Exhibit 10.62

 

SECURITIES PURCHASE AGREEMENT

 

SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of June 27, 2008, by
and among Averion International Corp., a Delaware corporation, with principal
offices located at 225 Turnpike Road, Southborough, Massachusetts 01772 (the
“Company”), and the investors listed on the Schedule of Buyers attached hereto
(each, a “Buyer” and, collectively, the “Buyers”).  Capitalized terms used and
not defined elsewhere in this Agreement have the respective meanings assigned to
such terms in the Appendix hereto.

 

WHEREAS:

 

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

 

B.                                     The Buyers, severally and not jointly,
desire to purchase from the Company, and the Company wishes to sell to the
Buyers, upon the terms and conditions stated in this Agreement:

 

(1)                                  Secured senior notes, in the form attached
as Exhibit A, in the aggregate principal amount of $2,000,000 (together with any
promissory notes or other securities issued in exchange or substitution therefor
or replacement thereof, and as any of the same may be amended, supplemented,
restated or modified and in effect from time to time, the “Notes”) shall be
purchased by the Buyers on the Closing Date (as defined below) for a total
aggregate principal amount of Notes equal to $2,000,000; and

 

(2)                                  Shares of Common Stock as set forth on the
Schedule of Buyers (the “Shares”) which shall be issued at the Closing in
proportion to the principal amount of Notes purchased at the Closing.

 

C.                                     Contemporaneously with the execution and
delivery of this Agreement, the Company and Hesperion US, Inc., a Maryland
corporation (“Hesperion US”), are executing and delivering an Amendment No. 2 to
Security Agreement, in the form attached as Exhibit B (as the same may be
amended, supplemented, restated or modified and in effect from time to time, the
“Security Agreement”), in favor of the Collateral Agent (as defined in the
Security Agreement), for the benefit of the Buyers, pursuant to which the
Company and Hesperion US will agree to provide the Collateral Agent, as agent
for the Buyers, with security interests in substantially all of the material
assets of the Company and Hesperion US.

 

D.                                    Contemporaneously with the Closing,
Hesperion US will execute and deliver an Amendment No. 1 to Guaranty, in the
form attached hereto as Exhibit C (as the same may be amended, supplemented,
restated or modified and in effect from time to time, the “Guaranty”), pursuant
to which Hesperion US will agree to guaranty certain obligations of the Company
(the guarantees under the Guaranty, including any such guarantees added after
the Closing, being referred to herein as the “Guarantees”).

 

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

 

NOW THEREFORE, the Company and each of the Buyers, severally and not jointly,
hereby agree as follows:

 

1.                                       PURCHASE AND SALE OF NOTES AND SHARES.

 

A.                                       PURCHASE AND SALE OF NOTES AND SHARES. 
SUBJECT TO THE SATISFACTION (OR WAIVER) OF THE CONDITIONS SET FORTH IN SECTIONS
7 AND 8 BELOW, THE COMPANY SHALL ISSUE AND SELL TO EACH BUYER AND EACH BUYER
SEVERALLY AGREES TO PURCHASE FROM THE COMPANY THE NOTES. ON THE CLOSING DATE,
EACH BUYER SHALL PURCHASE (A) NOTES IN THE RESPECTIVE PRINCIPAL AMOUNTS SET
FORTH OPPOSITE SUCH BUYER’S NAME ON THE SCHEDULE OF BUYERS, WHICH NOTES SHALL BE
ISSUED TO THE BUYERS ON THE CLOSING DATE; AND (B) THE NUMBER OF SHARES NEXT TO
SUCH BUYER’S NAME ON THE SCHEDULE OF BUYERS, WHICH SHALL BE ISSUED TO SUCH BUYER
ON THE CLOSING DATE.  THE PURCHASE PRICE (THE “PURCHASE PRICE”) FOR THE NOTES
AND THE RELATED SHARES PURCHASED BY EACH BUYER SHALL BE AS SET FORTH OPPOSITE
SUCH BUYER’S NAME ON THE SCHEDULE OF BUYERS (REPRESENTING AN AGGREGATE PURCHASE
PRICE OF $2,000,000 FOR THE NOTES AND SHARES TO BE PURCHASED BY THE BUYERS AT
THE CLOSING).

 

B.                                      CLOSING DATE.  THE DATE AND TIME OF THE
CLOSING (THE “CLOSING”) SHALL BE 10:00 A.M., NEW YORK CITY TIME, ON THE DATE
THAT IS ONE (1) DAY AFTER THE SATISFACTION (OR WAIVER) OF ALL OF THE CONDITIONS
TO THE CLOSING SET FORTH IN SECTIONS 7 AND 8 (OR SUCH LATER OR EARLIER DATE AS
IS MUTUALLY AGREED TO BY THE COMPANY AND THE BUYERS) (THE “CLOSING DATE”).  THE
CLOSING SHALL OCCUR AT THE OFFICES OF AKERMAN SENTERFITT, ONE SOUTHEAST THIRD
AVENUE, 25TH FLOOR, MIAMI, FL 33131, OR AT SUCH OTHER PLACE AS THE COMPANY AND
BUYERS MAY COLLECTIVELY DESIGNATE IN WRITING.

 

For purposes of this Agreement, each Buyer’s “Allocation Percentage” shall be
with respect to all Notes purchased pursuant to this Agreement, the quotient of
(a) the total original aggregate principal amount of all Notes purchased by such
Buyer pursuant to this Agreement, divided by (b) the total original aggregate
principal amount of all Notes purchased pursuant to this Agreement.

 

C.                                       FORM OF PAYMENT AND DELIVERY OF
SHARES.  ON THE CLOSING DATE, (I) EACH BUYER SHALL PAY TO THE COMPANY AN AMOUNT
EQUAL TO THE PRINCIPAL AMOUNT OF THE NOTES SUCH BUYER IS TO PURCHASE AS OF THE
CLOSING DATE, BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS IN ACCORDANCE WITH
THE COMPANY’S WRITTEN WIRE INSTRUCTIONS (LESS ANY AMOUNT DEDUCTED AND PAID IN
ACCORDANCE WITH SECTION 4(H)), AND (II) THE COMPANY SHALL DELIVER (OR CAUSE ITS
TRANSFER AGENT TO DELIVER) TO EACH BUYER (I) A NOTE (OR NOTES IN THE PRINCIPAL
AMOUNTS AS SUCH BUYER SHALL REQUEST) REPRESENTING THE ORIGINAL PRINCIPAL AMOUNT
OF THE NOTES THAT SUCH BUYER IS PURCHASING HEREUNDER ON THE CLOSING DATE, AND
(II) SHARE CERTIFICATES FOR THE SHARES TO BE ISSUED TO SUCH BUYER ON THE CLOSING
DATE AS PROVIDED ON THE SCHEDULE OF BUYERS, IN EACH CASE DULY EXECUTED ON BEHALF
OF THE COMPANY AND REGISTERED IN THE NAME OF SUCH BUYER OR ITS DESIGNEE.

 

D.                                      FRACTIONAL SHARES.  NO FRACTIONAL SHARES
OF COMMON STOCK ARE TO BE ISSUED PURSUANT TO THIS SECTION 1, BUT RATHER THE
NUMBER OF SHARES OF COMMON STOCK TO BE ISSUED PURSUANT TO THIS SECTION 1 SHALL
BE ROUNDED UP TO THE NEAREST WHOLE NUMBER.

 

E.                                       CURRENCY; INTEREST.  ALL PAYMENTS TO A
BUYER UNDER THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS SHALL BE
MADE IN LAWFUL MONEY OF THE UNITED STATES OF

 

2

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

 

AMERICA, BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO SUCH ACCOUNTS AS
SUCH BUYER MAY FROM TIME TO TIME DESIGNATE BY WRITTEN NOTICE IN ACCORDANCE WITH
SECTION 10(F) OF THIS AGREEMENT.  ALL REFERENCES HEREIN AND IN EACH OF THE OTHER
TRANSACTION DOCUMENTS TO “DOLLARS” OR “$” SHALL MEAN THE LAWFUL MONEY OF THE
UNITED STATES OF AMERICA.  ANY AMOUNTS PAYABLE PURSUANT TO THIS AGREEMENT THAT
ARE NOT PAID WHEN DUE, AFTER THE EXPIRATION OF ALL NOTICE AND CURE PERIODS SET
FORTH HEREIN, SHALL BEAR INTEREST AT THE RATE EQUAL TO THE LESSER OF (I) 2.0%
PER MONTH, PRORATED FOR PARTIAL MONTHS, AND (II) THE HIGHEST LAWFUL INTEREST
RATE.

 

2.                                       BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer represents and warrants, as of the date of this Agreement and as of
the Closing Date, with respect to only itself, that:

 

A.                                       INVESTMENT PURPOSE.  SUCH BUYER IS
ACQUIRING THE NOTES (TOGETHER WITH THE RELATED GUARANTEES) AND THE SHARES
PURCHASED BY SUCH BUYER HEREUNDER (THE NOTES, THE GUARANTEES AND THE SHARES
BEING COLLECTIVELY REFERRED TO HEREIN AS THE “SECURITIES”), FOR SUCH BUYER’S OWN
ACCOUNT AND NOT WITH A VIEW TOWARDS, OR FOR RESALE IN CONNECTION WITH, THE
PUBLIC SALE OR DISTRIBUTION THEREOF, EXCEPT PURSUANT TO SALES REGISTERED UNDER,
OR EXEMPTED FROM THE REGISTRATION REQUIREMENTS OF, THE 1933 ACT; PROVIDED,
HOWEVER, THAT BY MAKING THE REPRESENTATIONS HEREIN, SUCH BUYER DOES NOT AGREE TO
HOLD ANY OF THE SECURITIES FOR ANY MINIMUM OR OTHER SPECIFIC TERM AND RESERVES
THE RIGHT TO DISPOSE OF THE SECURITIES AT ANY TIME IN ACCORDANCE WITH OR
PURSUANT TO A REGISTRATION STATEMENT OR AN EXEMPTION UNDER THE 1933 ACT.

 

B.                                      ACCREDITED INVESTOR STATUS.  SUCH BUYER
IS AN “ACCREDITED INVESTOR” AS THAT TERM IS DEFINED IN RULE 501(A) OF REGULATION
D.

 

C.                                       RELIANCE ON EXEMPTIONS.  SUCH BUYER
UNDERSTANDS THAT THE SECURITIES ARE BEING OFFERED AND SOLD TO IT IN RELIANCE ON
SPECIFIC EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES LAWS
AND THAT THE COMPANY IS RELYING IN PART UPON THE TRUTH AND ACCURACY OF, AND SUCH
BUYER’S COMPLIANCE WITH, THE REPRESENTATIONS, WARRANTIES, AGREEMENTS,
ACKNOWLEDGMENTS AND UNDERSTANDINGS OF SUCH BUYER SET FORTH HEREIN IN ORDER TO
DETERMINE THE AVAILABILITY OF SUCH EXEMPTIONS AND THE ELIGIBILITY OF SUCH BUYER
TO ACQUIRE THE SECURITIES.

