILED ALL FOREIGN, FEDERAL AND STATE INCOME AND ALL OTHER
TAX RETURNS, REPORTS AND DECLARATIONS REQUIRED BY ANY JURISDICTION TO WHICH IT
IS SUBJECT, (II) HAS PAID ALL MATERIAL TAXES AND OTHER GOVERNMENTAL ASSESSMENTS
AND CHARGES THAT ARE MATERIAL IN AMOUNT, SHOWN OR DETERMINED TO BE DUE ON SUCH
RETURNS, REPORTS AND DECLARATIONS, EXCEPT THOSE BEING CONTESTED IN GOOD FAITH,
WITH RESPECT TO WHICH ADEQUATE RESERVES HAVE BEEN SET ASIDE ON THE BOOKS OF THE
COMPANY AND (III) HAS SET ASIDE ON ITS BOOKS PROVISION REASONABLY ADEQUATE FOR
THE PAYMENT OF ALL TAXES FOR PERIODS SUBSEQUENT TO THE PERIODS TO WHICH SUCH
RETURNS, REPORTS OR DECLARATIONS APPLY.  TO THE COMPANY’S KNOWLEDGE, THERE ARE
NO UNPAID TAXES IN ANY MATERIAL AMOUNT CLAIMED TO BE PAST DUE BY THE TAXING
AUTHORITY OF ANY JURISDICTION, AND THE COMPANY KNOWS OF NO BASIS FOR SUCH
CLAIM.  THE COMPANY HAS NOT WAIVED OR EXTENDED ANY STATUTE OF LIMITATIONS AT THE
REQUEST OF ANY TAXING AUTHORITY.  THERE ARE NO OUTSTANDING TAX SHARING
AGREEMENTS OR OTHER SUCH ARRANGEMENTS BETWEEN THE COMPANY AND ANY OTHER
CORPORATION OR ENTITY AND THE COMPANY IS NOT PRESENTLY UNDERGOING ANY AUDIT BY A
TAXING AUTHORITY.

 

(M)          ABSENCE OF LITIGATION.  EXCEPT AS DISCLOSED IN THE COMPANY’S SEC
REPORTS, THERE IS NO ACTION, SUIT, CLAIM, OR PROCEEDING, OR, TO THE COMPANY’S
KNOWLEDGE, INQUIRY OR INVESTIGATION, BEFORE OR BY ANY COURT, PUBLIC BOARD,
GOVERNMENT AGENCY, SELF-REGULATORY ORGANIZATION OR BODY PENDING OR, TO THE
KNOWLEDGE OF THE COMPANY, THREATENED AGAINST OR AFFECTING THE COMPANY OR ANY OF
ITS SIGNIFICANT SUBSIDIARIES THAT WOULD REASONABLY BE EXPECTED TO HAVE,
INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL ADVERSE EFFECT.

 

(N)           ENVIRONMENTAL MATTERS.  TO THE COMPANY’S KNOWLEDGE, THE COMPANY
AND EACH SIGNIFICANT SUBSIDIARY (I) IS NOT IN VIOLATION OF ANY STATUTE, RULE,
REGULATION, DECISION OR ORDER OF ANY GOVERNMENTAL AGENCY OR BODY OR ANY COURT,
DOMESTIC OR FOREIGN, RELATING TO THE USE, DISPOSAL OR RELEASE OF HAZARDOUS OR
TOXIC SUBSTANCES OR RELATING TO THE PROTECTION OR RESTORATION OF THE ENVIRONMENT
OR HUMAN EXPOSURE TO HAZARDOUS OR TOXIC SUBSTANCES (COLLECTIVELY, “ENVIRONMENTAL
LAWS”), (II) DOES NOT OWN OR OPERATE ANY REAL PROPERTY CONTAMINATED WITH ANY
SUBSTANCE IN VIOLATION OF ANY ENVIRONMENTAL LAWS, (III) IS NOT LIABLE FOR ANY
OFF-SITE DISPOSAL OR CONTAMINATION PURSUANT TO ANY ENVIRONMENTAL LAWS AND
(IV) IS NOT SUBJECT TO ANY CLAIM RELATING TO ANY ENVIRONMENTAL LAWS; WHICH
VIOLATION, CONTAMINATION, LIABILITY OR CLAIM HAS HAD OR WOULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT, INDIVIDUALLY OR IN THE AGGREGATE;
AND THERE IS NO PENDING OR, TO THE COMPANY’S KNOWLEDGE, THREATENED INVESTIGATION
THAT MIGHT LEAD TO SUCH A CLAIM.

 

(O)           COMPLIANCE.  NONE OF THE COMPANY NOR ANY SIGNIFICANT SUBSIDIARY,
EXCEPT IN EACH CASE AS WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY
BE EXPECTED TO HAVE OR RESULT IN A MATERIAL ADVERSE EFFECT, (I) IS IN DEFAULT
UNDER OR IN VIOLATION OF (AND NO EVENT HAS OCCURRED THAT HAS NOT BEEN WAIVED
THAT, WITH NOTICE OR LAPSE OF TIME OR BOTH, WOULD RESULT IN A DEFAULT BY THE
COMPANY OR ANY SIGNIFICANT SUBSIDIARY UNDER), NOR HAS THE COMPANY OR ANY

 

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SIGNIFICANT SUBSIDIARY RECEIVED WRITTEN NOTICE OF A CLAIM THAT IT IS IN DEFAULT
UNDER OR THAT IT IS IN VIOLATION OF, ANY INDENTURE, LOAN OR CREDIT AGREEMENT OR
ANY OTHER AGREEMENT OR INSTRUMENT TO WHICH IT IS A PARTY OR BY WHICH IT OR ANY
OF ITS PROPERTIES IS BOUND (WHETHER OR NOT SUCH DEFAULT OR VIOLATION HAS BEEN
WAIVED), (II) IS IN VIOLATION OF ANY ORDER OF ANY COURT, ARBITRATOR OR
GOVERNMENTAL BODY OR (III) IS OR HAS BEEN IN VIOLATION OF ANY STATUTE, RULE OR
REGULATION OF ANY GOVERNMENTAL AUTHORITY.

 

(P)           TITLE TO ASSETS.  THE COMPANY AND THE SIGNIFICANT SUBSIDIARIES
HAVE GOOD AND MARKETABLE TITLE IN FEE SIMPLE TO ALL REAL PROPERTY OWNED BY THEM
THAT IS MATERIAL TO THE BUSINESS OF THE COMPANY AND THE SIGNIFICANT SUBSIDIARIES
AND GOOD AND MARKETABLE TITLE IN ALL PERSONAL PROPERTY OWNED BY THEM THAT IS
MATERIAL TO THE BUSINESS OF THE COMPANY AND THE SIGNIFICANT SUBSIDIARIES, IN
EACH CASE FREE AND CLEAR OF ALL LIENS, EXCEPT FOR LIENS THAT DO NOT,
INDIVIDUALLY OR IN THE AGGREGATE, HAVE OR WOULD REASONABLY BE EXPECTED TO RESULT
IN A MATERIAL ADVERSE EFFECT.  ANY REAL PROPERTY AND FACILITIES HELD UNDER LEASE
BY THE COMPANY AND THE SIGNIFICANT SUBSIDIARIES ARE HELD BY THEM UNDER VALID,
SUBSISTING AND ENFORCEABLE LEASES OF WHICH THE COMPANY AND THE SIGNIFICANT
SUBSIDIARIES ARE IN MATERIAL COMPLIANCE.

 

(Q)           NO GENERAL SOLICITATION; PLACEMENT AGENT’S FEES.  NEITHER THE
COMPANY, NOR ANY OF ITS AFFILIATES, NOR ANY PERSON ACTING ON ITS OR THEIR
BEHALF, HAS ENGAGED IN ANY FORM OF GENERAL SOLICITATION OR GENERAL ADVERTISING
(WITHIN THE MEANING OF REGULATION D) IN CONNECTION WITH THE OFFER OR SALE OF THE
SECURITIES.  THE COMPANY SHALL BE RESPONSIBLE FOR THE PAYMENT OF ANY PLACEMENT
AGENT’S FEES, FINANCIAL ADVISORY FEES, OR BROKERS’ COMMISSIONS (OTHER THAN FOR
PERSONS ENGAGED BY ANY INVESTOR OR ITS INVESTMENT ADVISOR) RELATING TO OR
ARISING OUT OF THE ISSUANCE OF THE SECURITIES PURSUANT TO THIS AGREEMENT.  THE
COMPANY SHALL PAY, AND HOLD EACH INVESTOR HARMLESS AGAINST, ANY LIABILITY, LOSS
OR EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEY’S FEES AND
OUT-OF-POCKET EXPENSES) ARISING IN CONNECTION WITH ANY SUCH CLAIM FOR FEES
ARISING OUT OF THE ISSUANCE OF THE SECURITIES PURSUANT TO THIS AGREEMENT.

