Exhibit 10.1

EXECUTION COPY

PURCHASE AGREEMENT

This Purchase Agreement (this “Agreement”) is dated as of March 22, 2006 between
Broadwing Corporation, a Delaware corporation (the “Company”), and the
purchasers identified on the signature pages hereto (each, a “Purchaser” and
collectively, the “Purchasers”).

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

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

“Advice” has the meaning set forth in Section 6.5.

“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.

“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 Company Shares
pursuant to Section 2.1.

“Closing Date” means the date of the Closing.

“Company Counsel” means Mayer, Brown, Rowe & Maw LLP, counsel to the Company.

“Company Shares” means an aggregate of 3,000,000 shares of Common Stock, which
are being issued and sold by the Company to the Purchasers at the Closing.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, par value $0.01 per share.

“Disclosure Materials” has the meaning set forth in Section 3.1(g).

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“Effective Date” means the date that the Registration Statement is first
declared effective by the Commission.

“Effectiveness Period” has the meaning set forth in Section 6.1(b).

“Event Payment Date” has the meaning set forth in Section 6.1(c).

“8-K Filing” has the meaning set forth in Section 4.4.

“Event” has the meaning set forth in Section 6.1(c).

“Event Payments” has the meaning set forth in Section 6.1(c).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Events” has the meaning set forth in Section 6.1(c).

“Form 10-K” has the meaning set forth in Section 3.1(a).

“GAAP” has the meaning set forth in Section 3.1(g).

“Indemnified Party” has the meaning set forth in Section 6.4(c).

“Indemnifying Party” has the meaning set forth in Section 6.4(c).

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

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

“Losses” means any and all losses, claims, damages, liabilities, settlement
costs and expenses, including, without limitation, costs of preparation,
investigation and litigation and reasonable attorneys’ fees.

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

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

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

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced, threatened, brought, conducted or heard by or
before, or otherwise involving, any governmental entity or arbitrator.

 

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

“Purchaser Counsel” has the meaning set forth in Section 6.2(a).

“Registrable Securities” means any Common Stock issued or issuable pursuant to
the Transaction Documents, together with any securities issued or issuable upon
any stock split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing.

“Registration Statement” means each registration statement required to be filed
under Article VI, including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.

“Related Person” has the meaning set forth in Section 4.6.

“Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and Rule 424,
respectively, promulgated by the Commission 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 Commission having substantially the same effect as such
Rule.

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

“Subsidiary” means any “significant subsidiary,” as defined in Rule 1-02(w) of
Regulation S-X promulgated by the Commission pursuant to the Exchange Act

“Trading Day” means any day on which the Common Stock is listed or quoted and
traded on the Trading Market.

“Trading Market” means the Nasdaq National Market.

“Transaction Documents” means this Agreement, the Transfer Agent Instructions
and any other documents or agreements executed in connection with the
transactions contemplated hereunder.

“Transfer Agent Instructions” means the Irrevocable Transfer Agent Instructions,
in the form of Exhibit A, executed by the Company and delivered to and
acknowledged in writing by the Company’s transfer agent.

 

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ARTICLE II.

PURCHASE AND SALE

2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at
the Closing the Company shall issue and sell to each Purchaser, and each
Purchaser shall, severally and not jointly, purchase from the Company, such
number of Company Shares set forth on such Purchaser’s signature page attached
hereto following the heading “Number of Shares.” The Closing shall take place at
the offices of Company Counsel within five Business Days immediately following
the execution hereof, or at such other location or time as the parties may
agree.

2.2 Closing Deliveries.

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

(i) one or more stock certificates, free and clear of all restrictive and other
legends (except as expressly provided in Section 4.1(b) hereof), evidencing such
number of Company Shares equal to the number of Company Shares set forth
opposite such Purchaser’s name on Schedule A hereto under the heading “Purchased
Shares,” registered in the name of such Purchaser;

(ii) legal opinions of the Company’s internal counsel and Company Counsel, in
the form of Exhibit B-1 and B-2 respectively, executed by such counsel and
delivered to the Purchasers; and

(iii) duly executed Transfer Agent Instructions acknowledged by the Company’s
transfer agent.

(b) At the Closing, each Purchaser shall deliver or cause to be delivered to the
Company the purchase price set forth set forth on such Purchaser’s signature
page attached hereto following the heading “Purchase Price” in United States
dollars and in immediately available funds, by wire transfer to an account
designated in writing to such Purchaser by the Company for such purpose.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. The Company hereby represents
and warrants to each of the Purchasers as follows (which representations and
warranties shall be deemed to apply, where appropriate, to each Subsidiary of
the Company):

(a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than
those listed in the SEC Report on Form 10-K for the year ended December 31, 2005
(the “Form 10-K”) or Schedule 3.1(a). Except as disclosed in the Form 10-K or in
Schedule 3.1(a), the Company owns, directly or indirectly, the capital stock or
comparable equity interests of each Subsidiary free and clear of any Lien 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.

 

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(b) Organization and Qualification. Each of the Company and the 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 power and authority to own and use its properties and assets and
to carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified to
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, could not, individually or
in the aggregate, (i) adversely affect the legality, validity or enforceability
of any Transaction Document, (ii) reasonably be expected to have or result in a
material adverse effect on the results of operations, assets, business or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole on a consolidated basis, or (iii) 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”).

(c) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents 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.

(d) No Conflicts. The execution, delivery and performance of the Transaction
Documents to which it is a party 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 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 Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, except to the extent that such conflict, default or termination right
could 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 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 Subsidiary is
bound or affected.

 

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(e) Issuance of the Company Shares. The Company Shares 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 rights or similar rights of
stockholders.

(f) Capitalization. As of February 28, 2006, the outstanding capital stock of
the Company consists of 76,165,407 shares, 76,165,407 shares of which are common
stock, $0.01 par value per share, and zero shares of which are preferred stock,
$0.01 par value per share. The preceding sentence does not give effect to the
Company’s private placement of 7,400,000 shares of Common Stock on March 14,
2006 and any other subsequent issuances of Common Stock pursuant to the
Company’s equity based compensation plans. As of February 28, 2006, the
authorized capital stock of the Company consists of 1,900,000,000 shares of
common stock. As of December 31, 2005, there were 74,038,257 shares of common
stock issued and outstanding. There were no shares of preferred stock
outstanding on December 31, 2005. Except as disclosed in the SEC Reports (as
defined below), there has been no material change in the Company’s
capitalization since December 31, 2005. All outstanding shares of capital stock
are duly authorized, validly issued, fully paid and nonassessable and have been
issued in compliance with all applicable securities laws. Except as disclosed in
Schedule 3.1(f) here are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. Except as disclosed in Schedule
3.1(f), the issue and sale of the Company Shares will not obligate the Company
to issue shares of Common Stock or other securities to any Person (other than
the Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under
such securities. To the knowledge of the Company, except as specifically
disclosed in the proxy statement for the Company’s annual meeting of
stockholders held on May 13, 2005, no Person or group of related Persons
beneficially owns (as determined pursuant to Rule 13d-3 under 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) 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 two years 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 or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission 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

 

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to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto, and fairly present in all
material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments. All material
agreements to which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any Subsidiary are subject are included as
part of or specifically identified in the SEC Reports to the extent required by
the rules and regulations of the Commission as in effect at the time of filing.

(h) Material Changes. Since the date of the audited financial statements
included in the Form 10-K, (i) there has been no event, occurrence or
development that, individually or in the aggregate, has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) the Company
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (iii) the Company has not altered
its method of accounting or the identity of its auditors, except as disclosed in
its SEC Reports, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock-based plans.

(i) Absence of Litigation. Except as disclosed in the Form 10-K, there is no
action, suit, claim, proceeding, 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 Subsidiaries that could, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

(j) Compliance. Neither the Company nor any Subsidiary (i) is in default under
or in violation of (and no event has occurred that has not been waived that,
with notice or lapse of time or both, would result in a default by the Company
or any Subsidiary under), nor has the Company or any Subsidiary received 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) to the Company’s
knowledge, is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and

 

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safety, product quality and safety and employment and labor matters, except in
each case as could not, individually or in the aggregate, reasonably be expected
to have or result in a Material Adverse Effect.

(k) Title to Assets. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them that is material to the
business of the Company and the Subsidiaries and good and marketable title in
all personal property owned by them that is material to the business of the
Company and the Subsidiaries, in each case free and clear of all Liens, except
for Liens that do not materially affect the value of such property, do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries and could not, individually or in the
aggregate, have or result in a Material Adverse Effect. To the Company’s
knowledge, any real property and facilities held under lease by the Company and
the Subsidiaries are held by them under valid, subsisting and enforceable leases
of which the Company and the Subsidiaries are in compliance except, in each
case, as could not reasonably be expected to result in a Material Adverse
Effect.

(l) Certain Fees. Other than fees to Jefferies & Company, Inc. and Davidson
Capital Group for which the Company will be solely liable and which will be
fully paid at Closing, no brokerage or finder’s fees or commissions are or will
be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by this Agreement, and the Company has not taken
any action that would cause any Purchaser to be liable for any such fees or
commissions pursuant to any agreement or arrangement to which the Company is a
party.

(m) Private Placement. Neither the Company nor any Person acting on the
Company’s behalf has sold or offered to sell or solicited any offer to buy the
Company Shares by means of any form of general solicitation or advertising.
Neither the Company nor any of its Affiliates nor any person acting on the
Company’s 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 Company Shares as
contemplated hereby or (ii) cause the offering of the Company Shares 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, and is not an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company is not a United States real property holding corporation
within the meaning of the Foreign Investment in Real Property Tax Act of 1980.
No consent, license, permit, waiver approval or authorization of, or
designation, declaration, registration or filing with, the Commission or any
state securities regulatory authority is required in connection with the offer,
sale, issuance or delivery of the Company Shares, other than the possible filing
of a Form D with the Commission.

