Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of November
13, 2006, among GlobalSCAPE, Inc., a Delaware corporation (the “Company”), each
of the Persons named on Schedule I hereto (each a “Selling Stockholder” and
collectively the “Selling Stockholders”) and each purchaser identified on the
signature pages hereto (each, including its successors and assigns, a
“Purchaser” and collectively the “Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement, the
Company desires to issue and sell to each Purchaser, each Selling Stockholder
desires to sell to each Purchaser, and each Purchaser, severally and not
jointly, desires to purchase from the Company and the Selling Stockholders,
securities of the Company as more fully described in this Agreement.

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

ARTICLE I.
DEFINITIONS

1.1           DEFINITIONS.  IN ADDITION TO THE TERMS DEFINED ELSEWHERE IN THIS
AGREEMENT, FOR ALL PURPOSES OF THIS AGREEMENT, THE FOLLOWING TERMS HAVE THE
MEANINGS INDICATED IN THIS SECTION 1.1:

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

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person as such terms are used in and construed under Rule 144 under the
Securities Act of 1933, as amended (the “Securities Act”).  With respect to a
Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser will be
deemed to be an Affiliate of such Purchaser.

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

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

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

“Closing Price” means on any particular date (a) the last reported closing bid
price per share of Common Stock on such date on the Trading Market (as reported
by

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

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed into.

“Company Shares” means the shares of Common Stock issued by the Company to the
Purchasers pursuant to this Agreement other than the Warrant Shares.

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

“Company Counsel” means Jackson Walker L.L.P.

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

“Company Subscription Amount” means, as to each Purchaser, the aggregate amount
to be paid to the Company for the Company Shares and Warrants purchased
hereunder from the Company as specified opposite such Purchaser’s name on
Schedule II hereto.

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

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

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

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

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

“Indemnified Liabilities” shall have the meaning ascribed to such term is
Section 4.9.

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

“Knowledge” means the actual knowledge of the President and Chief Financial
Officer of the Company.

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

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

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

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

“Non-Disclosure Agreement” means as to each Purchaser, the confidentiality or
similar agreement executed and delivered by the Company and such Purchaser
relating to the transactions contemplated by this Agreement.

“Per Share Purchase Price” equals $2.50, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement and
prior to the Closing Date.

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

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

“Purchaser Counsel” shall have the meaning ascribed to such term in Section 4.4.

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

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

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

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

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

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

“Securities” means the Company Securities and the Selling Stockholder Shares.

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

“Selling Stockholder Shares” means the shares of Common Stock set forth opposite
the name of each Selling Stockholder on Schedule I which are being sold to the
Purchasers pursuant to this Agreement.

“Selling Stockholder Subscription Amount” means, as to each Purchaser, the
aggregate amount to be paid to the Selling Stockholders for the Selling
Stockholder Shares purchased hereunder from the Selling Stockholders as
specified opposite such Purchaser’s name on Schedule II hereto.

“Shares” means the Company Shares and the Selling Stockholder Shares.

“Short Sales” shall include all “short sales” as defined in Rule 200 of
Regulation SHO under the Exchange Act and all types of direct and indirect stock
pledges, forward sale contracts, options, puts, calls, short sales, swaps and
similar arrangements (including on a total return basis) and sales and other
transactions having the effect of hedging securities or investments made
pursuant to this Agreement.

“Subscription Amount” means, as to each Purchaser, the aggregate amount of such
Purchaser’s Company Subscription Amount and Selling Stockholder Subscription
Amount.

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

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

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

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

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted for trading as reported by Bloomberg
Financial L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to
4:02 p.m. (New York City time); (b)  if the OTC Bulletin Board is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock
is not then quoted for trading on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “Pink Sheets” published by Pink Sheets,
LLC (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common Stock so
reported; or (d) in all other cases, the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by the
Holder and reasonably acceptable to the Company.

“Warrants” means collectively the Common Stock purchase warrants, in the form of
Exhibit C delivered to the Purchasers at the Closing in accordance with Section
2.2(a) hereof, which Warrants shall be initially exercisable on the date six (6)
months after the date of issuance and have a term of exercise equal to five (5)
years thereafter.

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

ARTICLE II.
PURCHASE AND SALE

2.1           CLOSING.  ON THE CLOSING DATE, UPON THE TERMS AND SUBJECT TO THE
CONDITIONS SET FORTH HEREIN, SUBSTANTIALLY CONCURRENT WITH THE EXECUTION AND
DELIVERY OF THIS AGREEMENT BY THE PARTIES HERETO, (I) THE COMPANY AGREES TO
SELL, AND EACH PURCHASER AGREES TO PURCHASE, SEVERALLY AND NOT JOINTLY, FROM THE
COMPANY THE AMOUNT OF COMPANY SHARES AND WARRANTS SET FORTH OPPOSITE EACH SUCH
PURCHASER’S NAME ON SCHEDULE II HERETO, AND (II) THE SELLING STOCKHOLDERS AGREE
TO SELL, AND EACH PURCHASER AGREES TO PURCHASE, SEVERALLY AND NOT JOINTLY, FROM
THE SELLING STOCKHOLDERS THE AMOUNT OF SELLING STOCKHOLDER SHARES SET FORTH
OPPOSITE EACH SUCH PURCHASER’S NAME ON SCHEDULE II HERETO.  EACH PURCHASER SHALL
DELIVER VIA WIRE TRANSFER TO MELLON INVESTOR SERVICES,  L.L.C. (THE “ESCROW
AGENT”), TO BE HELD IN ESCROW PURSUANT TO THE ESCROW AGREEMENT BY AND AMONG THE
ESCROW AGENT, THE COMPANY, THE SELLING STOCKHOLDERS AND THE PURCHASERS OF EVEN
DATE HEREWITH, PENDING THE CLOSING, THE COMPANY SUBSCRIPTION AMOUNT AND THE
SELLING

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STOCKHOLDER SUBSCRIPTION AMOUNT.  THE COMPANY SHALL DELIVER TO EACH PURCHASER
ITS RESPECTIVE COMPANY SHARES AND WARRANTS AS DETERMINED PURSUANT TO SECTION
2.2(A) AND THE OTHER ITEMS SET FORTH IN SECTION 2.2 DELIVERABLE AT THE CLOSING. 
THE SELLING STOCKHOLDERS SHALL DELIVER TO EACH PURCHASER ITS RESPECTIVE SELLING
STOCKHOLDER SHARES AND THE OTHER ITEMS SET FORTH IN SECTION 2.2 DELIVERABLE AT
THE CLOSING.  UPON SATISFACTION OF THE CONDITIONS SET FORTH IN SECTIONS 2.2 AND
2.3, THE CLOSING SHALL OCCUR AT THE OFFICES OF COMPANY COUNSEL, OR SUCH OTHER
LOCATION AS THE PARTIES SHALL MUTUALLY AGREE, AND THE SUBSCRIPTION AMOUNTS SHALL
BE DISBURSED IN ACCORDANCE WITH ANNEX A.

2.2           DELIVERIES.

(A)           ON OR PRIOR TO THE CLOSING DATE, THE COMPANY SHALL DELIVER OR
CAUSE TO BE DELIVERED TO EACH PURCHASER THE FOLLOWING:

(I)            THIS AGREEMENT DULY EXECUTED BY THE COMPANY;

(II)           A LEGAL OPINION OF COMPANY COUNSEL, IN SUBSTANTIALLY THE FORM OF
EXHIBIT B ATTACHED HERETO;

(III)          A COPY OF THE IRREVOCABLE INSTRUCTIONS TO THE COMPANY’S TRANSFER
AGENT INSTRUCTING THE TRANSFER AGENT TO DELIVER, ON AN EXPEDITED BASIS, A
CERTIFICATE EVIDENCING A NUMBER OF COMPANY SHARES EQUAL TO SUCH PURCHASER’S
COMPANY SUBSCRIPTION AMOUNT DIVIDED BY THE PER SHARE PURCHASE PRICE, REGISTERED
IN THE NAME OF SUCH PURCHASER;

(IV)          A WARRANT REGISTERED IN THE NAME OF SUCH PURCHASER TO PURCHASE UP
TO A NUMBER OF SHARES OF COMMON STOCK EQUAL TO 40% OF THE SHARES TO BE PURCHASED
BY SUCH PURCHASER, WITH AN EXERCISE PRICE EQUAL TO $3.15, SUBJECT TO ADJUSTMENT
THEREIN;

(V)           THE REGISTRATION RIGHTS AGREEMENT DULY EXECUTED BY THE COMPANY;

(VI)          A CERTIFICATE SIGNED BY THE CHIEF EXECUTIVE OFFICER AND CHIEF
FINANCIAL OFFICER OF THE COMPANY, DATED AS OF THE CLOSING DATE, TO THE EFFECT
THAT, TO THE KNOWLEDGE OF THE COMPANY AND SUCH OFFICERS, THE CONDITIONS SET
FORTH IN SECTION 2.3(B)(I), (II), (III), (IV), (V) AND (VI) HAVE BEEN SATISFIED;
AND

(VII)         A CERTIFICATE SIGNED BY THE SECRETARY OF THE COMPANY, DATED AS OF
THE CLOSING DATE, AS TO: (I) A COPY, CERTIFIED BY THE SECRETARY OF THE COMPANY,
OF THE RESOLUTIONS OF THE BOARD OF DIRECTORS OF THE COMPANY EVIDENCING APPROVAL
OF THE TRANSACTION DOCUMENTS AND CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
THEREIN AND OTHER MATTERS CONTEMPLATED HEREBY; (II) A COPY, CERTIFIED BY THE
SECRETARY OF THE COMPANY, OF THE BY-LAWS OF THE COMPANY; (III) CERTIFIED COPIES
OF ALL DOCUMENTS EVIDENCING OTHER NECESSARY CORPORATE OR OTHER ACTION AND
GOVERNMENTAL APPROVALS, IF ANY, WITH RESPECT TO THIS AGREEMENT; (IV) CERTIFYING
THE NAMES, TITLES AND SIGNATURES OF THE OFFICERS OF THE COMPANY AUTHORIZED TO
SIGN THIS AGREEMENT AND THE OTHER DOCUMENTS OR CERTIFICATES TO BE DELIVERED
PURSUANT TO THIS AGREEMENT BY THE COMPANY OR ANY OF ITS OFFICERS, TOGETHER WITH
THE TRUE

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SIGNATURES OF SUCH OFFICERS; AND (V) A COPY, CERTIFIED BY THE SECRETARY OF THE
COMPANY AND CERTIFIED BY THE SECRETARY OF STATE OF DELAWARE, OF THE CERTIFICATE
OF INCORPORATION OF THE COMPANY AS IN EFFECT ON THE CLOSING DATE.

(B)           ON OR PRIOR TO THE CLOSING DATE, EACH SELLING STOCKHOLDER SHALL
DELIVER OR CAUSE TO BE DELIVERED TO EACH PURCHASER THE FOLLOWING:

(I)            THIS AGREEMENT DULY EXECUTED THE SELLING STOCKHOLDER;

(II)           ONE OR MORE STOCK CERTIFICATES REPRESENTING, IN THE AGGREGATE,
THE SELLING STOCKHOLDER SHARES BEING SOLD BY THE SELLING STOCKHOLDER ACCOMPANIED
BY AN IRREVOCABLE STOCK POWER DULY EXECUTED IN BLANK;

(III)          A CERTIFICATE SIGNED BY THE SELLING STOCKHOLDER, DATED AS OF THE
CLOSING DATE, TO THE EFFECT THAT, TO THE KNOWLEDGE OF THE SELLING STOCKHOLDER,
THE CONDITIONS SET FORTH IN SECTION 2.3(B) (VI), (VII) AND (VIII) HAVE BEEN
SATISFIED; AND

(C)           ON OR PRIOR TO THE CLOSING DATE, EACH PURCHASER SHALL DELIVER OR
CAUSE TO BE DELIVERED TO THE COMPANY AND THE SELLING STOCKHOLDERS THE FOLLOWING:

(I)            THIS AGREEMENT DULY EXECUTED BY SUCH PURCHASER;

(II)           SUCH PURCHASER’S SUBSCRIPTION AMOUNT BY WIRE TRANSFER TO THE
ACCOUNT AS SPECIFIED IN WRITING BY THE COMPANY AND THE SELLING STOCKHOLDERS; AND

(III)          THE REGISTRATION RIGHTS AGREEMENT DULY EXECUTED BY SUCH
PURCHASER.

2.3           CLOSING CONDITIONS.

(A)           THE OBLIGATIONS OF THE COMPANY AND THE SELLING STOCKHOLDERS
HEREUNDER IN CONNECTION WITH THE CLOSING ARE SUBJECT TO THE FOLLOWING CONDITIONS
BEING MET:

(I)            THE ACCURACY IN ALL MATERIAL RESPECTS WHEN MADE AND ON THE
CLOSING DATE OF THE REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS CONTAINED
HEREIN;

(II)           ALL OBLIGATIONS, COVENANTS AND AGREEMENTS OF THE PURCHASERS
REQUIRED TO BE PERFORMED AT OR PRIOR TO THE CLOSING DATE SHALL HAVE BEEN
PERFORMED IN ALL MATERIAL RESPECTS; AND

(III)          THE DELIVERY BY THE PURCHASERS OF THE ITEMS SET FORTH IN SECTION
2.2(C) OF THIS AGREEMENT.

(B)           THE RESPECTIVE OBLIGATIONS OF THE PURCHASERS HEREUNDER IN
CONNECTION WITH THE CLOSING ARE SUBJECT TO THE FOLLOWING CONDITIONS BEING MET:

(I)            THE ACCURACY IN ALL MATERIAL RESPECTS ON THE CLOSING DATE OF THE
REPRESENTATIONS AND WARRANTIES OF THE COMPANY CONTAINED HEREIN;

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(II)           ALL OBLIGATIONS, COVENANTS AND AGREEMENTS OF THE COMPANY REQUIRED
TO BE PERFORMED AT OR PRIOR TO THE CLOSING DATE SHALL HAVE BEEN PERFORMED IN ALL
MATERIAL RESPECTS;

(III)          THE DELIVERY BY THE COMPANY OF THE ITEMS SET FORTH IN SECTION
2.2(A) OF THIS AGREEMENT;

(IV)          THERE HAS BEEN NO EVENT, OCCURRENCE OR DEVELOPMENT THAT HAS OR
THAT COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT;

(V)           FROM THE DATE HEREOF TO THE CLOSING DATE, TRADING IN THE COMMON
STOCK SHALL NOT HAVE BEEN SUSPENDED BY THE COMMISSION OR THE COMPANY’S PRINCIPAL
TRADING MARKET (EXCEPT FOR ANY SUSPENSION OF TRADING OF LIMITED DURATION AGREED
TO BY THE COMPANY, WHICH SUSPENSION SHALL BE TERMINATED PRIOR TO THE CLOSING),
AND, AT ANY TIME PRIOR TO THE CLOSING DATE, TRADING IN SECURITIES GENERALLY AS
REPORTED BY BLOOMBERG FINANCIAL MARKETS SHALL NOT HAVE BEEN SUSPENDED OR
LIMITED, OR MINIMUM PRICES SHALL NOT HAVE BEEN ESTABLISHED ON SECURITIES WHOSE
TRADES ARE REPORTED BY SUCH SERVICE, OR ON ANY TRADING MARKET, NOR SHALL A
BANKING MORATORIUM HAVE BEEN DECLARED EITHER BY THE UNITED STATES OR NEW YORK
STATE AUTHORITIES NOR SHALL THERE HAVE OCCURRED ANY MATERIAL OUTBREAK OR
ESCALATION OF HOSTILITIES OR OTHER NATIONAL OR INTERNATIONAL CALAMITY OF SUCH
MAGNITUDE IN ITS EFFECT ON, OR ANY MATERIAL ADVERSE CHANGE IN, ANY FINANCIAL
MARKET WHICH, IN EACH CASE, IN THE REASONABLE JUDGMENT OF EACH PURCHASER, MAKES
IT IMPRACTICABLE OR INADVISABLE TO PURCHASE THE SHARES AND WARRANTS AT THE
CLOSING;

(VI)          THE ACCURACY IN ALL MATERIAL RESPECTS ON THE CLOSING DATE OF THE
REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS CONTAINED HEREIN;

(VII)         ALL OBLIGATIONS, COVENANTS AND AGREEMENTS OF THE SELLING
STOCKHOLDER REQUIRED TO BE PERFORMED AT OR PRIOR TO THE CLOSING DATE SHALL HAVE
BEEN PERFORMED IN ALL MATERIAL RESPECTS; AND

(VIII)        THE DELIVERY BY THE SELLING STOCKHOLDERS OF THE ITEMS SET FORTH IN
SECTION 2.2(B) OF THIS AGREEMENT.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

3.1           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  EXCEPT AS SET
FORTH IN THE SEC REPORTS (AS DEFINED BELOW) OR IN THE DISCLOSURE SCHEDULES WHICH
DISCLOSURE SCHEDULES SHALL BE DEEMED A PART HEREOF AND TO QUALIFY ANY
REPRESENTATION OR WARRANTY OTHERWISE MADE HEREIN TO THE EXTENT OF SUCH
DISCLOSURE, THE COMPANY HEREBY MAKES THE REPRESENTATIONS AND WARRANTIES SET
FORTH BELOW TO EACH PURCHASER:

(A)           SUBSIDIARIES.  SCHEDULE 3.1(A) SETS FORTH A LIST OF ALL OF THE
DIRECT AND INDIRECT SUBSIDIARIES OF THE COMPANY.  THE COMPANY OWNS, DIRECTLY OR
INDIRECTLY, ALL OF THE CAPITAL STOCK OR OTHER EQUITY INTERESTS OF EACH
SUBSIDIARY FREE AND CLEAR OF ANY LIENS, AND ALL THE ISSUED AND OUTSTANDING
SHARES OF CAPITAL STOCK OF EACH SUBSIDIARY ARE VALIDLY

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ISSUED AND ARE FULLY PAID, NON-ASSESSABLE AND FREE OF PREEMPTIVE AND SIMILAR
RIGHTS TO SUBSCRIBE FOR OR PURCHASE SECURITIES.