 

(R)            PRIVATE PLACEMENT.  NONE OF THE COMPANY, ITS SUBSIDIARIES, ANY OF
THEIR AFFILIATES, OR ANY PERSON ACTING ON THEIR BEHALF HAS, DIRECTLY OR
INDIRECTLY, AT ANY TIME WITHIN THE PAST SIX MONTHS, MADE ANY OFFER OR SALE OF
ANY SECURITY OR SOLICITATION OF ANY OFFER TO BUY ANY SECURITY UNDER
CIRCUMSTANCES THAT WOULD (I) ELIMINATE THE AVAILABILITY OF THE EXEMPTION FROM
REGISTRATION UNDER REGULATION D UNDER THE SECURITIES ACT IN CONNECTION WITH THE
OFFER AND SALE BY THE COMPANY OF THE SECURITIES AS CONTEMPLATED HEREBY OR
(II) CAUSE THE OFFERING OF THE SECURITIES PURSUANT TO THE TRANSACTION DOCUMENTS
TO BE INTEGRATED WITH PRIOR OFFERINGS BY THE COMPANY FOR PURPOSES OF ANY
APPLICABLE LAW, REGULATION OR STOCKHOLDER APPROVAL PROVISIONS, INCLUDING,
WITHOUT LIMITATION, UNDER THE RULES AND REGULATIONS OF ANY TRADING MARKET.  THE
COMPANY IS NOT REQUIRED TO BE REGISTERED AS A UNITED STATES REAL PROPERTY
HOLDING CORPORATION WITHIN THE MEANING OF THE FOREIGN INVESTMENT IN REAL
PROPERTY TAX ACT OF 1980, AS AMENDED.

 

(S)           REGISTRATION RIGHTS.  EXCEPT AS DESCRIBED IN THE REGISTRATION
RIGHTS AGREEMENT, THE COMPANY HAS NOT GRANTED OR AGREED TO GRANT TO ANY PERSON
ANY RIGHTS (INCLUDING “PIGGY-BACK” REGISTRATION RIGHTS) TO HAVE ANY SECURITIES
OF THE COMPANY REGISTERED WITH THE SEC OR ANY OTHER GOVERNMENTAL AUTHORITY THAT
HAVE NOT BEEN SATISFIED OR WAIVED.

 

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(T)            APPLICATION OF TAKEOVER PROTECTIONS.  THERE IS NO CONTROL SHARE
ACQUISITION, BUSINESS COMBINATION, POISON PILL (INCLUDING ANY DISTRIBUTION UNDER
A RIGHTS AGREEMENT) OR OTHER SIMILAR ANTI-TAKEOVER PROVISION UNDER THE COMPANY’S
CHARTER DOCUMENTS OR THE LAWS OF ITS STATE OF INCORPORATION THAT IS OR WOULD
BECOME APPLICABLE TO ANY OF THE INVESTORS AS A RESULT OF THE INVESTORS AND THE
COMPANY FULFILLING THEIR OBLIGATIONS OR EXERCISING THEIR RIGHTS UNDER THE
TRANSACTION DOCUMENTS, INCLUDING, WITHOUT LIMITATION, AS A RESULT OF THE
COMPANY’S ISSUANCE OF THE SECURITIES AND THE INVESTORS’ OWNERSHIP OF THE
SECURITIES.

 

(U)           DISCLOSURE.  NEITHER THIS AGREEMENT, NOR ANY OF THE TRANSACTION
DOCUMENTS, CERTIFICATES OR OTHER DOCUMENTS MADE OR DELIVERED AT THE CLOSING,
CONTAINS ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITS TO STATE A MATERIAL
FACT NECESSARY TO MAKE THE STATEMENTS HEREIN OR THEREIN NOT MISLEADING.

 

(V)           ACKNOWLEDGMENT REGARDING INVESTORS’ PURCHASE OF SECURITIES.  BASED
UPON THE ASSUMPTION THAT THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE
CONSUMMATED IN ALL MATERIAL RESPECTS IN CONFORMITY WITH THE TRANSACTION
DOCUMENTS, THE COMPANY ACKNOWLEDGES AND AGREES THAT EACH OF THE INVESTORS IS
ACTING SOLELY IN THE CAPACITY OF AN ARM’S-LENGTH PURCHASER WITH RESPECT TO THE
TRANSACTION DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.  THE
COMPANY FURTHER ACKNOWLEDGES THAT NO INVESTOR IS ACTING AS A FINANCIAL ADVISOR
OR FIDUCIARY OF THE COMPANY (OR IN ANY SIMILAR CAPACITY) WITH RESPECT TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY AND ANY ADVICE GIVEN BY ANY
INVESTOR OR ANY OF THEIR RESPECTIVE REPRESENTATIVES OR AGENTS IN CONNECTION WITH
THE TRANSACTION DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY
IS MERELY INCIDENTAL TO THE INVESTORS’ PURCHASE OF THE SECURITIES.  THE COMPANY
FURTHER REPRESENTS TO EACH INVESTOR THAT THE COMPANY’S DECISION TO ENTER INTO
THIS AGREEMENT HAS BEEN BASED SOLELY ON THE INDEPENDENT EVALUATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY BY THE COMPANY AND ITS REPRESENTATIVES.

 

(W)          INSURANCE.  THE COMPANY AND THE SIGNIFICANT SUBSIDIARIES ARE
INSURED BY INSURERS OF RECOGNIZED FINANCIAL RESPONSIBILITY AGAINST SUCH LOSSES
AND RISKS AND IN SUCH AMOUNTS AS ARE PRUDENT AND CUSTOMARY IN THE BUSINESSES AND
LOCATION IN WHICH THE COMPANY AND THE SIGNIFICANT SUBSIDIARIES ARE ENGAGED. 
NEITHER THE COMPANY NOR ANY SIGNIFICANT SUBSIDIARY HAS ANY KNOWLEDGE THAT IT
WILL NOT BE ABLE TO RENEW ITS EXISTING INSURANCE COVERAGE AS AND WHEN SUCH
COVERAGE EXPIRES OR TO OBTAIN SIMILAR COVERAGE FROM SIMILAR INSURERS AS MAY BE
NECESSARY TO CONTINUE ITS BUSINESS WITHOUT A SIGNIFICANT INCREASE IN COST.

 

(X)            ERISA.  AS OF THE CLOSING DATE, NEITHER THE COMPANY NOR ANY OF
ITS SIGNIFICANT SUBSIDIARIES HAS ANY OBLIGATION OR ANY LIABILITY IN RESPECT OF
ANY EMPLOYEE PENSION BENEFIT PLAN SUBJECT TO THE PROVISIONS OF TITLE IV OF ERISA
OR SECTION 412 OF THE INTERNAL REVENUE CODE OF 1986 OR SECTION 302 OF ERISA, AND
IN RESPECT OF WHICH THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY (OR, IF SUCH PLAN
WERE TERMINATED, WOULD UNDER SECTION 4069 OF ERISA BE DEEMED TO BE) AN
“EMPLOYER” AS DEFINED IN SECTION 3(5) OF ERISA OR ANY MULTIEMPLOYER PLAN AS
DEFINED IN SECTION 4001(A)(3) OF ERISA.

 

(Y)           REGULATORY PERMITS.  THE COMPANY AND THE SIGNIFICANT SUBSIDIARIES
POSSESS ALL CERTIFICATES, AUTHORIZATIONS AND PERMITS ISSUED BY THE APPROPRIATE
FEDERAL, STATE, LOCAL OR FOREIGN REGULATORY AUTHORITIES NECESSARY TO CONDUCT
THEIR RESPECTIVE BUSINESSES AS DESCRIBED IN THE SEC REPORTS, EXCEPT WHERE THE
FAILURE TO POSSESS SUCH PERMITS DOES NOT, INDIVIDUALLY OR IN THE AGGREGATE, HAVE
OR RESULT IN A MATERIAL ADVERSE EFFECT (“MATERIAL PERMITS”), AND NEITHER THE
COMPANY NOR ANY SIGNIFICANT SUBSIDIARY HAS RECEIVED ANY WRITTEN NOTICE OF
PROCEEDINGS RELATING TO THE REVOCATION OR MODIFICATION OF ANY MATERIAL PERMIT.

 

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(Z)            TRANSACTIONS WITH AFFILIATES AND EMPLOYEES.  EXCEPT AS SET FORTH
IN THE SEC REPORTS MADE ON OR PRIOR TO THE DATE HEREOF, NONE OF THE OFFICERS OR
DIRECTORS OF THE COMPANY AND, TO THE COMPANY’S KNOWLEDGE, NONE OF THE EMPLOYEES
OF THE COMPANY IS PRESENTLY A PARTY TO ANY TRANSACTION WITH THE COMPANY OR ANY
SIGNIFICANT SUBSIDIARY OR TO A PRESENTLY CONTEMPLATED TRANSACTION (OTHER THAN
FOR ORDINARY COURSE SERVICES AS EMPLOYEES, OFFICERS AND DIRECTORS) THAT WOULD BE
REQUIRED TO BE DISCLOSED PURSUANT TO ITEM 404 OF REGULATION S-K PROMULGATED
UNDER THE SECURITIES ACT.