(n) Well-Known Seasoned Issuer; Form S-3 Eligibility. The Company is currently,
and will be at the time of filing of the Registration Statement, a “well-known
seasoned issuer” as defined in Rule 405 under the Securities Act. The
Registration Statement will be at the time of filing an “automatic shelf
registration statement,” as defined in Rule 405 under the

 

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Securities Act, the Company has not received from the Commission any notice
pursuant to Rule 401(g)(2) under the Securities Act objecting to use of the
automatic shelf registration statement form, and the Company is eligible to
register the Company Shares for resale by the Purchasers using Form S-3
promulgated under the Securities Act.

(o) Company Not Ineligible Issuer. The Company is not an “ineligible issuer” (as
defined in Rule 405 under the Securities Act), without taking account of any
determination by the Commission pursuant to Rule 405 under the Securities Act
that it is not necessary under the circumstances that the Company be considered
an ineligible issuer.

(p) Listing and Maintenance Requirements. Since October 8, 2004, the Company has
been in compliance with all listing and maintenance requirements for the Trading
Market on which the Common Stock is listed or quoted except, in each case, as
could not reasonably be expected to result in de-listing or suspension from the
Trading Market.

(q) Registration Rights. 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 Commission or any other
governmental authority that have not been satisfied and extinguished, except
pursuant to the Purchase Agreement, dated March 12, 2006, between the Company
and the purchasers named therein.

(r) 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 could become
applicable to any of the Purchasers solely as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including, without limitation, as a result of the
Company’s issuance of the Company Shares and the Purchasers’ ownership or
disposition of the Company Shares.

(s) Disclosure. The Company confirms that neither it nor any other Person acting
on its behalf has provided any of the Purchasers or their agents or counsel with
any information that constitutes or might constitute material, nonpublic
information. The Company understands and confirms that each of the Purchasers
will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Purchasers regarding
the Company, its business and the transactions contemplated hereby, including
the Schedules to this Agreement, furnished by or on behalf of the Company taken
as a whole is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed. The Company acknowledges and agrees that no Purchaser makes or has
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2.

 

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(t) Acknowledgment Regarding Purchasers’ Purchase of Company Shares. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Company Shares. The Company further represents to each Purchaser
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.

(u) Patents and Trademarks. Except as disclosed in the Form 10-K, to the
Company’s knowledge, the Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and other similar rights that
are necessary or material for use in connection with their respective businesses
as described in the Form 10-K and which the failure to so have could have a
Material Adverse Effect (collectively, the “Intellectual Property Rights”).
Neither the Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or any Subsidiary violates or
infringes upon the rights of any Person except as may be described in the Form
10-K or as could not reasonably be expected to result in a Material Adverse
Effect. To the knowledge of the Company, all such Intellectual Property Rights
are enforceable and there is no existing infringement by another Person of any
of the Intellectual Property Rights, in each case except as may be described in
the Form 10-K or as could not reasonably be expected to result in a Material
Adverse Effect.

(v) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the Form 10-K, except where the failure to
possess such permits could not, individually or in the aggregate, have or result
in a Material Adverse Effect (“Material Permits”), and neither the Company nor
any Subsidiary has received any written notice of proceedings relating to the
revocation or modification of any Material Permit, except as described in the
Form 10-K or as could not reasonably be expected to result in a Material Adverse
Effect.

(w) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge
of the Company, none of the employees of the Company, is presently a party to
any transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors) exceeding $60,000, including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

(x) Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are

 

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prudent and customary in the businesses in which the Company and the
Subsidiaries are engaged. Neither the Company nor any Subsidiary has any reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business.

(y) Solvency. Based on the financial condition of the Company as of the Closing
Date, (i) the Company’s fair saleable value of its assets exceeds the amount
that will be required to be paid on or in respect of the Company’s existing
debts and other liabilities (including known contingent liabilities) as they
mature; (ii) the Company’s assets do not constitute unreasonably small capital
to carry on its business for the current fiscal year as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof; and (iii) the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its debt when such amounts are required to be paid. The Company does
not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in
respect of its debt).

(z) Internal Accounting and Disclosure Controls. The Company and the
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company maintains disclosure controls and
procedures (as defined in Exchange Act Rule 13a-15(e)) that comply with the
requirements of the Exchange Act; such disclosure controls and procedures are
effective.

(aa) Internal Control Over Financial Reporting. The Company maintains a system
of internal control over financial reporting (as such term is defined in Rule
13a-15(f) under the Exchange Act) that complies with the requirements of the
Exchange Act. The Company’s internal control over financial reporting is
effective and the Company is not aware of any material weaknesses in its
internal control over financial reporting. Since the date of the audited
financial statements included in the Form 10-K, 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.

(bb) Sarbanes-Oxley Act. The Company is in compliance in all material respects
with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that
are effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the Commission thereunder that are effective as of
the date hereof.

(cc) Labor Relations. No labor or employment dispute exists or, to the knowledge
of the Company, is imminent or threatened, with respect to any of the employees
or consultants of the Company that has, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

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3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, as
to itself only and for no other Purchaser, represents and warrants to the
Company as follows:

(a) Organization; Authority. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with 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 Purchaser of the Company Shares hereunder has been duly
authorized by all necessary action on the part of such Purchaser. This Agreement
has been duly executed and delivered by such Purchaser and constitutes the valid
and binding obligation of such Purchaser, enforceable against it in accordance
with its terms.

(b) Investment Intent. Such Purchaser is acquiring the Company Shares as
principal for its own account for investment purposes only and not with a view
to or for distributing such Company Shares or any part thereof, without
prejudice, however, to such Purchaser’s right, subject to the provisions of this
Agreement, at all times to sell or otherwise dispose of all or any part of such
Company Shares pursuant to an effective registration statement under the
Securities Act or under an exemption from such registration and in compliance
with applicable federal and state securities laws. Nothing contained herein
shall be deemed a representation or warranty by such Purchaser to hold Company
Shares for any period of time. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Company Shares.

(c) Purchaser Status. At the time such Purchaser was offered the Company Shares,
it was, and at the date hereof it is, an “accredited investor” as defined in
Rule 501(a) under the Securities Act.

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

(e) Access to Information. Such Purchaser acknowledges that it has reviewed the
Disclosure Materials and has been afforded: (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Company Shares and the merits and risks of investing in the
Company Shares; (ii) access to information about the Company and the
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. Neither such inquiries nor any other investigation

 

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conducted by or on behalf of such Purchaser or its representatives or counsel
shall modify, amend or affect such Purchaser’s right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction Documents.

(f) Certain Fees. Except for the fees that will be payable by the Company under
Section 3.1(l), such Purchaser has not entered into any agreement or arrangement
that would entitle any broker or finder to compensation by the Company in
connection with the sale of the Company Shares to such Purchaser.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) Company Shares may only be disposed of pursuant to an effective registration
statement under 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 any transfer of Company
Shares other than pursuant to an effective registration statement or to the
Company or pursuant to paragraph (k) of Rule 144, except as otherwise set forth
herein, the Company may require that the transferor provide to the Company an
opinion of counsel, selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration 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, any transfer of
Company Shares by a Purchaser to an Affiliate of such Purchaser, provided that
the transferee certifies to the Company that it is an “accredited investor” as
defined in Rule 501(a) under the Securities Act.

(b) The Purchasers agree to the imprinting, so long as is required by this
Section 4.1(b), of the following legend on any certificate evidencing Company
Shares:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE
FOREGOING, (I) THESE SECURITIES MAY BE TRANSFERRED TO AN AFFILIATE (AS SUCH TERM
IS USED IN RULE 144 UNDER THE SECURITIES ACT) PROVIDED SUCH AFFILIATE IS AN
“ACCREDITED INVESTOR” (AS SUCH TERM IS DEFINED IN RULES AND REGULATIONS
PROMULGATED

 

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UNDER THE SECURITIES ACT), AND (II) THESE SECURITIES MAY BE PLEDGED TO AN
“ACCREDITED INVESTOR” (AS SUCH TERM IS DEFINED IN RULES AND REGULATIONS
PROMULGATED UNDER THE SECURITIES ACT) IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

Certificates evidencing Company Shares shall not be required to contain such
legend or any other legend (i) while a Registration Statement covering the
resale of such Company Shares is effective under the Securities Act, or
(ii) following any sale of such Company Shares pursuant to Rule 144, or (iii) if
such Company Shares are eligible for sale under paragraph (k) of Rule 144, or
(iv) if such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the Staff of the Commission). The Company shall cause its internal counsel and
Company Counsel to issue the legal opinion included in the Transfer Agent
Instructions to the Company’s transfer agent on the Effective Date. Following
the Effective Date or at such earlier time as a legend is no longer required for
certain Company Shares, the Company will no later than three Trading Days
following the delivery by a Purchaser to the Company or the Company’s transfer
agent of a legended certificate representing such Company Shares, deliver or
cause to be delivered to such Purchaser a certificate representing such Company
Shares that is free from all restrictive and other legends. Following the
Effective Date and upon the delivery to any Purchaser of any certificate
representing Company Shares that is free from all restrictive and other legends,
such Purchaser agrees that any sale of such Company Shares shall be made
pursuant to the Registration Statement and in accordance with the plan of
distribution described therein. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section. For so long as any
Purchaser owns Company Shares, the Company will not effect or publicly announce
its intention to effect any exchange, recapitalization or other transaction that
effectively requires or rewards physical delivery of certificates evidencing the
Common Stock.