(B)           ORGANIZATION AND QUALIFICATION.  THE COMPANY AND EACH OF THE
SUBSIDIARIES IS AN ENTITY DULY INCORPORATED OR OTHERWISE ORGANIZED, VALIDLY
EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS
INCORPORATION OR ORGANIZATION (AS APPLICABLE), WITH THE REQUISITE POWER AND
AUTHORITY TO OWN AND USE ITS PROPERTIES AND ASSETS AND TO CARRY ON ITS BUSINESS
AS CURRENTLY CONDUCTED.  NEITHER THE COMPANY NOR ANY SUBSIDIARY IS IN VIOLATION
OR DEFAULT OF ANY OF THE PROVISIONS OF ITS RESPECTIVE CERTIFICATE OR ARTICLES OF
INCORPORATION, BYLAWS OR OTHER ORGANIZATIONAL OR CHARTER DOCUMENTS.  EACH OF THE
COMPANY AND THE SUBSIDIARIES IS DULY QUALIFIED TO CONDUCT BUSINESS AND IS IN
GOOD STANDING AS A FOREIGN CORPORATION OR OTHER ENTITY IN EACH JURISDICTION IN
WHICH THE NATURE OF THE BUSINESS CONDUCTED OR PROPERTY OWNED BY IT MAKES SUCH
QUALIFICATION NECESSARY, EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED OR IN GOOD
STANDING, AS THE CASE MAY BE, COULD NOT HAVE OR REASONABLY BE EXPECTED TO RESULT
IN (I) A MATERIAL ADVERSE EFFECT ON THE LEGALITY, VALIDITY OR ENFORCEABILITY OF
ANY TRANSACTION DOCUMENT, (II) A MATERIAL ADVERSE EFFECT ON THE RESULTS OF
OPERATIONS, ASSETS, BUSINESS, PROSPECTS OR CONDITION (FINANCIAL OR OTHERWISE) OF
THE COMPANY AND THE SUBSIDIARIES, TAKEN AS A WHOLE, OR (III) A MATERIAL ADVERSE
EFFECT ON THE COMPANY’S ABILITY TO PERFORM IN ANY MATERIAL RESPECT ON A TIMELY
BASIS ITS OBLIGATIONS UNDER ANY TRANSACTION DOCUMENT (ANY OF (I), (II) OR (III),
A “MATERIAL ADVERSE EFFECT”) AND NO PROCEEDING HAS BEEN INSTITUTED IN ANY SUCH
JURISDICTION REVOKING, LIMITING OR CURTAILING OR SEEKING TO REVOKE, LIMIT OR
CURTAIL SUCH POWER AND AUTHORITY OR QUALIFICATION.

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

(D)           NO CONFLICTS.  THE EXECUTION, DELIVERY AND PERFORMANCE OF THE
TRANSACTION DOCUMENTS BY THE COMPANY, THE ISSUANCE AND SALE OF THE COMPANY
SHARES AND THE WARRANTS AND THE CONSUMMATION BY THE COMPANY OF THE OTHER
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY DO NOT AND WILL NOT (I) CONFLICT
WITH OR VIOLATE ANY PROVISION OF THE COMPANY’S OR ANY SUBSIDIARY’S CERTIFICATE
OR ARTICLES OF INCORPORATION, BYLAWS OR OTHER

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ORGANIZATIONAL OR CHARTER DOCUMENTS, OR (II) CONFLICT WITH, OR CONSTITUTE A
DEFAULT (OR AN EVENT THAT WITH NOTICE OR LAPSE OF TIME OR BOTH WOULD BECOME A
DEFAULT) UNDER, RESULT IN THE CREATION OF ANY LIEN UPON ANY OF THE PROPERTIES OR
ASSETS OF THE COMPANY OR ANY SUBSIDIARY, OR GIVE TO OTHERS ANY RIGHTS OF
TERMINATION, AMENDMENT, ACCELERATION OR CANCELLATION (WITH OR WITHOUT NOTICE,
LAPSE OF TIME OR BOTH) OF, ANY MATERIAL AGREEMENT, CREDIT FACILITY, DEBT OR
OTHER INSTRUMENT (EVIDENCING A COMPANY OR SUBSIDIARY DEBT OR OTHERWISE) OR OTHER
UNDERSTANDING TO WHICH THE COMPANY OR ANY SUBSIDIARY IS A PARTY OR BY WHICH ANY
PROPERTY OR ASSET OF THE COMPANY OR ANY SUBSIDIARY IS BOUND OR AFFECTED, OR
(III) SUBJECT TO THE REQUIRED APPROVALS, CONFLICT WITH OR RESULT IN A VIOLATION
OF ANY APPLICABLE LAW, RULE, REGULATION, ORDER, JUDGMENT, INJUNCTION, DECREE OR
OTHER RESTRICTION OF ANY COURT OR GOVERNMENTAL AUTHORITY TO WHICH THE COMPANY OR
A SUBSIDIARY IS SUBJECT (INCLUDING FEDERAL AND STATE SECURITIES LAWS AND
REGULATIONS), OR BY WHICH ANY PROPERTY OR ASSET OF THE COMPANY OR A SUBSIDIARY
IS BOUND OR AFFECTED; EXCEPT IN THE CASE OF EACH OF CLAUSES (II) AND (III), SUCH
AS WOULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.

(E)           FILINGS, CONSENTS AND APPROVALS.  THE COMPANY IS NOT REQUIRED TO
OBTAIN ANY CONSENT, WAIVER, AUTHORIZATION OR ORDER OF, GIVE ANY NOTICE TO, OR
MAKE ANY FILING OR REGISTRATION WITH, ANY COURT OR OTHER FEDERAL, STATE, LOCAL
OR OTHER GOVERNMENTAL AUTHORITY OR OTHER PERSON IN CONNECTION WITH THE
EXECUTION, DELIVERY AND PERFORMANCE BY THE COMPANY OF THE TRANSACTION DOCUMENTS,
OTHER THAN (I) FILINGS REQUIRED PURSUANT TO SECTION 4.4 OF THIS AGREEMENT, (II)
THE FILING WITH THE COMMISSION OF THE REGISTRATION STATEMENT, (III) THE FILING
OF FORM D WITH THE COMMISSION AND SUCH FILINGS AS ARE REQUIRED TO BE MADE UNDER
APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, RULES AND REGULATIONS AND THE
APPLICATION(S) TO EACH TRADING MARKET FOR THE LISTING OF THE SHARES FOR TRADING
THEREON IN THE TIME AND MANNER REQUIRED THEREBY, (V) THOSE MADE OR OBTAINED
PRIOR TO CLOSING (COLLECTIVELY, THE “REQUIRED APPROVALS”), AND (VI) THOSE
REQUIRED APPROVALS, THE FAILURE OF WHICH BY THE COMPANY TO OBTAIN WOULD NOT HAVE
A MATERIAL ADVERSE EFFECT.

(F)            ISSUANCE OF THE SECURITIES.  THE COMPANY SECURITIES ARE DULY
AUTHORIZED AND, WHEN ISSUED AND PAID FOR IN ACCORDANCE WITH THE APPLICABLE
TRANSACTION DOCUMENTS, WILL BE DULY AND VALIDLY ISSUED, FULLY PAID AND
NONASSESSABLE, FREE AND CLEAR OF ALL LIENS IMPOSED BY THE COMPANY OTHER THAN
RESTRICTIONS ON TRANSFER PROVIDED FOR IN THE TRANSACTION DOCUMENTS AND
APPLICABLE FEDERAL AND STATE SECURITIES OR “BLUE SKY” LAWS, RULES OR
REGULATIONS.  THE WARRANT SHARES, WHEN ISSUED IN ACCORDANCE WITH THE TERMS OF
THE TRANSACTION DOCUMENTS, WILL BE VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE,
FREE AND CLEAR OF ALL LIENS IMPOSED BY THE COMPANY.  THE COMPANY HAS RESERVED
FROM ITS DULY AUTHORIZED CAPITAL STOCK THE MAXIMUM NUMBER OF SHARES OF COMMON
STOCK ISSUABLE PURSUANT TO THIS AGREEMENT AND THE WARRANTS.

(G)           CAPITALIZATION.  THE CAPITALIZATION OF THE COMPANY IS AS SET FORTH
ON SCHEDULE 3.1(G).  EXCEPT AS SET FORTH IN SCHEDULE 3.1(G), THE COMPANY HAS NOT
ISSUED ANY CAPITAL STOCK SINCE ITS MOST RECENTLY FILED PERIODIC REPORT UNDER THE
EXCHANGE ACT, OTHER THAN PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS
UNDER THE COMPANY’S STOCK OPTION PLANS, THE ISSUANCE OF SHARES OF COMMON STOCK
TO EMPLOYEES PURSUANT TO THE COMPANY’S EMPLOYEE STOCK PURCHASE PLAN AND PURSUANT
TO THE CONVERSION OR EXERCISE OF COMMON STOCK EQUIVALENTS OUTSTANDING AS OF THE
DATE OF THE MOST RECENTLY FILED PERIODIC

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REPORT UNDER THE EXCHANGE ACT.  EXCEPT AS DISCLOSED ON SCHEDULE 3.1(G), NO
PERSON HAS ANY RIGHT OF FIRST REFUSAL, PREEMPTIVE RIGHT, RIGHT OF PARTICIPATION,
OR ANY SIMILAR RIGHT TO PARTICIPATE IN THE TRANSACTIONS CONTEMPLATED BY THE
TRANSACTION DOCUMENTS.  EXCEPT AS A RESULT OF THE PURCHASE AND SALE OF THE
COMPANY SECURITIES AND AS SET FORTH IN SCHEDULE 3.1(G), THERE ARE NO OUTSTANDING
OPTIONS, WARRANTS, SCRIPT RIGHTS TO SUBSCRIBE TO, CALLS OR COMMITMENTS OF ANY
CHARACTER WHATSOEVER RELATING TO, OR SECURITIES, RIGHTS OR OBLIGATIONS
CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE FOR, OR GIVING ANY PERSON ANY
RIGHT TO SUBSCRIBE FOR OR ACQUIRE, ANY SHARES OF COMMON STOCK, OR CONTRACTS,
COMMITMENTS, UNDERSTANDINGS OR ARRANGEMENTS BY WHICH THE COMPANY OR ANY
SUBSIDIARY IS OR MAY BECOME BOUND TO ISSUE ADDITIONAL SHARES OF COMMON STOCK OR
COMMON STOCK EQUIVALENTS.  EXCEPT AS DISCLOSED ON SCHEDULE 3.1(G), THE ISSUANCE
AND SALE OF THE COMPANY SECURITIES WILL NOT OBLIGATE THE COMPANY TO ISSUE SHARES
OF COMMON STOCK OR OTHER SECURITIES TO ANY PERSON (OTHER THAN THE PURCHASERS)
AND WILL NOT RESULT IN A RIGHT OF ANY HOLDER OF COMPANY SECURITIES TO ADJUST THE
EXERCISE, CONVERSION, EXCHANGE OR RESET PRICE UNDER ANY OF SUCH SECURITIES. ALL
OF THE OUTSTANDING SHARES OF CAPITAL STOCK OF THE COMPANY ARE VALIDLY ISSUED,
FULLY PAID AND NONASSESSABLE, HAVE BEEN ISSUED IN COMPLIANCE WITH ALL FEDERAL
AND STATE SECURITIES LAWS, AND NONE OF SUCH OUTSTANDING SHARES WAS ISSUED IN
VIOLATION OF ANY PREEMPTIVE RIGHTS OR SIMILAR RIGHTS TO SUBSCRIBE FOR OR
PURCHASE SECURITIES.  NO FURTHER APPROVAL OR AUTHORIZATION OF ANY STOCKHOLDER,
THE BOARD OF DIRECTORS OF THE COMPANY OR OTHERS IS REQUIRED FOR THE ISSUANCE AND
SALE OF THE COMPANY SECURITIES PURSUANT TO THE TERMS OF THE TRANSACTION
DOCUMENTS.  EXCEPT AS DISCLOSED ON SCHEDULE 3.1(G), THERE ARE NO STOCKHOLDERS
AGREEMENTS, VOTING AGREEMENTS OR OTHER SIMILAR AGREEMENTS WITH RESPECT TO THE
COMPANY’S CAPITAL STOCK TO WHICH THE COMPANY IS A PARTY OR, TO THE KNOWLEDGE OF
THE COMPANY, BETWEEN OR AMONG ANY OF THE COMPANY’S STOCKHOLDERS.

(H)           SEC REPORTS; FINANCIAL STATEMENTS.  THE COMPANY HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY IT UNDER THE SECURITIES ACT AND THE EXCHANGE
ACT, INCLUDING PURSUANT TO SECTION 13(A) OR 15(D) THEREOF, FOR THE TWO YEARS
PRECEDING THE DATE HEREOF (OR SUCH SHORTER PERIOD AS THE COMPANY WAS REQUIRED BY
LAW OR REGULATION TO FILE SUCH MATERIAL) (THE FOREGOING MATERIALS, INCLUDING THE
EXHIBITS THERETO AND DOCUMENTS INCORPORATED BY REFERENCE THEREIN, BEING
COLLECTIVELY REFERRED TO HEREIN AS THE “SEC REPORTS” AND TOGETHER WITH THE
DISCLOSURE SCHEDULE 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, AS APPLICABLE, AND NONE
OF THE SEC REPORTS, WHEN FILED, CONTAINED ANY UNTRUE STATEMENT OF A MATERIAL
FACT OR OMITTED TO STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR
NECESSARY IN ORDER TO MAKE THE STATEMENTS THEREIN, IN THE LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING.  THE FINANCIAL
STATEMENTS OF THE COMPANY INCLUDED IN THE SEC REPORTS COMPLY IN ALL MATERIAL
RESPECTS WITH APPLICABLE ACCOUNTING REQUIREMENTS AND THE RULES AND REGULATIONS
OF THE COMMISSION WITH RESPECT THERETO AS IN EFFECT AT THE TIME OF FILING.  SUCH
FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES APPLIED ON A CONSISTENT BASIS DURING
THE PERIODS INVOLVED (“GAAP”), EXCEPT AS MAY BE OTHERWISE SPECIFIED IN SUCH
FINANCIAL STATEMENTS OR THE NOTES THERETO AND EXCEPT THAT UNAUDITED FINANCIAL
STATEMENTS MAY NOT CONTAIN ALL FOOTNOTES

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REQUIRED BY GAAP, AND FAIRLY PRESENT IN ALL MATERIAL RESPECTS THE FINANCIAL
POSITION OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES AS OF AND FOR THE
DATES THEREOF AND THE RESULTS OF OPERATIONS AND CASH FLOWS FOR THE PERIODS THEN
ENDED, SUBJECT, IN THE CASE OF UNAUDITED STATEMENTS, TO NORMAL, IMMATERIAL,
YEAR-END AUDIT ADJUSTMENTS.

(I)            MATERIAL CHANGES; UNDISCLOSED EVENTS, LIABILITIES OR
DEVELOPMENTS.  SINCE THE DATE OF THE LATEST AUDITED FINANCIAL STATEMENTS
INCLUDED WITHIN THE SEC REPORTS, EXCEPT AS SPECIFICALLY DISCLOSED IN THE SEC
REPORTS, (I) THERE HAS BEEN NO EVENT, OCCURRENCE OR DEVELOPMENT THAT HAS HAD OR
THAT COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT, (II)
THE COMPANY HAS NOT INCURRED ANY LIABILITIES (CONTINGENT OR OTHERWISE) OTHER
THAN (A) TRADE PAYABLES AND ACCRUED EXPENSES INCURRED IN THE ORDINARY COURSE OF
BUSINESS CONSISTENT WITH PAST PRACTICE, AND (B) LIABILITIES NOT REQUIRED TO BE
REFLECTED IN THE COMPANY’S FINANCIAL STATEMENTS PURSUANT TO GAAP OR REQUIRED TO
BE DISCLOSED IN THE FILINGS MADE WITH THE COMMISSION, (III) EXCEPT AS REQUIRED
BY APPLICABLE LAW OR GAAP, THE COMPANY HAS NOT ALTERED ITS METHOD OF ACCOUNTING,
(IV) THE COMPANY HAS NOT DECLARED OR MADE ANY DIVIDEND OR DISTRIBUTION OF CASH
OR OTHER PROPERTY TO ITS STOCKHOLDERS OR PURCHASED, REDEEMED OR MADE ANY
AGREEMENTS TO PURCHASE OR REDEEM ANY SHARES OF ITS CAPITAL STOCK AND (V) THE
COMPANY HAS NOT ISSUED ANY EQUITY SECURITIES TO ANY OFFICER, DIRECTOR OR
AFFILIATE, EXCEPT PURSUANT TO EXISTING COMPANY STOCK OPTION PLANS AND EXCEPT AS
SET FORTH IN SCHEDULE 3.1(I).  THE COMPANY DOES NOT HAVE PENDING BEFORE THE
COMMISSION ANY REQUEST FOR CONFIDENTIAL TREATMENT OF INFORMATION.  EXCEPT FOR
THE ISSUANCE OF THE COMPANY SECURITIES CONTEMPLATED BY THIS AGREEMENT OR AS SET
FORTH ON SCHEDULE 3.1(I), NO EVENT, LIABILITY OR DEVELOPMENT HAS OCCURRED OR
EXISTS WITH RESPECT TO THE COMPANY OR ITS SUBSIDIARIES OR THEIR RESPECTIVE
BUSINESS, PROPERTIES, OPERATIONS OR FINANCIAL CONDITION, THAT WOULD BE REQUIRED
TO BE DISCLOSED BY THE COMPANY UNDER APPLICABLE SECURITIES LAWS AT THE TIME THIS
REPRESENTATION IS MADE THAT HAS NOT BEEN PUBLICLY DISCLOSED AT LEAST 1 TRADING
DAY PRIOR TO THE DATE THAT THIS REPRESENTATION IS MADE.