 

(AA)         QUESTIONABLE PAYMENTS.  NEITHER THE COMPANY NOR ANY SIGNIFICANT
SUBSIDIARY, NOR, TO THE COMPANY’S KNOWLEDGE, DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS OR OTHER PERSONS ACTING ON BEHALF OF THE COMPANY OR ANY SIGNIFICANT
SUBSIDIARY HAS, IN THE COURSE OF ITS ACTIONS FOR, OR ON BEHALF OF, THE COMPANY: 
(I) USED ANY CORPORATE FUNDS FOR UNLAWFUL CONTRIBUTIONS, GIFTS, ENTERTAINMENT OR
OTHER UNLAWFUL EXPENSES RELATING TO FOREIGN OR DOMESTIC POLITICAL ACTIVITY;
(II) MADE ANY DIRECT OR INDIRECT UNLAWFUL PAYMENTS TO ANY FOREIGN OR DOMESTIC
GOVERNMENTAL OFFICIALS OR EMPLOYEES FROM CORPORATE FUNDS; (III) VIOLATED IN ANY
RESPECT ANY PROVISION OF THE FOREIGN CORRUPT PRACTICES ACT OF 1977, AS AMENDED
OR (IV) MADE ANY OTHER UNLAWFUL BRIBE, REBATE, PAYOFF, INFLUENCE PAYMENT,
KICKBACK OR OTHER UNLAWFUL PAYMENT TO ANY FOREIGN OR DOMESTIC GOVERNMENT
OFFICIAL OR EMPLOYEE WHICH, IN THE AGGREGATE OF CLAUSES (I) THROUGH (IV) WOULD
HAVE A MATERIAL ADVERSE EFFECT.

 

(BB)         INTERNAL ACCOUNTING CONTROLS.  THE COMPANY AND THE SIGNIFICANT
SUBSIDIARIES MAINTAIN A SYSTEM OF INTERNAL ACCOUNTING CONTROLS SUFFICIENT TO
PROVIDE REASONABLE ASSURANCE THAT (I) TRANSACTIONS ARE EXECUTED IN ACCORDANCE
WITH MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATIONS, (II) TRANSACTIONS ARE
RECORDED AS NECESSARY TO PERMIT PREPARATION OF FINANCIAL STATEMENTS IN
CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND TO MAINTAIN ASSET
ACCOUNTABILITY, (III) ACCESS TO ASSETS IS PERMITTED ONLY IN ACCORDANCE WITH
MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATION AND (IV) THE RECORDED
ACCOUNTABILITY FOR ASSETS IS COMPARED WITH THE EXISTING ASSETS AT REASONABLE
INTERVALS AND APPROPRIATE ACTION IS TAKEN WITH RESPECT TO ANY DIFFERENCES.

 

(CC)         SARBANES-OXLEY ACT.  THROUGH MARCH 31, 2008, THE COMPANY WAS IN
COMPLIANCE WITH APPLICABLE REQUIREMENTS OF THE SARBANES-OXLEY ACT OF 2002, AS
AMENDED, AND APPLICABLE RULES AND REGULATIONS PROMULGATED BY THE SEC THEREUNDER,
EXCEPT WHERE SUCH NONCOMPLIANCE WOULD NOT HAVE, INDIVIDUALLY OR IN THE
AGGREGATE, A MATERIAL ADVERSE EFFECT.

 

(DD)         INVESTMENT COMPANY.  NEITHER THE COMPANY NOR ANY OF ITS SIGNIFICANT
SUBSIDIARIES IS (I) AN “INVESTMENT COMPANY” AS DEFINED IN, OR SUBJECT TO
REGULATION UNDER, THE INVESTMENT COMPANY ACT OF 1940 OR (II) A “HOLDING COMPANY”
AS DEFINED IN, OR SUBJECT TO REGULATION UNDER, THE PUBLIC UTILITY HOLDING
COMPANY ACT OF 1935, AS AMENDED.

 

(EE)         MARGIN STOCK.  NEITHER THE COMPANY NOR ANY OF THE SIGNIFICANT
SUBSIDIARIES IS ENGAGED PRINCIPALLY, OR AS ONE OF THEIR IMPORTANT ACTIVITIES, IN
THE BUSINESS OF EXTENDING CREDIT FOR THE PURPOSE OF BUYING OR CARRYING MARGIN
STOCK (AS SUCH TERM IS DEFINED IN REGULATION U).  IMMEDIATELY BEFORE AND AFTER
GIVING EFFECT TO THE SALE OF THE CONVERTIBLE NOTES,

 

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MARGIN STOCK WILL CONSTITUTE LESS THAN 25% OF THE COMPANY’S ASSETS AS DETERMINED
IN ACCORDANCE WITH REGULATION U.  NO PART OF THE PROCEEDS OF THE CONVERTIBLE
NOTES WILL BE USED, WHETHER DIRECTLY OR INDIRECTLY, AND WHETHER IMMEDIATELY,
INCIDENTALLY OR ULTIMATELY, TO PURCHASE, ACQUIRE OR CARRY ANY MARGIN STOCK OR
FOR ANY PURPOSE THAT ENTAILS A VIOLATION OF, OR THAT IS INCONSISTENT WITH, THE
PROVISIONS OF THE REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM OF THE UNITED STATES OF AMERICA, INCLUDING REGULATION T, U OR X.

 

(FF)           SOLVENCY.  BOTH BEFORE AND AFTER GIVING EFFECT TO (A) THE
CONVERTIBLE NOTES TO BE MADE OR EXTENDED ON THE CLOSING DATE OR SUCH OTHER DATE
AS THE CONVERTIBLE NOTES REQUESTED HEREUNDER ARE MADE OR EXTENDED, (B) THE
DISBURSEMENT OF THE PROCEEDS OF SUCH CONVERTIBLE NOTES PURSUANT TO THE
INSTRUCTIONS OF THE COMPANY, (C) THE REDEMPTION (AS HEREINAFTER DEFINED) AND
(D) THE PAYMENT AND ACCRUAL OF ALL TRANSACTION COSTS IN CONNECTION WITH THE
FOREGOING, EACH OF THE COMPANY AND EACH OF ITS SUBSIDIARIES IS SOLVENT.

 

3.2           REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.  EACH INVESTOR
HEREBY, AS TO ITSELF ONLY AND FOR NO OTHER INVESTOR, REPRESENTS AND WARRANTS TO
THE COMPANY AS FOLLOWS:

 

(A)           ORGANIZATION; AUTHORITY.  SUCH INVESTOR IS AN ENTITY DULY
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE
JURISDICTION OF ITS ORGANIZATION WITH THE REQUISITE CORPORATE OR PARTNERSHIP
POWER AND AUTHORITY TO ENTER INTO AND TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THE TRANSACTION DOCUMENTS AND OTHERWISE TO CARRY OUT ITS
OBLIGATIONS HEREUNDER AND THEREUNDER.  THE PURCHASE BY SUCH INVESTOR OF THE
SECURITIES HEREUNDER HAS BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION ON THE
PART OF, SUCH INVESTOR.  THIS AGREEMENT HAS BEEN DULY EXECUTED AND DELIVERED BY
SUCH INVESTOR AND CONSTITUTES THE VALID AND BINDING OBLIGATION OF SUCH INVESTOR,
ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS TERMS, EXCEPT AS MAY BE LIMITED BY
(I) APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION OR OTHER LAWS OF GENERAL
APPLICATION RELATING TO OR AFFECTING THE ENFORCEMENT OF CREDITORS RIGHTS
GENERALLY AND (II) THE EFFECT OF RULES OF LAW GOVERNING THE AVAILABILITY OF
SPECIFIC PERFORMANCE AND OTHER EQUITABLE REMEDIES.

 

(B)           NO PUBLIC SALE OR DISTRIBUTION; INVESTMENT INTENT.  SUCH INVESTOR
IS ACQUIRING THE SECURITIES IN THE ORDINARY COURSE OF BUSINESS FOR ITS OWN
ACCOUNT AND NOT WITH A VIEW TOWARDS, OR FOR RESALE IN CONNECTION WITH, THE
PUBLIC SALE OR DISTRIBUTION THEREOF, AND SUCH INVESTOR DOES NOT HAVE A PRESENT
ARRANGEMENT TO EFFECT ANY DISTRIBUTION OF THE SECURITIES TO OR THROUGH ANY
PERSON OR ENTITY.

 

(C)           INVESTOR STATUS.  AT THE TIME SUCH INVESTOR WAS OFFERED THE
SECURITIES, IT WAS, AND AT THE DATE HEREOF IT IS, AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(A) UNDER THE SECURITIES ACT.