(c) The Company acknowledges and agrees that a Purchaser may from time to time
pledge or grant a security interest in some or all of the Company Shares to a
pledgee or secured party that is an “accredited investor” (as defined in Rule
501(a) under the Securities Act) in connection with a bona fide margin agreement
or other loan or financing arrangement secured by the Company Shares and, if
required under the terms of such agreement, loan or arrangement, such Purchaser
may transfer pledged or secured Company Shares to such pledgees or secured
parties. Such a pledge or transfer would not be subject to approval of the
Company and no legal opinion of the pledgee, secured party or pledgor shall be
required in connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of Company
Shares may reasonably request in connection with a pledge or transfer of the
Company Shares pursuant to this Section 4.1(c), including the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder.

 

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4.2 Filing of Information . As long as any Purchaser owns Company Shares, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. As long as any
Purchaser owns Company Shares, if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Purchasers and make
publicly available in accordance with paragraph (c) of Rule 144 such information
as is required for the Purchasers to sell the Company Shares under Rule 144. The
Company further covenants that it will take such further action as any holder of
Company Shares may reasonably request to satisfy the provisions of Rule 144
applicable to the issuer of securities relating to transactions for the sale of
securities pursuant to Rule 144.

4.3 Integration. The Company shall not, and shall use its commercially
reasonably 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 Company Shares in a manner that would require the
registration under the Securities Act of the sale of the Company Shares to the
Purchasers or that would be integrated with the offer or sale of the Company
Shares for purposes of the rules and regulations of any Trading Market.

4.4 Securities Laws Disclosure; Publicity. The Company shall, on or before 9:30
a.m., Eastern Daylight Time on March 24, 2006, issue a press release reasonably
acceptable to the Purchasers disclosing all material terms of the transactions
contemplated hereby. No later than the first Business Day following the Closing
Date, the Company shall file a Current Report on Form 8-K (the “8-K Filing”)
with the Commission describing the terms of the transactions contemplated by the
Transaction Documents and including as an exhibit to the 8-K Filing, this
Agreement, in the form required by the Exchange Act. Thereafter, the Company
shall timely file any filings and notices required by the Commission or
applicable law with respect to the transactions contemplated hereby. Except with
respect to the 8-K Filing (a copy of which will be provided to the Purchasers
for their review as early as practicable prior to its filing), the Company
shall, at least two Trading Days prior to the filing or dissemination of any
disclosure required by this paragraph, provide a copy thereof to the Purchasers
for their review. The Company and the Purchasers shall consult with each other
in issuing any press releases or otherwise making public statements or filings
and other communications with the Commission 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 Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except to the
extent such disclosure (but not any disclosure as to the controlling Persons
thereof) is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure. 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
Purchaser with, any material nonpublic information regarding the Company or any
of its Subsidiaries from and

 

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after the filing of the 8-K Filing without the express written consent of such
Purchaser. In the event of a breach of the foregoing covenant by the Company,
any of its Subsidiaries, or any of its or their respective officers, directors,
employees and agents, in addition to any other remedy provided herein or in the
Transaction Documents, a Purchaser shall have the right to require the Company
to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material nonpublic information. No Purchaser
shall have any liability to the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees, stockholders or agents for any
such disclosure. Subject to the foregoing, neither the Company nor any Purchaser
shall issue any press releases or any other public statements with respect to
the transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of any Purchaser, to make any press
release or other public disclosure with respect to such transactions (i) in
substantial conformity with the 8-K Filing and contemporaneously therewith and
(ii) as is required by applicable law and regulations (provided that in the case
of clause (i) each Purchaser shall be consulted by the Company in connection
with any such press release or other public disclosure prior to its release).
Each press release disseminated during the 12 months preceding the date of this
Agreement did not at the time of release contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.

4.5 Use of Proceeds. Except as set forth on Schedule 4.5, the Company shall use
the net proceeds from the sale of the Securities hereunder for general corporate
purposes.

4.6 Reimbursement. If any Purchaser or any of its Affiliates or any officer,
director, partner, controlling person, employee or agent of a Purchaser or any
of its Affiliates (a “Related Person”) becomes involved in any capacity in any
Proceeding brought by or against any Person in connection with or as a result of
the transactions contemplated by the Transaction Documents (other than
transactions brought by the investors or shareholders of such Purchaser against
such Purchaser), the Company will indemnify and hold harmless such Purchaser or
Related Person for its reasonable legal and other expenses (including the costs
of any investigation, preparation and travel) and for any Losses incurred in
connection therewith, as such expenses or Losses are incurred, excluding only
Losses that result directly from such Purchaser’s or Related Person’s gross
negligence or willful misconduct. In addition, the Company shall indemnify and
hold harmless each Purchaser and Related Person from and against any and all
Losses, as incurred, arising out of or relating to any breach by the Company of
any of the representations, warranties or covenants made by the Company in this
Agreement or any other Transaction Document, or any allegation by a third party
that, if true, would constitute such a breach. The conduct of any Proceedings
for which indemnification is available under this paragraph shall be governed by
Section 6.4(c) below. The indemnification obligations of the Company under this
paragraph shall be in addition to any liability that the Company may otherwise
have and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Purchasers and any such
Related Persons. The Company also agrees that neither the Purchasers nor any
Related Persons shall have any liability to the Company or any Person asserting
claims on behalf of or in right of the Company in connection with or as a result
of the transactions contemplated by the Transaction Documents, except to the
extent that any Losses incurred by the Company result from the gross negligence
or willful misconduct of the applicable Purchaser or

 

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Related Person in connection with such transactions. If the Company breaches its
obligations under any Transaction Document, then, in addition to any other
liabilities the Company may have under any Transaction Document or applicable
law, the Company shall pay or promptly reimburse the Purchasers on demand for
all costs of collection and enforcement (including reasonable attorneys’ fees
and expenses). Without limiting the generality of the foregoing, the Company
specifically agrees to promptly reimburse the Purchasers on demand for all costs
of enforcing the indemnification obligations in this paragraph.

ARTICLE V.

CONDITIONS

5.1 Conditions Precedent to the Obligations of the Purchasers. The obligation of
each Purchaser to acquire Company Shares at the Closing is subject to the
satisfaction or waiver by such Purchaser, at or before the Closing, of each of
the following conditions:

(a) Representations and Warranties. The representations and warranties of the
Company contained herein shall be true and correct in all material respects as
of the date when made and as of the Closing as though made on and as of such
date; and

(b) Performance. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by it at or
prior to the Closing.

5.2 Conditions Precedent to the Obligations of the Company. The obligation of
the Company to sell Company Shares at the Closing is subject to the satisfaction
or waiver by the Company, at or before the Closing, of each of the following
conditions:

(a) Representations and Warranties. The representations and warranties of the
Purchasers contained herein shall be true and correct in all material respects
as of the date when made and as of the Closing Date as though made on and as of
such date; and

(b) Performance. The Purchasers shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Purchasers at or prior to the Closing.

ARTICLE VI.

REGISTRATION RIGHTS

6.1 Shelf Registration.

(a) As promptly as possible following the Closing, and in no event more than 10
Business Days following the Closing, the Company shall file with the Commission
a “Shelf” Registration Statement covering the resale of all Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule 415
(a copy of such Registration Statement is attached hereto as Exhibit C-1). The
Registration Statement shall be on Form S-3 and shall contain (except if
otherwise directed by the Purchasers) the “Plan of Distribution” attached hereto
as

 

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Exhibit C-2. Notwithstanding the Company’s representation that it is Form S-3
eligible, and without relieving the Company of any liability it should have for
such breach of such representation, if the Company is at the time of filing not
eligible to register for resale the Registrable Securities on Form S-3, such
registration shall be on another appropriate form in accordance herewith as the
Purchasers may consent. Notwithstanding the Company’s representation that the
Registration Statement shall be an “automatic shelf registration statement,” and
without relieving the Company of any liability it should have for such breach of
such representation, if the Registration Statement is not automatically
effective upon filing, the Company shall use its reasonable best efforts to
cause the Registration Statement to become effective as soon as possible after
filing. The Company shall ensure that each Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any 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 (in
the case of prospectuses, in the light of the circumstances in which they were
made) not misleading, except with respect to any information provided by a
Purchaser furnished in writing to the Company by such Purchaser expressly for
use therein, or to the extent that such information relates to such Purchaser or
such Purchaser’s proposed method of distribution of Registrable Securities and
was reviewed and expressly approved in writing by such Purchaser expressly for
use in the Registration Statement, such Prospectus or such form of Prospectus or
in any amendment or supplement thereto.

(b) The Company shall use its reasonable best efforts to keep the Registration
Statement continuously effective under the Securities Act until the earlier of
(i) the date that all Registrable Securities covered by such Registration
Statement have been sold or (ii) the second anniversary of the Closing Date (the
“Effectiveness Period”).

(c) Upon the occurrence of any Event (as defined below) and on every monthly
anniversary thereof until the applicable Event is cured, as partial relief for
the damages suffered therefrom by the Purchasers (which remedy shall not be
exclusive of any other remedies available under this Agreement, at law or in
equity), the Company shall pay to each Purchaser an amount in cash, as
liquidated damages and not as a penalty, equal to 0.5% of the aggregate purchase
price paid by such Purchaser for the first month and 1.0% for each month
thereafter for all the Company Shares. The payments to which a Purchaser shall
be entitled pursuant to this Section 6.1(d) are referred to herein as “Event
Payments.” Any Event Payments payable pursuant to the terms hereof shall apply
on a pro-rata basis for any portion of a month prior to the cure of an Event,
and any such Event Payments shall be due and payable monthly on or before the
10th Business Day following the earlier to occur of either (i) the cure of an
Event or (ii) the monthly anniversary of the Event (and each monthly anniversary
thereafter until the cure of the Event) (an “Event Payment Date”). In the event
the Company fails to make Event Payments by the Event Payment Date, such Event
Payments shall bear interest at the rate of 1.0% per month (prorated for partial
months) until paid in full.