(J)            LITIGATION.  THERE IS NO ACTION, SUIT, INQUIRY, NOTICE OF
VIOLATION, PROCEEDING OR INVESTIGATION PENDING OR, TO THE KNOWLEDGE OF THE
COMPANY, THREATENED AGAINST OR AFFECTING THE COMPANY, ANY SUBSIDIARY OR ANY OF
THEIR RESPECTIVE PROPERTIES BEFORE OR BY ANY COURT, ARBITRATOR, GOVERNMENTAL OR
ADMINISTRATIVE AGENCY OR REGULATORY AUTHORITY (FEDERAL, STATE, COUNTY, LOCAL OR
FOREIGN) (COLLECTIVELY, AN “ACTION”) WHICH (I) ADVERSELY AFFECTS OR CHALLENGES
THE LEGALITY, VALIDITY OR ENFORCEABILITY OF ANY OF THE TRANSACTION DOCUMENTS OR
THE COMPANY SECURITIES OR (II) WOULD, IF THERE WERE AN UNFAVORABLE DECISION,
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.  NEITHER THE
COMPANY NOR ANY SUBSIDIARY, NOR, TO THE COMPANY’S KNOWLEDGE, ANY DIRECTOR OR
OFFICER THEREOF, IS OR HAS BEEN THE SUBJECT OF ANY ACTION INVOLVING A CLAIM OF
VIOLATION OF OR LIABILITY UNDER FEDERAL OR STATE SECURITIES LAWS OR A CLAIM OF
BREACH OF FIDUCIARY DUTY.  THERE HAS NOT BEEN, AND TO THE KNOWLEDGE OF THE
COMPANY, THERE IS NOT PENDING OR CONTEMPLATED, ANY INVESTIGATION BY THE
COMMISSION INVOLVING THE COMPANY OR ANY CURRENT OR FORMER DIRECTOR OR OFFICER OF
THE COMPANY.  THE COMMISSION HAS NOT ISSUED ANY STOP ORDER OR OTHER ORDER
SUSPENDING THE EFFECTIVENESS OF ANY REGISTRATION STATEMENT FILED BY THE COMPANY
OR ANY SUBSIDIARY UNDER THE EXCHANGE ACT OR THE SECURITIES ACT.  THERE ARE NO
DISAGREEMENTS OF ANY KIND PRESENTLY EXISTING, OR REASONABLY ANTICIPATED BY THE
COMPANY OR ANY SUBSIDIARY TO ARISE, BETWEEN ACCOUNTANTS AND LAWYERS FORMERLY OR

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PRESENTLY ENGAGED BY THE COMPANY OR ANY SUBSIDIARY AND THE COMPANY AND EACH
SUBSIDIARY IS CURRENT WITH RESPECT TO ANY FEES OWED TO ITS ACCOUNTANT AND
LAWYERS.

(K)           LABOR RELATIONS.  NO MATERIAL LABOR DISPUTE EXISTS OR, TO THE
KNOWLEDGE OF THE COMPANY, IS IMMINENT WITH RESPECT TO ANY OF THE EMPLOYEES OF
THE COMPANY WHICH COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE
EFFECT.

(L)            COMPLIANCE.  NEITHER THE COMPANY NOR ANY SUBSIDIARY (I) IS IN
DEFAULT UNDER OR IN VIOLATION OF (AND NO EVENT HAS OCCURRED THAT HAS NOT BEEN
WAIVED THAT, WITH NOTICE OR LAPSE OF TIME OR BOTH, WOULD RESULT IN A DEFAULT BY
THE COMPANY OR ANY SUBSIDIARY UNDER), NOR HAS THE COMPANY OR ANY SUBSIDIARY
RECEIVED NOTICE OF A CLAIM THAT IT IS IN DEFAULT UNDER OR THAT IT IS IN
VIOLATION OF, ANY INDENTURE, LOAN OR CREDIT AGREEMENT OR ANY OTHER AGREEMENT OR
INSTRUMENT TO WHICH IT IS A PARTY OR BY WHICH IT OR ANY OF ITS PROPERTIES IS
BOUND (WHETHER OR NOT SUCH DEFAULT OR VIOLATION HAS BEEN WAIVED), (II) IS IN
VIOLATION OF ANY ORDER OF ANY COURT, ARBITRATOR OR GOVERNMENTAL BODY, OR (III)
IS OR HAS BEEN IN VIOLATION OF ANY STATUTE, RULE OR REGULATION OF ANY
GOVERNMENTAL AUTHORITY INCLUDING, WITHOUT LIMITATION, ALL FOREIGN, FEDERAL,
STATE AND LOCAL LAWS APPLICABLE TO ITS BUSINESS EXCEPT IN EACH CASE AS WOULD NOT
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.

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

(N)           TITLE TO ASSETS.  THE COMPANY AND THE SUBSIDIARIES HAVE GOOD AND
MARKETABLE TITLE IN FEE SIMPLE TO ALL REAL PROPERTY OWNED BY THEM THAT IS
MATERIAL TO THE BUSINESS OF THE COMPANY AND THE SUBSIDIARIES AND GOOD AND
MARKETABLE TITLE IN ALL PERSONAL PROPERTY OWNED BY THEM THAT IS MATERIAL TO THE
BUSINESS OF THE COMPANY AND THE SUBSIDIARIES, IN EACH CASE FREE AND CLEAR OF ALL
LIENS, EXCEPT FOR LIENS AS DO NOT MATERIALLY AFFECT THE VALUE OF SUCH PROPERTY
AND DO NOT MATERIALLY INTERFERE WITH THE USE MADE AND PROPOSED TO BE MADE OF
SUCH PROPERTY BY THE COMPANY AND THE SUBSIDIARIES AND LIENS FOR THE PAYMENT OF
FEDERAL, STATE OR OTHER TAXES, THE PAYMENT OF WHICH IS NEITHER DELINQUENT NOR
SUBJECT TO PENALTIES AND THE LIENS SET FORTH ON SCHEDULE 3.1(N).  ANY REAL
PROPERTY AND FACILITIES HELD UNDER LEASE BY THE COMPANY AND THE SUBSIDIARIES ARE
HELD BY THEM UNDER VALID, SUBSISTING AND ENFORCEABLE LEASES WITH WHICH THE
COMPANY AND THE SUBSIDIARIES ARE IN COMPLIANCE.

(O)           PATENTS AND TRADEMARKS.  THE COMPANY AND THE SUBSIDIARIES OWN, OR
HAVE RIGHTS TO USE, ALL PATENTS, PATENT RIGHTS, PATENT APPLICATIONS, TRADEMARKS,
TRADEMARK APPLICATIONS, SERVICE MARKS, TRADE NAMES, COPYRIGHTS, TRADE SECRETS,
INVENTIONS, KNOW-HOW, LICENSES AND OTHER SIMILAR RIGHTS NECESSARY OR MATERIAL
FOR USE IN CONNECTION WITH THEIR RESPECTIVE BUSINESSES AS DESCRIBED IN THE SEC
REPORTS AND WHICH THE FAILURE TO SO HAVE COULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT (COLLECTIVELY, THE

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“INTELLECTUAL PROPERTY RIGHTS”).  NEITHER THE COMPANY NOR ANY SUBSIDIARY HAS
RECEIVED A WRITTEN NOTICE OR HAS KNOWLEDGE THAT THE INTELLECTUAL PROPERTY RIGHTS
USED BY THE COMPANY OR ANY SUBSIDIARY VIOLATES OR INFRINGES, OR ALLEGEDLY
VIOLATES OR ALLEGEDLY INFRINGES, UPON THE RIGHTS OF ANY PERSON.  TO THE
KNOWLEDGE OF THE COMPANY, ALL SUCH INTELLECTUAL PROPERTY RIGHTS ARE ENFORCEABLE
AND THERE IS NO EXISTING INFRINGEMENT BY ANOTHER PERSON OF ANY OF THE
INTELLECTUAL PROPERTY RIGHTS OF OTHERS.  THE COMPANY AND ITS SUBSIDIARIES HAVE
TAKEN REASONABLE SECURITY MEASURES TO PROTECT THE SECRECY, CONFIDENTIALITY AND
VALUE OF ALL OF INTELLECTUAL PROPERTY RIGHTS, EXCEPT WHERE FAILURE TO DO SO
COULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT.

(P)           INSURANCE.  THE COMPANY AND THE SUBSIDIARIES ARE, TO THE KNOWLEDGE
OF THE COMPANY, INSURED BY INSURERS OF RECOGNIZED FINANCIAL RESPONSIBILITY
AGAINST SUCH LOSSES AND RISKS AND IN SUCH AMOUNTS AS ARE PRUDENT AND CUSTOMARY
IN THE BUSINESSES IN WHICH THE COMPANY AND THE SUBSIDIARIES ARE ENGAGED,
INCLUDING, BUT NOT LIMITED TO, DIRECTORS AND OFFICERS INSURANCE COVERAGE AT
LEAST EQUAL TO THE AGGREGATE SUBSCRIPTION AMOUNT.  NEITHER THE COMPANY NOR ANY
SUBSIDIARY HAS ANY REASON TO BELIEVE THAT IT WILL NOT BE ABLE TO RENEW ITS
EXISTING INSURANCE COVERAGE AS AND WHEN SUCH COVERAGE EXPIRES OR TO OBTAIN
SIMILAR COVERAGE FROM SIMILAR INSURERS AS MAY BE NECESSARY TO CONTINUE ITS
BUSINESS WITHOUT A SIGNIFICANT INCREASE IN COST.

(Q)           TRANSACTIONS WITH AFFILIATES AND EMPLOYEES.  EXCEPT AS SET FORTH
IN THE SEC REPORTS, NONE OF THE OFFICERS OR DIRECTORS OF THE COMPANY AND, TO THE
KNOWLEDGE OF THE COMPANY, NONE OF THE EMPLOYEES OF THE COMPANY IS PRESENTLY A
PARTY TO ANY TRANSACTION WITH THE COMPANY OR ANY SUBSIDIARY (OTHER THAN FOR
SERVICES AS EMPLOYEES, OFFICERS AND DIRECTORS), INCLUDING ANY CONTRACT,
AGREEMENT OR OTHER ARRANGEMENT PROVIDING FOR THE FURNISHING OF SERVICES TO OR
BY, PROVIDING FOR RENTAL OF REAL OR PERSONAL PROPERTY TO OR FROM, OR OTHERWISE
REQUIRING PAYMENTS TO OR FROM ANY OFFICER, DIRECTOR OR SUCH EMPLOYEE OR, TO THE
KNOWLEDGE OF THE COMPANY, ANY ENTITY IN WHICH ANY OFFICER, DIRECTOR, OR ANY SUCH
EMPLOYEE HAS A SUBSTANTIAL INTEREST OR IS AN OFFICER, DIRECTOR, TRUSTEE OR
PARTNER, IN EACH CASE IN EXCESS OF $120,000 OTHER THAN (I) FOR PAYMENT OF SALARY
OR CONSULTING FEES FOR SERVICES RENDERED, (II) REIMBURSEMENT FOR EXPENSES
INCURRED ON BEHALF OF THE COMPANY (III) FOR OTHER EMPLOYEE BENEFITS, INCLUDING
STOCK OPTION AGREEMENTS UNDER ANY STOCK OPTION PLAN OF THE COMPANY, (IV)
CUSTOMARY INDEMNIFICATION ARRANGEMENTS AND (V) THOSE NOT REQUIRED TO BE
DISCLOSED IN THE SEC REPORTS.  EXCEPT AS DESCRIBED ABOVE OR IN ANY SEC REPORTS,
NONE OF THE OFFICERS, DIRECTORS OR, TO THE BEST OF THE COMPANY’S KNOWLEDGE, KEY
EMPLOYEES OR STOCKHOLDERS OF THE COMPANY OR ANY MEMBERS OF THEIR IMMEDIATE
FAMILIES, ARE INDEBTED TO THE COMPANY OR ANY SUBSIDIARY, INDIVIDUALLY OR IN THE
AGGREGATE, IN EXCESS OF $120,000 OR HAVE ANY DIRECT OR INDIRECT OWNERSHIP
INTEREST IN ANY FIRM OR CORPORATION WITH WHICH THE COMPANY OR ANY SUBSIDIARY IS
AFFILIATED OR WITH WHICH THE COMPANY OR ANY SUBSIDIARY HAS A BUSINESS
RELATIONSHIP, OR ANY FIRM OR CORPORATION WHICH COMPETES WITH THE COMPANY OR ANY
SUBSIDIARY, OTHER THAN PASSIVE INVESTMENTS IN PUBLICLY TRADED COMPANIES
(REPRESENTING LESS THAN ONE PERCENT (1%) OF SUCH COMPANY) WHICH MAY COMPETE WITH
THE COMPANY OR ANY SUBSIDIARY.  EXCEPT AS SET FORTH IN ANY SEC REPORTS, THE
COMPANY IS NOT A GUARANTOR OR INDEMNITOR OF ANY INDEBTEDNESS OF ANY OTHER
PERSON, FIRM OR CORPORATION.

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(R)            SARBANES-OXLEY; INTERNAL ACCOUNTING CONTROLS.  THE COMPANY IS IN
MATERIAL COMPLIANCE WITH ALL PROVISIONS OF THE SARBANES-OXLEY ACT OF 2002 WHICH
ARE APPLICABLE TO IT AS OF THE CLOSING DATE.  THE COMPANY AND THE SUBSIDIARIES
MAINTAIN A SYSTEM OF INTERNAL ACCOUNTING CONTROLS SUFFICIENT TO PROVIDE
REASONABLE ASSURANCE THAT (I) TRANSACTIONS ARE EXECUTED IN ACCORDANCE WITH
MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATIONS, (II) TRANSACTIONS ARE RECORDED
AS NECESSARY TO PERMIT PREPARATION OF FINANCIAL STATEMENTS IN CONFORMITY WITH
GAAP AND TO MAINTAIN ASSET ACCOUNTABILITY, (III) ACCESS TO ASSETS IS PERMITTED
ONLY IN ACCORDANCE WITH MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATION, AND (IV)
THE RECORDED ACCOUNTABILITY FOR ASSETS IS COMPARED WITH THE EXISTING ASSETS AT
REASONABLE INTERVALS AND APPROPRIATE ACTION IS TAKEN WITH RESPECT TO ANY
DIFFERENCES. THE COMPANY HAS ESTABLISHED DISCLOSURE CONTROLS AND PROCEDURES (AS
DEFINED IN EXCHANGE ACT RULES 13A-15(E) AND 15D-15(E)) FOR THE COMPANY AND
DESIGNED SUCH DISCLOSURE CONTROLS AND PROCEDURES TO ENSURE THAT INFORMATION
REQUIRED TO BE DISCLOSED BY THE COMPANY IN THE REPORTS IT FILES OR SUBMITS UNDER
THE EXCHANGE ACT IS RECORDED, PROCESSED, SUMMARIZED AND REPORTED, WITHIN THE
TIME PERIODS SPECIFIED IN THE COMMISSION’S RULES AND FORMS.  THE COMPANY’S
CERTIFYING OFFICERS HAVE EVALUATED THE EFFECTIVENESS OF THE COMPANY’S DISCLOSURE
CONTROLS AND PROCEDURES AS OF THE END OF THE PERIOD COVERED BY THE COMPANY’S
MOST RECENTLY FILED PERIODIC REPORT UNDER THE EXCHANGE ACT (SUCH DATE, THE
“EVALUATION DATE”).  THE COMPANY PRESENTED IN ITS MOST RECENTLY FILED PERIODIC
REPORT UNDER THE EXCHANGE ACT THE CONCLUSIONS OF THE CERTIFYING OFFICERS ABOUT
THE EFFECTIVENESS OF THE DISCLOSURE CONTROLS AND PROCEDURES BASED ON THEIR
EVALUATIONS AS OF THE EVALUATION DATE.  SINCE THE EVALUATION DATE, THERE HAVE
BEEN NO CHANGES IN THE COMPANY’S INTERNAL CONTROL OVER FINANCIAL REPORTING (AS
SUCH TERM IS DEFINED IN THE EXCHANGE ACT) THAT HAS MATERIALLY AFFECTED, OR IS
REASONABLY LIKELY TO MATERIALLY AFFECT, THE COMPANY’S INTERNAL CONTROL OVER
FINANCIAL REPORTING, AND NO SIGNIFICANT DEFICIENCIES OR MATERIAL WEAKNESSES IN
INTERNAL CONTROLS OVER FINANCIAL REPORTING, OR OTHER FACTORS THAT COULD
SIGNIFICANTLY AFFECT THE COMPANY’S INTERNAL CONTROLS OVER FINANCIAL REPORTING,
HAVE BEEN IDENTIFIED.

(S)           CERTAIN FEES.  EXCEPT AS DISCLOSED ON SCHEDULE 3.1(S), NO
BROKERAGE OR FINDER’S FEES OR COMMISSIONS ARE OR WILL BE PAYABLE BY THE COMPANY
TO ANY BROKER, FINANCIAL ADVISOR OR CONSULTANT, FINDER, PLACEMENT AGENT,
INVESTMENT BANKER, BANK OR OTHER PERSON WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED BY THE TRANSACTION DOCUMENTS.  THE PURCHASERS SHALL HAVE NO
OBLIGATION WITH RESPECT TO ANY FEES OR WITH RESPECT TO ANY CLAIMS MADE BY OR ON
BEHALF OF OTHER PERSONS FOR FEES OF A TYPE CONTEMPLATED IN THIS SECTION THAT MAY
BE DUE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION
DOCUMENTS.

(T)            PRIVATE PLACEMENT. ASSUMING THE ACCURACY OF THE PURCHASERS
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 3.3, NO REGISTRATION UNDER
THE SECURITIES ACT IS REQUIRED FOR THE OFFER AND SALE OF THE SECURITIES AS
CONTEMPLATED HEREBY. THE ISSUANCE AND SALE OF THE SECURITIES HEREUNDER DOES NOT
CONTRAVENE THE RULES AND REGULATIONS OF THE TRADING MARKET.

(U)           INVESTMENT COMPANY. THE COMPANY IS NOT, AND IS NOT AN AFFILIATE
OF, AND IMMEDIATELY AFTER RECEIPT OF PAYMENT FOR THE SECURITIES, WILL NOT BE OR
BE AN AFFILIATE OF,

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AN “INVESTMENT COMPANY” WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED.