 

D.                                      INFORMATION.  SUCH BUYER AND ITS
ADVISORS, IF ANY, HAVE BEEN FURNISHED WITH ALL MATERIALS RELATING TO THE
BUSINESS, FINANCES AND OPERATIONS OF THE COMPANY AND MATERIALS RELATING TO THE
OFFER AND SALE OF THE SECURITIES THAT HAVE BEEN REQUESTED BY SUCH BUYER.  SUCH
BUYER AND ITS ADVISORS, IF ANY, HAVE BEEN AFFORDED THE OPPORTUNITY TO ASK
QUESTIONS OF THE COMPANY.  NEITHER SUCH INQUIRIES NOR ANY OTHER DUE DILIGENCE
INVESTIGATIONS CONDUCTED BY SUCH BUYER OR ITS ADVISORS, IF ANY, OR ITS
REPRESENTATIVES SHALL MODIFY, AMEND OR AFFECT SUCH BUYER’S RIGHT TO RELY ON THE
COMPANY’S REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTIONS 3 AND 11(L) BELOW
OR CONTAINED IN ANY OF THE OTHER TRANSACTION DOCUMENTS.  SUCH BUYER UNDERSTANDS
THAT ITS INVESTMENT IN THE SECURITIES INVOLVES A HIGH DEGREE OF RISK AND THAT IT
HAS REVIEWED THE COMPANY’S SEC DOCUMENTS AND THE DISCLOSURES CONTAINED THEREIN,
INCLUDING, WITHOUT LIMITATION, THAT SET FORTH UNDER THE HEADING “RISK FACTORS.” 
SUCH BUYER HAS SOUGHT SUCH ACCOUNTING, LEGAL AND TAX ADVICE AS IT HAS CONSIDERED
NECESSARY TO MAKE AN INFORMED INVESTMENT DECISION WITH RESPECT TO ITS
ACQUISITION OF THE SECURITIES.

 

3

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

 

E.                                       NO GOVERNMENTAL REVIEW.  SUCH BUYER
UNDERSTANDS THAT NO GOVERNMENTAL ENTITY HAS PASSED ON OR MADE ANY RECOMMENDATION
OR ENDORSEMENT OF THE SECURITIES OR THE FAIRNESS OR SUITABILITY OF AN INVESTMENT
IN THE SECURITIES NOR HAVE SUCH AUTHORITIES PASSED UPON OR ENDORSED THE MERITS
OF THE OFFERING OF THE SECURITIES.

 

F.                                         TRANSFER OR RESALE.  SUCH BUYER
UNDERSTANDS THAT: (I) THE SECURITIES HAVE NOT BEEN AND ARE NOT BEING REGISTERED
UNDER THE 1933 ACT OR ANY OTHER SECURITIES LAWS, AND MAY NOT BE OFFERED FOR
SALE, SOLD, ASSIGNED OR TRANSFERRED UNLESS (A) SUBSEQUENTLY REGISTERED
THEREUNDER, (B) SUCH BUYER SHALL HAVE DELIVERED TO THE COMPANY AN OPINION OF
COUNSEL, IN A GENERALLY ACCEPTABLE FORM, TO THE EFFECT THAT THE SECURITIES TO BE
SOLD, ASSIGNED OR TRANSFERRED MAY BE SOLD, ASSIGNED OR TRANSFERRED PURSUANT TO
AN EXEMPTION FROM SUCH REGISTRATION, OR (C) SUCH BUYER PROVIDES THE COMPANY WITH
REASONABLE ASSURANCE THAT THE SECURITIES CAN BE SOLD, ASSIGNED OR TRANSFERRED
PURSUANT TO RULE 144 PROMULGATED UNDER THE 1933 ACT, AS AMENDED (OR A SUCCESSOR
RULE THERETO) (“RULE 144”); (II) ANY SALE OF THE SECURITIES MADE IN RELIANCE ON
RULE 144 MAY BE MADE ONLY IN ACCORDANCE WITH THE TERMS OF RULE 144, AND FURTHER,
IF RULE 144 IS NOT APPLICABLE, ANY RESALE OF THE SECURITIES UNDER CIRCUMSTANCES
IN WHICH THE SELLER (OR THE PERSON THROUGH WHOM THE SALE IS MADE) MAY BE DEEMED
TO BE AN UNDERWRITER (AS THAT TERM IS DEFINED IN THE 1933 ACT) MAY REQUIRE
COMPLIANCE WITH SOME OTHER EXEMPTION UNDER THE 1933 ACT OR ANY OTHER SECURITIES
LAWS; AND (III) NEITHER THE COMPANY NOR ANY OTHER PERSON IS UNDER ANY OBLIGATION
TO REGISTER THE SECURITIES UNDER THE 1933 ACT OR ANY OTHER SECURITIES LAWS. 
NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS PARAGRAPH, THE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

G.                                      LEGENDS.  SUCH BUYER UNDERSTANDS THAT,
EXCEPT AS SET FORTH BELOW, THE SHARE CERTIFICATES AND THE CERTIFICATES OR OTHER
INSTRUMENTS REPRESENTING THE NOTES SHALL BEAR A RESTRICTIVE LEGEND IN THE
FOLLOWING FORM (THE “1933 ACT LEGEND”) (AND A STOP-TRANSFER ORDER MAY BE PLACED
AGAINST TRANSFER OF SUCH SHARE CERTIFICATES):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. 
THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR
(B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities, if (i) such
Securities are registered for resale under the 1933 Act, (ii) such holder
provides the Company with reasonable assurances that the Securities can be sold
without restriction pursuant to Rule 144 promulgated under the 1933 Act

 

4

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

 

(or a successor rule thereto), or (iii) such holder provides the Company
reasonable assurances that the Securities have been or are being sold pursuant
to Rule 144.

 

H.                                      AUTHORIZATION; ENFORCEMENT; VALIDITY. 
SUCH BUYER IS A VALIDLY EXISTING CORPORATION, PARTNERSHIP, LIMITED LIABILITY
COMPANY OR OTHER ENTITY AND HAS THE REQUISITE CORPORATE, PARTNERSHIP, LIMITED
LIABILITY OR OTHER ORGANIZATIONAL POWER AND AUTHORITY TO PURCHASE THE SECURITIES
PURSUANT TO THIS AGREEMENT.  THIS AGREEMENT HAS BEEN DULY AND VALIDLY
AUTHORIZED, EXECUTED AND DELIVERED ON BEHALF OF SUCH BUYER AND IS A VALID AND
BINDING AGREEMENT OF SUCH BUYER ENFORCEABLE AGAINST SUCH BUYER IN ACCORDANCE
WITH ITS TERMS.  THE SECURITY AGREEMENT AND EACH OF THE OTHER AGREEMENTS ENTERED
INTO BY SUCH BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AS OF
THE CLOSING WILL HAVE BEEN DULY AND VALIDLY AUTHORIZED, EXECUTED AND DELIVERED
ON BEHALF OF SUCH BUYER AS OF THE CLOSING AND WILL BE VALID AND BINDING
AGREEMENTS OF SUCH BUYER, ENFORCEABLE AGAINST SUCH BUYER IN ACCORDANCE WITH
THEIR RESPECTIVE TERMS.

 

I.                                          RESIDENCY.  SUCH BUYER IS A RESIDENT
OF THAT JURISDICTION SPECIFIED BELOW ITS ADDRESS ON THE SCHEDULE OF BUYERS.

 

J.                                          NO OTHER AGREEMENTS.  AS OF THE
CLOSING DATE, SUCH BUYER HAS NOT, DIRECTLY OR INDIRECTLY, MADE ANY AGREEMENTS
WITH THE COMPANY RELATING TO THE TERMS OR CONDITIONS OF THE TRANSACTIONS
CONTEMPLATED BY THE TRANSACTION DOCUMENTS EXCEPT AS SET FORTH IN THE TRANSACTION
DOCUMENTS.

 

3.                                       REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.

 

The Company represents and warrants, as of the date of this Agreement as of the
Closing Date, to each Buyer, that except as set forth in the Schedules to this
Agreement delivered by the Company to Buyer:

 

A.                                       ORGANIZATION AND QUALIFICATION;
SUBSIDIARIES.  THE COMPANY WAS FORMED ON APRIL 22, 2002.  SET FORTH IN SCHEDULE
3(A) IS A TRUE AND CORRECT LIST OF THE COMPANY’S SUBSIDIARIES AND FOREIGN
SUBSIDIARIES AND THE JURISDICTION IN WHICH EACH IS ORGANIZED OR INCORPORATED,
TOGETHER WITH THEIR RESPECTIVE JURISDICTIONS OF ORGANIZATION.  OTHER THAN WITH
RESPECT TO THE ENTITIES LISTED ON SCHEDULE 3(A), THE COMPANY DOES NOT DIRECTLY
OWN ANY SECURITY OR BENEFICIAL OWNERSHIP INTEREST IN ANY OTHER PERSON (INCLUDING
THROUGH JOINT VENTURE OR PARTNERSHIP AGREEMENTS) OR HAVE ANY INTEREST IN ANY
OTHER PERSON.  EACH OF THE COMPANY AND ITS SUBSIDIARIES AND, TO THE COMPANY’S
KNOWLEDGE, FOREIGN SUBSIDIARIES IS A CORPORATION, LIMITED LIABILITY COMPANY,
PARTNERSHIP OR OTHER ENTITY AND IS DULY ORGANIZED OR FORMED AND VALIDLY EXISTING
IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION IN WHICH IT IS INCORPORATED
OR ORGANIZED (OTHER THAN THE SUBSIDIARY) AND HAS THE REQUISITE CORPORATE,
PARTNERSHIP, LIMITED LIABILITY COMPANY OR OTHER ORGANIZATIONAL POWER AND
AUTHORITY TO OWN ITS PROPERTIES AND TO CARRY ON ITS BUSINESS AS NOW BEING
CONDUCTED AND AS PROPOSED TO BE CONDUCTED BY THE COMPANY AND ITS SUBSIDIARIES
AND, TO THE COMPANY’S KNOWLEDGE, ITS FOREIGN SUBSIDIARIES.  EACH OF THE COMPANY
AND ITS SUBSIDIARIES, AND, TO THE COMPANY’S KNOWLEDGE, ITS FOREIGN SUBSIDIARIES
IS DULY QUALIFIED TO DO BUSINESS AND IS IN GOOD STANDING IN EVERY JURISDICTION
IN WHICH ITS OWNERSHIP OF PROPERTY OR THE NATURE OF THE BUSINESS CONDUCTED OR
PROPOSED TO BE CONDUCTED BY THE COMPANY AND ITS SUBSIDIARIES, AND, TO THE
COMPANY’S KNOWLEDGE, ITS FOREIGN SUBSIDIARIES WILL MAKE SUCH QUALIFICATION
NECESSARY, EXCEPT TO THE EXTENT THAT THE FAILURE TO BE SO QUALIFIED OR BE IN
GOOD STANDING COULD NOT HAVE AND COULD

 

5

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

 

NOT BE, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT.  EXCEPT AS SET FORTH IN SCHEDULE 3(A), THE COMPANY
HOLDS ALL RIGHT, TITLE AND INTEREST IN AND TO 100% OF THE CAPITAL STOCK, EQUITY
OR SIMILAR INTERESTS OF EACH OF ITS SUBSIDIARIES, AND, TO THE COMPANY’S
KNOWLEDGE AND TO THE EXTENT APPLICABLE, ITS FOREIGN SUBSIDIARIES FREE AND CLEAR
OF ANY LIENS (AS DEFINED BELOW), INCLUDING ANY RESTRICTION ON THE USE, VOTING,
TRANSFER, RECEIPT OF INCOME OR OTHER EXERCISE OF ANY ATTRIBUTES OF FREE AND
CLEAR OWNERSHIP BY A CURRENT HOLDER, AND NO SUCH SUBSIDIARY OR, TO THE COMPANY’S
KNOWLEDGE, FOREIGN SUBSIDIARY OWNS CAPITAL STOCK OR HOLDS AN EQUITY OR SIMILAR
INTEREST IN ANY OTHER PERSON.