For such purposes, each of the following shall constitute an “Event”:

(i) except (A) as provided for in Section 6.1(d), (B) if the Company is involved
in a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act,
or (C) a merger or consolidation of the Company or a sale of more than one-half
of the assets of the

 

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Company in one or a series of related transactions, unless following such
transaction or series of transactions, the holders of the Company’s securities
prior to the first such transaction continue to hold at least 50% of the voting
rights and equity interests of the surviving entity or acquirer (clauses (B) and
(C), collectively, the “Excluded Events”) after the Effective Date, a Purchaser
is not permitted to sell Registrable Securities under the Registration Statement
(or a subsequent Registration Statement filed in replacement thereof) for any
reason for a period of at least five consecutive Trading Days, provided that
such an Event shall be deemed “cured” for purposes of this Section 6.1(c) upon
the termination of such period; or

(ii) the Common Stock is not listed or quoted, or is suspended from trading, on
the Trading Market for a period of at least three consecutive Trading Days at
any time during the first 12 months after the Effective Date, provided that such
an Event shall be deemed “cured” for purposes of this Section 6.1(c) upon the
termination of such period;

(iii) the Company fails for any reason to deliver a certificate evidencing any
Company Shares to a Purchaser within three Trading Days after delivery of such
certificate is required pursuant to any Transaction Document, provided that such
an Event shall be deemed “cured” for purposes of this Section 6.1(c) upon the
delivery of such certificate; or

(iv) the Company fails for any reason to file the Registration Statement
pursuant to Section 6.1(a) or such Registration Statement does not become
effective within 10 Business Days following the Closing Date.

(d) Notwithstanding anything in this Agreement to the contrary, the Company may,
by written notice to the Purchasers, suspend sales under a Registration
Statement after the Effective Date thereof and/or require that the Purchasers
immediately cease the sale of shares of Common Stock pursuant thereto and/or
defer the filing of any Registration Statement if the Company determines in good
faith, by appropriate resolutions or a certificate executed by the Company’s CEO
and CFO, that (A) it would be materially detrimental to the Company (other than
as relating solely to the price of the Common Stock) to file a Registration
Statement at such time and (B) it is in the best interests of the Company to
defer proceeding with such registration at such time. Upon receipt of such
notice, each Purchaser shall immediately discontinue any sales of Registrable
Securities pursuant to such registration until such Purchaser has received
copies of a supplemented or amended Prospectus or until such Purchaser is
advised in writing by the Company that the then-current Prospectus may be used
and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in such Prospectus. In no
event, however, shall this right be exercised to suspend sales beyond the period
during which (in the good faith determination of the Company’s Board of
Directors) the failure to require such suspension would be materially
detrimental to the Company. The Company’s rights under this Section 6.1(d) may
not be exercised (x) more than twice in the 60 Trading Days immediately
subsequent to the Effective Date or for a period of greater than 10 Trading Days
during such period, or (y) more than twice or for a period greater than 45 days
in any twelve-month period after the 60 Trading Days immediately subsequent to
the Effective Date. Immediately after the end of any suspension period under
this Section 6.1(d), the Company shall take all necessary actions (including
filing any required supplemental prospectus) to restore the effectiveness of the
applicable Registration Statement and the ability of the Purchasers to publicly
resell their Registrable Securities pursuant to such effective Registration
Statement.

 

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(e) The Company shall not, prior to the Effective Date of the Registration
Statement, prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, except to the extent required
pursuant to the Purchase Agreement, dated March 12, 2006, between the Company
and the purchasers named therein

6.2 Registration Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:

(a) Not less than three Trading Days prior to the filing of a Registration
Statement or any related Prospectus or any amendment or supplement thereto
(including any document that would be incorporated or deemed to be incorporated
therein by reference (other than any documents containing material non-public
information)), the Company shall (i) furnish to each Purchaser and any counsel
designated by any Purchaser (each, a “Purchaser Counsel”) copies of all such
documents proposed to be filed and (ii) cause its officers and directors,
counsel and independent certified public accountants to respond to such
inquiries as shall be necessary, in the reasonable opinion of respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act. The Company shall not file a Registration Statement or any such
Prospectus or any amendments or supplements (other than periodic reports
required under the Exchange Act) thereto to which Purchasers holding a majority
of the Registrable Securities shall reasonably object in writing within two
Trading Days of receipt. Notwithstanding the foregoing, this paragraph (a) shall
not apply to the initial filing of the Registration Statement attached hereto as
Exhibit C-1.

(b) (i) Subject to Section 6.1(d), prepare and file with the Commission such
amendments, including post-effective amendments, to each Registration Statement
and the Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received from
the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as reasonably possible provide each Purchaser true and
complete copies of all correspondence from and to the Commission relating to the
Registration Statement (other than correspondence containing material nonpublic
information); and (iv) comply in all material respects with the provisions of
the Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Purchasers thereof set forth in the Registration Statement as so amended or in
such Prospectus as so supplemented.

(c) Notify the Purchasers of Registrable Securities to be sold and each
Purchaser Counsel as promptly as reasonably possible, and (if requested by any
such Person)

 

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confirm such notice in writing no later than one Trading Day thereafter, of any
of the following events: (i) the Commission notifies the Company whether there
will be a “review” of any Registration Statement; (ii) the Commission comments
in writing on any Registration Statement (in which case the Company shall
deliver to each Purchaser a copy of such comments and of all written responses
thereto (other than any correspondence containing material nonpublic
information)); (iii) any Registration Statement or any post-effective amendment
is declared effective; (iv) the Commission or any other Federal or state
governmental authority requests any amendment or supplement to any Registration
Statement or Prospectus or requests additional information related thereto;
(v) the Commission issues any stop order suspending the effectiveness of any
Registration Statement or initiates any Proceedings for that purpose; (vi) the
Company receives notice of any suspension of the qualification or exemption from
qualification of any Registrable Securities for sale in any jurisdiction, or the
initiation or threat of any Proceeding for such purpose; or (vii) the financial
statements included in any Registration Statement become ineligible for
inclusion therein or any statement made in any Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference is untrue in any material respect or any revision to a Registration
Statement, Prospectus or other document is required so that it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

(d) Use its reasonable best efforts to avoid the issuance of or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of any
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as soon as possible.

(e) Furnish to each Purchaser and Purchaser Counsel, without charge, at least
one conformed copy of each Registration Statement and each amendment thereto,
and all exhibits to the extent requested by such Person (including those
previously furnished or incorporated by reference) promptly after the filing of
such documents with the Commission.

(f) Promptly deliver to each Purchaser and Purchaser Counsel, without charge, as
many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Purchasers in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto to the extent permitted
by federal and state securities laws and regulations.

(g) (i) In the time and manner required by the Trading Market, prepare and file
with the Trading Market an additional shares listing application covering all of
the Registrable Securities; (ii) take all steps necessary to cause such
Registrable Securities to be approved for listing on the Trading Market as soon
as possible thereafter; (iii) provide to the Purchasers evidence of such
listing; and (iv) except as a result of the Excluded Events, during the
Effectiveness Period, maintain the listing of such Registrable Securities on the
Trading Market.

(h) Prior to any public offering of Registrable Securities, use its reasonable
best efforts to register or qualify or cooperate with the selling Purchasers and
each Purchaser

 

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Counsel in connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any Purchaser requests in writing, to keep each such
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by a Registration Statement; provided, however, that the
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities 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.

(i) Cooperate with the Purchasers to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be delivered to
a transferee pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by this Agreement and applicable law, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Purchasers may request.

(j) With respect to any event that would cause the Registration Statement not to
be continuously effective as required by Section 6.1(b), including for any event
described in Section 6.2(c)(vii), as promptly as reasonably possible, prepare a
supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an 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, in the light of the circumstances
under which they were made, not misleading.

(k) Cooperate with any reasonable due diligence investigation undertaken by the
Purchasers in connection with the sale of Registrable Securities, including,
without limitation, by making available any documents and information; provided
that the Company will not deliver or make available to any Purchaser material,
nonpublic information unless such Purchaser specifically requests in advance to
receive material, nonpublic information in writing and, if requested by the
Company, such Purchaser agrees in writing to treat such information
confidentially.

(l) Comply with all applicable rules and regulations of the Commission in all
material respects.

6.3 Registration Expenses. The Company shall pay (or reimburse the Purchasers
for) all fees and expenses incident to the performance of or compliance with
Article VI of this Agreement by the Company, including without limitation
(a) all registration and filing fees and expenses, including without limitation
those related to filings with the Commission, any Trading Market and in
connection with applicable state securities or Blue Sky laws, (b) printing
expenses (including without limitation expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the
Purchasers), (c) messenger, telephone and delivery expenses incurred by the
Company, (d) fees and disbursements of counsel for the Company,

 

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(e) fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement, and
(f) all listing fees to be paid by the Company to the Trading Market.