(V)           REGISTRATION RIGHTS.  EXCEPT AS DISCLOSED ON THE DISCLOSURE
SCHEDULE TO THE REGISTRATION RIGHTS AGREEMENT, OTHER THAN EACH OF THE PURCHASERS
AND ANY REGISTERED BROKER-DEALER RECEIVING COMPENSATION IN THE FORM OF EQUITY IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, NO PERSON HAS
ANY RIGHT TO CAUSE THE COMPANY TO EFFECT THE REGISTRATION UNDER THE SECURITIES
ACT OF ANY SECURITIES OF THE COMPANY.

(W)          LISTING AND MAINTENANCE REQUIREMENTS.  THE COMPANY’S COMMON STOCK
IS REGISTERED PURSUANT TO SECTION 12(B) OR 12(G) OF THE EXCHANGE ACT, AND THE
COMPANY HAS TAKEN NO ACTION DESIGNED TO, OR WHICH TO ITS KNOWLEDGE IS LIKELY TO
HAVE THE EFFECT OF, TERMINATING THE REGISTRATION OF THE COMMON STOCK UNDER THE
EXCHANGE ACT NOR HAS THE COMPANY RECEIVED ANY NOTIFICATION THAT THE COMMISSION
IS CONTEMPLATING TERMINATING SUCH REGISTRATION.  THE COMPANY HAS NOT, IN THE 12
MONTHS PRECEDING THE DATE HEREOF, RECEIVED NOTICE FROM ANY TRADING MARKET ON
WHICH THE COMMON STOCK IS OR HAS BEEN LISTED OR QUOTED TO THE EFFECT THAT THE
COMPANY IS NOT IN COMPLIANCE WITH THE LISTING OR MAINTENANCE REQUIREMENTS OF
SUCH TRADING MARKET. THE COMPANY IS, AND HAS NO REASON TO BELIEVE THAT IT WILL
NOT IN THE FORESEEABLE FUTURE CONTINUE TO BE, IN COMPLIANCE WITH ALL SUCH
LISTING AND MAINTENANCE REQUIREMENTS.

(X)            APPLICATION OF TAKEOVER PROTECTIONS.  THE COMPANY AND ITS BOARD
OF DIRECTORS HAVE TAKEN ALL NECESSARY ACTION, IF ANY, IN ORDER TO RENDER
INAPPLICABLE ANY CONTROL SHARE ACQUISITION, BUSINESS COMBINATION, POISON PILL
(INCLUDING ANY DISTRIBUTION UNDER A RIGHTS AGREEMENT) OR OTHER SIMILAR
ANTI-TAKEOVER PROVISION UNDER THE COMPANY’S CERTIFICATE OF INCORPORATION (OR
SIMILAR CHARTER DOCUMENTS) OR THE LAWS OF ITS STATE OF INCORPORATION THAT IS OR
COULD BECOME APPLICABLE TO THE PURCHASERS AS A RESULT OF THE PURCHASERS AND THE
COMPANY FULFILLING THEIR OBLIGATIONS OR EXERCISING THEIR RIGHTS UNDER THE
TRANSACTION DOCUMENTS, INCLUDING WITHOUT LIMITATION AS A RESULT OF THE SALE OF
THE SECURITIES PURSUANT TO THIS AGREEMENT AND THE PURCHASERS’ OWNERSHIP OF THE
SECURITIES.

(Y)           DISCLOSURE.  EXCEPT WITH RESPECT TO THE MATERIAL TERMS AND
CONDITIONS OF THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS AND FOR
CERTAIN INFORMATION DISCLOSED TO EACH PURCHASER PURSUANT TO A NON-DISCLOSURE
AGREEMENT (THE “ADDITIONAL INFORMATION”), 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, NON-PUBLIC INFORMATION.  THE COMPANY UNDERSTANDS AND
CONFIRMS THAT THE PURCHASERS WILL RELY ON THE FOREGOING REPRESENTATION IN
EFFECTING TRANSACTIONS IN SECURITIES OF THE COMPANY.  ALL DISCLOSURE FURNISHED
BY OR ON BEHALF OF THE COMPANY TO THE PURCHASERS REGARDING THE COMPANY, ITS
BUSINESS AND THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING THE DISCLOSURE
SCHEDULES TO THIS AGREEMENT AND THE ADDITIONAL INFORMATION, WITH RESPECT TO THE
REPRESENTATIONS AND WARRANTIES MADE HEREIN, ARE TRUE AND CORRECT WITH RESPECT TO
SUCH REPRESENTATIONS AND WARRANTIES AND DO NOT CONTAIN ANY UNTRUE STATEMENT OF A
MATERIAL FACT OR OMIT TO STATE ANY MATERIAL FACT NECESSARY IN ORDER TO MAKE THE
STATEMENTS MADE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE
MADE, NOT MISLEADING. THE PRESS RELEASES DISSEMINATED BY THE COMPANY DURING

16

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THE TWELVE MONTHS PRECEDING THE DATE OF THIS AGREEMENT TAKEN AS A WHOLE DO NOT
CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT
REQUIRED TO BE STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE STATEMENTS, IN
LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE AND WHEN MADE, NOT
MISLEADING.  THE COMPANY ACKNOWLEDGES AND AGREES THAT NO PURCHASER MAKES OR HAS
MADE ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED HEREBY OTHER THAN THOSE SPECIFICALLY SET FORTH IN SECTION 3.3
HEREOF.

(Z)            NO INTEGRATED OFFERING. ASSUMING THE ACCURACY OF THE PURCHASERS’
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 3.3, NEITHER THE COMPANY,
NOR ANY OF ITS AFFILIATES, NOR ANY PERSON ACTING ON ITS OR THEIR BEHALF HAS,
DIRECTLY OR INDIRECTLY, MADE ANY OFFERS OR SALES OF ANY SECURITY OR SOLICITED
ANY OFFERS TO BUY ANY SECURITY, UNDER CIRCUMSTANCES THAT WOULD CAUSE THIS
OFFERING OF THE SECURITIES TO BE INTEGRATED WITH PRIOR OFFERINGS BY THE COMPANY
FOR PURPOSES OF THE SECURITIES ACT OR ANY APPLICABLE SHAREHOLDER APPROVAL
PROVISIONS OF ANY TRADING MARKET ON WHICH ANY OF THE SECURITIES OF THE COMPANY
ARE LISTED OR DESIGNATED.

(AA)         TAX STATUS.  EXCEPT FOR MATTERS THAT WOULD NOT, INDIVIDUALLY OR IN
THE AGGREGATE, HAVE OR REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE
EFFECT, THE COMPANY AND EACH SUBSIDIARY HAS FILED ALL NECESSARY FEDERAL, STATE
AND FOREIGN INCOME AND FRANCHISE TAX RETURNS AND HAS PAID OR ACCRUED ALL TAXES
SHOWN AS DUE THEREON, AND THE COMPANY HAS NO KNOWLEDGE OF A TAX DEFICIENCY WHICH
HAS BEEN ASSERTED OR THREATENED AGAINST THE COMPANY OR ANY SUBSIDIARY.

(BB)         NO GENERAL SOLICITATION.  NEITHER THE COMPANY NOR ANY PERSON ACTING
ON BEHALF OF THE COMPANY HAS OFFERED OR SOLD ANY OF THE SECURITIES BY ANY FORM
OF GENERAL SOLICITATION OR GENERAL ADVERTISING.  THE COMPANY HAS OFFERED THE
COMPANY SECURITIES FOR SALE ONLY TO THE PURCHASERS AND CERTAIN OTHER “ACCREDITED
INVESTORS” WITHIN THE MEANING OF RULE 501 UNDER THE SECURITIES ACT.

(CC)         FOREIGN CORRUPT PRACTICES.  NEITHER THE COMPANY, NOR TO THE
KNOWLEDGE OF THE COMPANY, ANY AGENT OR OTHER PERSON ACTING ON BEHALF OF THE
COMPANY, HAS (I) DIRECTLY OR INDIRECTLY, USED ANY FUNDS FOR UNLAWFUL
CONTRIBUTIONS, GIFTS, ENTERTAINMENT OR OTHER UNLAWFUL EXPENSES RELATED TO
FOREIGN OR DOMESTIC POLITICAL ACTIVITY, (II) MADE ANY UNLAWFUL PAYMENT TO
FOREIGN OR DOMESTIC GOVERNMENT OFFICIALS OR EMPLOYEES OR TO ANY FOREIGN OR
DOMESTIC POLITICAL PARTIES OR CAMPAIGNS FROM CORPORATE FUNDS, (III) FAILED TO
DISCLOSE FULLY ANY CONTRIBUTION MADE BY THE COMPANY (OR MADE BY ANY PERSON
ACTING ON ITS BEHALF OF WHICH THE COMPANY IS AWARE) WHICH IS  IN VIOLATION OF
LAW, OR (IV) VIOLATED IN ANY MATERIAL RESPECT ANY PROVISION OF THE FOREIGN
CORRUPT PRACTICES ACT OF 1977, AS AMENDED.

(DD)         ACCOUNTANTS.  THE COMPANY’S INDEPENDENT AUDITORS ARE HELIN,
DONOVAN, TRUBEE & WILKINSON, LLP. TO THE KNOWLEDGE OF THE COMPANY, SUCH
ACCOUNTANTS, WHO THE COMPANY EXPECTS WILL EXPRESS THEIR OPINION WITH RESPECT TO
THE FINANCIAL STATEMENTS TO BE INCLUDED IN THE COMPANY’S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDING DECEMBER 31, 2006, ARE A REGISTERED PUBLIC ACCOUNTING
FIRM AS REQUIRED BY THE EXCHANGE ACT AND REGISTERED WITH THE PUBLIC COMPANY
ACCOUNTING OVERSIGHT BOARD.  THE COMPANY EXPECTS

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SUCH ACCOUNTANTS TO CONSENT TO THE INCLUSION OF THEIR OPINION ON SUCH FINANCIAL
STATEMENTS INTO THE REGISTRATION STATEMENT AND THE PROSPECTUS WHICH FORMS A PART
THEREOF.

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

(FF)           ACKNOWLEDGEMENT REGARDING PURCHASERS’ TRADING ACTIVITY.  ANYTHING
IN THIS AGREEMENT OR ELSEWHERE HEREIN TO THE CONTRARY NOTWITHSTANDING (EXCEPT
FOR SECTION 4.13 HEREOF), IT IS UNDERSTOOD AND ACKNOWLEDGED BY THE COMPANY (I)
THAT NONE OF THE PURCHASERS HAVE BEEN ASKED TO AGREE, NOR HAS ANY PURCHASER
AGREED, TO HOLD THE SECURITIES FOR ANY SPECIFIED TERM; (II) THAT PAST OR FUTURE
OPEN MARKET OR OTHER TRANSACTIONS BY ANY PURCHASER, INCLUDING SHORT SALES, AND
SPECIFICALLY INCLUDING, WITHOUT LIMITATION, SHORT SALES OR “DERIVATIVE”
TRANSACTIONS EXECUTED IN COMPLIANCE WITH APPLICABLE FEDERAL LAW, MAY NEGATIVELY
IMPACT THE MARKET PRICE OF THE COMPANY’S PUBLICLY-TRADED SECURITIES; AND (III)
THAT EACH PURCHASER SHALL NOT BE DEEMED TO HAVE ANY AFFILIATION WITH OR CONTROL
OVER ANY ARM’S LENGTH, UNAFFILIATED, COUNTER-PARTY IN ANY “DERIVATIVE”
TRANSACTION. THE COMPANY FURTHER UNDERSTANDS AND ACKNOWLEDGES THAT, EXCEPT AS
SET FORTH IN SECTION 4.13, (A) ONE OR MORE PURCHASERS MAY ENGAGE IN HEDGING
ACTIVITIES AT VARIOUS TIMES DURING THE PERIOD THAT THE SECURITIES ARE
OUTSTANDING, INCLUDING, WITHOUT LIMITATION, DURING THE PERIODS THAT THE VALUE OF
THE WARRANT SHARES DELIVERABLE WITH RESPECT TO WARRANTS ARE BEING DETERMINED AND
(B) SUCH HEDGING ACTIVITIES (IF ANY) COULD REDUCE THE VALUE OF THE EXISTING
STOCKHOLDERS’ EQUITY INTERESTS IN THE COMPANY AT AND AFTER THE TIME THAT THE
HEDGING ACTIVITIES ARE BEING CONDUCTED.  THE COMPANY ACKNOWLEDGES THAT SUCH
AFOREMENTIONED HEDGING ACTIVITIES DO NOT CONSTITUTE A BREACH OF ANY OF THE
TRANSACTION DOCUMENTS.

(GG)         MANIPULATION OF PRICE.  THE COMPANY HAS NOT, AND TO ITS KNOWLEDGE
NO ONE ACTING ON ITS BEHALF HAS, (I) TAKEN, DIRECTLY OR INDIRECTLY, ANY ACTION
DESIGNED TO CAUSE OR TO RESULT IN THE STABILIZATION OR MANIPULATION OF THE PRICE
OF ANY SECURITY OF THE COMPANY TO FACILITATE THE SALE OR RESALE OF ANY OF THE
SECURITIES, (II) SOLD, BID FOR, PURCHASED, OR, PAID ANY COMPENSATION FOR
SOLICITING PURCHASES OF, ANY OF THE SECURITIES, OR (III) PAID OR AGREED TO PAY
TO ANY PERSON ANY COMPENSATION FOR SOLICITING ANOTHER TO PURCHASE ANY OTHER
SECURITIES OF THE COMPANY, OTHER THAN, IN THE CASE OF CLAUSES (II) AND (III),
COMPENSATION PAID TO THE COMPANY’S PLACEMENT AGENT IN CONNECTION WITH THE
PLACEMENT OF THE SECURITIES.

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3.2           REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.  EACH
SELLING STOCKHOLDER HEREBY, FOR ITSELF AND FOR NO OTHER SELLING STOCKHOLDER,
REPRESENTS AND WARRANTS AS OF THE DATE HEREOF AND AS OF THE CLOSING DATE TO THE
COMPANY AS FOLLOWS:

(A)           ORGANIZATION AND QUALIFICATION.  SUCH SELLING STOCKHOLDER, IF SUCH
SELLING STOCKHOLDER IS NOT A NATURAL PERSON, IS AN ENTITY DULY INCORPORATED OR
OTHERWISE ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE
JURISDICTION OF ITS INCORPORATION OR ORGANIZATION (AS APPLICABLE), WITH THE
REQUISITE POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND FULFILL ITS
OBLIGATIONS HEREUNDER.

(B)           AUTHORIZATION; ENFORCEMENT.  SUCH SELLING STOCKHOLDER HAS THE
LEGAL RIGHT AND POWER, AND ALL AUTHORIZATIONS AND APPROVALS REQUIRED BY LAW AND,
TO THE EXTENT APPLICABLE, UNDER ITS CHARTER OR BY-LAWS, PARTNERSHIP AGREEMENT,
TRUST AGREEMENT OR OTHER ORGANIZATIONAL DOCUMENTS TO ENTER INTO THIS AGREEMENT
TO SELL, TRANSFER AND DELIVER ALL OF THE SELLING STOCKHOLDER SHARES WHICH MAY BE
SOLD BY SUCH SELLING STOCKHOLDER PURSUANT TO THIS AGREEMENT AND TO COMPLY WITH
ITS OTHER OBLIGATIONS HEREUNDER AND THEREUNDER.  THIS AGREEMENT HAS BEEN (OR
UPON DELIVERY WILL HAVE BEEN) DULY EXECUTED BY SUCH SELLING STOCKHOLDER, WHEN
DELIVERED IN ACCORDANCE WITH THE TERMS HEREOF AND THEREOF, WILL CONSTITUTE THE
VALID AND BINDING OBLIGATION OF SUCH SELLING STOCKHOLDER ENFORCEABLE AGAINST
SUCH SELLING STOCKHOLDER IN ACCORDANCE WITH ITS TERMS EXCEPT (I) AS LIMITED BY
GENERAL EQUITABLE PRINCIPLES AND APPLICABLE BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM AND OTHER LAWS OF GENERAL APPLICATION AFFECTING
ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY, (II) AS LIMITED BY LAWS RELATING TO
THE AVAILABILITY OF SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF OR OTHER EQUITABLE
REMEDIES AND (III) INSOFAR AS INDEMNIFICATION AND CONTRIBUTION PROVISIONS MAY BE
LIMITED BY APPLICABLE LAW.

(C)           NO CONFLICTS.  THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT BY SUCH SELLING STOCKHOLDER, THE SALE OF THE SELLING STOCKHOLDER
SHARES BY SUCH SELLING STOCKHOLDER AND THE CONSUMMATION BY SUCH SELLING
STOCKHOLDER OF THE OTHER TRANSACTIONS CONTEMPLATED HEREBY DO NOT AND WILL NOT
(I) IF SUCH SELLING STOCKHOLDER IS NOT A NATURAL PERSON, CONFLICT WITH OR
VIOLATE ANY PROVISION OF THE COMPANY’S OR ANY SUBSIDIARY’S CERTIFICATE OR
ARTICLES OF INCORPORATION, BYLAWS OR OTHER ORGANIZATIONAL OR CHARTER DOCUMENTS,
OR (II) RESULT IN THE CREATION OF ANY LIEN UPON ANY SHARES BEING SOLD BY SUCH
SELLING STOCKHOLDER.