 

ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES

 

4.1           TRANSFER RESTRICTIONS.

 

(A)           THE INVESTORS COVENANT THAT THE SECURITIES WILL ONLY BE DISPOSED
OF PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, AND IN COMPLIANCE WITH
THE REQUIREMENTS OF, THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND IN COMPLIANCE WITH
ANY APPLICABLE STATE SECURITIES LAWS.  IN CONNECTION WITH

 

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ANY TRANSFER OF SECURITIES OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR TO THE COMPANY, THE COMPANY MAY REQUIRE THE TRANSFEROR TO PROVIDE
TO THE COMPANY AN OPINION OF COUNSEL SELECTED BY THE TRANSFEROR, THE FORM AND
SUBSTANCE OF WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO THE COMPANY, TO
THE EFFECT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES
ACT.  NOTWITHSTANDING THE FOREGOING, THE COMPANY HEREBY CONSENTS TO AND AGREES
TO REGISTER ON THE BOOKS OF THE COMPANY AND WITH ITS TRANSFER AGENT, WITHOUT ANY
SUCH LEGAL OPINION, EXCEPT TO THE EXTENT THAT THE TRANSFER AGENT REQUESTS SUCH
LEGAL OPINION, ANY TRANSFER OF SECURITIES BY AN INVESTOR TO AN AFFILIATE OF SUCH
INVESTOR, PROVIDED THAT THE TRANSFEREE MAKES CUSTOMARY REPRESENTATIONS TO
COMPANY AND CERTIFIES TO THE COMPANY THAT IT IS AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(A) UNDER THE SECURITIES ACT AND PROVIDED THAT SUCH AFFILIATE
DOES NOT REQUEST ANY REMOVAL OF ANY EXISTING LEGENDS ON ANY CERTIFICATE
EVIDENCING THE SECURITIES.

 

(B)           SUCH INVESTOR UNDERSTANDS THAT THE INSTRUMENTS REPRESENTING THE
CONVERTIBLE NOTES AND THE STOCK CERTIFICATES REPRESENTING THE CONVERSION SHARES
UNTIL SUCH TIME AS THE RESALE OF THE CONVERSION SHARES HAVE BEEN REGISTERED AND
SOLD UNDER THE SECURITIES ACT, SHALL BEAR ANY LEGEND AS REQUIRED BY THE “BLUE
SKY” LAWS OF ANY STATE AND A RESTRICTIVE LEGEND IN SUBSTANTIALLY THE FOLLOWING
FORM (AND A STOP-TRANSFER ORDER MAY BE PLACED AGAINST TRANSFER OF SUCH STOCK
CERTIFICATES):

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE 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
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR (B) IF REASONABLY REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT.

 

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities have been registered and sold pursuant to an effective registration
statement under the Securities Act or (ii) in connection with a sale, assignment
or other transfer, the Company reasonably requests that such holder provide the
Company with opinion of counsel reasonably acceptable to the Company that the
sale, assignment or transfer of the Securities may be made without registration
under the applicable requirements of the Securities Act.

 

4.2           FURNISHING OF INFORMATION.  SO LONG AS ANY INVESTOR OWNS ANY
SECURITIES, THE COMPANY COVENANTS TO USE COMMERCIALLY REASONABLE EFFORTS TO
TIMELY FILE (OR OBTAIN EXTENSIONS IN RESPECT THEREOF AND FILE WITHIN THE
APPLICABLE GRACE PERIOD) ALL REPORTS REQUIRED TO BE FILED BY THE COMPANY AFTER
THE DATE HEREOF PURSUANT TO THE EXCHANGE ACT.  UPON THE REASONABLE REQUEST OF
ANY INVESTOR, THE COMPANY SHALL DELIVER TO SUCH INVESTOR A WRITTEN CERTIFICATION
OF A DULY AUTHORIZED OFFICER AS TO WHETHER IT HAS COMPLIED WITH THE PRECEDING
SENTENCE.  THE COMPANY FURTHER COVENANTS THAT IT WILL TAKE SUCH FURTHER ACTION
AS ANY HOLDER OF SECURITIES MAY REASONABLY REQUEST TO SATISFY THE PROVISIONS OF
THIS SECTION 4.2.  NOTWITHSTANDING THE FOREGOING, EACH

 

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INVESTOR ACKNOWLEDGES THAT THE COMPANY FILED THE CERTIFICATION AND NOTICE OF
TERMINATION WITH THE SEC ON APRIL 24, 2008, AND IS NO LONGER OBLIGATED TO FILE
REPORTS WITH THE SEC OTHER THAN THE ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED MARCH 31, 2008, WHICH THE COMPANY WILL FILE WITH THE SEC WITHIN THE
TIME PERIOD REQUIRED BY THE SEC.

 

4.3           INTEGRATION.  THE COMPANY SHALL NOT, AND SHALL USE ITS
COMMERCIALLY REASONABLE EFFORTS TO ENSURE THAT NO AFFILIATE THEREOF SHALL, SELL,
OFFER FOR SALE OR SOLICIT OFFERS TO BUY OR OTHERWISE NEGOTIATE IN RESPECT OF ANY
SECURITY (AS DEFINED IN SECTION 2 OF THE SECURITIES ACT) THAT WOULD BE
INTEGRATED WITH THE OFFER OR SALE OF THE SECURITIES IN A MANNER THAT WOULD
REQUIRE THE REGISTRATION UNDER THE SECURITIES ACT OF THE SALE OF THE SECURITIES
TO THE INVESTORS OR THAT WOULD BE INTEGRATED WITH THE OFFER OR SALE OF THE
SECURITIES FOR PURPOSES OF THE RULES AND REGULATIONS OF ANY TRADING MARKET.

 

4.4           RESERVATION OF SECURITIES.  THE COMPANY SHALL MAINTAIN A RESERVE
FROM ITS DULY AUTHORIZED SHARES OF COMMON STOCK FOR ISSUANCE PURSUANT TO THE
TRANSACTION DOCUMENTS IN SUCH AMOUNT AS MAY BE REQUIRED TO FULFILL ITS
OBLIGATIONS IN FULL UNDER THE TRANSACTION DOCUMENTS.  IN THE EVENT THAT AT ANY
TIME THE THEN AUTHORIZED SHARES OF COMMON STOCK ARE INSUFFICIENT FOR THE COMPANY
TO SATISFY ITS OBLIGATIONS IN FULL UNDER THE TRANSACTION DOCUMENTS, THE COMPANY
SHALL PROMPTLY TAKE SUCH ACTIONS AS MAY BE REQUIRED TO INCREASE THE NUMBER OF
AUTHORIZED SHARES.

 

4.5           SECURITIES LAWS DISCLOSURE; PUBLICITY.  THE COMPANY SHALL DISCLOSE
THE MATERIAL TERMS OF THE TRANSACTIONS CONTEMPLATED HEREBY IN ITS ANNUAL REPORT
ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31, 2008.  THE COMPANY AND THE
INVESTORS SHALL CONSULT WITH EACH OTHER IN ISSUING ANY PRESS RELEASES OR
OTHERWISE MAKING PUBLIC STATEMENTS OR FILINGS AND OTHER COMMUNICATIONS WITH THE
SEC OR ANY REGULATORY AGENCY OR TRADING MARKET WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED HEREBY, AND NEITHER PARTY SHALL ISSUE ANY SUCH PRESS RELEASE OR
OTHERWISE MAKE ANY SUCH PUBLIC STATEMENT, FILING OR OTHER COMMUNICATION WITHOUT
THE PRIOR CONSENT OF THE OTHER, EXCEPT IF SUCH DISCLOSURE IS REQUIRED BY LAW, IN
WHICH CASE THE DISCLOSING PARTY SHALL PROMPTLY PROVIDE THE OTHER PARTY WITH
PRIOR NOTICE OF SUCH PUBLIC STATEMENT, FILING OR OTHER COMMUNICATION. 
NOTWITHSTANDING THE FOREGOING, THE COMPANY SHALL NOT PUBLICLY DISCLOSE THE NAME
OF ANY INVESTOR, OR INCLUDE THE NAME OF ANY INVESTOR IN ANY PRESS RELEASE
WITHOUT THE PRIOR WRITTEN CONSENT OF SUCH INVESTOR.  EXCEPT AS REQUIRED UNDER
THE TRANSACTION DOCUMENTS, THE COMPANY SHALL NOT, AND SHALL CAUSE EACH OF ITS
SUBSIDIARIES AND ITS AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES
AND AGENTS NOT TO, PROVIDE ANY INVESTOR WITH ANY MATERIAL NONPUBLIC INFORMATION
REGARDING THE COMPANY OR ANY OF ITS SUBSIDIARIES FROM AND AFTER THE ISSUANCE OF
THE ABOVE REFERENCED PRESS RELEASE WITHOUT THE EXPRESS WRITTEN CONSENT OF SUCH
INVESTOR.