6.4 Indemnification.

(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Purchaser, the
officers, directors, partners, members, agents, investment advisors and
employees of each of them, each Person who controls any such Purchaser (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, partners, members, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all Losses, as incurred, arising out of or relating to
any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (i) such untrue statements, alleged untrue
statements, omissions or alleged omissions are based solely upon information
regarding such Purchaser furnished in writing to the Company by such Purchaser
expressly for use therein, or to the extent that such information relates to
such Purchaser or such Purchaser’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Purchaser expressly for use in the Registration Statement, such Prospectus
or such form of Prospectus or in any amendment or supplement thereto or (ii) in
the case of an occurrence of an event of the type specified in
Section 6.2(c)(v)-(vii), the use by such Purchaser of an outdated or defective
Prospectus after the Company has notified such Purchaser in writing that the
Prospectus is outdated or defective and prior to the receipt by such Purchaser
of the Advice contemplated in Section 6.5. The Company shall notify the
Purchasers promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions contemplated by
this Agreement.

(b) Indemnification by Purchasers. Each Purchaser shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses arising
solely out of any untrue statement of a material fact contained in the
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of any omission of a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in the light of the circumstances under which they were made) not
misleading to the extent, but only to the extent, that such untrue statement or
omission is contained in any information so furnished in writing by such
Purchaser to the Company specifically for inclusion in such Registration
Statement or such Prospectus or to the extent that

 

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(i) such untrue statements or omissions are based solely upon information
regarding such Purchaser furnished in writing to the Company by such Purchaser
expressly for use therein, or to the extent that such information relates to
such Purchaser or such Purchaser’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Purchaser expressly for use in the Registration Statement, such Prospectus
or such form of Prospectus or in any amendment or supplement thereto or (ii) in
the case of an occurrence of an event of the type specified in
Section 6.2(c)(v)-(vii), the use by such Purchaser of an outdated or defective
Prospectus after the Company has notified such Purchaser in writing that the
Prospectus is outdated or defective and prior to the receipt by such Purchaser
of the Advice contemplated in Section 6.5. In no event shall the liability of
any selling Purchaser hereunder be greater in amount than the dollar amount of
the gross proceeds in respect of the sale by such Purchaser of the Registrable
Securities giving rise to such indemnification obligation.

(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought
or asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all fees and
expenses incurred in connection with defense thereof; provided, that the failure
of any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except (and
only) to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (i) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (ii) the Indemnifying Party shall have failed promptly to assume
the defense of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding; or (iii) the named parties to any
such Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the Indemnifying Party). It
being understood, however, that the Indemnifying Party shall not, in connection
with any one such Proceeding be liable for the fees and expenses of more than
one separate firm of attorneys at any time for all Indemnified Parties, which
firm shall be appointed by a majority of the Indemnified Parties. The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.

 

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All fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to
defend such Proceeding in a manner not inconsistent with this Section) shall be
paid to the Indemnified Party, as incurred, within ten Trading Days of written
notice thereof to the Indemnifying Party; provided, that the Indemnifying Party
may require such Indemnified Party to undertake to reimburse all such fees and
expenses to the extent it is finally judicially determined that such Indemnified
Party is not entitled to indemnification hereunder.

(d) Contribution. If a claim for indemnification under Section 6.4(a) or (b) is
unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 6.4(c), any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6.4(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6.4(d), no Purchaser shall be
required to contribute, in the aggregate, any amount in excess of the total
amount for which the Registrable Securities were sold by such Purchaser. 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 indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

6.5 Dispositions. Each Purchaser agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection
with sales of Registrable Securities pursuant to the Registration Statement.
Each Purchaser further agrees that, upon receipt of a notice from the Company of
the occurrence of any event of the kind described in Sections 6.2(c)(v), (vi) or
(vii), such Purchaser will discontinue disposition of such Registrable
Securities under the Registration Statement until such Purchaser’s receipt of
the

 

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copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 6.2(j), or until it is advised in writing (the “Advice”)
by the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.

6.6 No Piggyback on Registrations. Neither the Company nor any of its security
holders (other than the Purchasers in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security holders.

6.7 Piggy-Back Registrations. If at any time during the Effectiveness Period
there is not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Purchaser written notice of
such determination and if, within fifteen days after receipt of such notice, any
such Purchaser shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Purchaser requests to be registered, provided that the including of the
Registrable Securities in such registration statement shall not relieve the
Company of its obligations under this Article VI, except pursuant to the
Purchase Agreement, dated March 12, 2006, between the Company and the purchasers
named therein.

ARTICLE VII.

MISCELLANEOUS

7.1 Termination. This Agreement may be terminated by the Company or any
Purchaser, 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).

7.2 Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all fees of
its transfer agent, stamp taxes and other taxes and duties levied in connection
with the sale and issuance by the Company of Company Shares hereunder.

7.3 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

 

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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, each party hereto will execute and deliver to any other
party hereto such further documents as may be reasonably requested in order to
give practical effect to the intention of the parties under the Transaction
Documents.

7.4 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, (d) the third
Trading Day after the date of deposit, first class postage prepaid, in the U.S.
mails, or (e) 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.

7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the
Company and each of the Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Purchasers under Article VI and
that does not directly or indirectly affect the rights of other Purchasers may
be given by Purchasers holding at least a majority of the Registrable Securities
to which such waiver or consent relates.

7.6 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.

7.7 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 Purchasers. Any Purchaser may assign
its rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Company Shares, provided such transferee agrees in writing to be
bound, with respect to the transferred Company Shares, by the provisions hereof
that apply to the “Purchasers.” Notwithstanding anything to the contrary herein,
Company Shares may be assigned to any Person in connection with a bona fide
margin account or other loan or financing arrangement secured by such Company
Shares, provided such Person is an “accredited investor” as such term is defined
in the rules and regulations under the Securities Act.

 

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7.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except that each Related Person is an intended third party beneficiary
of Section 4.6 and each Indemnified Party is an intended third party beneficiary
of Section 6.4 and (in each case) may enforce the provisions of such Sections
directly against the parties with obligations thereunder.

7.9 Governing Law; Venue; Waiver Of Jury Trail. 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 PURCHASERS 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 PURCHASER 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 PURCHASER, 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 PURCHASERS HEREBY WAIVE ALL RIGHTS TO A TRIAL
BY JURY.

7.10 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery and/or exercise of
the Company Shares, as applicable.

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

 

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7.12 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.

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

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

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

7.16 Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.

7.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under any
Transaction Document. The decision of each Purchaser to purchase Company Shares
pursuant to this Agreement has been made by such Purchaser independently of any
other Purchaser and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results

 

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of operations, condition (financial or otherwise) or prospects of the Company or
of the Subsidiary which may have been made or given by any other Purchaser or by
any agent or employee of any other Purchaser, and no Purchaser or any of its
agents or employees shall have any liability to any other Purchaser (or any
other person) relating to or arising from any such information, materials,
statements or opinions. Nothing contained herein or in any Transaction Document,
and no action taken by any Purchaser pursuant thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Document. Each Purchaser
acknowledges that no other Purchaser has acted as agent for such Purchaser in
connection with making its investment hereunder and that no other Purchaser will
be acting as agent of such Purchaser in connection with monitoring its
investment hereunder. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

[SIGNATURE PAGES FOLLOW]

 

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

 

  BROADWING CORPORATION   By:  

/s/ Lynn D. Anderson

  Name:   Lynn D. Anderson   Title:   Senior VP and CFO

 

   Address for Notice:    1122 Capital of Texas Highway    Austin, Texas 78746
   Facsimile No.: (443) 259-4416    Attn: Chief Financial Officer
With a copy to:    Mayer, Brown, Rowe & Maw LLP    71 South Wacker Drive   
Chicago, Illinois 60606    Facsimile No.: (312) 701-7711    Attn: Philip J.
Niehoff, Esq.

 

31

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Purchaser Signature Page

By its execution and delivery of this signature page, the undersigned Purchaser
hereby joins in and agrees to be bound by the terms and conditions of the
Purchase Agreement dated as of March 22, 2006 (the “Purchase Agreement”) by and
among Broadwing Corporation and the Purchasers (as defined therein), as to the
number of shares of Common Stock set forth below, and authorizes this signature
page to be attached to the Purchase Agreement or counterparts thereof.

 

Name of Purchaser: GLG North American Opportunity Fund By:  

GLG Partners, LP

  Robert Price Title:   Head of Operations Record   Address:   Walker House   PO
Box 908 GT  

Georgetown, Grand Cayman,

Cayman Islands

Telecopy No.: Number of Shares:   615,000 Purchase Price:   $12.00

 

Agreed to and accepted this 22nd day of March, 2006 BROADWING CORPORATION By:  

/s/ Lynn D. Anderson

Name:   Lynn D. Anderson Title:   Senior VP and CFO

 

32

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Purchaser Signature Page

By its execution and delivery of this signature page, the undersigned Purchaser
hereby joins in and agrees to be bound by the terms and conditions of the
Purchase Agreement dated as of March 22, 2006 (the “Purchase Agreement”) by and
among Broadwing Corporation and the Purchasers (as defined therein), as to the
number of shares of Common Stock set forth below, and authorizes this signature
page to be attached to the Purchase Agreement or counterparts thereof.

 

Name of Purchaser: EagleRock Master Fund, L.P. By:  

[unintelligible]

Title:   Manager Record   Address:   24 West 40th Street, 10th Floor   New York,
NY 10018 Telecopy No.: Number of Shares:   400,000 Purchase Price:   $12.00

 

Agreed to and accepted this 22nd day of March, 2006 BROADWING CORPORATION By:  

/s/ Lynn D. Anderson

Name:   Lynn D. Anderson Title:   Senior VP and CFO

 

33

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Purchaser Signature Page

By its execution and delivery of this signature page, the undersigned Purchaser
hereby joins in and agrees to be bound by the terms and conditions of the
Purchase Agreement dated as of March 22, 2006 (the “Purchase Agreement”) by and
among Broadwing Corporation and the Purchasers (as defined therein), as to the
number of shares of Common Stock set forth below, and authorizes this signature
page to be attached to the Purchase Agreement or counterparts thereof.