(D)           TITLE TO SHARES TO BE SOLD.  SUCH SELLING STOCKHOLDER IS, ON THE
CLOSING DATE, THE RECORD AND BENEFICIAL OWNER OF, AND HAS GOOD AND VALID TITLE
TO, THE SELLING STOCKHOLDER SHARES TO BE SOLD BY IT FREE AND CLEAR OF ALL LIENS,
ENCUMBRANCES, EQUITIES, PLEDGES OR CLAIMS AND HAS DULY INDORSED SUCH SHARES IN
BLANK, AND ASSUMING THAT THE PURCHASERS ACQUIRE THEIR INTEREST IN THE SHARES
THEY HAVE PURCHASED WITHOUT NOTICE OF ANY ADVERSE CLAIM (WITHIN THE MEANING OF
SECTION 8-105 OF THE UNIFORM COMMERCIAL CODE (“UCC”)), SUCH PURCHASERS THAT HAVE
PURCHASED THE SHARES BY MAKING PAYMENT THEREFOR, AS PROVIDED HEREIN, AND THAT
HAVE HAD SUCH SHARES DELIVERED TO, OR CREDITED TO THE SECURITIES ACCOUNT OR
ACCOUNTS OF, SUCH PURCHASERS SHALL HAVE ACQUIRED A SECURITY ENTITLEMENT (WITHIN
THE MEANING OF SECTION 8-102(A)(17) OF THE UCC) TO SUCH SHARES PURCHASED BY SUCH
PURCHASERS, AND NO ACTION BASED ON AN ADVERSE CLAIM, MAY BE ASSERTED AGAINST
SUCH PURCHASERS WITH RESPECT TO SUCH SHARES.

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(E)           DELIVERY OF THE SHARES TO BE SOLD.  UPON DELIVERY OF THE SELLING
STOCKHOLDER SHARES WHICH ARE BEING SOLD BY SUCH SELLING STOCKHOLDER PURSUANT TO
THIS AGREEMENT AND ASSUMING THAT EACH PURCHASER HAS NO KNOWLEDGE OF AN ADVERSE
CLAIM, SUCH PURCHASER SHALL BE A PROTECTED PURCHASER (WITHIN THE MEANING OF
SECTION 8-303 OF THE UCC).

(F)            DISCLOSURE.  EXCEPT WITH RESPECT TO THE MATERIAL TERMS AND
CONDITIONS OF THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS, SUCH
SELLING STOCKHOLDER CONFIRMS THAT, NEITHER HE, SHE OR IT NOR ANY OTHER PERSON
ACTING ON HIS, HER OR ITS BEHALF HAS PROVIDED ANY OF THE PURCHASERS OR THEIR
AGENTS OR COUNSEL WITH ANY INFORMATION THAT CONSTITUTES OR MIGHT CONSTITUTE
MATERIAL, NON-PUBLIC INFORMATION.  SUCH SELLING STOCKHOLDER UNDERSTANDS AND
CONFIRMS THAT THE PURCHASERS WILL RELY ON THE FOREGOING REPRESENTATION IN
EFFECTING TRANSACTIONS IN SECURITIES OF THE COMPANY.  SUCH SELLING STOCKHOLDER
HAS REVIEWED THE REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY PURSUANT TO
SECTION 3.1 HEREOF AS MODIFIED BY THE DISCLOSURE SCHEDULES AND HEREBY REPRESENTS
AND WARRANTS THAT SUCH SELLING STOCKHOLDER HAS NO ACTUAL KNOWLEDGE OF ANY FACTS
OR CIRCUMSTANCES THAT WOULD MAKE ANY STATEMENTS MADE THEREIN, IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE, UNTRUE OR MISLEADING IN ANY MATERIAL
RESPECT.  SUCH SELLING STOCKHOLDER 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 3.3 HEREOF.

(G)           LITIGATION.  THERE IS NO ACTION, SUIT, INQUIRY, NOTICE OF
VIOLATION, PROCEEDING OR INVESTIGATION PENDING AGAINST SUCH SELLING STOCKHOLDER
OR, TO THE KNOWLEDGE OF SUCH SELLING STOCKHOLDER, THREATENED AGAINST OR
AFFECTING THE LEGALITY, VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT WITH
RESPECT TO THE OBLIGATIONS OF SUCH SELLING STOCKHOLDER, AND, TO THE KNOWLEDGE OF
SUCH SELLING STOCKHOLDER, NO EVENT HAS OCCURRED AND NO CONDITION EXISTS THAT
COULD FORM THE BASIS OF ANY SUCH ACTION, SUIT, INQUIRY, NOTICE OF VIOLATION,
PROCEEDING OR INVESTIGATION.

(H)           PRIVATE PLACEMENT. ASSUMING THE ACCURACY OF THE PURCHASERS
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 3.3, NO REGISTRATION UNDER
THE SECURITIES ACT IS REQUIRED FOR THE OFFER AND SALE OF THE SECURITIES AS
CONTEMPLATED HEREBY.

3.3           REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.  EACH PURCHASER
HEREBY, FOR ITSELF AND FOR NO OTHER PURCHASER, REPRESENTS AND WARRANTS AS OF THE
DATE HEREOF AND AS OF THE CLOSING DATE TO THE COMPANY AND THE SELLING
STOCKHOLDERS AS FOLLOWS:

(A)           ORGANIZATION; AUTHORITY.  SUCH PURCHASER IS AN ENTITY DULY
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE
JURISDICTION OF ITS ORGANIZATION WITH FULL RIGHT, CORPORATE OR PARTNERSHIP POWER
AND AUTHORITY TO ENTER INTO AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY
THE TRANSACTION DOCUMENTS AND OTHERWISE TO CARRY OUT ITS OBLIGATIONS HEREUNDER
AND THEREUNDER. THE EXECUTION, DELIVERY AND PERFORMANCE BY SUCH PURCHASER OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT HAVE BEEN DULY AUTHORIZED BY ALL
NECESSARY CORPORATE OR SIMILAR ACTION ON THE PART OF SUCH PURCHASER.  EACH
TRANSACTION DOCUMENT TO WHICH IT IS A PARTY HAS BEEN DULY EXECUTED BY SUCH
PURCHASER, AND WHEN DELIVERED BY SUCH PURCHASER IN ACCORDANCE WITH THE TERMS

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HEREOF, WILL CONSTITUTE THE VALID AND LEGALLY BINDING OBLIGATION OF SUCH
PURCHASER, ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS TERMS, EXCEPT (I) AS
LIMITED BY GENERAL EQUITABLE PRINCIPLES AND APPLICABLE BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM AND OTHER LAWS OF GENERAL APPLICATION AFFECTING
ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY, (II) AS LIMITED BY LAWS RELATING TO
THE AVAILABILITY OF SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF OR OTHER EQUITABLE
REMEDIES AND (III) INSOFAR AS INDEMNIFICATION AND CONTRIBUTION PROVISIONS MAY BE
LIMITED BY APPLICABLE LAW.

(B)           OWN ACCOUNT.  SUCH PURCHASER UNDERSTANDS THAT THE SECURITIES ARE
“RESTRICTED SECURITIES” AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR
ANY APPLICABLE STATE SECURITIES LAW AND IS ACQUIRING THE SECURITIES AS PRINCIPAL
FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO OR FOR DISTRIBUTING OR RESELLING SUCH
SECURITIES ANY PART THEREOF IN VIOLATION OF THE SECURITIES ACT OR ANY APPLICABLE
STATE SECURITIES LAW, HAS NO PRESENT INTENTION OF DISTRIBUTING ANY OF SUCH
SECURITIES IN VIOLATION OF THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAW AND HAS NO DIRECT OR INDIRECT ARRANGEMENT OR UNDERSTANDINGS WITH ANY OTHER
PERSONS TO DISTRIBUTE OR REGARDING THE DISTRIBUTION OF SUCH SECURITIES (THIS
REPRESENTATION AND WARRANTY NOT LIMITING SUCH PURCHASER’S RIGHT TO SELL THE
SECURITIES PURSUANT TO THE REGISTRATION STATEMENT OR OTHERWISE IN COMPLIANCE
WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS) IN VIOLATION OF THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW.  SUCH PURCHASER IS
ACQUIRING THE SECURITIES HEREUNDER IN THE ORDINARY COURSE OF ITS BUSINESS.

(C)           PURCHASER STATUS.  AT THE TIME SUCH PURCHASER WAS OFFERED THE
SECURITIES, IT WAS, AND AT THE DATE HEREOF IT IS, AND ON EACH DATE ON WHICH IT
EXERCISES ANY WARRANTS, IT WILL BE EITHER: (I) AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(A)(1), (A)(2), (A)(3), (A)(7) OR (A)(8) UNDER THE SECURITIES
ACT OR (II) A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A(A) UNDER
THE SECURITIES ACT.  SUCH PURCHASER IS NOT A REGISTERED BROKER-DEALER OR AN
ENTITY ENGAGED IN THE BUSINESS OF BEING A BROKER-DEALER UNDER SECTION 15 OF THE
EXCHANGE ACT.

(D)           EXPERIENCE OF SUCH PURCHASER.  SUCH PURCHASER, EITHER ALONE OR
TOGETHER WITH ITS REPRESENTATIVES, HAS SUCH KNOWLEDGE, SOPHISTICATION AND
EXPERIENCE IN BUSINESS AND FINANCIAL MATTERS SO AS TO BE CAPABLE OF EVALUATING
THE MERITS AND RISKS OF THE PROSPECTIVE INVESTMENT IN THE SECURITIES, AND HAS SO
EVALUATED THE MERITS AND RISKS OF SUCH INVESTMENT.  SUCH PURCHASER IS ABLE TO
BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE SECURITIES AND, AT THE PRESENT
TIME, IS ABLE TO AFFORD A COMPLETE LOSS OF SUCH INVESTMENT.

(E)           GENERAL SOLICITATION.  SUCH PURCHASER IS NOT PURCHASING THE
SECURITIES AS A RESULT OF ANY ADVERTISEMENT, ARTICLE, NOTICE OR OTHER
COMMUNICATION REGARDING THE SECURITIES PUBLISHED IN ANY NEWSPAPER, MAGAZINE OR
SIMILAR MEDIA, BROADCAST OVER TELEVISION OR RADIO, DISSEMINATED OVER THE
INTERNET OR PRESENTED AT ANY SEMINAR OR ANY OTHER GENERAL SOLICITATION OR
GENERAL ADVERTISEMENT.

(F)            SHORT SALES AND CONFIDENTIALITY PRIOR TO THE DATE HEREOF.  OTHER
THAN THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, SUCH PURCHASER HAS NOT
DIRECTLY OR INDIRECTLY, NOR HAS ANY PERSON ACTING ON BEHALF OF OR PURSUANT TO
ANY UNDERSTANDING WITH SUCH PURCHASER, EXECUTED ANY DISPOSITION, INCLUDING SHORT
SALES, IN THE SECURITIES OF THE

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COMPANY DURING THE PERIOD COMMENCING FROM THE TIME THAT SUCH PURCHASER EXECUTED
AND DELIVERED A NON-DISCLOSURE AGREEMENT UNTIL THE DATE HEREOF (“DISCUSSION
TIME”).  NOTWITHSTANDING THE FOREGOING, IN THE CASE OF A PURCHASER THAT IS A
MULTI-MANAGED INVESTMENT VEHICLE WHEREBY SEPARATE PORTFOLIO MANAGERS MANAGE
SEPARATE PORTIONS OF SUCH PURCHASER’S ASSETS AND THE PORTFOLIO MANAGERS HAVE NO
DIRECT KNOWLEDGE OF THE INVESTMENT DECISIONS MADE BY THE PORTFOLIO MANAGERS
MANAGING OTHER PORTIONS OF SUCH PURCHASER’S ASSETS, THE REPRESENTATION SET FORTH
ABOVE SHALL ONLY APPLY WITH RESPECT TO THE PORTION OF ASSETS MANAGED BY THE
PORTFOLIO MANAGER THAT MADE THE INVESTMENT DECISION TO PURCHASE THE SECURITIES
COVERED BY THIS AGREEMENT.  OTHER THAN TO OTHER PERSONS PARTY TO THIS AGREEMENT,
SUCH PURCHASER HAS MAINTAINED THE CONFIDENTIALITY OF ALL DISCLOSURES MADE TO IT
IN CONNECTION WITH THIS TRANSACTION (INCLUDING THE EXISTENCE AND TERMS OF THIS
TRANSACTION).

(G)           ACCESS TO INFORMATION.  EACH 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 SECURITIES AND THE MERITS AND RISKS OF INVESTING IN THE
SECURITIES; (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 CONDUCTED BY OR
ON BEHALF OF EACH 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 OR THE SELLING STOCKHOLDERS’
REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN.

(H)           INDEPENDENT INVESTMENT DECISION.  EACH PURCHASER HAS INDEPENDENTLY
EVALUATED THE MERITS OF ITS DECISION TO PURCHASE SECURITIES PURSUANT TO THIS
AGREEMENT, SUCH DECISION HAS BEEN INDEPENDENTLY MADE BY SUCH PURCHASER AND SUCH
PURCHASER CONFIRMS THAT IT HAS ONLY RELIED ON THE ADVICE OF ITS OWN BUSINESS
AND/OR LEGAL COUNSEL AND NOT ON THE ADVICE OF ANY OTHER PURCHASER’S BUSINESS
AND/OR LEGAL COUNSEL, OR THE COMPANY’S LEGAL COUNSEL, IN MAKING SUCH DECISION. 
EACH PURCHASER HAS NOT RELIED ON THE TRUTH, ACCURACY OR COMPLETENESS OF THE
STATEMENTS CONTAINED IN ANY RESEARCH REPORT CONCERNING THE COMPANY THAT WAS
PREPARED BY AN INVESTMENT BANKING FIRM.

(I)            RELIANCE.  EACH PURCHASER UNDERSTANDS AND ACKNOWLEDGES THAT: (I)
THE SECURITIES ARE BEING OFFERED AND SOLD TO IT WITHOUT REGISTRATION UNDER THE
SECURITIES ACT IN A PRIVATE PLACEMENT THAT IS EXEMPT FROM THE REGISTRATION
PROVISIONS OF THE SECURITIES ACT AND (II) THE AVAILABILITY OF SUCH EXEMPTION
DEPENDS IN PART ON, AND THE COMPANY WILL RELY UPON THE ACCURACY AND TRUTHFULNESS
OF, THE FOREGOING REPRESENTATIONS AND SUCH INVESTOR HEREBY CONSENTS TO SUCH
RELIANCE.

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ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

The Company hereby covenants and agrees with each of the Purchasers that:

4.1           TRANSFER RESTRICTIONS.

(A)           THE SECURITIES MAY ONLY BE DISPOSED OF IN COMPLIANCE WITH STATE
AND FEDERAL SECURITIES LAWS.  IN CONNECTION WITH ANY TRANSFER OF SECURITIES
OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR RULE 144, TO THE
COMPANY OR TO AN AFFILIATE OF A PURCHASER OR IN CONNECTION WITH A PLEDGE AS
CONTEMPLATED IN SECTION 4.1(B), THE COMPANY MAY REQUIRE THE TRANSFEROR THEREOF
TO PROVIDE TO THE COMPANY AN OPINION OF COUNSEL SELECTED BY THE TRANSFEROR AND
REASONABLY ACCEPTABLE TO THE COMPANY, THE FORM AND SUBSTANCE OF WHICH OPINION
SHALL BE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH
TRANSFER DOES NOT REQUIRE REGISTRATION OF SUCH TRANSFERRED SECURITIES UNDER THE
SECURITIES ACT.  AS A CONDITION OF TRANSFER, ANY SUCH TRANSFEREE SHALL AGREE IN
WRITING TO BE BOUND BY THE TERMS OF THIS AGREEMENT AND SHALL HAVE THE RIGHTS OF
A PURCHASER UNDER THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT.

(B)           THE PURCHASERS AGREE TO THE IMPRINTING, SO LONG AS IS REQUIRED BY
THIS SECTION 4.1, OF A LEGEND ON ANY OF THE SECURITIES IN THE FOLLOWING FORM:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement

23

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and, if required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured parties.  Such
a pledge or transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith, but such legal opinion shall be required in
connection with a subsequent transfer or foreclosure following default by the
Purchaser transferee of the pledge.  Further, no notice shall be required of
such pledge but Purchaser’s transferee shall promptly notify the Company of the
pledge.  At the appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the
Securities, including, if the Securities are subject to registration pursuant to
the Registration Rights Agreement, the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
Selling Stockholders thereunder.   Each Purchaser acknowledges that the Company
shall not be responsible for any pledges relating to, or the grant of any
security interest in, any of the Securities or for any agreement, understanding
or arrangement between any Purchaser and its pledgee or secured party. The
Company’s indemnification obligations pursuant to this Agreement shall not
extend to any Proceeding or Losses arising out of or related to this Section
4.1(b).

(C)           THE COMPANY AGREES, UPON A PURCHASER’S REASONABLE REQUEST, TO
REISSUE CERTIFICATES EVIDENCING THE SHARES AND WARRANT SHARES WHICH DO NOT
CONTAIN ANY LEGEND (INCLUDING THE LEGEND SET FORTH IN SECTION 4.1(B)), (I)
SUBJECT TO SECTION 4.1(D) WHILE A REGISTRATION STATEMENT (INCLUDING THE
REGISTRATION STATEMENT) COVERING THE RESALE OF SUCH SECURITY IS EFFECTIVE UNDER
THE SECURITIES ACT, OR (II) FOLLOWING ANY SALE OF SUCH SHARES OR WARRANT SHARES
PURSUANT TO RULE 144, OR (III) IF SUCH SHARES OR WARRANT SHARES ARE ELIGIBLE FOR
SALE UNDER RULE 144(K) (TO THE EXTENT THAT THE APPLICABLE PURCHASER PROVIDES A
CERTIFICATION OR LEGAL OPINION TO THE COMPANY TO THAT EFFECT), OR (IV) IF THE
COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT TO THE
EFFECT THAT SUCH LEGEND IS NOT REQUIRED UNDER APPLICABLE REQUIREMENTS OF THE
SECURITIES ACT (INCLUDING JUDICIAL INTERPRETATIONS AND PRONOUNCEMENTS ISSUED BY
THE STAFF OF THE COMMISSION).  THE COMPANY SHALL CAUSE ITS COUNSEL TO ISSUE A
LEGAL OPINION TO THE COMPANY’S TRANSFER AGENT PROMPTLY AFTER THE EFFECTIVE DATE
IF REQUIRED BY THE COMPANY’S TRANSFER AGENT TO EFFECT THE REMOVAL OF THE LEGEND
HEREUNDER SUBJECT TO SECTION 4.1(D).  IF ALL OR ANY PORTION OF A WARRANT IS
EXERCISED AT A TIME WHEN THERE IS AN EFFECTIVE REGISTRATION STATEMENT TO COVER
THE RESALE OF THE WARRANT SHARES, SUCH WARRANT SHARES SHALL BE ISSUED FREE OF
ALL LEGENDS.  THE COMPANY AGREES THAT FOLLOWING THE EFFECTIVE DATE OR AT SUCH
TIME AS SUCH LEGEND IS NO LONGER REQUIRED UNDER THIS SECTION 4.1(C), IT WILL, NO
LATER THAN THREE TRADING DAYS FOLLOWING THE DELIVERY BY A PURCHASER TO THE
COMPANY OR THE COMPANY’S TRANSFER AGENT OF A CERTIFICATE REPRESENTING SHARES OR
WARRANT SHARES, AS THE CASE MAY BE, ISSUED WITH A RESTRICTIVE LEGEND (ENDORSED
OR WITH STOCK POWERS ATTACHED, SIGNATURES GUARANTEED, AND OTHERWISE IN FORM
NECESSARY TO AFFECT THE REISSUANCE AND/OR TRANSFER) (SUCH THIRD TRADING DAY, THE
“LEGEND REMOVAL DATE”), DELIVER OR CAUSE TO BE DELIVERED TO SUCH PURCHASER A
CERTIFICATE REPRESENTING SUCH SHARES THAT IS FREE FROM ALL RESTRICTIVE AND OTHER
LEGENDS.   THE COMPANY MAY NOT MAKE ANY NOTATION ON ITS RECORDS OR GIVE
INSTRUCTIONS TO ANY TRANSFER AGENT OF THE COMPANY THAT ENLARGE THE RESTRICTIONS
ON TRANSFER SET FORTH IN THIS

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SECTION.  CERTIFICATES FOR SECURITIES SUBJECT TO LEGEND REMOVAL HEREUNDER SHALL
BE TRANSMITTED BY THE TRANSFER AGENT OF THE COMPANY TO THE PURCHASERS BY
CREDITING THE ACCOUNT OF THE PURCHASER’S PRIME BROKER WITH THE DEPOSITORY TRUST
COMPANY SYSTEM, IF PRACTICABLE.