 

B.                                      AUTHORIZATION; ENFORCEMENT; VALIDITY. 
EACH OF THE COMPANY AND ITS SUBSIDIARIES HAS THE REQUISITE CORPORATE OR OTHER
ORGANIZATIONAL POWER AND AUTHORITY TO ENTER INTO AND PERFORM ITS OBLIGATIONS
UNDER THIS AGREEMENT AND EACH OF THE OTHER TRANSACTION DOCUMENTS TO WHICH SUCH
PERSON IS A PARTY AND TO ISSUE THE SECURITIES IN ACCORDANCE WITH THE TERMS
HEREOF AND THEREOF.  THE EXECUTION AND DELIVERY OF THE TRANSACTION DOCUMENTS BY
THE COMPANY AND EACH OF ITS SUBSIDIARIES AND THE CONSUMMATION BY THE COMPANY AND
EACH OF ITS SUBSIDIARIES OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY,
INCLUDING THE ISSUANCE OF THE NOTES, THE GUARANTEES AND THE SHARES TO BE ISSUED
AT THE CLOSING, HAVE BEEN DULY AUTHORIZED BY THE RESPECTIVE BOARDS OF DIRECTORS
(OR A COMMITTEE THEREOF), MEMBERS, MANAGERS, TRUSTEES, STOCKHOLDERS, OTHER
EQUITYHOLDERS OR HOLDERS OF BENEFICIAL INTERESTS, AS APPLICABLE, OF THE COMPANY
AND EACH OF ITS SUBSIDIARIES AND NO FURTHER CONSENT OR AUTHORIZATION IS REQUIRED
BY THE COMPANY, ANY OF ITS SUBSIDIARIES OR ANY OF THEIR RESPECTIVE BOARDS OF
DIRECTORS, MEMBERS, MANAGERS, TRUSTEES, STOCKHOLDERS, OTHER EQUITYHOLDERS OR
HOLDERS OF BENEFICIAL INTERESTS, AS APPLICABLE.  THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS DATED OF EVEN DATE HEREWITH HAVE BEEN DULY EXECUTED AND
DELIVERED BY THE COMPANY AND EACH OF ITS SUBSIDIARIES THAT IS A PARTY THERETO,
AND CONSTITUTE THE VALID AND BINDING OBLIGATIONS OF THE COMPANY AND EACH OF ITS
SUBSIDIARIES, ENFORCEABLE AGAINST THE COMPANY AND EACH OF ITS SUBSIDIARIES IN
ACCORDANCE WITH THEIR RESPECTIVE TERMS, EXCEPT AS MAY BE LIMITED BY BANKRUPTCY,
INSOLVENCY, FRAUDULENT CONVEYANCE OR SIMILAR LAWS AFFECTING CREDITORS’ RIGHTS
GENERALLY AND GENERAL PRINCIPLES OF EQUITY.  AS OF THE CLOSING, THE TRANSACTION
DOCUMENTS DATED AFTER THE DATE OF THIS AGREEMENT SHALL HAVE BEEN DULY EXECUTED
AND DELIVERED BY THE COMPANY AND EACH OF ITS SUBSIDIARIES THAT IS A PARTY
THERETO AND SHALL CONSTITUTE THE VALID AND BINDING OBLIGATIONS OF THE COMPANY
AND EACH OF ITS SUBSIDIARIES, ENFORCEABLE AGAINST THE COMPANY AND EACH OF ITS
SUBSIDIARIES IN ACCORDANCE WITH THEIR RESPECTIVE TERMS, EXCEPT AS MAY BE LIMITED
BY BANKRUPTCY, INSOLVENCY, FRAUDULENT CONVEYANCE OR SIMILAR LAWS AFFECTING
CREDITORS’ RIGHTS GENERALLY AND GENERAL PRINCIPLES OF EQUITY.

 

C.                                       CAPITALIZATION.  THE AUTHORIZED CAPITAL
STOCK OF THE COMPANY CONSISTS OF  750,000,000 SHARES OF COMMON STOCK, OF WHICH:

 

(I)                                     625,632,455 SHARES ARE ISSUED AND
OUTSTANDING; PROVIDED, HOWEVER, THAT AS OF THE CLOSING DATE;

 

(II)                                  100,000,000 SHARES ARE RESERVED FOR
ISSUANCE PURSUANT TO THE COMPANY’S STOCK OPTION, RESTRICTED STOCK AND EMPLOYEE
STOCK PURCHASE PLANS DESCRIBED IN THE SEC DOCUMENTS (THE “EQUITY PLANS”),
INCLUDING 71,510,000 SHARES ISSUABLE PURSUANT TO OUTSTANDING AWARDS UNDER THE
EQUITY PLANS;

 

6

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

 

(III)                               3,290,666 SHARES ARE RESERVED FOR ISSUANCE
PURSUANT TO THE COMPANY’S OUTSTANDING WARRANTS DESCRIBED ON SCHEDULE
3(C)(III) (THE “WARRANTS”); AND

 

(IV)                              4,285,714 SHARES OF COMMON STOCK ARE RESERVED
FOR ISSUANCE TO MILLENNIX, INC. ON JANUARY 1, 2009 (SUBJECT TO GENE RESNICK
REMAINING AN EMPLOYEE THROUGH SUCH ISSUANCE DATE) PURSUANT TO THAT CERTAIN ASSET
PURCHASE AGREEMENT DATED NOVEMBER 9, 2005 (AS AMENDED ON SEPTEMBER 6, 2006),
RELATED TO THE PURCHASE OF THE ASSETS OF MILLENNIX, INC.

 

No shares of Common Stock are reserved for issuance under any plan, agreement or
arrangement, other than shares of Common Stock reserved for issuance with
respect to the Warrants and under the Equity Plans; and except as described in
the foregoing provisions of this Section 3(c), there are no shares of Capital
Stock, Options, Convertible Securities or other equity securities of the Company
authorized, issued or outstanding, and the Company is not under any current or
future obligation to issue any such shares of Capital Stock, Options,
Convertible Securities or other equity securities of the Company.  All of the
outstanding and issuable shares of Capital Stock have been, or upon issuance
will be, validly issued and are, or upon issuance will be, fully paid and
nonassessable.

 

Except as set forth on Schedule 3(c):

 

(1)                                  EXCEPT AS SET FORTH IN THE SECURITIES
PURCHASE AGREEMENT, DATED AS OF OCTOBER 31, 2007, AS AMENDED, AMONG THE COMPANY
AND THE INVESTORS LISTED ON THE SCHEDULE OF BUYERS ATTACHED THERETO, NO SHARES
OF THE CAPITAL STOCK OF THE COMPANY OR ANY OF ITS SUBSIDIARIES ARE SUBJECT TO
PREEMPTIVE RIGHTS OR ANY OTHER SIMILAR RIGHTS OR ANY LIENS SUFFERED OR PERMITTED
BY THE COMPANY OR ANY OF ITS SUBSIDIARIES;

 

(2)                                  THERE ARE NO OUTSTANDING OPTIONS, WARRANTS,
SCRIP, RIGHTS TO SUBSCRIBE TO, CALLS OR COMMITMENTS OF ANY CHARACTER WHATSOEVER
RELATING TO, OR SECURITIES OR RIGHTS CONVERTIBLE INTO OR EXERCISABLE FOR, ANY
SHARES OF CAPITAL STOCK OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR, TO THE
COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES, OR CONTRACTS, COMMITMENTS,
UNDERSTANDINGS OR ARRANGEMENTS BY WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES
OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES IS OR MAY BECOME
BOUND TO ISSUE ADDITIONAL SHARES OF CAPITAL STOCK OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR FOREIGN SUBSIDIARIES OR OPTIONS, WARRANTS, SCRIP, RIGHTS TO
SUBSCRIBE TO, CALLS OR COMMITMENTS OF ANY CHARACTER WHATSOEVER RELATING TO, OR
SECURITIES OR RIGHTS CONVERTIBLE INTO OR EXERCISABLE FOR, ANY SHARES OF CAPITAL
STOCK OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES;

 

(3)                                  TO THE KNOWLEDGE OF THE COMPANY, THERE ARE
NO VOTING TRUSTS, PROXIES OR OTHER AGREEMENTS, COMMITMENTS OR UNDERSTANDINGS OF
ANY CHARACTER WITH RESPECT TO THE VOTING OF ANY SHARES OF CAPITAL STOCK OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES, AND THERE ARE NO
AGREEMENTS OR ARRANGEMENTS UNDER WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES OR
FOREIGN SUBSIDIARIES IS OBLIGATED TO REGISTER THE SALE OF ANY OF THEIR
SECURITIES UNDER THE 1933 ACT (EXCEPT THE REGISTRATION RIGHTS SET FORTH IN THE
COMPANY’S SEC DOCUMENTS, INCLUDING REGISTRATION RIGHTS AGREEMENTS ENTERED DATED
JULY 31, 2006 AND NOVEMBER 9, 2005 AND THE REGISTRATION RIGHTS

 

7

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

 

GIVEN TO THE INVESTORS IN THE COMPANY’S OCTOBER 17, 2006 FINANCING OR SUCH OTHER
RIGHTS AS SHALL HAVE BEEN WAIVED OR TERMINATED PRIOR TO THE CLOSING);

 

(4)                                  OTHER THAN THE NOTES AND THE PRIOR NOTES,
THERE ARE NO OUTSTANDING SECURITIES OR INSTRUMENTS OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES
THAT CONTAIN ANY REDEMPTION OR SIMILAR PROVISIONS, AND THERE ARE NO CONTRACTS,
COMMITMENTS, UNDERSTANDINGS OR ARRANGEMENTS BY WHICH THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES IS
OR MAY BECOME BOUND TO REDEEM A SECURITY OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR FOREIGN SUBSIDIARIES, AND THERE ARE NO OTHER STOCKHOLDER
AGREEMENTS OR SIMILAR AGREEMENTS TO WHICH THE COMPANY, ANY OF ITS SUBSIDIARIES
OR, TO THE COMPANY’S KNOWLEDGE, ANY FOREIGN SUBSIDIARY OR ANY HOLDER OF THE
COMPANY’S CAPITAL STOCK IS A PARTY;

 

(5)                                  THERE ARE NO SECURITIES OR INSTRUMENTS
CONTAINING ANTI-DILUTION OR SIMILAR PROVISIONS THAT WILL OR MAY BE TRIGGERED BY
THE ISSUANCE OF THE SECURITIES;

 

(6)                                  THE COMPANY DOES NOT HAVE ANY STOCK
APPRECIATION RIGHTS OR “PHANTOM STOCK” PLANS OR AGREEMENTS OR ANY SIMILAR PLAN
OR AGREEMENT; AND

 

(7)                                  TO THE COMPANY’S KNOWLEDGE, NO OFFICER OR
DIRECTOR OF THE COMPANY OR BENEFICIAL OWNER OF ANY OF THE COMPANY’S OUTSTANDING
COMMON STOCK HAS PLEDGED COMMON STOCK IN CONNECTION WITH A MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH COMMON STOCK.

 

The Company has furnished to each Buyer true and correct copies of:

 

(X)                               The Company’s Certificate of Incorporation, as
amended and in effect (the “Certificate of Incorporation”); and

 

(Y)                                The Company’s Bylaws, as amended and in
effect (the “Bylaws”).

 

All of the equity interests of each of the Subsidiaries are certificated or
otherwise represented in tangible form.

 

D.                                      ISSUANCE OF SECURITIES.  THE NOTES ARE
DULY AUTHORIZED AND, UPON ISSUANCE IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT, SHALL BE FREE FROM ALL TAXES AND LIENS WITH RESPECT TO THE ISSUANCE
THEREOF AND ENTITLED TO THE RIGHTS SET FORTH THEREIN.  THE SHARES ARE DULY
AUTHORIZED AND, UPON ISSUANCE IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT,
WILL BE VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE AND FREE FROM TAXES AND
LIENS WITH RESPECT TO THE ISSUANCE THEREOF, WITH THE HOLDERS BEING ENTITLED TO
ALL RIGHTS ACCORDED TO A HOLDER OF COMMON STOCK.  THE ISSUANCE BY THE COMPANY OF
THE SECURITIES IS EXEMPT FROM REGISTRATION UNDER THE 1933 ACT AND ANY OTHER
APPLICABLE SECURITIES LAWS.