 

4.6           USE OF PROCEEDS.  WITHIN TWO (2) BUSINESS DAYS FOLLOWING THE
CLOSING, THE COMPANY SHALL USE PROCEEDS FROM THE SALE OF THE SECURITIES TO PAY,
(I) TO GOLDMAN SACHS, ALL ACCRUED AND UNPAID INTEREST UNDER THE GS EXISTING
NOTE, AND (II) TO SYNTEK, ALL ACCRUED AND UNPAID INTEREST UNDER THE SYNTEK
EXISTING NOTE (COLLECTIVELY, THE “INTEREST PAYMENT”), IN EACH CASE, IN UNITED
STATES DOLLARS AND IN IMMEDIATELY AVAILABLE FUNDS, BY WIRE TRANSFER TO AN
ACCOUNT DESIGNATED IN WRITING TO THE COMPANY BY THE APPLICABLE INVESTOR.  THE
COMPANY SHALL USE THE REMAINING NET PROCEEDS FROM THE SALE OF THE SECURITIES FOR
WORKING CAPITAL AND GENERAL CORPORATE PURPOSES.  PENDING USE FOR WORKING CAPITAL
AND GENERAL CORPORATE PURPOSES, THE COMPANY INTENDS TO INVEST THE NET PROCEEDS
FROM THE SALE OF THE SECURITIES IN SHORT-TERM, INTEREST-BEARING,

 

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INVESTMENT-GRADE SECURITIES, OR AS OTHERWISE PURSUANT TO THE COMPANY’S CUSTOMARY
INVESTMENT POLICIES.  PROVIDED THAT THE CLOSING HAS OCCURRED IN ACCORDANCE WITH
THE TERMS OF THIS AGREEMENT, THEN, EFFECTIVE UPON RECEIPT OF THE INTEREST
PAYMENT IN ACCORDANCE WITH THE TERMS OF THIS SECTION 4.6, (I) SYNTEK HEREBY
WAIVES ANY DEFAULT BY THE COMPANY UNDER THE SYNTEK EXISTING NOTE AND
(II) GOLDMAN SACHS HEREBY WAIVES ANY DEFAULT BY THE COMPANY UNDER THE GS
EXISTING NOTE.

 

4.7           SHORT SALES.  EACH INVESTOR REPRESENTS, WARRANTS AND AGREES THAT,
SINCE THE DATE ON WHICH ANY OF THE COMPANY OR FIRST CONTACTED SUCH INVESTOR
ABOUT THE POTENTIAL SALE OF THE SECURITIES, IT HAS NOT ENGAGED IN ANY
TRANSACTIONS IN THE SECURITIES OF THE COMPANY (INCLUDING, WITHOUT LIMITATION,
ANY SHORT SALES INVOLVING THE COMPANY’S SECURITIES).  SUCH INVESTOR COVENANTS
THAT IT WILL NOT ENGAGE IN ANY TRANSACTIONS IN THE SECURITIES OF THE COMPANY
(INCLUDING SHORT SALES) PRIOR TO THE TIME THAT THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT ARE PUBLICLY DISCLOSED.  SUCH INVESTOR FURTHER COVENANTS THAT IT
WILL NOT ENGAGE IN ANY SHORT SALES IN THE COMPANY’S SECURITIES FOR A PERIOD OF
180 DAYS FROM THE CLOSING DATE.  FOR PURPOSES HEREOF, “SHORT SALES” INCLUDE,
WITHOUT LIMITATION, ALL “SHORT SALES” AS DEFINED IN RULE 3B-3 OF THE EXCHANGE
ACT AND RULE 200 PROMULGATED UNDER REGULATION SHO UNDER THE EXCHANGE ACT,
WHETHER OR NOT AGAINST THE BOX, AND ALL TYPES OF DIRECT AND INDIRECT STOCK
PLEDGES, FORWARD SALES CONTRACTS, OPTIONS, PUTS, CALLS, SHORT SALES, SWAPS, “PUT
EQUIVALENT POSITIONS” (AS DEFINED IN RULE 16A-L(H) UNDER THE EXCHANGE ACT) AND
SIMILAR ARRANGEMENTS (INCLUDING ON A TOTAL RETURN BASIS), AND SALES AND OTHER
TRANSACTIONS THROUGH NON-US BROKER DEALERS OR FOREIGN REGULATED BROKERS.

 

ARTICLE V
CONDITIONS

 

5.1           CONDITIONS PRECEDENT TO EACH INVESTOR’S OBLIGATION TO PURCHASE. 
THE OBLIGATION OF EACH INVESTOR TO PURCHASE THE SECURITIES AT THE CLOSING IS
SUBJECT TO THE SATISFACTION OR WAIVER BY SUCH INVESTOR, AT OR BEFORE THE
CLOSING, OF EACH OF THE FOLLOWING CONDITIONS:

 

(A)           THE COMPANY AND EACH SUBSIDIARY, AS APPLICABLE, SHALL HAVE DULY
EXECUTED AND DELIVERED TO EACH INVESTOR:

 

(I)            A CONVERTIBLE NOTE IN FAVOR OF SUCH INVESTOR IN THE AGGREGATE
PRINCIPAL AMOUNT AS IS SET FORTH OPPOSITE SUCH INVESTOR’S NAME ON THE SCHEDULE
OF INVESTORS;

 

(II)           THE GUARANTY AND SECURITY AGREEMENT SIGNED ON BEHALF OF THE
COMPANY, AND EACH SUBSIDIARY PARTY THERETO, TOGETHER WITH THE FOLLOWING (SUBJECT
TO THE PROVISIONS OF THE GUARANTY AND SECURITY AGREEMENT ALLOWING DELIVERY OF
CERTAIN ITEMS POST-CLOSING):

 

(1)           any certificated securities representing shares of capital stock
or other similar interests owned by or on behalf of any Grantor (as defined in
the Guaranty and Security Agreement) constituting Collateral (as defined in the
Guaranty and Security Agreement) as of the Closing Date after giving effect to
the Transactions;

 

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(2)           any promissory notes and other instruments evidencing all loans,
advances and other debt owed or owing to any Grantor constituting Collateral as
of the Closing Date after giving effect to the Transactions;

 

(3)           stock powers and instruments of transfer, endorsed in blank, with
respect to such certificated securities, promissory notes and other instruments;

 

(4)           descriptions of all intellectual property, including all patents,
trademarks and copyrights, owned by the Company and its Subsidiaries in detail
reasonably satisfactory to the Investors;

 

(5)           all instruments and other documents, including UCC financing
statements, required by law or reasonably requested by the Collateral Agent to
be filed, registered or recorded to create or perfect the Liens intended to be
created under the Guaranty and Security Agreement; and

 

(6)           results of a search of the UCC (or equivalent) filings made and
tax and judgment lien searches with respect to the Grantors in the jurisdictions
contemplated by the Guaranty and Security Agreement and copies of the financing
statements (or similar documents) disclosed by such search and evidence
reasonably satisfactory to the Collateral Agent that the Liens indicated by such
financing statements (or similar documents) are acceptable to the Collateral
Agent or have been released; and

 

(III)          THE REGISTRATION RIGHTS AGREEMENT.

 

(B)           SUCH INVESTOR SHALL HAVE RECEIVED THE OPINION FROM THE COMPANY’S
GENERAL COUNSEL, DATED AS OF THE CLOSING DATE, IN SUBSTANTIALLY THE FORM OF
EXHIBIT F ATTACHED HERETO.

 

(C)           THE COMPANY SHALL HAVE DELIVERED A CERTIFICATE, EXECUTED ON BEHALF
OF THE COMPANY BY ITS SECRETARY, DATED AS OF THE CLOSING DATE, CERTIFYING THE
RESOLUTIONS ADOPTED BY THE BOARD OF DIRECTORS OF THE COMPANY APPROVING THE
TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS AND THE ISSUANCE OF THE
SECURITIES, CERTIFYING THE CURRENT VERSIONS OF THE CERTIFICATE AND BYLAWS OF THE
COMPANY AND CERTIFYING AS TO THE SIGNATURES AND AUTHORITY OF PERSONS SIGNING
THIS AGREEMENT AND RELATED DOCUMENTS ON BEHALF OF THE COMPANY.