(D)           EACH PURCHASER, SEVERALLY AND NOT JOINTLY WITH THE OTHER
PURCHASERS, AGREES THAT THE REMOVAL OF THE RESTRICTIVE LEGEND FROM CERTIFICATES
REPRESENTING SECURITIES AS SET FORTH IN THIS SECTION 4.1 IS PREDICATED UPON THE
COMPANY’S RELIANCE THAT THE PURCHASER WILL SELL ANY SECURITIES PURSUANT TO
EITHER THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING ANY
APPLICABLE PROSPECTUS DELIVERY REQUIREMENTS, OR AN EXEMPTION THEREFROM, AND THAT
IF SECURITIES ARE SOLD PURSUANT TO A REGISTRATION STATEMENT, THEY WILL BE SOLD
IN COMPLIANCE WITH THE PLAN OF DISTRIBUTION SET FORTH THEREIN. TO PROVIDE
FURTHER ASSURANCE IN CONNECTION WITH LEGEND REMOVAL, EACH PURCHASER HEREUNDER
COMMITS THAT IT WILL CONTINUE TO HOLD THE SHARES IN ITS OWN NAME, AND NOT IN THE
NAME OF A NOMINEE, UNTIL SUCH TIME AS THE SHARES ARE DULY AND PROPERLY SOLD IN
COMPLIANCE WITH ALL RELEVANT SECURITIES LAWS. BOTH THE COMPANY AND ITS TRANSFER
AGENT, AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS, MAY RELY
ON THIS SUBSECTION (D) AND EACH PURCHASER HEREUNDER WILL INDEMNIFY AND HOLD
HARMLESS EACH OF SUCH PERSONS FROM ANY BREACHES OR VIOLATIONS OF THIS PARAGRAPH.

4.2           FURNISHING OF INFORMATION.  AS LONG AS ANY PURCHASER OWNS
SECURITIES, THE COMPANY COVENANTS TO USE ITS REASONABLE COMMERCIAL EFFORTS TO
TIMELY FILE (OR OBTAIN EXTENSIONS IN RESPECT THEREOF AND FILE WITHIN THE
APPLICABLE GRACE PERIOD) ALL REPORTS REQUIRED TO BE FILED BY THE COMPANY AFTER
THE DATE HEREOF PURSUANT TO THE EXCHANGE ACT.  AS LONG AS ANY PURCHASER OWNS
SECURITIES, IF THE COMPANY IS NOT REQUIRED TO FILE REPORTS PURSUANT TO THE
EXCHANGE ACT, IT WILL PREPARE AND FURNISH TO THE PURCHASERS AND MAKE PUBLICLY
AVAILABLE IN ACCORDANCE WITH RULE 144(C) SUCH INFORMATION AS IS REQUIRED FOR THE
PURCHASERS TO SELL THE SECURITIES UNDER RULE 144. THE COMPANY FURTHER COVENANTS
THAT IT WILL USE COMMERCIALLY REASONABLE EFFORTS TO TAKE SUCH FURTHER ACTION AS
ANY HOLDER OF SECURITIES MAY REASONABLY REQUEST, TO THE EXTENT REQUIRED FROM
TIME TO TIME TO ENABLE SUCH PERSON TO SELL SUCH SECURITIES WITHOUT REGISTRATION
UNDER THE SECURITIES ACT WITHIN THE REQUIREMENTS OF THE EXEMPTION PROVIDED BY
(A) RULE 144 UNDER THE SECURITIES ACT, AS SUCH RULE MAY BE AMENDED FROM TIME TO
TIME, OR (B) ANY SIMILAR RULE OR REGULATION HEREAFTER ADOPTED BY THE SEC.  UPON
REQUEST, THE COMPANY WILL PROVIDE TO A PURCHASER WRITTEN CERTIFICATION OF ITS
COMPLIANCE WITH THE PROVISIONS OF THIS SECTION 4.2.

4.3           INTEGRATION.  THE COMPANY SHALL NOT SELL, OFFER FOR SALE OR
SOLICIT OFFERS TO BUY OR OTHERWISE NEGOTIATE IN RESPECT OF ANY SECURITY (AS
DEFINED IN SECTION 2 OF THE SECURITIES ACT) THAT WOULD BE INTEGRATED WITH THE
OFFER OR SALE OF THE SECURITIES IN A MANNER THAT WOULD REQUIRE THE REGISTRATION
UNDER THE SECURITIES ACT OF THE SALE OF THE SECURITIES TO THE PURCHASERS OR THAT
WOULD BE INTEGRATED WITH THE OFFER OR SALE OF THE SECURITIES FOR PURPOSES OF THE
RULES AND REGULATIONS OF ANY TRADING MARKET SUCH THAT IT WOULD REQUIRE
SHAREHOLDER APPROVAL PRIOR TO THE CLOSING OF SUCH OTHER TRANSACTION UNLESS
SHAREHOLDER APPROVAL IS OBTAINED BEFORE THE CLOSING OF SUCH SUBSEQUENT
TRANSACTION.

4.4           SECURITIES LAWS DISCLOSURE; PUBLICITY.  THE COMPANY SHALL, BY 9:00
A.M. EASTERN TIME ON THE EARLIER OF (I) THE FOURTH BUSINESS DAY IMMEDIATELY
FOLLOWING THE DATE HEREOF AND (II) THE FIRST BUSINESS DAY AFTER THE CLOSING
DATE, ISSUE A CURRENT REPORT ON FORM 8-K, REASONABLY

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ACCEPTABLE TO MICHAEL E. DAHM, COUNSEL TO SF CAPITAL PARTNERS, LTD. (“PURCHASER
COUNSEL”) DISCLOSING THE MATERIAL TERMS OF THE TRANSACTIONS CONTEMPLATED HEREBY,
AND SHALL ATTACH THE TRANSACTION DOCUMENTS THERETO.  THE COMPANY AND EACH
PURCHASER COUNSEL SHALL CONSULT WITH EACH OTHER IN ISSUING ANY OTHER PRESS
RELEASES WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY, AND NEITHER THE
COMPANY NOR ANY PURCHASER SHALL ISSUE ANY SUCH PRESS RELEASE OR OTHERWISE MAKE
ANY SUCH PUBLIC STATEMENT WITHOUT THE PRIOR CONSENT OF THE COMPANY, WITH RESPECT
TO ANY PRESS RELEASE OF ANY PURCHASER, OR WITHOUT THE PRIOR CONSENT OF EACH
PURCHASER AS INDICATED BY EACH PURCHASER COUNSEL, WITH RESPECT TO ANY PRESS
RELEASE OF THE COMPANY, WHICH CONSENT SHALL NOT UNREASONABLY BE WITHHELD OR
DELAYED, EXCEPT IF SUCH DISCLOSURE IS REQUIRED BY LAW, IN WHICH CASE THE
DISCLOSING PARTY SHALL PROMPTLY PROVIDE THE OTHER PARTY WITH PRIOR NOTICE OF
SUCH PUBLIC STATEMENT OR COMMUNICATION.  NOTWITHSTANDING THE FOREGOING, THE
COMPANY SHALL NOT PUBLICLY DISCLOSE THE NAME OF ANY PURCHASER, OR INCLUDE THE
NAME OF ANY PURCHASER IN ANY FILING WITH THE COMMISSION OR ANY REGULATORY AGENCY
OR TRADING MARKET, WITHOUT THE PRIOR WRITTEN CONSENT OF SUCH PURCHASER, EXCEPT
(I) AS REQUIRED BY FEDERAL SECURITIES LAW IN CONNECTION WITH (A) ANY
REGISTRATION STATEMENT CONTEMPLATED BY THE REGISTRATION RIGHTS AGREEMENT AND (B)
THE FILING OF FINAL TRANSACTION DOCUMENTS (INCLUDING SIGNATURE PAGES THERETO)
WITH THE COMMISSION AND (II) TO THE EXTENT SUCH DISCLOSURE IS REQUIRED BY LAW OR
TRADING MARKET REGULATIONS, IN WHICH CASE THE COMPANY SHALL PROVIDE THE
PURCHASERS WITH PRIOR NOTICE OF SUCH DISCLOSURE PERMITTED UNDER THIS SUBCLAUSE
(II).  IN ADDITION, THE COMPANY SHALL PUBLICLY DISCLOSE THE ADDITIONAL
INFORMATION ON OR PRIOR TO DECEMBER 15, 2006.

4.5           SHAREHOLDER RIGHTS PLAN.  NO CLAIM WILL BE MADE OR ENFORCED BY THE
COMPANY OR, WITH THE CONSENT OF THE COMPANY, ANY OTHER PERSON, THAT ANY
PURCHASER IS AN “ACQUIRING PERSON” UNDER ANY CONTROL SHARE ACQUISITION, BUSINESS
COMBINATION, POISON PILL (INCLUDING ANY DISTRIBUTION UNDER A RIGHTS AGREEMENT)
OR SIMILAR ANTI-TAKEOVER PLAN OR ARRANGEMENT IN EFFECT OR HEREAFTER ADOPTED BY
THE COMPANY, OR THAT ANY PURCHASER COULD BE DEEMED TO TRIGGER THE PROVISIONS OF
ANY SUCH PLAN OR ARRANGEMENT, BY VIRTUE OF RECEIVING SECURITIES UNDER THE
TRANSACTION DOCUMENTS OR UNDER ANY OTHER AGREEMENT BETWEEN THE COMPANY AND THE
PURCHASERS.  THE COMPANY SHALL CONDUCT ITS BUSINESS IN A MANNER SO THAT IT WILL
NOT BECOME SUBJECT TO THE INVESTMENT COMPANY ACT.

4.6           NON-PUBLIC INFORMATION.  EXCEPT WITH RESPECT TO THE MATERIAL TERMS
AND CONDITIONS OF THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS,
THE COMPANY COVENANTS AND AGREES THAT NEITHER IT NOR ANY OTHER PERSON ACTING ON
ITS BEHALF WILL PROVIDE ANY PURCHASER OR ITS AGENTS OR COUNSEL WITH ANY
INFORMATION THAT THE COMPANY BELIEVES CONSTITUTES MATERIAL NON-PUBLIC
INFORMATION, UNLESS PRIOR THERETO SUCH PURCHASER SHALL HAVE EXECUTED A WRITTEN
AGREEMENT REGARDING THE CONFIDENTIALITY AND USE OF SUCH INFORMATION.  THE
COMPANY UNDERSTANDS AND CONFIRMS THAT EACH PURCHASER SHALL BE RELYING ON THE
FOREGOING REPRESENTATIONS IN EFFECTING TRANSACTIONS IN SECURITIES OF THE
COMPANY.

4.7           USE OF PROCEEDS.  EXCEPT AS SET FORTH ON SCHEDULE 4.7 ATTACHED
HERETO, THE COMPANY SHALL USE THE NET PROCEEDS FROM THE SALE OF THE SECURITIES
HEREUNDER FOR WORKING CAPITAL PURPOSES AND NOT FOR THE SATISFACTION OF ANY
PORTION OF THE COMPANY’S DEBT (OTHER THAN PAYMENT OF TRADE PAYABLES IN THE
ORDINARY COURSE OF THE COMPANY’S BUSINESS AND PRIOR PRACTICES), TO REDEEM ANY
COMMON STOCK OR COMMON STOCK EQUIVALENTS OR TO SETTLE ANY OUTSTANDING
LITIGATION.

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4.8           INDEMNIFICATION OF PURCHASERS.  SUBJECT TO THE PROVISIONS OF THIS
SECTION 4.8, IN CONSIDERATION OF EACH PURCHASER’S EXECUTION AND DELIVERY OF THE
TRANSACTION DOCUMENTS AND ACQUIRING THE SECURITIES THEREUNDER AND IN ADDITION TO
ALL OF THE COMPANY’S OTHER OBLIGATIONS UNDER THE TRANSACTION DOCUMENTS, THE
COMPANY WILL INDEMNIFY, PROTECT AND HOLD THE PURCHASERS AND THEIR DIRECTORS,
OFFICERS, SHAREHOLDERS, MEMBERS, PARTNERS, EMPLOYEES AND AGENTS (AND ANY OTHER
PERSONS WITH A FUNCTIONALLY EQUIVALENT ROLE OF A PERSON HOLDING SUCH TITLES
NOTWITHSTANDING A LACK OF SUCH TITLE OR ANY OTHER TITLE), EACH PERSON WHO
CONTROLS SUCH PURCHASER (WITHIN THE MEANING OF SECTION 15 OF THE SECURITIES ACT
AND SECTION 20 OF THE EXCHANGE ACT), AND THE DIRECTORS, OFFICERS, SHAREHOLDERS,
AGENTS, MEMBERS, PARTNERS OR EMPLOYEES (AND ANY OTHER PERSONS WITH A
FUNCTIONALLY EQUIVALENT ROLE OF A PERSON HOLDING SUCH TITLES NOTWITHSTANDING A
LACK OF SUCH TITLE OR ANY OTHER TITLE) OF SUCH CONTROLLING PERSONS (EACH, A
“PURCHASER PARTY”) HARMLESS FROM ANY AND ALL LOSSES, LIABILITIES, OBLIGATIONS,
CLAIMS, CONTINGENCIES, DAMAGES, ACTIONS, CAUSES OF ACTION, SUITS, PENALTIES,
FEES, COSTS AND EXPENSES, (IRRESPECTIVE OF WHETHER ANY SUCH PURCHASER PARTY IS A
PARTY TO THE ACTION FOR WHICH INDEMNIFICATION HEREUNDER IS SOUGHT), INCLUDING
ALL JUDGMENTS, AMOUNTS PAID IN SETTLEMENTS, COURT COSTS AND REASONABLE
ATTORNEYS’ FEES AND COSTS OF INVESTIGATION (COLLECTIVELY, THE “INDEMNIFIED
LIABILITIES”) THAT ANY SUCH PURCHASER PARTY MAY SUFFER OR INCUR AS A RESULT OF,
ARISING OUT OR, OR RELATING TO (A) ANY MISREPRESENTATION OR BREACH OF ANY
REPRESENTATION OR WARRANTY MADE BY THE COMPANY IN THE TRANSACTION DOCUMENTS OR
ANY OTHER CERTIFICATE, INSTRUMENT OR DOCUMENT CONTEMPLATED HEREBY OR THEREBY,
(B) ANY BREACH OF ANY COVENANT, AGREEMENT OR OBLIGATION OF THE COMPANY CONTAINED
IN THE TRANSACTION DOCUMENTS OR ANY OTHER CERTIFICATE, INSTRUMENT OR DOCUMENT
CONTEMPLATED HEREBY OR THEREBY OR (C) ANY CAUSE OF ACTION, SUIT OR CLAIM BROUGHT
OR MADE AGAINST SUCH PURCHASER PARTY BY A THIRD PARTY (INCLUDING FOR THESE
PURPOSES A DERIVATIVE ACTION BROUGHT ON BEHALF OF THE COMPANY) AND ARISING OUT
OF OR RESULTING FROM (I) THE EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF
THE TRANSACTION DOCUMENTS OR ANY OTHER CERTIFICATE, INSTRUMENT OR DOCUMENT
CONTEMPLATED HEREBY OR THEREBY, (II) ANY TRANSACTION FINANCED OR TO BE FINANCED
IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF THE ISSUANCE
OF THE SECURITIES, OR (III) THE STATUS OF SUCH PURCHASER OR HOLDER OF THE
SECURITIES AS AN INVESTOR IN THE COMPANY PURSUANT TO THE TRANSACTIONS
CONTEMPLATED BY THE TRANSACTION DOCUMENTS (UNLESS, AND ONLY TO THE EXTENT THAT,
SUCH ACTION IS BASED SOLELY UPON A BREACH OF SUCH PURCHASER’S REPRESENTATIONS,
WARRANTIES OR COVENANTS UNDER THE TRANSACTION DOCUMENTS OR ANY CONDUCT BY SUCH
PURCHASER WHICH CONSTITUTES FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT).  TO
THE EXTENT THAT THE FOREGOING UNDERTAKING BY THE COMPANY MAY BE UNENFORCEABLE
FOR ANY REASON, THE COMPANY SHALL MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT
AND SATISFACTION OF EACH OF THE INDEMNIFIED LIABILITIES WHICH IS PERMISSIBLE
UNDER APPLICABLE LAW.  IF ANY ACTION SHALL BE BROUGHT AGAINST ANY PURCHASER
PARTY IN RESPECT OF WHICH INDEMNITY MAY BE SOUGHT PURSUANT TO THIS AGREEMENT,
SUCH PURCHASER PARTY SHALL PROMPTLY NOTIFY THE COMPANY IN WRITING, AND THE
COMPANY SHALL HAVE THE RIGHT TO ASSUME THE DEFENSE THEREOF WITH COUNSEL OF ITS
OWN CHOOSING REASONABLY ACCEPTABLE TO SUCH PURCHASER.  ANY PURCHASER PARTY SHALL
HAVE THE RIGHT TO EMPLOY SEPARATE COUNSEL IN ANY SUCH ACTION AND PARTICIPATE IN
THE DEFENSE THEREOF, BUT THE FEES AND EXPENSES OF SUCH COUNSEL SHALL BE AT THE
EXPENSE OF SUCH PURCHASER PARTY EXCEPT TO THE EXTENT THAT (I) THE EMPLOYMENT
THEREOF HAS BEEN SPECIFICALLY AUTHORIZED BY THE COMPANY IN WRITING, (II) THE
COMPANY HAS FAILED AFTER A REASONABLE PERIOD OF TIME TO ASSUME SUCH DEFENSE AND
TO EMPLOY COUNSEL REASONABLY ACCEPTABLE TO SUCH PURCHASER, OR (III) IN SUCH
ACTION THERE IS, IN THE REASONABLE OPINION OF SUCH SEPARATE COUNSEL, A MATERIAL
CONFLICT ON ANY MATERIAL ISSUE BETWEEN THE POSITION OF THE COMPANY AND THE
POSITION OF SUCH PURCHASER PARTY.  THE COMPANY WILL NOT BE LIABLE TO ANY
PURCHASER PARTY UNDER THIS AGREEMENT (I) FOR ANY SETTLEMENT BY A PURCHASER PARTY
EFFECTED