 

E.                                       NO CONFLICTS.  EXCEPT AS SET FORTH ON
SCHEDULE 3(E), THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS BY THE COMPANY AND EACH OF ITS SUBSIDIARIES, THE
PERFORMANCE BY THE COMPANY AND EACH OF ITS SUBSIDIARIES OF ITS OBLIGATIONS
HEREUNDER AND THEREUNDER AND THE CONSUMMATION BY THE COMPANY AND EACH OF ITS
SUBSIDIARIES OF

 

8

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

 

THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY (INCLUDING THE RESERVATION FOR
ISSUANCE AND THE ISSUANCE OF THE SHARES) WILL NOT:

 

(I)                                     RESULT IN A VIOLATION OF THE CERTIFICATE
OR ARTICLES OF INCORPORATION, CERTIFICATE OR ARTICLES OF ORGANIZATION, BYLAWS,
OPERATING AGREEMENT, PARTNERSHIP AGREEMENT OR ANY OTHER GOVERNING DOCUMENTS, AS
APPLICABLE, OF ANY SUCH PERSON;

 

(II)                                  CONFLICT WITH, OR CONSTITUTE A BREACH OR
DEFAULT (OR AN EVENT WHICH, WITH THE GIVING OF NOTICE OR PASSAGE OF TIME OR
BOTH, CONSTITUTES OR WOULD CONSTITUTE A BREACH OR DEFAULT) UNDER, OR GIVE TO
OTHERS ANY RIGHT OF TERMINATION, AMENDMENT, ACCELERATION OR CANCELLATION OF, OR
OTHER REMEDY WITH RESPECT TO, ANY AGREEMENT, INDENTURE, INSTRUMENT OR OTHER
DOCUMENT TO WHICH ANY SUCH PERSON IS A PARTY OR BY WHICH SUCH PERSON IS BOUND;
OR

 

(III)                               RESULT IN A VIOLATION OF ANY LAW, RULE,
REGULATION, ORDER, JUDGMENT OR DECREE (INCLUDING SECURITIES LAWS AND THE
RULES AND REGULATIONS, IF ANY, OF THE PRINCIPAL MARKET) APPLICABLE TO ANY SUCH
PERSON OR BY WHICH ANY PROPERTY OR ASSET OF ANY SUCH PERSON IS BOUND OR
AFFECTED.

 

Neither the Company nor any of its Subsidiaries nor, to the Company’s Knowledge,
any of its Foreign Subsidiaries is in violation of any term of its certificate
or articles of incorporation, certificate or articles of organization, bylaws,
operating agreement, partnership agreement or any other governing document, as
applicable.  Neither the Company nor any of its Subsidiaries nor, to the
Company’s Knowledge, any of its Foreign Subsidiaries is or has been in violation
of any term of or in default under (or with the giving of notice or passage of
time or both would be in violation of or default under) any contract, agreement,
mortgage, indebtedness, indenture, instrument, document, judgment, decree or
order or any Law applicable to the Company or its Subsidiaries or Foreign
Subsidiaries, except where such violation or default could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect or to
result in the acceleration of any Indebtedness or other obligation.  The
business of the Company and its Subsidiaries and, to the Company’s Knowledge,
its Foreign Subsidiaries has not been and is not being conducted in violation of
any Law of any Governmental Entity except as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  Except for
the filing of instruments to perfect security interests and as set forth in
Schedule 3(e), neither the Company nor any of its Subsidiaries is, has been, or
will be required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or Governmental Entity in order for it to
execute, deliver or perform any of its obligations under or contemplated by the
Transaction Documents in accordance with the terms hereof or thereof.  All
consents, authorizations, orders, filings and registrations that the Company or
any of its Subsidiaries is or has been required to obtain as described in the
preceding sentence have been obtained or effected on or prior to the date of
this Agreement and prior to the date of the effectiveness of such requirement.

 

F.                                         SEC DOCUMENTS; FINANCIAL STATEMENTS.

 

(I)                                     EXCEPT AS SET FORTH ON SCHEDULE 3(F),
SINCE DECEMBER 31, 2007, THE COMPANY HAS FILED ALL REPORTS, SCHEDULES, FORMS,
STATEMENTS AND OTHER DOCUMENTS REQUIRED

 

9

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

 

TO BE FILED BY IT WITH THE SEC PURSUANT TO THE REPORTING REQUIREMENTS OF THE
1934 ACT (ALL OF THE FOREGOING FILED PRIOR TO THE DATE THIS REPRESENTATION IS
MADE (INCLUDING ALL EXHIBITS INCLUDED THEREIN AND FINANCIAL STATEMENTS AND
SCHEDULES THERETO AND DOCUMENTS INCORPORATED BY REFERENCE THEREIN) BEING
REFERRED TO HEREIN AS THE “SEC DOCUMENTS” AND THE COMPANY’S CONSOLIDATED BALANCE
SHEET AS OF MARCH 31, 2008, AS INCLUDED IN THE COMPANY’S QUARTERLY REPORT ON
FORM 10-Q FOR THE PERIOD THEN ENDED, AS FILED WITH THE SEC ON MAY 15, 2008,
BEING REFERRED TO HEREIN AS THE “MOST RECENT BALANCE SHEET”).  EACH OF THE SEC
DOCUMENTS WAS FILED WITH THE SEC VIA THE SEC’S EDGAR SYSTEM WITHIN THE TIME
FRAMES PRESCRIBED BY THE SEC FOR THE FILING OF SUCH SEC DOCUMENTS SUCH THAT EACH
FILING WAS TIMELY FILED WITH THE SEC (WITH GIVING EFFECT TO ANY EXTENSIONS OF
TIME PERMITTED BY RULE 12B-25 UNDER THE 1934 ACT).  AS OF THEIR RESPECTIVE
DATES, THE SEC DOCUMENTS COMPLIED IN ALL MATERIAL RESPECTS WITH THE SECURITIES
LAWS.  NONE OF THE SEC DOCUMENTS, AT THE TIME THEY WERE FILED WITH THE SEC,
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 LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING.  SINCE THE FILING OF EACH OF THE SEC DOCUMENTS, NO EVENT HAS
OCCURRED THAT WOULD REQUIRE AN AMENDMENT OR SUPPLEMENT TO ANY SUCH SEC DOCUMENT
AND AS TO WHICH SUCH AN AMENDMENT OR SUPPLEMENT HAS NOT BEEN FILED AND MADE
PUBLICLY AVAILABLE ON THE SEC’S EDGAR SYSTEM NO LESS THAN FIVE (5) BUSINESS DAYS
PRIOR TO THE DATE THIS REPRESENTATION IS MADE.  EXCEPT AS SET FORTH ON SCHEDULE
3(F)(I), THE COMPANY HAS NOT RECEIVED ANY WRITTEN COMMENTS FROM THE SEC STAFF
THAT HAVE NOT BEEN RESOLVED TO THE SATISFACTION OF THE SEC STAFF.

 

(II)                                  AS OF THEIR RESPECTIVE DATES, THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND ITS SUBSIDIARIES AND
FOREIGN SUBSIDIARIES  INCLUDED IN THE SEC DOCUMENTS COMPLIED AS TO FORM IN ALL
MATERIAL RESPECTS WITH APPLICABLE ACCOUNTING REQUIREMENTS AND THE SECURITIES
LAWS WITH RESPECT THERETO.  SUCH CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN
PREPARED IN ACCORDANCE WITH GAAP, CONSISTENTLY APPLIED, DURING THE PERIODS
INVOLVED (EXCEPT (I) AS MAY BE OTHERWISE INDICATED IN SUCH FINANCIAL STATEMENTS
OR THE NOTES THERETO, OR (II) IN THE CASE OF UNAUDITED INTERIM STATEMENTS, TO
THE EXTENT THEY MAY EXCLUDE FOOTNOTES) AND FAIRLY PRESENT IN ALL MATERIAL
RESPECTS THE FINANCIAL POSITION OF THE COMPANY AND ITS SUBSIDIARIES AND FOREIGN
SUBSIDIARIES AS OF THE DATES THEREOF AND THE RESULTS OF THEIR OPERATIONS AND
CASH FLOWS FOR THE PERIODS THEN ENDED IN ACCORDANCE WITH GAAP (SUBJECT, IN THE
CASE OF UNAUDITED STATEMENTS, TO NORMAL YEAR-END AUDIT ADJUSTMENTS THAT ARE NOT
MATERIAL INDIVIDUALLY OR IN THE AGGREGATE).

 

(III)                               SINCE DECEMBER 31, 2007, NONE OF THE
COMPANY, ITS SUBSIDIARIES AND THEIR RESPECTIVE OFFICERS, DIRECTORS AND
AFFILIATES OR, TO THE COMPANY’S KNOWLEDGE, ANY STOCKHOLDER OF THE COMPANY HAS
MADE ANY FILING WITH THE SEC OR ISSUED ANY PRESS RELEASE ON BEHALF OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES OR OTHERWISE RELATING TO THE COMPANY OR ANY
OF ITS SUBSIDIARIES THAT CONTAINS ANY UNTRUE STATEMENT OF A MATERIAL FACT OR
OMITS ANY STATEMENT OF MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS
THEREIN, IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY ARE OR WERE MADE,
NOT MISLEADING OR HAS PROVIDED ANY OTHER INFORMATION TO ANY BUYER, INCLUDING
INFORMATION REFERRED TO IN SECTION 2(D), THAT, CONSIDERED IN THE AGGREGATE,
CONTAINS ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITS TO STATE ANY MATERIAL
FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS

 

10

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

 

THEREIN, IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY ARE OR WERE MADE,
NOT MISLEADING.

 

(IV)                              EXCEPT AS SET FORTH IN SCHEDULE 3(F)(IV), THE
COMPANY IS NOT REQUIRED TO FILE AND WILL NOT BE REQUIRED TO FILE ANY AGREEMENT,
NOTE, LEASE, MORTGAGE, DEED OR OTHER INSTRUMENT ENTERED INTO PRIOR TO THE DATE
THIS REPRESENTATION IS MADE AND IN EFFECT ON THE DATE THIS REPRESENTATION IS
MADE AND TO WHICH THE COMPANY OR ANY SUBSIDIARY OR, TO THE COMPANY’S KNOWLEDGE,
ANY FOREIGN SUBSIDIARY IS A PARTY OR BY WHICH THE COMPANY OR ANY SUBSIDIARY OR
FOREIGN SUBSIDIARY IS BOUND THAT HAS NOT BEEN PREVIOUSLY FILED AS AN EXHIBIT
(INCLUDING BY WAY OF INCORPORATION BY REFERENCE) TO ITS REPORTS FILED OR MADE
WITH THE SEC UNDER THE 1934 ACT.

 

(V)                                 THE ACCOUNTING FIRM THAT HAS EXPRESSED ITS
OPINION WITH RESPECT TO THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE
COMPANY’S MOST RECENTLY FILED ANNUAL REPORT ON FORM 10-KSB (THE “AUDIT OPINION”)
IS INDEPENDENT OF THE COMPANY PURSUANT TO THE STANDARDS SET FORTH IN RULE 2-01
OF REGULATION S-X PROMULGATED BY THE SEC AND SUCH FIRM WAS OTHERWISE QUALIFIED
TO RENDER THE AUDIT OPINION UNDER APPLICABLE SECURITIES LAWS.  EACH ACCOUNTING
FIRM THAT SINCE SUCH FILING HAS CONDUCTED OR WILL CONDUCT A REVIEW OR AUDIT OF
ANY OF THE COMPANY’S CONSOLIDATED FINANCIAL STATEMENTS IS INDEPENDENT OF THE
COMPANY PURSUANT TO THE STANDARDS SET FORTH IN RULE 2-01 OF REGULATION S-X
PROMULGATED BY THE SEC AND IS OTHERWISE QUALIFIED TO CONDUCT SUCH REVIEW OR
AUDIT AND RENDER AN AUDIT OPINION UNDER APPLICABLE SECURITIES LAWS.