 

Name of Purchaser: EagleRock Institutional Partners, LP By:  

[unintelligible]

Title:   Manager Record   Address:   24 West 40th Street, 10th Floor   New York,
NY 10018 Telecopy No.: Number of Shares:   215,000 Purchase Price:   $12.00

 

Agreed to and accepted this 22nd day of March, 2006 BROADWING CORPORATION By:  

/s/ Lynn D. Anderson

Name:   Lynn D. Anderson Title:   Senior VP and CFO

 

34

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Purchaser Signature Page

By its execution and delivery of this signature page, the undersigned Purchaser
hereby joins in and agrees to be bound by the terms and conditions of the
Purchase Agreement dated as of March 22, 2006 (the “Purchase Agreement”) by and
among Broadwing Corporation and the Purchasers (as defined therein), as to the
number of shares of Common Stock set forth below, and authorizes this signature
page to be attached to the Purchase Agreement or counterparts thereof.

 

Name of Purchaser: Tudor Proprietary Trading, LLC By:  

[unintelligible]

Title:   Managing Director Record   Address:   c/o Tudor Investment Corporation
  50 Rowes Wharf   Boston, MA 02110 Telecopy No.:   Number of Shares:   37,638
Purchase Price:   $12.00

 

Agreed to and accepted this 22nd day of March, 2006 BROADWING CORPORATION By:  

/s/ Lynn D. Anderson

Name:   Lynn D. Anderson Title:   Senior VP and CFO

 

35

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

Purchaser Signature Page

By its execution and delivery of this signature page, the undersigned Purchaser
hereby joins in and agrees to be bound by the terms and conditions of the
Purchase Agreement dated as of March 22, 2006 (the “Purchase Agreement”) by and
among Broadwing Corporation and the Purchasers (as defined therein), as to the
number of shares of Common Stock set forth below, and authorizes this signature
page to be attached to the Purchase Agreement or counterparts thereof.

 

Name of Purchaser: The Tudor BVI Global Portfolio Ltd. By:  

[unintelligible]

Title:   Managing Director Record Address:   c/o Tudor Investment Corporation  
50 Rowes Wharf   Boston, MA 02110 Telecopy No.: Number of Shares:   69,899
Purchase Price:   $12.00

 

Agreed to and accepted this 22nd day of March, 2006 BROADWING CORPORATION By:  

/s/ Lynn D. Anderson

Name:   Lynn D. Anderson Title:   Senior VP and CFO

 

36

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

Purchaser Signature Page

By its execution and delivery of this signature page, the undersigned Purchaser
hereby joins in and agrees to be bound by the terms and conditions of the
Purchase Agreement dated as of March 22, 2006 (the “Purchase Agreement”) by and
among Broadwing Corporation and the Purchasers (as defined therein), as to the
number of shares of Common Stock set forth below, and authorizes this signature
page to be attached to the Purchase Agreement or counterparts thereof.

 

Name of Purchaser: Witches Rock Portfolio Ltd. By:  

[unintelligible]

Title:   Managing Director Record   Address:   c/o Tudor Investment Corporation
  50 Rowes Wharf   Boston, MA 02110 Telecopy No.: Number of Shares:   432,463
Purchase Price:   $12.00

 

Agreed to and accepted this 22nd day of March, 2006 BROADWING CORPORATION By:  

/s/ Lynn D. Anderson

Name:   Lynn D. Anderson Title:   Senior VP and CFO

 

37

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

Purchaser Signature Page

By its execution and delivery of this signature page, the undersigned Purchaser
hereby joins in and agrees to be bound by the terms and conditions of the
Purchase Agreement dated as of March 22, 2006 (the “Purchase Agreement”) by and
among Broadwing Corporation and the Purchasers (as defined therein), as to the
number of shares of Common Stock set forth below, and authorizes this signature
page to be attached to the Purchase Agreement or counterparts thereof.

 

Name of Purchaser: Deephaven Event Trading, Ltd. By:  

/s/ Colin Smith

Title:   CEO Record   Address:   130 Cheshire Lane, Suite 102   Minnetonka, MN
55305 Telecopy No.: Number of Shares:   412,050 Purchase Price:   $12.00

 

Agreed to and accepted this 22nd day of March, 2006 BROADWING CORPORATION By:  

/s/ Lynn D. Anderson

Name:   Lynn D. Anderson Title:   Senior VP and CFO

 

38

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

Purchaser Signature Page

By its execution and delivery of this signature page, the undersigned Purchaser
hereby joins in and agrees to be bound by the terms and conditions of the
Purchase Agreement dated as of March 22, 2006 (the “Purchase Agreement”) by and
among Broadwing Corporation and the Purchasers (as defined therein), as to the
number of shares of Common Stock set forth below, and authorizes this signature
page to be attached to the Purchase Agreement or counterparts thereof.

 

Name of Purchaser: Deephaven Growth Opportunities Trading Ltd. By:  

/s/ Colin Smith

Title:   CEO Record   Address:   130 Cheshire Lane, Suite 102   Minnetonka, MN
55305 Telecopy No.: Number of Shares:   162,975 Purchase Price:   $12.00

 

Agreed to and accepted this 22nd day of March, 2006 BROADWING CORPORATION By:  

/s/ Lynn D. Anderson

Name:   Lynn D. Anderson Title:   Senior VP and CFO

 

39

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

EXECUTION COPY

Purchaser Signature Page

By its execution and delivery of this signature page, the undersigned Purchaser
hereby joins in and agrees to be bound by the terms and conditions of the
Purchase Agreement dated as of March 22, 2006 (the “Purchase Agreement”) by and
among Broadwing Corporation and the Purchasers (as defined therein), as to the
number of shares of Common Stock set forth below, and authorizes this signature
page to be attached to the Purchase Agreement or counterparts thereof.

 

Name of Purchaser: MA Deep Event Ltd. By:  

/s/ Colin Smith

Title:   CEO Record   Address:   130 Cheshire Lane, Suite 102   Minnetonka, MN
55305 Telecopy No.: Number of Shares:   39,975 Purchase Price:   $12.00

 

Agreed to and accepted this 22nd day of March, 2006 BROADWING CORPORATION By:  

/s/ Lynn D. Anderson

Name:   Lynn D. Anderson Title:   Senior VP and CFO

 

40

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

Purchaser Signature Page

By its execution and delivery of this signature page, the undersigned Purchaser
hereby joins in and agrees to be bound by the terms and conditions of the
Purchase Agreement dated as of March 22, 2006 (the “Purchase Agreement”) by and
among Broadwing Corporation and the Purchasers (as defined therein), as to the
number of shares of Common Stock set forth below, and authorizes this signature
page to be attached to the Purchase Agreement or counterparts thereof.

 

Name of Purchaser: Smithfield Fiduciary LLC By:  

/s/ Adam J. Chill

Title:   Authorized Signatory Record   Address:   c/o Highbridge Capital
Management, LLC   9 West 57th Street, 57th Floor   New York, NY 10019 Telecopy
No.: Number of Shares:   615,000 Purchase Price:   $12.00

 

Agreed to and accepted this 22nd day of March, 2006 BROADWING CORPORATION By:  

/s/ Lynn D. Anderson

Name:   Lynn D. Anderson Title:   Senior VP and CFO

 

41

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Exhibit A

IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

BROADWING CORPORATION

Continental Stock Transfer & Trust Company

17 Battery Place, 8th Floor

New York, NY 10004

Ladies and Gentlemen:

Reference is made to that certain Purchase Agreement, dated as of March [__],
2006 (the “Purchase Agreement”), by and among Broadwing Corporation, a Delaware
corporation (the “Company”), and the purchasers named therein (collectively, the
“Holders”), pursuant to which the Company is issuing to the Holders shares of
the Company’s common stock, par value $0.01 per share (the “Shares”).

The Company has agreed with the Holders that it will instruct you to: (A) issue
the Shares free of all restrictive and other legends if, at the time of such
issue, (i) a registration statement covering the resale of such Shares has been
declared and is effective by the Commission under the Securities Act and Holders
have agreed to only sell such Shares pursuant to the plan of distribution of
such registration statement, (ii) such Shares are eligible for sale under Rule
144(k) or (iii) such legend is not required under applicable requirements of the
Securities Act; or (B) reissue the Shares (if such shares were originally issued
with a restrictive legend) free of all restrictive and other legends (i) upon
the effectiveness of a registration statement covering the resale of the Shares,
(ii) following any sale of such Shares pursuant to Rule 144, (iii) such Shares
are eligible for sale under Rule 144(k) or (iv) if such legend is not required
under applicable requirements of the Securities Act.

In furtherance of this instruction, upon the effectiveness of the Registration
Statement (as defined in the Purchase Agreement) we have instructed our counsel
to deliver to you their opinion letter in the form attached hereto as Exhibit I
to the effect that the Registration Statement is effective and that the Shares
are freely transferable by the Holders and accordingly may be issued (or
reissued, as applicable) and delivered to the Holders free of all restrictive
and other legends.

You need not require further letters from us or our counsel to effect any future
issuance or reissuance of Shares to the Holders as contemplated by the Purchase
Agreement and this letter. This letter shall serve as our standing irrevocable
instructions with regard to this matter.

Please be advised that the Holders have relied upon this instruction letter as
an inducement to enter into the Purchase Agreement. Please execute this letter
in the space indicated to acknowledge your agreement to act in accordance with
these instructions.