 

(D)           THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS (EXCEPT FOR THOSE REPRESENTATIONS AND
WARRANTIES THAT ARE QUALIFIED BY MATERIALITY OR MATERIAL ADVERSE EFFECT, WHICH
SHALL BE TRUE AND CORRECT IN ALL RESPECTS) AS OF THE DATE WHEN MADE AND AS OF
THE CLOSING DATE AS THOUGH MADE AT THAT TIME (EXCEPT FOR REPRESENTATIONS AND
WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE) AND THE COMPANY SHALL HAVE
PERFORMED, SATISFIED AND COMPLIED IN ALL MATERIAL RESPECTS WITH THE COVENANTS,
AGREEMENTS AND CONDITIONS REQUIRED BY THE TRANSACTION DOCUMENTS TO BE PERFORMED,
SATISFIED OR COMPLIED WITH BY THE COMPANY AT OR PRIOR TO THE CLOSING DATE.  SUCH
INVESTOR SHALL HAVE RECEIVED A CERTIFICATE, EXECUTED BY THE CHIEF EXECUTIVE
OFFICER OF THE COMPANY, DATED AS OF THE CLOSING DATE, TO THE FOREGOING EFFECT
AND AS TO SUCH OTHER MATTERS AS MAY BE REASONABLY REQUESTED BY SUCH INVESTOR.

 

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(E)           THE COMPANY SHALL HAVE OBTAINED ALL GOVERNMENTAL, REGULATORY OR
THIRD PARTY CONSENTS AND APPROVALS, IF ANY, NECESSARY FOR THE SALE OF THE
SECURITIES, EXCEPT FOR THOSE CONSENTS AND APPROVALS SET FORTH IN SECTIONS
3.1(D), 3.1(G) AND 3.1(J) TO THE SCHEDULE OF EXCEPTIONS.

 

(F)            THE INVESTORS SHALL HAVE RECEIVED ALL FEES AND OTHER AMOUNTS DUE
AND PAYABLE ON OR PRIOR TO THE CLOSING DATE PURSUANT TO SECTION 6.2 HEREOF.

 

(G)           THE COMPANY SHALL HAVE DELIVERED TO SUCH INVESTOR SUCH OTHER
DOCUMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AS SUCH
INVESTOR OR ITS COUNSEL MAY REASONABLY REQUEST.

 

5.2           CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY.  THE
COMPANY’S OBLIGATION TO SELL AND ISSUE THE SECURITIES AT THE CLOSING IS, AT THE
OPTION OF THE COMPANY, SUBJECT TO THE FULFILLMENT OR WAIVER OF THE FOLLOWING
CONDITIONS:

 

(A)           THE INVESTORS SHALL HAVE DELIVERED PAYMENT OF THE PURCHASE PRICE
TO THE COMPANY FOR THE SECURITIES.

 

(B)           ANY AUTHORIZATION, APPROVAL, OR PERMIT OF ANY GOVERNMENTAL
AUTHORITY OR REGULATORY BODY REQUIRED TO BE OBTAINED BY THE COMPANY OR ANY OF
THE INVESTORS IN CONNECTION WITH THE ISSUANCE OF AND SALE OF THE SECURITIES AND
THE PERFORMANCE OF THE OBLIGATIONS IN THIS AGREEMENT SHALL HAVE BEEN OBTAINED
AND EFFECTIVE AS OF THE CLOSING DATE.

 

(C)           THE REPRESENTATIONS AND WARRANTIES MADE BY THE INVESTORS IN
SECTION 3.2 HEREOF QUALIFIED AS TO MATERIALITY SHALL BE TRUE AND CORRECT AT ALL
TIMES PRIOR TO AND ON THE CLOSING DATE AS IF MADE ON AND AS OF THE CLOSING DATE,
EXCEPT TO THE EXTENT ANY SUCH REPRESENTATION OR WARRANTY EXPRESSLY SPEAKS AS OF
AN EARLIER DATE, IN WHICH CASE SUCH REPRESENTATION OR WARRANTY SHALL BE TRUE AND
CORRECT AS OF SUCH EARLIER DATE; AND THE REPRESENTATIONS AND WARRANTIES MADE BY
THE INVESTORS IN SECTION 3.2 HEREOF NOT QUALIFIED AS TO MATERIALITY SHALL BE
TRUE AND CORRECT IN ALL MATERIAL RESPECTS AT ALL TIMES PRIOR TO AND ON THE
CLOSING DATE AS IF MADE ON AND AS OF THE CLOSING DATE, EXCEPT TO THE EXTENT ANY
SUCH REPRESENTATION OR WARRANTY EXPRESSLY SPEAKS AS OF AN EARLIER DATE, IN WHICH
CASE SUCH REPRESENTATION OR WARRANTY SHALL BE TRUE AND CORRECT IN ALL MATERIAL
RESPECTS AS OF SUCH EARLIER DATE.

 

(D)           ALL COVENANTS, AGREEMENTS AND CONDITIONS CONTAINED IN THIS
AGREEMENT TO BE PERFORMED, SATISFIED OR COMPLIED WITH BY THE INVESTORS ON OR
PRIOR TO THE CLOSING DATE SHALL HAVE BEEN PERFORMED, SATISFIED OR COMPLIED WITH
IN ALL MATERIAL RESPECTS.

 

ARTICLE VI
MISCELLANEOUS

 

6.1           TERMINATION.  THIS AGREEMENT MAY BE TERMINATED BY THE COMPANY OR
ANY INVESTOR, BY WRITTEN NOTICE TO THE OTHER PARTIES, IF THE CLOSING HAS NOT
BEEN CONSUMMATED BY THE THIRD BUSINESS DAY FOLLOWING THE DATE OF THIS AGREEMENT;
PROVIDED THAT NO SUCH TERMINATION WILL AFFECT THE RIGHT OF ANY PARTY TO SUE FOR
ANY BREACH BY THE OTHER PARTY (OR PARTIES).

 

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6.2           FEES AND EXPENSES.  AT THE CLOSING, THE COMPANY SHALL PAY TO THE
INVESTOR COUNSEL AN AGGREGATE OF UP TO $15,000 FOR THE LEGAL FEES AND EXPENSES
INCURRED OR TO BE INCURRED IN CONNECTION WITH ITS DUE DILIGENCE AND THE
PREPARATION AND NEGOTIATION OF THE TRANSACTION DOCUMENTS.  THE COMPANY FURTHER
AGREES IT SHALL PAY TO THE INVESTOR COUNSEL AN AGGREGATE OF UP TO $50,000 FOR
THE LEGAL FEES AND EXPENSES INCURRED OR TO BE INCURRED IN CONNECTION AND THE
REGISTRATION OF THE SECURITIES UNDER THE REGISTRATION RIGHTS AGREEMENT UPON THE
EFFECTIVENESS OF SUCH REGISTRATION STATEMENT.  IN LIEU OF THE FOREGOING PAYMENT,
GOLDMAN SACHS MAY RETAIN SUCH AMOUNT AT THE CLOSING OR REQUIRE THE COMPANY TO
PAY SUCH AMOUNT DIRECTLY TO INVESTOR COUNSEL.  EXCEPT AS EXPRESSLY SET FORTH IN
THE TRANSACTION DOCUMENTS TO THE CONTRARY, EACH PARTY SHALL PAY THE FEES AND
EXPENSES OF ITS ADVISERS, COUNSEL, ACCOUNTANTS AND OTHER EXPERTS, IF ANY, AND
ALL OTHER EXPENSES INCURRED BY SUCH PARTY INCIDENT TO THE NEGOTIATION,
PREPARATION, EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT.  THE COMPANY
SHALL PAY ALL TRANSFER AGENT FEES, STAMP TAXES AND OTHER TAXES AND DUTIES LEVIED
IN CONNECTION WITH THE INITIAL SALE AND ISSUANCE OF THEIR APPLICABLE SECURITIES
TO THE INVESTORS, INCLUDING THE CONVERSION OF THE CONVERTIBLE NOTES.

 

6.3           ENTIRE AGREEMENT.  THE TRANSACTION DOCUMENTS, TOGETHER WITH THE
EXHIBITS AND SCHEDULES THERETO, CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES
WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR AGREEMENTS AND
UNDERSTANDINGS, ORAL OR WRITTEN, WITH RESPECT TO SUCH MATTERS, WHICH THE PARTIES
ACKNOWLEDGE HAVE BEEN MERGED INTO SUCH DOCUMENTS, EXHIBITS AND SCHEDULES.  AT OR
AFTER THE CLOSING, AND WITHOUT FURTHER CONSIDERATION, THE COMPANY AND THE
INVESTORS WILL EXECUTE AND DELIVER SUCH FURTHER DOCUMENTS AS MAY BE REASONABLY
REQUESTED IN ORDER TO GIVE PRACTICAL EFFECT TO THE INTENTION OF THE PARTIES
UNDER THE TRANSACTION DOCUMENTS.