 

(VI)                              THERE IS NO TRANSACTION, ARRANGEMENT OR OTHER
RELATIONSHIP BETWEEN THE COMPANY AND AN UNCONSOLIDATED OR OTHER
OFF-BALANCE-SHEET ENTITY THAT IS REQUIRED TO BE DISCLOSED BY THE COMPANY IN ITS
REPORTS PURSUANT TO THE 1934 ACT THAT HAS NOT BEEN SO DISCLOSED IN THE SEC
DOCUMENTS AT LEAST FIVE (5) BUSINESS DAYS PRIOR TO THE DATE OF THIS AGREEMENT.

 

(VII)                           SINCE DECEMBER 31, 2007, THERE HAVE BEEN NO
INTERNAL OR SEC INQUIRIES OR INVESTIGATIONS (FORMAL OR INFORMAL) REGARDING
ACCOUNTING OR REVENUE RECOGNITION DISCUSSED WITH, REVIEWED BY OR INITIATED AT
THE DIRECTION OF ANY EXECUTIVE OFFICER, BOARD OF DIRECTORS OR ANY COMMITTEE
THEREOF OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR, TO THE COMPANY’S
KNOWLEDGE, FOREIGN SUBSIDIARIES.

 

(VIII)                        THE COMPANY IS NOT A “SHELL COMPANY” (AS DEFINED
IN RULE 12B-2 UNDER THE 1934 ACT).

 

G.                                      SARBANES-OXLEY COMPLIANCE; INTERNAL
ACCOUNTING CONTROLS; DISCLOSURE CONTROLS AND PROCEDURES; BOOKS AND RECORDS.

 

(I)                                     EXCEPT FOR AS SET FORTH IN THE SEC
DOCUMENTS, THE COMPANY AND ITS SUBSIDIARIES AND, TO THE COMPANY’S KNOWLEDGE, ITS
FOREIGN SUBSIDIARIES ARE IN ALL MATERIAL RESPECTS IN COMPLIANCE WITH THE
APPLICABLE PROVISIONS OF THE SARBANES-OXLEY ACT OF 2002, AS AMENDED, AND THE
RULES AND REGULATIONS THEREUNDER (COLLECTIVELY, “SARBANES-OXLEY”).

 

11

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

 

(II)                                  SINCE DECEMBER 31, 2007, NEITHER THE
COMPANY NOR ANY OF ITS SUBSIDIARIES OR, TO THE COMPANY’S KNOWLEDGE, ITS FOREIGN
SUBSIDIARIES NOR ANY DIRECTOR OR OFFICER OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR, TO THE COMPANY’S KNOWLEDGE, ITS FOREIGN SUBSIDIARIES HAS
RECEIVED OR OTHERWISE HAD OR OBTAINED KNOWLEDGE OF ANY COMPLAINT, ALLEGATION,
ASSERTION OR CLAIM, WHETHER WRITTEN OR ORAL, REGARDING THE ACCOUNTING OR
AUDITING PRACTICES, PROCEDURES, METHODOLOGIES OR METHODS OF THE COMPANY OR ANY
OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES OR ITS INTERNAL ACCOUNTING CONTROLS,
INCLUDING ANY COMPLAINT, ALLEGATION, ASSERTION OR CLAIM THAT THE COMPANY OR ANY
OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES HAS ENGAGED IN QUESTIONABLE
ACCOUNTING OR AUDITING PRACTICES.

 

(III)                               NO ATTORNEY REPRESENTING THE COMPANY OR ANY
OF ITS SUBSIDIARIES, WHETHER OR NOT EMPLOYED BY THE COMPANY OR ANY OF ITS
SUBSIDIARIES, HAS REPORTED EVIDENCE OF A MATERIAL VIOLATION OF SECURITIES LAWS,
BREACH OF FIDUCIARY DUTY OR SIMILAR VIOLATION BY THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS
TO THEIR RESPECTIVE BOARDS OF DIRECTORS OR ANY COMMITTEE THEREOF OR PURSUANT TO
SECTION 307 OF SARBANES-OXLEY.

 

(IV)                              EXCEPT AS SET FORTH ON SCHEDULE 3(G) AND IN
THE SEC DOCUMENTS, THE COMPANY HAS, AND HAS CAUSED EACH OF ITS SUBSIDIARIES AND,
TO THE COMPANY’S KNOWLEDGE, ITS FOREIGN SUBSIDIARIES, IF APPLICABLE, TO, AT ALL
TIMES KEEP BOOKS, RECORDS AND ACCOUNTS WITH RESPECT TO ALL OF SUCH PERSON’S
BUSINESS ACTIVITIES, IN ACCORDANCE WITH SOUND ACCOUNTING PRACTICES AND GAAP, OR
WITH RESPECT TO THE FOREIGN SUBSIDIARIES, THE APPLICABLE ACCOUNTING STANDARDS,
CONSISTENTLY APPLIED.  EXCEPT AS SET FORTH IN THE SEC DOCUMENTS, THE COMPANY AND
EACH OF ITS SUBSIDIARIES AND, TO THE COMPANY’S KNOWLEDGE, ITS FOREIGN
SUBSIDIARIES, IF APPLICABLE, MAINTAINS A SYSTEM OF INTERNAL ACCOUNTING CONTROLS
SUFFICIENT TO PROVIDE REASONABLE ASSURANCE THAT (A) TRANSACTIONS ARE EXECUTED IN
ACCORDANCE WITH MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATIONS,
(B) TRANSACTIONS ARE RECORDED AS NECESSARY TO PERMIT PREPARATION OF FINANCIAL
STATEMENTS IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND TO
MAINTAIN ASSET AND LIABILITY ACCOUNTABILITY, (C) ACCESS TO ASSETS OR INCURRENCE
OF LIABILITY IS PERMITTED ONLY IN ACCORDANCE WITH MANAGEMENT’S GENERAL OR
SPECIFIC AUTHORIZATION AND (D) THE RECORDED ACCOUNTABILITY FOR ASSETS AND
LIABILITIES IS COMPARED WITH THE EXISTING ASSETS AND LIABILITIES AT REASONABLE
INTERVALS AND APPROPRIATE ACTION IS TAKEN WITH RESPECT TO ANY DIFFERENCES.

 

(V)                                 THE COMPANY HAS TIMELY FILED AND MADE
PUBLICLY AVAILABLE ON THE SEC’S EDGAR SYSTEM NO LESS THAN FIVE (5) BUSINESS DAYS
PRIOR TO THE DATE OF THIS REPRESENTATION, ALL CERTIFICATIONS AND STATEMENTS
REQUIRED BY (A) RULE 13A-14 OR RULE 15D-14 UNDER THE 1934 ACT AND
(B) SECTION 906 OF SARBANES-OXLEY WITH RESPECT TO ANY COMPANY SEC DOCUMENTS.

 

(VI)                              EXCEPT AS SET FORTH IN THE SEC DOCUMENTS, THE
COMPANY MAINTAINS DISCLOSURE CONTROLS AND PROCEDURES REQUIRED BY RULE 13A-15 OR
RULE 15D-15 UNDER THE 1934 ACT.  EXCEPT AS SET FORTH IN THE SEC DOCUMENTS, SUCH
DISCLOSURE CONTROLS AND PROCEDURES ARE EFFECTIVE TO ENSURE THAT THE INFORMATION
REQUIRED TO BE DISCLOSED BY THE COMPANY IN THE REPORTS THAT IT FILES WITH OR
SUBMITS TO THE SEC (A) IS RECORDED, PROCESSED, SUMMARIZED AND REPORTED
ACCURATELY WITHIN THE TIME PERIODS SPECIFIED IN THE SEC’S RULES 

 

12

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

 

AND FORMS AND (B) IS ACCUMULATED AND COMMUNICATED TO THE COMPANY’S MANAGEMENT,
INCLUDING ITS PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER, AS
APPROPRIATE TO ALLOW TIMELY DECISIONS REGARDING REQUIRED DISCLOSURE.

 

(VII)                           EXCEPT AS SET FORTH ON SCHEDULE 3(G) AND IN THE
SEC DOCUMENTS, THE COMPANY MAINTAINS INTERNAL CONTROL OVER FINANCIAL REPORTING
REQUIRED BY RULE 13A-14 OR RULE 15D-14 UNDER THE 1934 ACT.  AS SET FORTH IN THE
SEC DOCUMENTS, PRIOR TO JANUARY 1, 2008, SUCH INTERNAL CONTROL OVER FINANCIAL
REPORTING CONTAINED MATERIAL WEAKNESSES.

 

H.                                      ABSENCE OF CERTAIN CHANGES.  SINCE
DECEMBER 31, 2007, NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES OR, TO THE
COMPANY’S KNOWLEDGE, FOREIGN SUBSIDIARIES HAS TAKEN ANY STEPS, AND NEITHER THE
COMPANY NOR ANY OF ITS SUBSIDIARIES OR, TO THE COMPANY’S KNOWLEDGE, FOREIGN
SUBSIDIARIES CURRENTLY EXPECTS TO TAKE ANY STEPS TO SEEK PROTECTION PURSUANT TO
ANY BANKRUPTCY LAW NOR DOES THE COMPANY OR ANY OF ITS SUBSIDIARIES OR FOREIGN
SUBSIDIARIES, TO THE COMPANY’S KNOWLEDGE, HAVE ANY KNOWLEDGE OR REASON TO
BELIEVE THAT THE CREDITORS OF SUCH PERSON INTEND TO INITIATE INVOLUNTARY
BANKRUPTCY PROCEEDINGS OR ANY KNOWLEDGE OF ANY FACT THAT WOULD REASONABLY LEAD A
CREDITOR TO DO SO.  NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES OR, TO THE
COMPANY’S KNOWLEDGE, ANY FOREIGN SUBSIDIARY IS AS OF THE DATE THIS
REPRESENTATION IS MADE, NOR AFTER GIVING EFFECT TO THE TRANSACTIONS CONTEMPLATED
HEREBY OR BY ANY OF THE OTHER TRANSACTION DOCUMENTS WILL BE, INSOLVENT.  EXCEPT
AS SET FORTH IN THE SEC DOCUMENTS, SINCE DECEMBER 31, 2007, NEITHER THE COMPANY
NOR ANY OF ITS SUBSIDIARIES OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN
SUBSIDIARIES HAS DECLARED OR PAID ANY DIVIDENDS OR SOLD ANY ASSETS OUTSIDE OF
THE ORDINARY COURSE OF BUSINESS.  EXCEPT AS SET FORTH IN THE SEC DOCUMENTS,
SINCE DECEMBER 31, 2007, NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES HAS HAD
ANY CAPITAL EXPENDITURES OUTSIDE THE ORDINARY COURSE OF ITS BUSINESS.

 

I.                                          ABSENCE OF LITIGATION.   EXCEPT AS
SET FORTH ON SCHEDULE 3(I), (I) THERE HAS AT NO TIME BEEN ANY ACTION, SUIT,
PROCEEDING, INQUIRY OR INVESTIGATION (“LITIGATION”) BEFORE OR BY ANY COURT,
PUBLIC BOARD, GOVERNMENTAL ENTITY, SELF-REGULATORY ORGANIZATION OR BODY PENDING
OR, TO THE COMPANY’S KNOWLEDGE, THREATENED AGAINST OR AFFECTING THE COMPANY OR
ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES OR ANY OF THEIR ASSETS, AND
(II) TO THE COMPANY’S KNOWLEDGE, NO DIRECTOR OR OFFICER OF THE COMPANY OR ANY OF
ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES HAS BEEN INVOLVED IN SECURITIES-RELATED
LITIGATION DURING THE PAST FIVE (5) YEARS.  NO LITIGATION DISCLOSED ON SCHEDULE
3(I) HAS HAD OR COULD REASONABLY BE EXPECTED TO HAVE, INDIVIDUALLY OR IN THE
AGGREGATE, A MATERIAL ADVERSE EFFECT.