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WITHOUT THE COMPANY’S PRIOR WRITTEN CONSENT, WHICH SHALL NOT BE UNREASONABLY
WITHHELD OR DELAYED; OR (II) TO THE EXTENT, BUT ONLY TO THE EXTENT THAT A LOSS,
CLAIM, DAMAGE OR LIABILITY IS ATTRIBUTABLE TO ANY PURCHASER PARTY’S BREACH OF
ANY OF THE REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS MADE BY THE
PURCHASERS IN THIS AGREEMENT OR IN THE OTHER TRANSACTION DOCUMENTS. THE COMPANY
SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE APPLICABLE PURCHASER PARTY,
CONSENT TO ENTRY OF ANY JUDGMENT OR ENTER INTO ANY SETTLEMENT OR OTHER
COMPROMISE WHICH DOES NOT INCLUDE AS AN UNCONDITIONAL TERM THEREOF THE GIVING BY
THE CLAIMANT OR PLAINTIFF TO THE APPLICABLE PURCHASER PARTY OF A RELEASE FROM
ALL LIABILITY IN RESPECT TO SUCH CLAIM (AS DEFINED IN THE REGISTRATION RIGHTS
AGREEMENT) OR LITIGATION.  THE FAILURE TO DELIVER WRITTEN NOTICE TO THE COMPANY
WITHIN A REASONABLE TIME OF THE COMMENCEMENT OF ANY SUCH ACTION SHALL NOT
RELIEVE THE COMPANY PARTY OF ANY LIABILITY TO THE PURCHASE PARTY UNDER THIS
SECTION 4.8, EXCEPT TO THE EXTENT THAT THE COMPANY IS PREJUDICED IN ITS ABILITY
TO DEFEND SUCH ACTION.

4.9           RESERVATION OF COMMON STOCK. AS OF THE DATE HEREOF, THE COMPANY
HAS RESERVED AND THE COMPANY SHALL CONTINUE TO RESERVE AND KEEP AVAILABLE AT ALL
TIMES, FREE OF PREEMPTIVE RIGHTS, A SUFFICIENT NUMBER OF SHARES OF COMMON STOCK
FOR THE PURPOSE OF ENABLING THE COMPANY TO ISSUE SHARES PURSUANT TO THIS
AGREEMENT AND WARRANT SHARES PURSUANT TO ANY EXERCISE OF THE WARRANTS.

4.10         EQUAL TREATMENT OF PURCHASERS.  NO CONSIDERATION SHALL BE OFFERED
OR PAID TO ANY PERSON TO AMEND OR CONSENT TO A WAIVER OR MODIFICATION OF ANY
PROVISION OF ANY OF THE TRANSACTION DOCUMENTS UNLESS THE SAME CONSIDERATION IS
ALSO OFFERED TO ALL OF THE PARTIES TO THE TRANSACTION DOCUMENTS.  FOR
CLARIFICATION PURPOSES, THIS PROVISION CONSTITUTES A SEPARATE RIGHT GRANTED TO
EACH PURCHASER BY THE COMPANY AND NEGOTIATED SEPARATELY BY EACH PURCHASER, AND
IS INTENDED TO TREAT FOR THE COMPANY THE PURCHASERS AS A CLASS AND SHALL NOT IN
ANY WAY BE CONSTRUED AS THE PURCHASERS ACTING IN CONCERT OR AS A GROUP WITH
RESPECT TO THE PURCHASE, DISPOSITION OR VOTING OF SECURITIES OR OTHERWISE.

4.11         ADDITIONAL REGISTRATION STATEMENTS.  FROM THE DATE HEREOF UNTIL SIX
MONTHS AFTER THE CLOSING DATE, WITHOUT THE PRIOR WRITTEN CONSENT OF PURCHASERS
OWNING A MAJORITY OF THE SHARES, THE COMPANY WILL NOT FILE A REGISTRATION
STATEMENT OTHER THAN A REGISTRATION STATEMENT OR A REGISTRATION STATEMENT ON
FORM S-8, FORM S-4 OR ANY SUCCESSOR FORM THERETO.

4.12         LOCK-UP AGREEMENTS.  FROM THE DATE HEREOF UNTIL SIX MONTHS AFTER
THE EFFECTIVE DATE, THE SELLING STOCKHOLDERS SHALL NOT, DIRECTLY OR INDIRECTLY
OFFER, SELL, PLEDGE, CONTRACT TO SELL, (INCLUDING ANY SHORT SALE), GRANT ANY
OPTION TO PURCHASE OR OTHERWISE DISPOSE OF ANY EQUITY SECURITIES OF THE COMPANY
OR ENTER INTO ANY HEDGING TRANSACTION RELATING TO ANY EQUITY SECURITIES OF THE
COMPANY; PROVIDED, HOWEVER, THAT SUBJECT TO APPLICABLE PROVISIONS OF THE
SECURITIES ACT, THIS SECTION 4.12 SHALL NOT APPLY TO DISPOSITIONS OF COMMON
STOCK PURCHASED BY THE SELLING STOCKHOLDERS AFTER THE DATE HEREOF IN AN OPEN
MARKET TRANSACTION.

4.13         SHORT SALES AND CONFIDENTIALITY AFTER THE DATE HEREOF.  EACH
PURCHASER SEVERALLY AND NOT JOINTLY WITH THE OTHER PURCHASERS COVENANTS THAT
NEITHER IT NOR ANY AFFILIATE ACTING ON ITS BEHALF OR PURSUANT TO ANY
UNDERSTANDING WITH IT WILL ENGAGE, DIRECTLY OR INDIRECTLY, IN ANY TRANSACTIONS
IN THE SECURITIES OF THE COMPANY (INCLUDING, WITHOUT LIMITATION, ANY SHORT SALES
INVOLVING THE COMPANY’S SECURITIES) DURING THE PERIOD COMMENCING AT THE
DISCUSSION TIME AND UNTIL SUCH TIME AS (I) THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT ARE FIRST PUBLICLY

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ANNOUNCED AS DESCRIBED IN SECTION 4.4 OR (II) THIS AGREEMENT IS TERMINATED IN
FULL PURSUANT TO SECTION 5.1.  EACH PURCHASER UNDERSTANDS AND ACKNOWLEDGES,
SEVERALLY AND NOT JOINTLY WITH ANY OTHER PURCHASER, THAT THE COMMISSION
CURRENTLY TAKES THE POSITION THAT COVERAGE OF SHORT SALES OF SHARES OF THE
COMMON STOCK “AGAINST THE BOX” PRIOR TO THE EFFECTIVE DATE OF THE REGISTRATION
STATEMENT WITH THE SECURITIES IS A VIOLATION OF SECTION 5 OF THE SECURITIES ACT,
AS SET FORTH IN ITEM 65, SECTION A, OF THE MANUAL OF PUBLICLY AVAILABLE
TELEPHONE INTERPRETATIONS, DATED JULY 1997, COMPILED BY THE OFFICE OF CHIEF
COUNSEL, DIVISION OF CORPORATION FINANCE. EXCEPT IN COMPLIANCE WITH THE
SECURITIES ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER AND
APPLICABLE STATE SECURITIES LAWS, THE PURCHASER WILL NOT ENGAGE IN ANY SHORT
SALES THAT RESULT IN THE DISPOSITION OF THE SECURITIES (INCLUDING THE WARRANT
SHARES) ACQUIRED HEREUNDER BY THE PURCHASER.  NOTWITHSTANDING THE FOREGOING, IN
THE CASE OF A PURCHASER THAT IS A MULTI-MANAGED INVESTMENT VEHICLE WHEREBY
SEPARATE PORTFOLIO MANAGERS MANAGE SEPARATE PORTIONS OF SUCH PURCHASER’S ASSETS
AND THE PORTFOLIO MANAGERS HAVE NO DIRECT KNOWLEDGE OF THE INVESTMENT DECISIONS
MADE BY THE PORTFOLIO MANAGERS MANAGING OTHER PORTIONS OF SUCH PURCHASER’S
ASSETS, THE COVENANT SET FORTH ABOVE SHALL ONLY APPLY WITH RESPECT TO THE
PORTION OF ASSETS MANAGED BY THE PORTFOLIO MANAGER THAT MADE THE INVESTMENT
DECISION TO PURCHASE THE SECURITIES COVERED BY THIS AGREEMENT.

4.14         DELIVERY OF SECURITIES AFTER CLOSING.  THE COMPANY SHALL DELIVER,
OR CAUSE TO BE DELIVERED, THE RESPECTIVE SECURITIES PURCHASED BY EACH PURCHASER
TO SUCH PURCHASER WITHIN 3 TRADING DAYS OF THE CLOSING DATE.

4.15         FORM D; BLUE SKY FILINGS.  THE COMPANY AGREES TO TIMELY FILE A FORM
D WITH RESPECT TO THE SECURITIES AS REQUIRED UNDER REGULATION D AND TO PROVIDE A
COPY THEREOF, PROMPTLY UPON REQUEST OF ANY PURCHASER. THE COMPANY SHALL TAKE
SUCH ACTION AS THE COMPANY SHALL REASONABLY DETERMINE IS NECESSARY IN ORDER TO
OBTAIN AN EXEMPTION FOR, OR TO QUALIFY THE SECURITIES FOR, SALE TO THE
PURCHASERS AT THE CLOSING UNDER APPLICABLE SECURITIES OR “BLUE SKY” LAWS OF THE
STATES OF THE UNITED STATES, AND SHALL PROVIDE EVIDENCE OF SUCH ACTIONS PROMPTLY
UPON REQUEST OF ANY PURCHASER.

4.16         LIMITATION ON MATERIAL NON-PUBLIC INFORMATION.  AS LONG AS SUCH
PURCHASER HOLDS ANY SHARES, THE COMPANY SHALL NOT DISCLOSE MATERIAL NONPUBLIC
INFORMATION TO A PURCHASER, OR TO ADVISORS TO OR REPRESENTATIVES OF SUCH
PURCHASER, UNLESS PRIOR TO DISCLOSURE OF SUCH INFORMATION THE COMPANY IDENTIFIES
SUCH INFORMATION AS BEING MATERIAL NONPUBLIC INFORMATION AND PROVIDES SUCH
PURCHASER, SUCH ADVISORS AND REPRESENTATIVES WITH THE OPPORTUNITY TO ACCEPT OR
REFUSE TO ACCEPT SUCH MATERIAL NONPUBLIC INFORMATION FOR REVIEW. THE COMPANY
MAY, AS A CONDITION TO DISCLOSING ANY MATERIAL NONPUBLIC INFORMATION HEREUNDER,
REQUIRE SUCH PURCHASER’S ADVISORS AND REPRESENTATIVES TO ENTER INTO A
CONFIDENTIALITY AGREEMENT (INCLUDING AN ACKNOWLEDGEMENT BY SUCH ADVISORS AND
REPRESENTATIVES AS TO THEIR LEGAL OBLIGATIONS REGARDING TRADING IN COMMON STOCK
DURING SUCH PERIOD OF TIME AS THEY ARE IN POSSESSION OF MATERIAL NONPUBLIC
INFORMATION) IN FORM REASONABLY SATISFACTORY TO THE COMPANY AND SUCH PURCHASER.

ARTICLE V.
MISCELLANEOUS

5.1           TERMINATION.  THIS AGREEMENT MAY BE TERMINATED BY ANY PURCHASER,
AS TO SUCH PURCHASER’S OBLIGATIONS HEREUNDER ONLY AND WITHOUT ANY EFFECT
WHATSOEVER ON THE OBLIGATIONS BETWEEN THE COMPANY AND THE OTHER PURCHASERS, BY
WRITTEN NOTICE TO THE OTHER PARTIES, IF THE

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CLOSING HAS NOT BEEN CONSUMMATED ON OR BEFORE NOVEMBER 22, 2006; PROVIDED,
HOWEVER, THAT NO SUCH TERMINATION WILL AFFECT THE RIGHT OF ANY PARTY TO SUE FOR
ANY BREACH BY THE OTHER PARTY (OR PARTIES).

5.2           FEES AND EXPENSES.  THE COMPANY SHALL REIMBURSE AMERICA’S GROWTH
CAPITAL, LLC (“AGC”), FOR ITS FEES AND EXPENSES INCURRED IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED IN THE TRANSACTION DOCUMENTS.  THE COMPANY SHALL
DELIVER, PRIOR TO THE CLOSING, A COMPLETED AND EXECUTED COPY OF THE CLOSING
STATEMENT, ATTACHED HERETO AS ANNEX A.  EXCEPT AS EXPRESSLY SET FORTH IN THE
TRANSACTION DOCUMENTS TO THE CONTRARY, EACH PARTY SHALL PAY THE FEES AND
EXPENSES OF ITS ADVISERS, COUNSEL, ACCOUNTANTS AND OTHER EXPERTS, IF ANY, AND
ALL OTHER EXPENSES INCURRED BY SUCH PARTY INCIDENT TO THE NEGOTIATION,
PREPARATION, EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT.  THE COMPANY
SHALL PAY ALL TRANSFER AGENT FEES, STAMP TAXES AND OTHER TAXES AND DUTIES LEVIED
IN CONNECTION WITH THE DELIVERY OF ANY SECURITIES TO THE PURCHASERS.

5.3           ENTIRE AGREEMENT.  THE TRANSACTION DOCUMENTS, TOGETHER WITH THE
EXHIBITS AND SCHEDULES THERETO, CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES
WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR AGREEMENTS AND
UNDERSTANDINGS, ORAL OR WRITTEN, WITH RESPECT TO SUCH MATTERS, WHICH THE PARTIES
ACKNOWLEDGE HAVE BEEN MERGED INTO SUCH DOCUMENTS, EXHIBITS AND SCHEDULES.

5.4           NOTICES.  ANY AND ALL NOTICES OR OTHER COMMUNICATIONS OR
DELIVERIES REQUIRED OR PERMITTED TO BE PROVIDED HEREUNDER SHALL BE IN WRITING
AND SHALL BE DEEMED GIVEN AND EFFECTIVE ON THE EARLIEST OF (A) THE DATE OF
TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS DELIVERED VIA FACSIMILE AT THE
FACSIMILE NUMBER SET FORTH ON THE SIGNATURE PAGES ATTACHED HERETO PRIOR TO 5:30
P.M. (NEW YORK CITY TIME) ON A TRADING DAY, (B) THE NEXT TRADING DAY AFTER THE
DATE OF TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS DELIVERED VIA FACSIMILE
AT THE FACSIMILE NUMBER SET FORTH ON THE SIGNATURE PAGES ATTACHED HERETO ON A
DAY THAT IS NOT A TRADING DAY OR LATER THAN 5:30 P.M. (NEW YORK CITY TIME) ON
ANY TRADING DAY, (C) THE 2ND TRADING DAY FOLLOWING THE DATE OF MAILING, IF SENT
BY U.S. NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE, OR (D) UPON ACTUAL
RECEIPT BY THE PARTY TO WHOM SUCH NOTICE IS REQUIRED TO BE GIVEN.  THE ADDRESS
FOR SUCH NOTICES AND COMMUNICATIONS SHALL BE AS SET FORTH ON THE SIGNATURE PAGES
ATTACHED HERETO.  A NOTICE DELIVERED TO THE PURCHASERS MUST BE DELIVERED TO EACH
PURCHASER HERETO IN ACCORDANCE WITH THIS SECTION 5.4.

5.5           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 PURCHASERS SUBSCRIBING FOR AT LEAST A MAJORITY OF THE
SECURITIES OR, IN THE CASE OF A WAIVER, BY THE PARTY AGAINST WHOM ENFORCEMENT OF
ANY SUCH WAIVED PROVISION IS SOUGHT.  NO WAIVER OF ANY DEFAULT WITH RESPECT TO
ANY PROVISION, CONDITION OR REQUIREMENT OF THIS AGREEMENT SHALL BE DEEMED TO BE
A CONTINUING WAIVER IN THE FUTURE OR A WAIVER OF ANY SUBSEQUENT DEFAULT OR A
WAIVER OF ANY OTHER PROVISION, CONDITION OR REQUIREMENT HEREOF, NOR SHALL ANY
DELAY OR OMISSION OF ANY PARTY TO EXERCISE ANY RIGHT HEREUNDER IN ANY MANNER
IMPAIR THE EXERCISE OF ANY SUCH RIGHT.