 

A-1

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

Very truly yours, BROADWING CORPORATION By:  

 

Name:   Kim D. Larsen Title:   Senior Vice President, General Counsel and
Secretary

 

ACKNOWLEDGED AND AGREED: Continental Stock Transfer & Trust Company By:  

 

Name:   Title:  

 

A-2

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

Exhibit I

[Counsel’s Letterhead]

[Transfer Agent]

Re: BROADWING CORPORATION

To Whom It May Concern:

We are writing on behalf of our client, Broadwing Corporation, a Delaware
corporation (the “Company”), in connection with the Company’s recent filing of a
Registration Statement on Form S-3 (File No.            ) (the “Registration
Statement”) with the Securities and Exchange Commission (the “SEC”) relating to
             shares of the Company’s common stock, par value $0.01 per share
(the “Registrable Securities”), issued to the selling stockholders (the “Selling
Stockholders”) listed in the selling stockholders table at page
                         of the final prospectus, a copy of which is attached
hereto as Exhibit A.

In connection with the foregoing, we advise you that the Registration Statement
is effective under Rule 462(e) of the Securities Act of 1933, as amended. We
have no knowledge that any stop order suspending its effectiveness has been
issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC.

This letter shall serve as our standing opinion to you that the Shares are
freely transferable by the Holders pursuant to the Registration Statement. You
need not require further letters from us to effect any future legend-free
issuance or reissuance of Shares to the Holders as contemplated by the Company’s
Irrevocable Transfer Agent Instructions dated                          , 2006.

If you have any questions relating to the foregoing, please feel free to call me
at                                     .

 

Very truly yours, [Counsel]

 

A-3

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

Exhibit B-1

[List of Purchasers]

Ladies and Gentlemen:

As general counsel, I represented Broadwing Corporation, a Delaware corporation
(the “Company”), in connection with the transactions contemplated in that
certain Purchase Agreement dated as of March [__], 2006 (the “Purchase
Agreement”), by and among the Company and the purchasers identified on the
signature pages thereto (the “Purchasers”) providing for, among other things,
the issuance and sale by the Company of shares of common stock of the Company,
par value $0.01 per share (the “Shares”). This opinion is rendered pursuant to
Section 2.2(a)(ii) of the Purchase Agreement. All capitalized terms not
otherwise defined herein are defined as set forth in the Purchase Agreement.

I have reviewed the Purchase Agreement, the Amended and Restated Certificate of
Incorporation of the Company (the “Certificate of Incorporation”) and the
By-laws of the Company, in each case as amended to date, and the records of the
meetings of the Board of Directors of the Company.

I have made such inquiry of the officers of the Company and have examined such
corporate and other records, documents, agreements and instruments, certificates
of officers of the Company and of public officials and have made such
investigation as to matters of law as I have considered necessary for the
purposes of this opinion. In making such investigation, I have assumed the
genuineness of all signatures, the authenticity of all documents submitted to me
as originals and the conformity to original documents of all copies of
documents, whether certified or not.

In rendering this opinion, I have relied, as to all questions of fact material
to this opinion, upon certificates of public officials and officers of the
Company, and representations and warranties by you and the Company contained in
the Purchase Agreement.

All opinions contained herein with respect to the enforceability of agreements
and instruments are qualified to the extent that (i) the enforceability of such
agreements and instruments may be limited by general principles of equity, and
the availability of the remedy of specific performance or of injunctive relief
is subject to the discretion of the court before which any proceedings therefor
may be brought, (ii) the enforceability of such agreements and instruments may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally, (iii) I express no
opinion as to the enforceability of any rights of indemnification relating to
liabilities under the securities laws, (iv) the remedies of specific performance
and injunctive and other forms of injunctive relief may be subject to equitable
defenses and (v) I express no opinion as to the enforceability of any provisions
of the Transaction Documents (as identified below) which waive rights granted by
law where such waivers are against public policy.

 

B-1-1

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

The opinions expressed in this opinion letter are limited to the laws of the
State of Maryland, federal laws of the United States of America and the General
Corporation Law of the State of Delaware. I am not opining on, and I assume no
responsibility with respect to, the applicability to or effect on any of the
matters covered herein of the laws of any other jurisdiction or the local laws
of any jurisdiction.

Based on the foregoing, I am of the opinion that:

1. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has all requisite
power and authority, and all material governmental licenses, authorizations,
consents and approvals, required to own and operate its properties and assets
and to carry on its business as now conducted and as proposed to be conducted
(all as described in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2005) (the “Form 10-K”). The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to
qualify would reasonably be expected to have a material adverse effect on the
Company.

2. Each of the significant subsidiaries (as defined in Rule 1-02(w) of
Regulation S-X promulgated by the Commission pursuant to the Exchange Act) set
forth in the Form 10-K (the “Subsidiaries”) is an entity duly organized and in
good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable).

3. The Company has all requisite power and authority to enter into and perform
the Purchase Agreement and the Transfer Agent Instructions (together, the
“Transaction Documents”), to issue, sell and deliver the Shares pursuant to the
Transaction Documents and to carry out and perform its obligations under, and to
consummate the transactions contemplated by, the Transaction Documents.

4. All corporate action on the part of the Company, its directors and its
stockholders necessary for the authorization, execution and delivery by the
Company of the Transaction Documents, the authorization, issuance, sale and
delivery of the Shares pursuant to the Purchase Agreement and the consummation
by the Company of the transactions contemplated by the Transaction Documents has
been duly taken. The Transaction Documents have been duly and validly executed
and delivered by the Company and constitute the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
their terms, except as set forth above.

5. The Company’s authorized and outstanding stock is as set forth in
Section 3.1(f) of the Purchase Agreement. All presently issued and outstanding
shares of common stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable and free of any preemptive or
similar rights, and have been issued in compliance with applicable securities
laws and regulations. The Shares which are being issued on the date hereof
pursuant to the Purchase Agreement have been duly authorized and validly issued
and are fully paid and nonassessable and free of preemptive or similar rights.
Except for rights described in Schedule 3.1(f) of the Purchase Agreement, I am
not aware of any other options, warrants, conversion privileges or other rights
presently outstanding to purchase or otherwise acquire from the Company any
capital stock or other securities of the Company, or any other agreements to
issue any such securities or rights. The rights, privileges and preferences of
the common stock of the Company are as stated in the Company’s Certificate of
Incorporation.

 

B-1-2

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

6. The execution, delivery and performance by the Company of, and the compliance
by the Company with the terms of, the Transaction Documents, and the issuance,
sale and delivery of the Shares pursuant to the Purchase Agreement do not
(a) conflict with or result in a violation of any provision of any existing
Delaware corporate law or, to my knowledge, any federal law, rule or regulation
thereunder having applicability to the Company or its Subsidiaries (except that
no opinion is expressed in this Paragraph 6 with respect to state and federal
securities laws or the laws of any foreign jurisdiction), (b) conflict with or
result in a violation of any provision of the Certificate of Incorporation or
By-laws of the Company, (c) to my knowledge, conflict with, result in a breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or result in or permit the termination or
modification of, any agreement, instrument, order, writ, judgment or decree
known to us to which the Company or its Subsidiaries is a party or is subject,
except in each case as would not cause a material adverse effect on the Company,
or (d) to my knowledge, result in the creation or imposition of any lien, claim
or encumbrance on any of the Company’s or its Subsidiaries’ assets or
properties, except in each case as would not reasonably be expected to cause a
material adverse effect on the Company.

7. To my knowledge, there is no claim, action, suit, proceeding, arbitration,
investigation or inquiry, pending or threatened, before any court or
governmental or administrative body or agency, or any private arbitration
tribunal, against the Company or its Subsidiaries, or any of its officers,
directors or employees (in connection with the discharge of their duties as
officers, directors and employees), or affecting any of its properties or
assets, except as disclosed in the Form 10-K or as would not reasonably be
expected to cause a material adverse effect on the Company.

8. All consents, approvals, permits, orders or authorizations of, and all
qualifications, registrations, designations or declarations with any federal or
Delaware governmental authority on the part of the Company that are required in
connection with the execution and delivery of the Purchase Agreement, the offer,
sale, issuance or delivery of the Shares and the consummation of the
transactions contemplated thereby have been obtained and are effective, except
that no opinion is expressed in this Paragraph 8 with respect to state and
federal securities laws governing the purchase and distribution of the Shares or
the laws of any foreign jurisdiction.

This opinion is furnished to you as the purchaser of Shares, and is solely for
your benefit and may not be relied upon by any other person. The foregoing
opinions are rendered as of the date of this letter. I assume no obligation to
update or supplement any of my opinions to reflect any changes in law or fact
that may occur.

 

Sincerely, Kim D. Larsen General Counsel

 

B-1-3

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Exhibit B-2

[List of Purchasers]

Ladies and Gentlemen;

This opinion is being rendered to you pursuant to Section 2.2(a)(ii) of the
Purchase Agreement, dated March [__], 2006 (the “Purchase Agreement”), by and
among Broadwing Corporation, a Delaware corporation (the “Company”), and the
Purchasers named therein, relating to the sale to the Purchasers by the Company
of shares of common stock of the Company, par value $0.01 per share (the
“Shares”). Capitalized terms not otherwise defined herein shall have the meaning
ascribed thereto in the Purchase Agreement.

We have acted as special counsel to the Company in connection with the sale of
the Shares. In rendering opinions expressed herein, we have examined originals
or certified, conformed, reproduced or photostatic copies of all such records,
agreements, instruments and documents as we have deemed relevant and necessary
as the basis for the opinions hereinafter expressed. In all such examinations,
we have assumed the genuineness of all signatures, the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document. We have
assumed the due authorization, execution and delivery of all documents and the
validity and enforceability of all documents against all parties thereto, in
accordance with their respective terms. As to questions of fact relevant to such
opinions, we have relied upon representations, warranties and covenants
contained in the documents, records, certificates of officers or representatives
of the Company and others. With respect to any opinions below with respect to
the Company, we have relied, with your permission, as to matters of fact, solely
on the representations and warranties made by the Company in the Purchase
Agreement.