 

J.                                          FULL DISCLOSURE; NO UNDISCLOSED
EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES.  SINCE DECEMBER 31, 2007,
THERE HAS BEEN NO MATERIAL ADVERSE EFFECT AND NO CIRCUMSTANCES EXIST THAT,
INDIVIDUALLY OR IN THE AGGREGATE, COULD REASONABLY BE EXPECTED TO BE, CAUSE OR
HAVE A MATERIAL ADVERSE EFFECT.  EXCEPT (A) AS AND TO THE EXTENT DISCLOSED OR
RESERVED AGAINST ON THE MOST RECENT BALANCE SHEET, (B) AS INCURRED SINCE THE
DATE THEREOF IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE,
(C) AS INCURRED AT THE CLOSING DATE UNDER THE NOTES AND THE OTHER TRANSACTION
DOCUMENTS, OR (D) AS SET FORTH ON SCHEDULE 3(J), NEITHER THE COMPANY, NOR ANY OF
ITS SUBSIDIARIES OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES
HAS ANY MATERIAL LIABILITIES OR OBLIGATIONS OF ANY NATURE, WHETHER FIXED OR
UNFIXED, KNOWN OR UNKNOWN, SECURED OR UNSECURED, ABSOLUTE, ACCRUED, CONTINGENT
OR OTHERWISE AND WHETHER DUE OR TO BECOME DUE.  NO REPRESENTATION OR WARRANTY OR
OTHER STATEMENT MADE BY THE

 

13

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

 

COMPANY IN THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, THE
SCHEDULES HERETO OR ANY CERTIFICATE OR INSTRUMENT DELIVERED PURSUANT TO THIS
AGREEMENT CONTAINS ANY UNTRUE STATEMENT OR OMITS TO STATE A MATERIAL FACT
NECESSARY TO MAKE ANY SUCH STATEMENT, IN LIGHT OF THE CIRCUMSTANCES IN WHICH IT
WAS MADE, NOT MISLEADING.

 

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

 

L.                                          NO GENERAL SOLICITATION.  NEITHER
THE COMPANY NOR ANY OF ITS AFFILIATES, NOR ANY PERSON ACTING ON THE BEHALF OF
ANY OF THE FOREGOING, HAS ENGAGED OR WILL ENGAGE IN ANY FORM OF GENERAL
SOLICITATION OR GENERAL ADVERTISING (WITHIN THE MEANING OF REGULATION D UNDER
THE 1933 ACT), INCLUDING ADVERTISEMENTS, ARTICLES, NOTICES, OR OTHER
COMMUNICATIONS PUBLISHED IN ANY NEWSPAPER, MAGAZINE OR SIMILAR MEDIA OR
BROADCAST OVER RADIO, TELEVISION OR INTERNET OR ANY SEMINAR OR MEETING WHOSE
ATTENDEES HAVE BEEN INVITED BY GENERAL SOLICITATION OR GENERAL ADVERTISING, IN
CONNECTION WITH THE OFFER OR SALE OF THE SECURITIES.

 

M.                                    NO REGISTRATION.  NEITHER THE COMPANY NOR
ANY OF ITS AFFILIATES, NOR ANY PERSON ACTING ON THE BEHALF OF ANY OF THE
FOREGOING, HAS, DIRECTLY OR INDIRECTLY, MADE ANY OFFERS OR SALES OF ANY SECURITY
OR SOLICITED ANY OFFERS TO PURCHASE ANY SECURITY, UNDER CIRCUMSTANCES THAT WOULD
REQUIRE REGISTRATION OF ANY OF THE SECURITIES UNDER THE 1933 ACT.

 

N.                                      EMPLOYEE RELATIONS.  EXCEPT AS SET FORTH
ON SCHEDULE 3(N), NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES, NOR, TO THE
COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES IS INVOLVED IN ANY LABOR
UNION DISPUTE NOR, TO THE KNOWLEDGE OF THE COMPANY, IS ANY SUCH DISPUTE
THREATENED.  TO THE KNOWLEDGE OF THE COMPANY, NONE OF THE EMPLOYEES OF EITHER
THE COMPANY OR ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES IS OR HAS BEEN A
MEMBER OF A UNION THAT RELATES, OR FOLLOWING THE CLOSING WILL RELATE, TO SUCH
EMPLOYEE’S RELATIONSHIP WITH THE COMPANY AND NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES IS
OR FOLLOWING THE CLOSING WILL BE, A PARTY TO A COLLECTIVE BARGAINING AGREEMENT. 
NO EXECUTIVE OFFICER (AS DEFINED IN RULE 3B-7 UNDER THE 1934 ACT), NOR ANY OTHER
INDIVIDUAL WHOSE TERMINATION WOULD BE REQUIRED TO BE DISCLOSED ON A CURRENT
REPORT ON FORM 8-K, HAS NOTIFIED THE COMPANY THAT SUCH INDIVIDUAL INTENDS TO
LEAVE THE COMPANY OR OTHERWISE TERMINATE SUCH INDIVIDUAL’S EMPLOYMENT WITH THE
COMPANY.  SUCH INDIVIDUALS CONSTITUTE ALL OF THE EMPLOYEES NECESSARY TO CONDUCT
THE COMPANY’S BUSINESS AS PRESENTLY CONDUCTED AND AS PROPOSED TO BE CONDUCTED
(AS DESCRIBED TO BUYERS PRIOR TO THE DATE HEREOF).  EXCEPT AS SET FORTH ON
SCHEDULE 3(N), TO THE KNOWLEDGE OF THE COMPANY NO SUCH INDIVIDUAL IS,

 

14

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

 

HAS BEEN, OR IS NOW EXPECTED TO BE, IN VIOLATION OF ANY MATERIAL TERM OF ANY
EMPLOYMENT CONTRACT, CONFIDENTIALITY, DISCLOSURE OR PROPRIETARY INFORMATION
AGREEMENT OR NON-COMPETITION AGREEMENT, OR ANY OTHER CONTRACT OR AGREEMENT OR
ANY RESTRICTIVE COVENANT, AND THE EMPLOYMENT OF EACH SUCH INDIVIDUAL DOES NOT,
HAS NOT AND WILL NOT SUBJECT THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR, TO THE
COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES TO ANY LIABILITY WITH
RESPECT TO ANY OF THE FOREGOING MATTERS THAT WOULD, INDIVIDUALLY OR IN THE
AGGREGATE, HAVE A MATERIAL ADVERSE EFFECT.  EXCEPT AS SET FORTH IN SCHEDULE
3(N), TO THE COMPANY’S KNOWLEDGE THE COMPANY AND EACH OF ITS SUBSIDIARIES AND,
TO THE COMPANY’S KNOWLEDGE, EACH OF ITS FOREIGN SUBSIDIARIES, AS APPLICABLE, IS
IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL LAWS RELATING TO EMPLOYMENT AND
EMPLOYMENT PRACTICES, TERMS AND CONDITIONS OF EMPLOYMENT AND WAGES AND HOURS. 
EXCEPT AS SET FORTH IN SCHEDULE 3(N), THE COMPANY AND EACH OF ITS SUBSIDIARIES
AND, TO THE COMPANY’S KNOWLEDGE, EACH OF ITS FOREIGN SUBSIDIARIES, AS
APPLICABLE, IS IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL LAWS RELATING TO
EMPLOYEE BENEFITS AND EMPLOYEE BENEFIT PLANS (AS SUCH TERMS ARE DEFINED IN
ERISA).

 

O.                                      INTELLECTUAL PROPERTY RIGHTS.  EXCEPT AS
SET FORTH ON SCHEDULE 3(O), THE COMPANY AND ITS SUBSIDIARIES AND, TO THE
COMPANY’S KNOWLEDGE, ITS FOREIGN SUBSIDIARIES, IF APPLICABLE, OWN OR POSSESS
ADEQUATE RIGHTS OR LICENSES TO USE ALL TRADEMARKS, TRADEMARK APPLICATIONS AND
REGISTRATIONS, TRADE NAMES, SERVICE MARKS, SERVICE MARK REGISTRATIONS, SERVICE
NAMES, PATENTS, PATENT RIGHTS, PATENT APPLICATIONS, COPYRIGHTS (WHETHER OR NOT
REGISTERED), INVENTIONS, LICENSES, APPROVALS, GOVERNMENTAL AUTHORIZATIONS, TRADE
SECRETS AND OTHER INTELLECTUAL PROPERTY RIGHTS (COLLECTIVELY, “INTELLECTUAL
PROPERTY”) NECESSARY TO CONDUCT THEIR RESPECTIVE BUSINESSES AS CONDUCTED AS OF
THE DATE THIS REPRESENTATION IS MADE.  EXCEPT AS SET FORTH IN SCHEDULE 3(O), TO
THE COMPANY’S KNOWLEDGE (I) NONE OF THE RIGHTS OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR FOREIGN SUBSIDIARIES IN ITS INTELLECTUAL PROPERTY HAVE EXPIRED
OR TERMINATED, OR ARE EXPECTED TO EXPIRE OR TERMINATE WITHIN FIVE (5) YEARS FROM
THE DATE OF THIS AGREEMENT, EXCEPT TO THE EXTENT SUCH TERMINATION COULD NOT AND
COULD NOT REASONABLY BE EXPECTED, INDIVIDUALLY OR IN THE AGGREGATE, TO HAVE A
MATERIAL ADVERSE EFFECT, (II) THERE HAS BEEN NO INFRINGEMENT BY THE COMPANY OR
ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES OR ANY OF THE COMPANY’S OR ANY
OF ITS SUBSIDIARIES’ OR FOREIGN SUBSIDIARIES’ LICENSORS OR LICENSEES OF ANY
INTELLECTUAL PROPERTY RIGHTS OF OTHERS, (III) THERE HAS BEEN NO INFRINGEMENT BY
ANY THIRD PARTIES OF ANY INTELLECTUAL PROPERTY OWNED OR LICENSED BY THE COMPANY
OR ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES, OR OF ANY DEVELOPMENT OF
SIMILAR OR IDENTICAL TRADE SECRETS OR TECHNICAL INFORMATION BY OTHERS,
(IV) THERE IS NO CLAIM, ACTION OR PROCEEDING AGAINST OR BEING THREATENED
AGAINST, THE COMPANY, ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES OR ANY OF
THEIR RESPECTIVE LICENSORS REGARDING THEIR INTELLECTUAL PROPERTY OR INFRINGEMENT
OF OTHER INTELLECTUAL PROPERTY RIGHTS AND THERE IS NO CLAIM, ACTION OR
PROCEEDING AGAINST OR BEING THREATENED AGAINST THE COMPANY, ANY OF ITS
SUBSIDIARIES OR FOREIGN SUBSIDIARIES OR ANY OF THEIR RESPECTIVE LICENSORS
REGARDING THEIR INTELLECTUAL PROPERTY OR INFRINGEMENT OF OTHER INTELLECTUAL
PROPERTY RIGHTS, (V) THERE ARE NO FACTS OR CIRCUMSTANCES THAT COULD REASONABLY
BE EXPECTED TO GIVE RISE TO ANY OF THE FOREGOING, (VI) THERE IS NO PATENT OR
PATENT APPLICATION WHICH CONTAINS CLAIMS THAT INTERFERE WITH THE ISSUED OR
PENDING CLAIMS OF ANY OF THE INTELLECTUAL PROPERTY OWNED OR LICENSED BY THE
COMPANY OR ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES, AND (VII) NONE OF
THE TECHNOLOGY EMPLOYED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES OR FOREIGN
SUBSIDIARIES HAS BEEN OBTAINED OR IS BEING USED BY THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR FOREIGN SUBSIDIARIES IN VIOLATION OF ANY MATERIAL CONTRACTUAL
OBLIGATION BINDING ON THE COMPANY OR ANY OF ITS SUBSIDIARIES OR FOREIGN
SUBSIDIARIES OR IS BEING USED BY ANY OF THE OFFICERS, DIRECTORS OR EMPLOYEES OF
THE COMPANY OR OF ITS SUBSIDIARIES OR FOREIGN

 

15

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

 

SUBSIDIARIES ON BEHALF OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR FOREIGN
SUBSIDIARIES IN VIOLATION OF THE RIGHTS OF ANY PERSON OR PERSONS.  THE COMPANY
AND ITS SUBSIDIARIES AND, TO THE COMPANY’S KNOWLEDGE, ITS FOREIGN SUBSIDIARIES,
AS APPLICABLE, HAVE TAKEN COMMERCIALLY REASONABLE SECURITY MEASURES TO PROTECT
THE SECRECY, CONFIDENTIALITY AND THE VALUE OF ALL OF THEIR MATERIAL INTELLECTUAL
PROPERTY.