5.6           HEADINGS.  THE HEADINGS HEREIN ARE FOR CONVENIENCE ONLY, DO NOT
CONSTITUTE A PART OF THIS AGREEMENT AND SHALL NOT BE DEEMED TO LIMIT OR AFFECT
ANY OF THE PROVISIONS HEREOF.

30

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5.7           SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF THE PARTIES AND THEIR SUCCESSORS AND PERMITTED ASSIGNS. 
THE COMPANY MAY NOT ASSIGN THIS AGREEMENT OR ANY RIGHTS OR OBLIGATIONS HEREUNDER
WITHOUT THE PRIOR WRITTEN CONSENT OF EACH PURCHASER (OTHER THAN BY MERGER).  ANY
PURCHASER MAY ASSIGN ANY OR ALL OF ITS RIGHTS UNDER THIS AGREEMENT TO ANY PERSON
TO WHOM SUCH PURCHASER ASSIGNS OR TRANSFERS ANY SECURITIES, PROVIDED SUCH
TRANSFEREE AGREES IN WRITING TO BE BOUND, WITH RESPECT TO THE TRANSFERRED
SECURITIES, BY THE PROVISIONS OF THE TRANSACTION DOCUMENTS THAT APPLY TO THE
“PURCHASERS”.

5.8           NO THIRD-PARTY BENEFICIARIES.  THIS AGREEMENT IS INTENDED FOR THE
BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND PERMITTED
ASSIGNS AND IS NOT FOR THE BENEFIT OF, NOR MAY ANY PROVISION HEREOF BE ENFORCED
BY, ANY OTHER PERSON, EXCEPT AS OTHERWISE SET FORTH IN SECTION 4.9.

5.9           GOVERNING LAW.  ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THE TRANSACTION DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW
THEREOF.  EACH PARTY AGREES THAT ALL LEGAL PROCEEDINGS CONCERNING THE
INTERPRETATIONS, ENFORCEMENT AND DEFENSE OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT AND ANY OTHER TRANSACTION DOCUMENTS (WHETHER BROUGHT AGAINST A
PARTY HERETO OR ITS RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, SHAREHOLDERS,
EMPLOYEES OR AGENTS) SHALL BE COMMENCED EXCLUSIVELY IN THE STATE AND FEDERAL
COURTS SITTING IN THE CITY OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY SUBMITS 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 HEREUNDER
OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR
DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE
TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT
IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER OR IS AN INCONVENIENT VENUE FOR SUCH PROCEEDING.  EACH PARTY HEREBY
IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA
REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY)
TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT
AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF
PROCESS AND NOTICE THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT
IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  THE
PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.  IF EITHER PARTY SHALL
COMMENCE AN ACTION OR PROCEEDING TO ENFORCE ANY PROVISIONS OF THE TRANSACTION
DOCUMENTS, THEN THE PREVAILING PARTY IN SUCH ACTION OR PROCEEDING SHALL BE
REIMBURSED BY THE OTHER PARTY FOR ITS REASONABLE ATTORNEYS’ FEES AND OTHER COSTS
AND EXPENSES INCURRED WITH THE INVESTIGATION, PREPARATION AND PROSECUTION OF
SUCH ACTION OR PROCEEDING.

5.10         SURVIVAL.  THE REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN
SHALL SURVIVE THE CLOSING AND THE DELIVERY OF THE SHARES AND WARRANT SHARES.

5.11         EXECUTION.  THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE
COUNTERPARTS, ALL OF WHICH WHEN TAKEN TOGETHER SHALL BE CONSIDERED ONE AND THE
SAME AGREEMENT AND SHALL BECOME EFFECTIVE WHEN COUNTERPARTS HAVE BEEN SIGNED BY
EACH PARTY AND DELIVERED TO THE OTHER PARTY, IT BEING UNDERSTOOD THAT BOTH
PARTIES NEED NOT SIGN THE SAME COUNTERPART.  IN THE EVENT THAT ANY SIGNATURE IS
DELIVERED BY FACSIMILE TRANSMISSION OR BY E-MAIL DELIVERY OF A “.PDF” FORMAT
DATA FILE,

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SUCH SIGNATURE SHALL CREATE A VALID AND BINDING OBLIGATION OF THE PARTY
EXECUTING (OR ON WHOSE BEHALF SUCH SIGNATURE IS EXECUTED) WITH THE SAME FORCE
AND EFFECT AS IF SUCH FACSIMILE OR “.PDF” SIGNATURE PAGE WERE AN ORIGINAL
THEREOF.

5.12         SEVERABILITY.  IF ANY TERM, PROVISION, COVENANT OR RESTRICTION OF
THIS AGREEMENT IS HELD BY A COURT OF COMPETENT JURISDICTION TO BE INVALID,
ILLEGAL, VOID OR UNENFORCEABLE, THE REMAINDER OF THE TERMS, PROVISIONS,
COVENANTS AND RESTRICTIONS SET FORTH HEREIN SHALL REMAIN IN FULL FORCE AND
EFFECT AND SHALL IN NO WAY BE AFFECTED, IMPAIRED OR INVALIDATED, AND THE PARTIES
HERETO SHALL USE THEIR COMMERCIALLY REASONABLE EFFORTS TO FIND AND EMPLOY AN
ALTERNATIVE MEANS TO ACHIEVE THE SAME OR SUBSTANTIALLY THE SAME RESULT AS THAT
CONTEMPLATED BY SUCH TERM, PROVISION, COVENANT OR RESTRICTION. IT IS HEREBY
STIPULATED AND DECLARED TO BE THE INTENTION OF THE PARTIES THAT THEY WOULD HAVE
EXECUTED THE REMAINING TERMS, PROVISIONS, COVENANTS AND RESTRICTIONS WITHOUT
INCLUDING ANY OF SUCH THAT MAY BE HEREAFTER DECLARED INVALID, ILLEGAL, VOID OR
UNENFORCEABLE.

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

5.14         REPLACEMENT OF SECURITIES.  IF ANY CERTIFICATE OR INSTRUMENT
EVIDENCING ANY SECURITIES IS MUTILATED, LOST, STOLEN OR DESTROYED, THE COMPANY
SHALL ISSUE OR CAUSE TO BE ISSUED IN EXCHANGE AND SUBSTITUTION FOR AND UPON
CANCELLATION THEREOF (IN THE CASE OF MUTILATION), OR IN LIEU OF AND SUBSTITUTION
THEREFOR, A NEW CERTIFICATE OR INSTRUMENT, BUT ONLY UPON RECEIPT OF EVIDENCE
REASONABLY SATISFACTORY TO THE COMPANY OF SUCH LOSS, THEFT OR DESTRUCTION.  THE
APPLICANT FOR A NEW CERTIFICATE OR INSTRUMENT UNDER SUCH CIRCUMSTANCES SHALL
ALSO PAY ANY REASONABLE THIRD-PARTY COSTS (INCLUDING CUSTOMARY INDEMNITY)
ASSOCIATED WITH THE ISSUANCE OF SUCH REPLACEMENT SECURITIES.

5.15         REMEDIES.  IN ADDITION TO BEING ENTITLED TO EXERCISE ALL RIGHTS
PROVIDED HEREIN OR GRANTED BY LAW, INCLUDING RECOVERY OF DAMAGES, EACH OF THE
PURCHASERS AND THE COMPANY WILL BE ENTITLED TO SPECIFIC PERFORMANCE UNDER THE
TRANSACTION DOCUMENTS.  THE PARTIES AGREE THAT MONETARY DAMAGES MAY NOT BE
ADEQUATE COMPENSATION FOR ANY LOSS INCURRED BY REASON OF ANY BREACH OF
OBLIGATIONS CONTAINED IN THE TRANSACTION DOCUMENTS AND HEREBY AGREES TO WAIVE
AND NOT TO ASSERT IN ANY ACTION FOR SPECIFIC PERFORMANCE OF ANY SUCH OBLIGATION
THE DEFENSE THAT A REMEDY AT LAW WOULD BE ADEQUATE.

5.16         PAYMENT SET ASIDE.  TO THE EXTENT THAT THE COMPANY MAKES A PAYMENT
OR PAYMENTS TO ANY PURCHASER PURSUANT TO ANY TRANSACTION DOCUMENT OR A PURCHASER
ENFORCES OR EXERCISES ITS RIGHTS THEREUNDER, AND SUCH PAYMENT OR PAYMENTS OR THE
PROCEEDS OF SUCH ENFORCEMENT OR EXERCISE OR ANY PART THEREOF ARE SUBSEQUENTLY
INVALIDATED, DECLARED TO BE FRAUDULENT OR PREFERENTIAL, SET ASIDE, RECOVERED
FROM, DISGORGED BY OR ARE REQUIRED TO BE REFUNDED, REPAID OR OTHERWISE RESTORED
TO THE COMPANY, A TRUSTEE, RECEIVER OR ANY OTHER PERSON UNDER ANY LAW
(INCLUDING, WITHOUT LIMITATION, ANY BANKRUPTCY LAW, STATE OR FEDERAL LAW, COMMON
LAW OR EQUITABLE CAUSE OF ACTION), THEN TO THE EXTENT OF ANY SUCH RESTORATION
THE OBLIGATION OR PART THEREOF

32

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ORIGINALLY INTENDED TO BE SATISFIED SHALL BE REVIVED AND CONTINUED IN FULL FORCE
AND EFFECT AS IF SUCH PAYMENT HAD NOT BEEN MADE OR SUCH ENFORCEMENT OR SETOFF
HAD NOT OCCURRED.

5.17         INDEPENDENT NATURE OF PURCHASERS’ OBLIGATIONS AND RIGHTS.  THE
OBLIGATIONS OF EACH PURCHASER UNDER ANY TRANSACTION DOCUMENT ARE SEVERAL AND NOT
JOINT WITH THE OBLIGATIONS OF ANY OTHER PURCHASER, AND NO PURCHASER SHALL BE
RESPONSIBLE IN ANY WAY FOR THE PERFORMANCE OR NON-PERFORMANCE OF THE OBLIGATIONS
OF ANY OTHER PURCHASER UNDER ANY TRANSACTION DOCUMENT.  NOTHING CONTAINED HEREIN
OR IN ANY OTHER TRANSACTION DOCUMENT, AND NO ACTION TAKEN BY ANY PURCHASER
PURSUANT THERETO, SHALL BE DEEMED TO CONSTITUTE THE PURCHASERS AS A PARTNERSHIP,
AN ASSOCIATION, A JOINT VENTURE OR ANY OTHER KIND OF ENTITY, OR CREATE A
PRESUMPTION THAT THE PURCHASERS ARE IN ANY WAY ACTING IN CONCERT OR AS A GROUP
WITH RESPECT TO SUCH OBLIGATIONS OR THE TRANSACTIONS CONTEMPLATED BY THE
TRANSACTION DOCUMENTS.  EACH PURCHASER SHALL BE ENTITLED TO INDEPENDENTLY
PROTECT AND ENFORCE ITS RIGHTS, INCLUDING WITHOUT LIMITATION, THE RIGHTS ARISING
OUT OF THIS AGREEMENT OR OUT OF THE OTHER TRANSACTION DOCUMENTS, AND IT SHALL
NOT BE NECESSARY FOR ANY OTHER PURCHASER TO BE JOINED AS AN ADDITIONAL PARTY IN
ANY PROCEEDING FOR SUCH PURPOSE.  EACH PURCHASER HAS BEEN REPRESENTED BY ITS OWN
SEPARATE LEGAL COUNSEL IN THEIR REVIEW AND NEGOTIATION OF THE TRANSACTION
DOCUMENTS.  FOR REASONS OF ADMINISTRATIVE CONVENIENCE ONLY, PURCHASERS AND THEIR
RESPECTIVE COUNSEL HAVE CHOSEN TO COMMUNICATE WITH THE COMPANY THROUGH GOODWIN
PROCTER LLP.  GOODWIN PROCTER LLP DOES NOT REPRESENT THE PURCHASERS BUT ONLY
AGC, WHO HAS ACTED AS PLACEMENT AGENT TO THE TRANSACTION.  THE COMPANY HAS
ELECTED TO PROVIDE ALL PURCHASERS WITH THE SAME TERMS AND TRANSACTION DOCUMENTS
FOR THE CONVENIENCE OF THE COMPANY AND NOT BECAUSE IT WAS REQUIRED OR REQUESTED
TO DO SO BY THE PURCHASERS.

5.18         LIQUIDATED DAMAGES.  THE COMPANY’S OBLIGATIONS TO PAY ANY PARTIAL
LIQUIDATED DAMAGES OR OTHER AMOUNTS OWING UNDER THE TRANSACTION DOCUMENTS IS A
CONTINUING OBLIGATION OF THE COMPANY AND SHALL NOT TERMINATE UNTIL ALL UNPAID
PARTIAL LIQUIDATED DAMAGES AND OTHER AMOUNTS HAVE BEEN PAID OR SUCH PAYMENTS
HAVE BEEN WAIVED OR OTHERWISE SATISFIED, NOTWITHSTANDING THE FACT THAT THE
INSTRUMENT OR SECURITY PURSUANT TO WHICH SUCH PARTIAL LIQUIDATED DAMAGES OR
OTHER AMOUNTS ARE DUE AND PAYABLE SHALL HAVE BEEN CANCELED.

5.19         CONSTRUCTION. THE PARTIES AGREE THAT EACH OF THEM AND/OR THEIR
RESPECTIVE COUNSEL HAS REVIEWED AND HAD AN OPPORTUNITY TO REVISE THE TRANSACTION
DOCUMENTS AND, THEREFORE, THE NORMAL RULE OF CONSTRUCTION TO THE EFFECT THAT ANY
AMBIGUITIES ARE TO BE RESOLVED AGAINST THE DRAFTING PARTY SHALL NOT BE EMPLOYED
IN THE INTERPRETATION OF THE TRANSACTION DOCUMENTS OR ANY AMENDMENTS HERETO.

5.20         WRITTEN CONSENT.  BY EXECUTION OF THIS AGREEMENT, EACH PURCHASER
HEREBY CONSENTS TO THE AMENDMENTS TO THE COMPANY’S AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION AS SET FORTH IN EXHIBIT C HERETO AND EACH PURCHASER
ACKNOWLEDGES AND AGREES THAT THE CONSENT SET FORTH IN THIS SECTION 5.20 SHALL
CONSTITUTE A WRITTEN CONSENT OF SUCH PURCHASER PURSUANT TO SECTION 228 OF THE
DELAWARE GENERAL CORPORATION LAW.

(Signature Pages Follow)

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

THE COMPANY:

 

 

 

 

 

GLOBALSCAPE, INC.

 

Address for Notice:

 

 

 

 

 

GlobalSCAPE, Inc.
6000 Northwest Parkway, Suite 100
San Antonio, TX 78249
Attn: Thomas W. Brown

 

 

 

By:

  /s/ Thomas W. Brown

 

 

 

Name: Thomas W. Brown

 

 

 

Title: Chariman

 

 

 

 

 

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

 

Jackson Walker L.L.P.

 

 

Weston Centre
112 E. Pecan Street, Suite 2400
San Antonio, Texas 78205
Attn: Steven Jacobs, Esq.

 

 

 

SELLING STOCKHOLDERS:

 

 

 

 

 

 

 

Address for Notice:
c/o GlobalSCAPE, Inc.
6000 Northwest Parkway, Suite 100

 /s/ Thomas W. Brown

 

San Antonio, TX 78249

Thomas W. Brown

 

 

 

 

 

 

 

Address for Notice:
c/o GlobalSCAPE, Inc.
6000 Northwest Parkway, Suite 100

 /s/ David L. Mann

 

San Antonio, TX 78249

David L. Mann

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOR PURCHASERS FOLLOW]

34

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Schedule I

SELLING STOCKHOLDERS

Selling Stockholder

 

Selling Stockholder
Shares Sold

 

Aggregate Sale Price ($)

 

 

 

 

 

 

 

Thomas W. Brown

 

1,178,000

 

$

2,945,000.00

 

David L. Mann

 

850,000

 

$

2,125,000.00

 

Total:

 

2,028,000

 

$

5,070,000.00

 

 

35

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Schedule II

PURCHASERS

Purchaser*

 

Company
Shares
Purchased

 

Warrants
Purchased

 

Company
Subscription
Amount ($)

 

Selling
Stockholder
Shares
Purchased

 

Selling
Stockholder
Subscription
Amount ($)

 

Total
Subscription
Amount ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Zeke, LP

 

480,000

 

480,000

 

$

1,200,000.00

 

720,000

 

$

1,800,000.00

 

$

3,000,000.00

 

SF Capital Partners Ltd.

 

480,000

 

480,000

 

$

1,200,000.00

 

720,000

 

$

1,800,000.00

 

$

3,000,000.00

 

Enable Growth Partners, L.P.

 

102,000

 

102,000

 

$

255,000.00

 

153,000

 

$

382,500.00

 

$

637,500.00

 

Enable Opportunity Partners, L.P.

 

12,000

 

12,000

 

$

30,000.00

 

18,000

 

$

45,000.00

 

$

75,000.00

 

Pierce Diversified Strategy Master Fund, LLC Ena

 

6,000

 

6,000

 

$

15,000.00

 

9,000

 

$

22,500.00

 

$

37,500.00

 

Dolphin Offshore Partners, L.P.

 

112,000

 

112,000

 

$

280,000.00

 

168,000

 

$

420,000.00

 

$

700,000.00

 

Emancipation Capital Master Ltd.

 

80,000

 

80,000

 

$

200,000.00

 

120,000

 

$

300,000.00

 

$

500,000.00

 

Iroquois Master Fund Ltd.

 

40,000

 

40,000

 

$

100,000.00

 

60,000

 

$

150,000.00

 

$

250,000.00

 

Nite Capital LP

 

40,000

 

40,000

 

$

100,000.00

 

60,000

 

$

150,000.00

 

$

250,000.00

 

Total:

 

1,352,000

 

1,352,000

 

$

3,380,000.00

 

2,028,000

 

$

5,070,000.00

 

$

8,450,000.00

 

 

36

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