 

6.4           NOTICES.  ANY AND ALL NOTICES OR OTHER COMMUNICATIONS OR
DELIVERIES REQUIRED OR PERMITTED TO BE PROVIDED HEREUNDER SHALL BE IN WRITING
AND SHALL BE DEEMED GIVEN AND EFFECTIVE ON THE EARLIEST OF (A) THE DATE OF
TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS DELIVERED VIA FACSIMILE AT THE
FACSIMILE NUMBER SPECIFIED IN THIS SECTION PRIOR TO 6:30 P.M.  (NEW YORK CITY
TIME) ON A TRADING DAY, (B) THE NEXT TRADING DAY AFTER THE DATE OF TRANSMISSION,
IF SUCH NOTICE OR COMMUNICATION IS DELIVERED VIA FACSIMILE AT THE FACSIMILE
NUMBER SPECIFIED IN THIS SECTION ON A DAY THAT IS NOT A TRADING DAY OR LATER
THAN 6:30 P.M.  (NEW YORK CITY TIME) ON ANY TRADING DAY, (C) THE TRADING DAY
FOLLOWING THE DATE OF DEPOSIT WITH A NATIONALLY RECOGNIZED OVERNIGHT COURIER
SERVICE, OR (D) UPON ACTUAL RECEIPT BY THE PARTY TO WHOM SUCH NOTICE IS REQUIRED
TO BE GIVEN.  THE ADDRESSES AND FACSIMILE NUMBERS FOR SUCH NOTICES AND
COMMUNICATIONS ARE THOSE SET FORTH ON THE SIGNATURE PAGES HEREOF, OR SUCH OTHER
ADDRESS OR FACSIMILE NUMBER AS MAY BE DESIGNATED IN WRITING HEREAFTER, IN THE
SAME MANNER, BY ANY SUCH PERSON.

 

6.5           AMENDMENTS; WAIVERS.  THIS AGREEMENT MAY BE AMENDED AND ANY
PROVISION HEREOF MAY BE WAIVED (EITHER GENERALLY OR IN A PARTICULAR INSTANCE AND
EITHER RETROACTIVELY OR PROSPECTIVELY) WITH THE WRITTEN CONSENT OF EACH OF
(I) THE COMPANY, (II) GOLDMAN SACHS, AND (III) SYNTEK; PROVIDED, HOWEVER, THAT
FOLLOWING REPAYMENT OF $1,500,000 OF THE PRINCIPAL AMOUNT UNDER THE CONVERTIBLE
NOTE ISSUED TO SYNTEK HEREUNDER (PLUS ALL ACCRUED AND UNPAID INTEREST THEREON),
SUCH AMENDMENT OF OR WAIVER UNDER THE AGREEMENT SHALL NO LONGER REQUIRE THE
WRITTEN CONSENT OF SYNTEK; PROVIDED, FURTHER, THAT NO SUCH AMENDMENT OR WAIVER
MAY MATERIALLY AND ADVERSELY AFFECT THE ECONOMIC INTEREST OF SYNTEK IN THE
COMPANY WITHOUT THE WRITTEN CONSENT OF SYNTEK.

 

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6.6           CONSTRUCTION.  THE HEADINGS HEREIN ARE FOR CONVENIENCE ONLY, DO
NOT CONSTITUTE A PART OF THIS AGREEMENT AND SHALL NOT BE DEEMED TO LIMIT OR
AFFECT ANY OF THE PROVISIONS HEREOF.  THE LANGUAGE USED IN THIS AGREEMENT WILL
BE DEEMED TO BE THE LANGUAGE CHOSEN BY THE PARTIES TO EXPRESS THEIR MUTUAL
INTENT, AND NO RULES OF STRICT CONSTRUCTION WILL BE APPLIED AGAINST ANY PARTY.

 

6.7           SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF THE PARTIES AND THEIR SUCCESSORS AND PERMITTED ASSIGNS. 
THE COMPANY MAY NOT ASSIGN THIS AGREEMENT OR ANY RIGHTS OR OBLIGATIONS HEREUNDER
WITHOUT THE PRIOR WRITTEN CONSENT OF THE INVESTORS.  ANY INVESTOR MAY ASSIGN ITS
RIGHTS UNDER THIS AGREEMENT TO ANY PERSON TO WHOM SUCH INVESTOR ASSIGNS OR
TRANSFERS ANY SECURITIES, PROVIDED SUCH TRANSFEREE AGREES IN WRITING TO BE
BOUND, WITH RESPECT TO THE TRANSFERRED SECURITIES, BY THE PROVISIONS HEREOF THAT
APPLY TO THE “INVESTORS.”

 

6.8           GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.  THE CORPORATE LAWS OF
THE STATE OF NEW YORK SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF
THE COMPANY AND ITS STOCKHOLDERS.  ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.  THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK,
BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY
OR ANY INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE
ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE,
AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY
OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION
OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER.  EACH
PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO
PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY
THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF
DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS
AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED
TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. 
THE COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

 

6.9           SURVIVAL.  THE REPRESENTATIONS AND WARRANTIES, AGREEMENTS AND
COVENANTS CONTAINED HEREIN SHALL SURVIVE THE CLOSING.

 

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6.10         EXECUTION.  THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE
COUNTERPARTS, ALL OF WHICH WHEN TAKEN TOGETHER SHALL BE CONSIDERED ONE AND THE
SAME AGREEMENT AND SHALL BECOME EFFECTIVE WHEN COUNTERPARTS HAVE BEEN SIGNED BY
EACH PARTY AND DELIVERED TO THE OTHER PARTY, IT BEING UNDERSTOOD THAT BOTH
PARTIES NEED NOT SIGN THE SAME COUNTERPART.  IN THE EVENT THAT ANY SIGNATURE IS
DELIVERED BY FACSIMILE TRANSMISSION, SUCH SIGNATURE SHALL CREATE A VALID AND
BINDING OBLIGATION OF THE PARTY EXECUTING (OR ON WHOSE BEHALF SUCH SIGNATURE IS
EXECUTED) WITH THE SAME FORCE AND EFFECT AS IF SUCH FACSIMILE SIGNATURE
PAGE WERE AN ORIGINAL THEREOF.

 

6.11         SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT IS HELD TO BE
INVALID OR UNENFORCEABLE IN ANY RESPECT, THE VALIDITY AND ENFORCEABILITY OF THE
REMAINING TERMS AND PROVISIONS OF THIS AGREEMENT SHALL NOT IN ANY WAY BE
AFFECTED OR IMPAIRED THEREBY AND THE PARTIES WILL ATTEMPT TO AGREE UPON A VALID
AND ENFORCEABLE PROVISION THAT IS A REASONABLE SUBSTITUTE THEREFOR, AND UPON SO
AGREEING, SHALL INCORPORATE SUCH SUBSTITUTE PROVISION IN THIS AGREEMENT.

 

6.12         RESCISSION AND WITHDRAWAL RIGHT.  NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN (AND WITHOUT LIMITING ANY SIMILAR PROVISIONS OF) THE
TRANSACTION DOCUMENTS, WHENEVER ANY INVESTOR EXERCISES A RIGHT, ELECTION, DEMAND
OR OPTION OWED TO SUCH INVESTOR BY THE COMPANY UNDER A TRANSACTION DOCUMENT AND
THE COMPANY DOES NOT TIMELY PERFORM ITS RELATED OBLIGATIONS WITHIN THE PERIODS
THEREIN PROVIDED, THEN, PRIOR TO THE PERFORMANCE BY THE COMPANY OF THE COMPANY’S
RELATED OBLIGATION, SUCH INVESTOR MAY RESCIND OR WITHDRAW, IN ITS SOLE
DISCRETION, FROM TIME TO TIME UPON WRITTEN NOTICE TO THE COMPANY, ANY RELEVANT
NOTICE, DEMAND OR ELECTION IN WHOLE OR IN PART WITHOUT PREJUDICE TO ITS FUTURE
ACTIONS AND RIGHTS.

 

6.13         REPLACEMENT OF SECURITIES.  IF ANY CERTIFICATE OR INSTRUMENT
EVIDENCING ANY SECURITIES IS MUTILATED, LOST, STOLEN OR DESTROYED, THE COMPANY
SHALL ISSUE OR CAUSE TO BE ISSUED IN EXCHANGE AND SUBSTITUTION FOR AND UPON
CANCELLATION THEREOF, OR IN LIEU OF AND SUBSTITUTION THEREFOR, A NEW CERTIFICATE
OR INSTRUMENT, BUT ONLY UPON RECEIPT OF EVIDENCE REASONABLY SATISFACTORY TO THE
COMPANY OF SUCH LOSS, THEFT OR DESTRUCTION AND THE EXECUTION BY THE HOLDER
THEREOF OF A CUSTOMARY LOST CERTIFICATE AFFIDAVIT OF THAT FACT AND AN AGREEMENT
TO INDEMNIFY AND HOLD HARMLESS THE COMPANY FOR ANY LOSSES IN CONNECTION
THEREWITH.  THE APPLICANTS FOR A NEW CERTIFICATE OR INSTRUMENT UNDER SUCH
CIRCUMSTANCES SHALL ALSO PAY ANY REASONABLE THIRD-PARTY COSTS ASSOCIATED WITH
THE ISSUANCE OF SUCH REPLACEMENT SECURITIES.