 

P.                                      ENVIRONMENTAL LAWS.  EXCEPT AS SET FORTH
ON SCHEDULE 3(P), EACH OF THE COMPANY AND ITS SUBSIDIARIES AND, TO THE COMPANY’S
KNOWLEDGE, ITS FOREIGN SUBSIDIARIES (I) IS, AND HAS AT ALL TIMES BEEN, IN
COMPLIANCE IN ALL MATERIAL RESPECTS WITH ANY AND ALL, AND HAS NOT VIOLATED ANY,
ENVIRONMENTAL LAWS (AS DEFINED BELOW), (II) HAS NO, AND HAS NEVER HAD ANY,
LIABILITY FOR FAILURE TO COMPLY WITH ANY ENVIRONMENTAL LAW, (III) HAS RECEIVED
ALL PERMITS, LICENSES OR OTHER APPROVALS REQUIRED OF IT UNDER APPLICABLE
ENVIRONMENTAL LAWS TO CONDUCT ITS BUSINESS AS PRESENTLY CONDUCTED, AND (IV) IS
IN COMPLIANCE WITH ALL TERMS AND CONDITIONS OF ANY SUCH PERMIT, LICENSE OR
APPROVAL.

 

Q.                                      INSURANCE.  THE COMPANY AND EACH OF ITS
SUBSIDIARIES, AND, TO THE COMPANY’S KNOWLEDGE, EACH OF ITS FOREIGN SUBSIDIARIES,
IF AND AS APPLICABLE, ARE INSURED BY INSURERS OF RECOGNIZED FINANCIAL
RESPONSIBILITY AGAINST SUCH LOSSES AND RISKS AND IN SUCH AMOUNTS AS IS PRUDENT
AND CUSTOMARY IN THE BUSINESSES IN WHICH THE COMPANY AND ITS SUBSIDIARIES AND
ITS FOREIGN SUBSIDIARIES ARE ENGAGED.  ALL OF THE COMPANY’S INSURANCE POLICIES
ARE IN FULL FORCE AND EFFECT AND ARE VALID, OUTSTANDING AND ENFORCEABLE, AND ALL
PREMIUMS WITH RESPECT THERETO ARE CURRENTLY PAID AND NO BASIS EXISTS FOR EARLY
TERMINATION OF ANY OF SUCH INSURANCE POLICIES ON THE PART OF THE INSURER
THEREUNDER.  NONE OF COMPANY OR ITS SUBSIDIARIES OR, TO THE COMPANY’S KNOWLEDGE,
ITS FOREIGN SUBSIDIARIES, IF APPLICABLE, HAS FAILED TO GIVE ANY NOTICE OR
PRESENT ANY CLAIM UNDER ANY SUCH INSURANCE POLICIES IN DUE AND TIMELY FASHION,
AND THERE ARE NO OUTSTANDING UNPAID CLAIMS UNDER ANY SUCH INSURANCE POLICIES. 
NEITHER THE COMPANY NOR ANY SUCH SUBSIDIARY, OR, TO THE COMPANY’S KNOWLEDGE, ANY
FOREIGN SUBSIDIARY HAS BEEN REFUSED ANY INSURANCE COVERAGE SOUGHT OR APPLIED
FOR, AND NEITHER THE COMPANY NOR ANY SUCH SUBSIDIARY, OR, TO THE COMPANY’S
KNOWLEDGE, ANY SUCH FOREIGN 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 AT A COST THAT WOULD NOT REASONABLY BE EXPECTED TO
RESULT IN A MATERIAL INCREASE IN THE COMPANY’S CURRENT COST OF SUCH INSURANCE.

 

R.                                         REGULATORY PERMITS.  THE COMPANY AND
ITS SUBSIDIARIES AND, TO THE COMPANY’S KNOWLEDGE, ITS FOREIGN SUBSIDIARIES, IF
APPLICABLE, POSSESS ALL CERTIFICATES, AUTHORIZATIONS, APPROVALS, LICENSES AND
PERMITS ISSUED BY THE APPROPRIATE FEDERAL, STATE OR FOREIGN REGULATORY
AUTHORITIES NECESSARY TO CONDUCT THEIR RESPECTIVE BUSINESSES AS CONDUCTED AT THE
TIME THIS REPRESENTATION IS MADE (“PERMITS”), AND NEITHER THE COMPANY NOR ANY
SUCH SUBSIDIARY OR, TO THE COMPANY’S KNOWLEDGE, ANY SUCH FOREIGN SUBSIDIARY HAS
RECEIVED ANY NOTICE OF PROCEEDINGS RELATING TO THE REVOCATION OR MODIFICATION OF
ANY SUCH PERMIT.  THE COMPANY AND ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES HAVE
NO KNOWLEDGE THAT THEY WILL NOT BE ABLE TO OBTAIN NECESSARY PERMITS AS AND WHEN
NECESSARY TO ENABLE THE COMPANY AND ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES TO
CONDUCT THEIR RESPECTIVE BUSINESSES.

 

S.                                       PRINCIPAL MARKET.  THE COMPANY IS NOT
IN VIOLATION OF ANY OF THE RULES, REGULATIONS OR REQUIREMENTS OF THE OTC
BULLETIN BOARD (THE “PRINCIPAL MARKET”; PROVIDED

 

16

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

 

HOWEVER, THAT, IF AFTER THE DATE OF THIS AGREEMENT THE COMMON STOCK IS LISTED ON
A NATIONAL SECURITIES EXCHANGE OR AUTOMATED QUOTATION SYSTEM, THE “PRINCIPAL
MARKET” SHALL MEAN SUCH NATIONAL SECURITIES EXCHANGE) AND HAS NO KNOWLEDGE OF
ANY FACTS OR CIRCUMSTANCES WHICH WOULD REASONABLY LEAD TO SUSPENSION OR
TERMINATION OF THE TRADING OF THE COMMON STOCK ON THE PRINCIPAL MARKET IN THE
FORESEEABLE FUTURE.  SINCE DECEMBER 31, 2007, (I) THE COMPANY’S COMMON STOCK HAS
BEEN QUOTED ON THE PRINCIPAL MARKET, (II) TRADING IN THE COMMON STOCK HAS NOT
BEEN SUSPENDED BY THE SEC OR ON THE PRINCIPAL MARKET AND (III) THE COMPANY HAS
RECEIVED NO COMMUNICATION, WRITTEN OR ORAL, FROM THE SEC OR THE PRINCIPAL MARKET
REGARDING THE SUSPENSION OR TERMINATION OF THE TRADING OF THE COMMON STOCK ON
THE PRINCIPAL MARKET.

 

T.                                         TAX STATUS.  THE  COMPANY AND EACH OF
ITS SUBSIDIARIES AND, TO THE COMPANY’S KNOWLEDGE, EACH OF ITS FOREIGN
SUBSIDIARIES, AS APPLICABLE, (I) HAS MADE OR FILED ALL FEDERAL, STATE AND
FOREIGN INCOME AND ALL OTHER TAX RETURNS, REPORTS AND DECLARATIONS REQUIRED BY
ANY JURISDICTION TO WHICH IT IS SUBJECT, (II) HAS PAID ALL TAXES AND OTHER
GOVERNMENTAL ASSESSMENTS AND CHARGES SHOWN OR DETERMINED TO BE DUE ON SUCH
RETURNS, REPORTS AND DECLARATIONS, EXCEPT THOSE BEING CONTESTED IN GOOD FAITH
AND FOR WHICH THE COMPANY HAS MADE APPROPRIATE RESERVES ON ITS BOOKS, AND
(III) HAS SET ASIDE ON ITS BOOKS PROVISIONS REASONABLY ADEQUATE FOR THE PAYMENT
OF ALL TAXES FOR PERIODS SUBSEQUENT TO THE PERIODS TO WHICH SUCH RETURNS,
REPORTS OR DECLARATIONS (REFERRED TO IN CLAUSE (I) ABOVE) APPLY.  THERE ARE NO
UNPAID TAXES CLAIMED IN WRITING TO BE DUE FROM THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES BY
THE TAXING AUTHORITY OF ANY JURISDICTION WHICH, INDIVIDUALLY OR IN THE
AGGREGATE, IS EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT, AND THERE IS NO BASIS
FOR ANY SUCH CLAIM.  NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES IS A
“UNITED STATES REAL PROPERTY HOLDING CORPORATION” (“USRPHC”) AS THAT TERM IS
DEFINED IN SECTION 897(C)(2) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
AND THE TREASURY REGULATIONS PROMULGATED THEREUNDER.

 

U.                                      TRANSACTIONS WITH AFFILIATES.  EXCEPT AS
SET FORTH ON SCHEDULE 3(U) OR IN THE SEC DOCUMENTS, NO RELATED PARTY OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES, OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS
FOREIGN SUBSIDIARIES, NOR ANY AFFILIATE THEREOF, IS PRESENTLY, HAS BEEN WITHIN
THE PAST THREE YEARS, OR WILL BE AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, A PARTY TO ANY TRANSACTION,
CONTRACT, AGREEMENT, INSTRUMENT, COMMITMENT, UNDERSTANDING OR OTHER ARRANGEMENT
OR RELATIONSHIP WITH THE COMPANY OR ANY OF ITS SUBSIDIARIES OR, TO THE COMPANY’S
KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES, WHETHER FOR THE FURNISHING OF
SERVICES TO OR BY, PROVIDING FOR RENTAL OF REAL OR PERSONAL PROPERTY TO OR FROM,
OR OTHERWISE REQUIRING PAYMENTS OR CONSIDERATION TO OR FROM ANY SUCH RELATED
PARTY.  NO RELATED PARTY OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR, TO THE
COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES, OR ANY OF THEIR RESPECTIVE
AFFILIATES, HAS ANY DIRECT OR INDIRECT OWNERSHIP INTEREST IN ANY PERSON (OTHER
THAN OWNERSHIP OF LESS THAN 2% OF THE OUTSTANDING COMMON STOCK OF A PUBLICLY
TRADED CORPORATION) IN WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES OR, TO THE
COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES HAS ANY DIRECT OR INDIRECT
OWNERSHIP INTEREST OR WITH WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES OR, TO
THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES COMPETES OR HAS A
BUSINESS RELATIONSHIP.