All opinions contained herein with respect to the enforceability of agreements
and instruments are qualified to the extent that (i) the enforceability of such
agreements and instruments may be limited by general principles of equity, and
the availability of the remedy of specific performance or of injunctive relief
is subject to the discretion of the court before which any proceedings therefor
may be brought, (ii) the enforceability of such agreements and instruments may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally, (iii) we express no
opinion as to the enforceability of any rights of indemnification relating to
liabilities under the securities laws, (iv) the remedies of specific performance
and injunctive and other forms of injunctive relief may be subject to equitable
defenses and (v) we express no opinion as to the enforceability of any
provisions of the Transaction Documents (as identified below) which waive rights
granted by law where such waivers are against public policy.

Based upon and subject to the foregoing, and having regard for legal
considerations which we deem relevant, we are of the opinion that:

1. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.

 

B-2-1

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

2. The Company has all requisite power and authority to enter into and perform
the Purchase Agreement and the Transfer Agent Instructions dated as of the date
hereof (together, the “Transaction Documents”), to issue, sell and deliver the
Shares pursuant to the Transaction Documents and to carry out and perform its
obligations under, and to consummate the transactions contemplated by, the
Transaction Documents.

3. All corporate action on the part of the Company, its directors and its
stockholders necessary for the authorization, execution and delivery by the
Company of the Transaction Documents, the authorization, issuance, sale and
delivery of the Shares pursuant to the Purchase Agreement and the consummation
by the Company of the transactions contemplated by the Transaction Documents has
been duly taken. The Transaction Documents have been duly and validly executed
and delivered by the Company and constitute the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
their terms, except as set forth above.

4. The Company meets the eligibility requirements for the use of Form S-3 for
the registration of the Shares in the twelve months ending on the date hereof,
and to our knowledge, the Company is a “well-known seasoned issuer” as defined
in Rule 405 under the Securities Act of 1933, as amended.

5. To our knowledge, the Company has filed all reports (the “SEC Documents”)
required to be filed by it under Sections 13(a) and 15(d) of the Exchange Act of
1934, as amended (the “Exchange Act”), in the twelve months ending on the date
hereof. As of their respective filing dates, the SEC Documents complied in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations of the Securities and Exchange Commission.

6. Based in part upon the representations of the Purchasers contained in the
Purchase Agreement, the Shares may be issued to the Purchasers without
registration under the Securities Act of 1933, as amended.

7. The Company is not an Investment Company within the meaning of the Investment
Company Act of 1940, as amended.

8. No consent, license, permit, waiver approval or authorization of, or
designation, declaration, registration or filing with, the Securities and
Exchange Commission or any state securities regulatory authority is required in
connection with the offer, sale, issuance or delivery of the Shares, other than
the filing of a Form 8-K with respect to the closing of the transaction
contemplated by the Transaction Documents and the possible filing of a Form D
with the Securities and Exchange Commission.

Whenever an opinion or statement herein is qualified by the words “to our
knowledge” or other words of similar import, it is intended to indicate that the
attorneys practicing law with this firm who represented the Company in
connection with the transactions contemplated by the Purchase Agreement have no
actual knowledge of any facts or information contrary to such opinion or
statement.

 

B-2-2

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

Members of our firm are admitted to practice law in the States of Illinois and
New York and our opinions expressed herein are limited solely to the federal
laws of the United States of America, the laws of the State of Illinois, the
laws of the State of New York and the corporate laws of the State of Delaware,
and we express no opinion herein concerning the laws of any other jurisdiction.

The opinions and statements expressed herein are as of the date hereof. We
assume no obligation to update or supplement this opinion letter to reflect any
facts or circumstances that may hereafter come to our attention or any changes
in applicable law which may hereafter occur.

The opinions expressed herein have been rendered at your request solely for the
purposes of the transaction contemplated by the Purchase Agreement, are solely
for your benefit and may not be used or relied upon in any manner by any other
person or by you for any other purpose without our express written consent.

 

Very truly yours, MAYER, BROWN, ROWE & MAW LLP

B-2-3

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

Exhibit C-1

Registration Statement

 

C-1-1

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

Exhibit C-2

Plan of Distribution

The selling stockholders may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling stockholders may use any one or more of the
following methods when selling shares:

 

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

 

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

 

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

 

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

 

  •   privately negotiated transactions;

 

  •   short sales;

 

  •   broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;

 

  •   a combination of any such methods of sale; and

 

  •   any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

The selling stockholders may also engage in short sales against the box, puts
and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades.

Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved. Any
profits on the resale of shares of common stock by a broker-dealer acting as
principal might be deemed to be underwriting discounts or commissions under the
Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, attributable to the sale of shares will be borne by a selling
stockholder. The selling stockholders may agree to indemnify any agent, dealer
or broker-dealer that participates in transactions involving sales of the shares
if liabilities are imposed on that person under the Securities Act.

 

C-2-1

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The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 amending
the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus.

The selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus.

The selling stockholders and any broker-dealers or agents that are involved in
selling the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares of common stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.

We are required to pay all fees and expenses incident to the registration of the
shares of common stock. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.

The selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling stockholder. If we are notified by any
selling stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares of common stock, if required, we will file
a supplement to this prospectus. If the selling stockholders use this prospectus
for any sale of the shares of common stock, they will be subject to the
prospectus delivery requirements of the Securities Act.

The anti-manipulation rules of Regulation M under the Securities Exchange Act of
1934 may apply to sales of our common stock and activities of the selling
stockholders.

 

C-2-2

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Exhibit D

INSTRUCTION SHEET FOR PURCHASER

(to be read in conjunction with the entire Purchase Agreement)

 

A. Complete the following items in the Purchase Agreement:

1. Complete and execute the Purchaser Signature Page. The Agreement must be
executed by an individual authorized to bind the Purchaser.

2. Exhibit F-1 - Stock Certificate Questionnaire:

Provide the information requested by the Stock Certificate Questionnaire;

3. Exhibit F-2 - Registration Statement Questionnaire:

Provide the information requested by the Registration Statement Questionnaire.

4. Return, via facsimile, the signed Purchase Agreement including the properly
completed Exhibits F-1 and F-2, to:

 

                                Mayer, Brown, Rowe & Maw LLP
                                Facsimile: (312) 706-8540
                                Attn: Michael A. Serafini, Esq.

5. After completing instruction number four (4) above, deliver the original
signed Purchase Agreement including the properly completed Exhibits F-1 and F-2
to:

 

                                Mayer, Brown, Rowe & Maw LLP

                                71 South Wacker Drive
                                Chicago, Illinois 60606-4637
                                Attn: Michael A. Serafini, Esq.

 

 

B. Instructions regarding the transfer of funds for the purchase of Company
Shares will be telecopied to the Purchaser by the Company at a later date.

 

C. Upon the resale of any Company Shares by the Purchaser after the Registration
Statement covering any Company Shares is effective, as described in the Purchase
Agreement, the Purchaser:

1. Must deliver a current prospectus, and annual and quarterly reports of the
Company to the buyer (prospectuses, and annual and quarterly reports may be
obtained from the Company at the Purchaser’s request).

 

D-1

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Exhibit D-1

Broadwing Corporation

STOCK CERTIFICATE QUESTIONNAIRE

Please provide us with the following information:

 

1.    The exact name that the Company Shares are to be registered in (this is
the name that will appear on the stock certificate(s)). You may use a nominee
name if appropriate:   

 

2.    The relationship between the Purchaser of the Company Shares and the
registered holder listed in response to item 1 above:   

 

3.    The mailing address, telephone and telecopy number of the registered
holder listed in response to item 1 above:   

 

4.    The Tax Identification Number of the registered holder listed in response
to item 1 above:   

 

D-2

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Exhibit D-2

Broadwing Corporation

REGISTRATION STATEMENT QUESTIONNAIRE

In connection with the Registration Statement, please provide us with the
following information regarding the Purchaser.

1. Please state your organization’s name exactly as it should appear in the
Registration Statement:

2. Have you or your organization had any position, office or other material
relationship within the past three years with the Company or its affiliates?

                            Yes         
                                                            No

If yes, please indicate the nature of any such relationship below:

 

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3. Are you the beneficial owner of any other securities of the Company?

                            Yes         
                                                            No

If yes, please describe the nature and amount of such ownership.

 

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D-3

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4. Have you made or are you aware of any arrangements relating to the
distribution of the shares of the Company pursuant to the Registration
Statement?

                            Yes         
                                                            No

If yes, please describe the nature and amount of such arrangements.

 

 

 

 

 

 

 

 

 

D-4

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Schedule 3.1(a)

List of Subsidiaries

Broadwing Communications Corporation

CIII Communications LLC

Broadwing Communications LLC

 

D-1

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Schedule 3.1(f)

Warrants, Options and Other Convertible Securities

As of February 28, 2006, the Company had outstanding options to purchase
3,650,811 shares of Common Stock.

As of February 28, 2006, the Company had outstanding warrants to purchase
3,457,838 shares of Common Stock.

The exercise price of warrants to purchase 2,732,838 shares of Common Stock will
be adjusted downward from $22.49 as a result of the issuance and sale of the
Shares to the Purchasers.

 

D-2

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Schedule 4.5

Use of Proceeds

None.

 

D-3