 

6.14         OTHER ENGAGEMENTS AND ACTIVITIES.  THE INVESTMENT IN THE COMPANY
MADE BY GOLDMAN SACHS (TOGETHER WITH ANY OTHER AFFILIATE OF GOLDMAN SACHS, THE
“GS ENTITIES” OR THE “GS ENTITY”) PURSUANT TO THIS AGREEMENT, AND ANY SUBSEQUENT
INVESTMENTS IN THE COMPANY BY ANY GS ENTITY AFTER THE DATE HEREOF, IS MADE
NOTWITHSTANDING ANY ENGAGEMENT, PRIOR TO OR SUBSEQUENT TO THE DATE HEREOF, BY
THE COMPANY, OF ANY GS ENTITY AS FINANCIAL ADVISOR, AGENT OR UNDERWRITER TO THE
COMPANY.  NOTWITHSTANDING ANYTHING IN THE TRANSACTION DOCUMENTS TO THE CONTRARY,
NO GS ENTITY SHALL BE RESTRICTED IN ANY WAY FROM ENGAGING IN ANY BROKERAGE,
INVESTMENT ADVISORY, FINANCIAL ADVISORY, FINANCING, ASSET MANAGEMENT, TRADING,
MARKET MAKING, ARBITRAGE AND OTHER SIMILAR ACTIVITIES CONDUCTED IN THE ORDINARY
COURSE OF GOLDMAN SACHS’S BUSINESS.  FURTHER, NEITHER THE COMPANY NOR ANY
SUBSIDIARY SHALL HAVE ANY RIGHT, BY VIRTUE OF ANY OF THE TRANSACTION DOCUMENTS
TO, IN OR TO SUCH OTHER VENTURES OR ACTIVITIES OF ANY GS ENTITY, OR TO THE
INCOME OR PROCEEDS DERIVED THEREFROM, AND THE PURSUIT OF SUCH VENTURES, EVEN IF
COMPETITIVE WITH THE BUSINESS OF THE COMPANY, SHALL NOT BE DEEMED WRONGFUL OR
IMPROPER.  ANY GS ENTITY SHALL HAVE THE RIGHT TO TAKE FOR ITS OWN ACCOUNT OR TO
RECOMMEND TO OTHERS, ANY INVESTMENT OPPORTUNITY INCLUDING INVESTMENT
OPPORTUNITIES THAT MAY BE COMPETITIVE WITH OR INVOLVE THE SAME LINE OF BUSINESS
AS THAT CONDUCTED OR PROPOSED TO BE CONDUCTED FROM TIME TO TIME BY THE COMPANY.

 

21

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6.15         NO PROMOTION.  EXCEPT AS OTHERWISE REQUIRED BY LAW AND AS PROVIDED
IN SECTION 4.5 HEREIN, THE COMPANY AGREES THAT IT WILL NOT, WITHOUT THE PRIOR
WRITTEN CONSENT OF GOLDMAN SACHS IN EACH INSTANCE, (I) USE IN ADVERTISING,
PUBLICITY, OR OTHERWISE THE NAME OF ANY GS ENTITY, OR ANY PARTNER OR EMPLOYEE OF
ANY GS ENTITY, NOR ANY TRADE NAME, TRADEMARK, TRADE DEVICE, SERVICE MARK, SYMBOL
OR ANY ABBREVIATION, CONTRACTION OR SIMULATION THEREOF OWNED BY ANY GS ENTITY OR
(II) REPRESENT, DIRECTLY OR INDIRECTLY, THAT ANY PRODUCT OR ANY SERVICE PROVIDED
BY THE COMPANY HAS BEEN APPROVED OR ENDORSED BY ANY GS ENTITY.  THIS PROVISION
SHALL SURVIVE TERMINATION OF THE TRANSACTION DOCUMENTS.

 

[SIGNATURE PAGES TO FOLLOW]

 

22

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Investor Signature Page

 

By its execution and delivery of this signature page, the undersigned Investor
hereby joins in and agrees to be bound by the terms and conditions of the
Securities Purchase Agreement dated as of June 13, 2008 (the “Purchase
Agreement”) by and among Vyyo Inc.  and the investors (as defined therein), as
to the number of shares of Convertible Notes set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.

 

 

 

GOLDMAN SACHS INVESTMENT

 

 

PARTNERS MASTER FUND, L.P.

 

 

 

 

 

By:

Goldman Sachs Investment Partners GP, LLC,

 

 

 

its General Partner

 

 

 

 

 

By:

/s/ Nick Advani

 

 

 

Name: Nick Advani

 

 

 

Title: Managing Director

 

 

 

 

 

Address for Notice:

 

 

 

 

 

Goldman Sachs Investment Partners Master Fund,

 

 

L.P.

 

 

One New York Plaza

 

 

New York, NY 10004

 

 

Telephone: (212) 902-4934

 

 

Facsimile: (212) 346-3124

 

 

Attention: Nick Advani

 

 

 

 

 

with a copy to:

 

 

 

 

 

Goldman Sachs Investment Partners Master Fund,

 

 

L.P.

 

 

One New York Plaza

 

 

New York, NY 10004

 

 

Telephone:

 

 

Facsimile:

 

 

Attention: Rashid S. Alvi

 

 

 

 

 

and

 

 

 

 

 

Proskauer Rose LLP

 

 

1585 Broadway

 

 

New York, NY 10036

 

 

Facsimile: (212) 969-2900

 

 

Telephone: (212) 969-3470

 

 

Attention: Stuart Bressman, Esq.

 

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

 

Investor Signature Page

 

By its execution and delivery of this signature page, the undersigned Investor
hereby joins in and agrees to be bound by the terms and conditions of the
Securities Purchase Agreement dated as of June 13, 2008 (the “Purchase
Agreement”) by and among Vyyo Inc.  and the investors (as defined therein), as
to the number of shares of Convertible Notes set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.

 

 

 

Syntek Capital AG

 

 

 

 

 

 

 

 

By:

/s/ Franco Franca

 

 

 

Name: Franco Franca

 

 

 

Title: CEO

 

 

 

 

 

 

 

 

By:

 /s/ Paolo Giacometti

 

 

 

Name: Paolo Giacometti

 

 

 

Title: CFO

 

 

 

 

 

Address for Notice:

 

 

 

 

 

Syntek Capital AG

 

 

Zugspitzstrasse 15

 

 

82049 Pullach – Germany

 

 

Telephone: +498955277201

 

 

Facsimile: +498955277405

 

 

Attention: Paolo Giacometti

 

 

Email: paolo.giacometti@syntekcapital.com

 

 

 

 

 

with a copy to:

 

 

 

 

 

Jeff Neurman

 

 

Syntek Capital

 

 

939 Union Street, #6A

 

 

Brooklyn, NY 11215

 

 

Email: jeff.neurman@syntekcapital.com

 

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

 

Company Signature Page

 

By its execution and delivery of this signature page, the undersigned hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement dated as of June 13, 2008 (the “Purchase Agreement”) by and
among Vyyo Inc. and the investors (as defined therein), as to the number of
shares of Convertible Notes set forth below, and authorizes this signature
page to be attached to the Purchase Agreement or counterparts thereof.

 

 

 

VYYO INC.

 

 

 

 

 

 

 

 

By:

 /s/ Wayne H. Davis

 

 

 

Name:

Wayne H. Davis

 

 

 

Title:

Chief Executive Officer

 

 

 

 

 

Address for Notice:

 

 

 

 

 

6625 The Corners Parkway, Suite 100

 

 

Norcross, GA 30092

 

 

Telephone: (678) 282-8011

 

 

Facsimile: (770) 446-1110

 

 

Attention: Tashia L. Rivard, General Counsel

 

 

 

 

 

 

 

 

with a copy to:

 

 

 

 

 

 

 

 

Warner Norcross & Judd LLP

 

 

900 Fifth Third Center

 

 

111 Lyon Street, NW

 

 

Grand Rapids, MI 49503

 

 

Telephone: (616) 752-2137

 

 

Facsimile: (616) 222-2137

 

 

Attention: Stephen C. Waterbury

 

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

 

Exhibits:

 

A                                      Schedule of Investors

 

B                                        Form of Convertible Note

 

C                                        Form of Restated Registration Rights
Agreement

 

D                                       Form of Guaranty and Security Agreement

 

E                                         Schedule of Exceptions

 

F                                         Opinion of the General Counsel of the
Company

 

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

 

Exhibit A

 

Schedule of Investors

 

Investor

 

Convertible
Note Amount

 

Cash Purchase Price

 

Outstanding Principal
Amount of Existing
Notes

 

 

 

 

 

 

 

 

 

Goldman Sachs Investment Partners Master Fund, L.P.

 

$

38,000,000

 

$

3,000,000

 

$

35,000,000

 

 

 

 

 

 

 

 

 

Syntek Capital AG

 

$

3,000,000

 

$

1,500,000

 

$

1,500,000

 

 

 

 

 

 

 

 

 

TOTAL

 

$

41,000,000

 

$

4,500,000

 

$

36,500,00

 

 

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