 

V.                                      APPLICATION OF TAKEOVER PROTECTIONS;
RIGHTS AGREEMENT.  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, OR OTHER SIMILAR ANTI-TAKEOVER PROVISION
UNDER THE CERTIFICATE OF INCORPORATION OR ANY CERTIFICATES OF DESIGNATIONS OR
THE LAWS OF THE STATE

 

17

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

 

OF DELAWARE TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE COMPANY’S
ISSUANCE OF THE SECURITIES IN ACCORDANCE WITH THE TERMS HEREOF AND ANY BUYER’S
OWNERSHIP AND VOTING (IN THE CASE OF THE SHARES) OF THE SECURITIES.  THE COMPANY
HAS NOT ADOPTED A STOCKHOLDER RIGHTS PLAN OR SIMILAR ARRANGEMENT RELATING TO
ACCUMULATIONS OF BENEFICIAL OWNERSHIP OF COMMON STOCK OR A CHANGE IN CONTROL OF
THE COMPANY.

 

W.                                    FOREIGN CORRUPT PRACTICES.  NEITHER THE
COMPANY, NOR ANY OF ITS SUBSIDIARIES, NOR, TO THE COMPANY’S KNOWLEDGE, ANY OF
ITS FOREIGN SUBSIDIARIES, NOR ANY DIRECTOR, OFFICER, AGENT, EMPLOYEE OR OTHER
PERSON ACTING ON BEHALF OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, NOR, TO THE
COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES HAS, IN THE COURSE OF ITS
ACTIONS FOR, OR ON BEHALF OF, THE COMPANY, USED ANY CORPORATE FUNDS FOR ANY
UNLAWFUL CONTRIBUTION, GIFT, ENTERTAINMENT OR OTHER UNLAWFUL EXPENSES RELATING
TO POLITICAL ACTIVITY; MADE ANY DIRECT OR INDIRECT UNLAWFUL PAYMENT TO ANY
FOREIGN OR DOMESTIC GOVERNMENT OFFICIAL OR EMPLOYEE FROM CORPORATE FUNDS;
VIOLATED OR IS IN VIOLATION OF ANY PROVISION OF THE U.S. FOREIGN CORRUPT
PRACTICES ACT OF 1977, AS AMENDED; OR MADE ANY UNLAWFUL BRIBE, REBATE, PAYOFF,
INFLUENCE PAYMENT, KICKBACK OR OTHER UNLAWFUL PAYMENT TO ANY FOREIGN OR DOMESTIC
GOVERNMENT OFFICIAL OR EMPLOYEE.

 

X.                                        OUTSTANDING INDEBTEDNESS; LIENS.
EXCEPT FOR THE PRIOR NOTES AND AS SET FORTH ON SCHEDULE 3(X), PAYMENTS OF
PRINCIPAL AND OTHER PAYMENTS DUE UNDER THE NOTES WILL, UPON ISSUANCE AT THE
CLOSING, RANK SENIOR TO ALL OTHER INDEBTEDNESS OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES, OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES
(IN RIGHT OF PAYMENT, WHETHER WITH RESPECT OF PAYMENT OF REDEMPTIONS, INTEREST
OR DAMAGES OR UPON LIQUIDATION OR DISSOLUTION OR OTHERWISE) AND, BY VIRTUE OF
THEIR SECURED POSITION, TO ALL TRADE ACCOUNT PAYABLES OF THE COMPANY OR ANY OF
ITS SUBSIDIARIES, OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN
SUBSIDIARIES.  THE NOTES WILL, UPON ISSUANCE AT THE CLOSING, RANK PARI PASSU
WITH THE PRIOR NOTES IN RIGHT OF PAYMENT, WHETHER WITH RESPECT OF PAYMENT OF
REDEMPTIONS, INTEREST OR DAMAGES OR UPON LIQUIDATION OR DISSOLUTION OR
OTHERWISE.  EXCEPT FOR THE PRIOR NOTES AND AS SET FORTH ON SCHEDULE 3(X),
(I) NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES, NOR, TO THE COMPANY’S
KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES HAS, AND UPON CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND BY THE OTHER TRANSACTION DOCUMENTS WILL NOT
HAVE, ANY OUTSTANDING INDEBTEDNESS OTHER THAN PERMITTED INDEBTEDNESS (AS DEFINED
BELOW), (II) THERE ARE NO, AND UPON CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY AND BY THE OTHER TRANSACTION DOCUMENTS THERE WILL NOT BE
ANY, LIENS ON ANY OF THE ASSETS OF THE COMPANY AND ITS SUBSIDIARIES OTHER THAN
THE PERMITTED LIENS AND THAT CREATED BY THE SECURITY AGREEMENT, AND (III) THERE
ARE NO, AND UPON CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY AND BY THE
OTHER TRANSACTION DOCUMENTS THERE WILL NOT BE ANY, FINANCING STATEMENTS SECURING
OBLIGATIONS OF ANY AMOUNTS FILED AGAINST THE COMPANY OR ANY OF ITS SUBSIDIARIES,
OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES OR ANY OF THEIR
RESPECTIVE ASSETS, OTHER THAN UNDER THE SECURITY AGREEMENT.

 

Y.                                      REAL PROPERTY.  NEITHER THE COMPANY NOR
ANY OF ITS SUBSIDIARIES, NOR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN
SUBSIDIARIES OWNS ANY REAL PROPERTY.  SCHEDULE 3(Y) CONTAINS A COMPLETE AND
CORRECT LIST OF ALL THE REAL PROPERTY, FACILITIES AND FIXTURES THAT (I) ARE
LEASED OR, IN THE CASE OF FIXTURES, OTHERWISE OWNED OR POSSESSED BY THE COMPANY
OR ANY OF ITS SUBSIDIARIES, OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN
SUBSIDIARIES, (II) IN CONNECTION WITH WHICH THE COMPANY OR ANY OF ITS
SUBSIDIARIES, OR, TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES
HAS ENTERED INTO AN OPTION AGREEMENT, PARTICIPATION AGREEMENT OR ACQUISITION

 

18

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

 

AGREEMENT OR (III) THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR, TO THE COMPANY’S
KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES HAS AGREED TO LEASE OR OTHERWISE
ACQUIRE OR MAY BE OBLIGATED TO LEASE OR OTHERWISE ACQUIRE IN CONNECTION WITH THE
CONDUCT OF ITS BUSINESS (COLLECTIVELY, INCLUDING ANY OF THE FOREGOING ACQUIRED
AFTER THE DATE OF THIS AGREEMENT, THE “REAL PROPERTY”), WHICH LIST IDENTIFIES
ALL OF THE REAL PROPERTY AND SPECIFIES WHICH OF THE COMPANY AND ITS
SUBSIDIARIES, AND, TO THE COMPANY’S KNOWLEDGE, ITS FOREIGN SUBSIDIARIES LEASES,
OWNS OR POSSESSES EACH ITEM OF THE REAL PROPERTY.  SCHEDULE 3(Y) ALSO CONTAINS A
COMPLETE AND CORRECT LIST OF ALL LEASES AND OTHER AGREEMENTS WITH RESPECT TO
WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR, TO THE COMPANY’S KNOWLEDGE,
ANY OF ITS FOREIGN SUBSIDIARIES IS A PARTY OR OTHERWISE BOUND OR AFFECTED WITH
RESPECT TO THE REAL PROPERTY, EXCEPT MASTER LEASES AFFILIATED WITH ANY SUB
LEASES, EASEMENTS, RIGHTS OF WAY, ACCESS AGREEMENTS, SURFACE DAMAGE AGREEMENTS,
SURFACE USE AGREEMENTS OR SIMILAR AGREEMENTS THAT PERTAIN TO REAL PROPERTY THAT
IS CONTAINED WHOLLY WITHIN THE BOUNDARIES OF ANY LEASED REAL PROPERTY OTHERWISE
DESCRIBED ON SCHEDULE 3(Y) (THE “REAL PROPERTY LEASES”).  EXCEPT AS SET FORTH IN
SCHEDULE 3(Y), ALL OF THE REAL PROPERTY LEASES ARE VALID AND IN FULL FORCE AND
EFFECT AND ARE ENFORCEABLE AGAINST ALL PARTIES THERETO.  EXCEPT AS SET FORTH IN
SCHEDULE 3(Y), NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES, NOR, TO THE
COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES NOR, TO THE COMPANY’S
KNOWLEDGE, ANY OTHER PARTY THERETO IS IN DEFAULT IN ANY MATERIAL RESPECT UNDER
ANY OF SUCH REAL PROPERTY LEASES AND NO EVENT HAS OCCURRED WHICH WITH THE GIVING
OF NOTICE OR THE PASSAGE OF TIME OR BOTH WOULD CONSTITUTE A DEFAULT UNDER, OR
OTHERWISE GIVE ANY PARTY THE RIGHT TO TERMINATE, ANY OF SUCH REAL PROPERTY
LEASES, OR COULD ADVERSELY AFFECT THE COMPANY’S OR ANY OF ITS SUBSIDIARIES’, OR,
TO THE COMPANY’S KNOWLEDGE, ANY OF ITS FOREIGN SUBSIDIARIES’ INTEREST IN AND
TITLE TO THE REAL PROPERTY SUBJECT TO ANY OF SUCH REAL PROPERTY LEASES.  NO REAL
PROPERTY LEASE IS SUBJECT TO TERMINATION, MODIFICATION OR ACCELERATION AS A
RESULT OF THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Z.                                        TANGIBLE ASSETS.  THE COMPANY AND ITS
SUBSIDIARIES AND, TO THE COMPANY’S KNOWLEDGE, ITS FOREIGN SUBSIDIARIES HAVE GOOD
AND MARKETABLE TITLE TO ALL OF THE TANGIBLE ASSETS THAT ARE MATERIAL TO THEIR
BUSINESSES (THE “ASSETS”), IN EACH CASE FREE AND CLEAR OF ANY LIEN, OTHER THAN
PERMITTED LIENS. THE ASSETS INCLUDE ALL TANGIBLE ASSETS NECESSARY FOR THE
CONDUCT OF THE COMPANY’S AND ITS SUBSIDIARIES’ AND, TO THE COMPANY’S KNOWLEDGE,
ITS FOREIGN SUBSIDIARIES’ BUSINESSES AS PRESENTLY PROPOSED TO BE CONDUCTED.  THE
ASSETS THAT ARE FACILITIES, FIXTURES, EQUIPMENT, AND OTHER PERSONAL PROPERTY
HAVE BEEN MAINTAINED IN ACCORDANCE WITH NORMAL INDUSTRY PRACTICE, AND ARE IN
GOOD OPERATING CONDITION AND REPAIR (SUBJECT TO NORMAL WEAR AND TEAR), AND ARE
SUITABLE FOR THE PURPOSES FOR WHICH THEY ARE NOW USED AND PROPOSED TO BE USED. 
THERE ARE NO EXISTING AGREEMENTS, OPTIONS, COMMITMENTS OR RIGHTS WITH, OF OR TO
ANY PERSON TO ACQUIRE ANY SUCH ASSETS, OR ANY INTERESTS THEREIN.

 

AA.                                 NO MATERIALLY ADVERSE CONTRACTS, ETC.  THE
COMPANY IS NOT SUBJECT TO ANY CHARTER, CONTRACT, AGREEMENT, INSTRUMENT,
CORPORATE OR OTHER LEGAL RESTRICTION, OR ANY JUDGMENT, DECREE, ORDER, RULE,
REGULATION OR OTHER LAW THAT HAS, HAS HAD, OR COULD REASONABLY BE EXPECTED IN
THE FUTURE TO HAVE, A MATERIAL ADVERSE EFFECT.

 

BB.                               INVESTMENT COMPANY.  THE COMPANY IS NOT, AND
UPON THE CLOSING WILL NOT BE, AN “INVESTMENT COMPANY,” A COMPANY CONTROLLED BY
AN “INVESTMENT COMPANY,” OR AN “AFFILIATED PERSON” OF, OR “PROMOTER” OR
“PRINCIPAL UNDERWRITER” FOR, AN “INVESTMENT COMPANY,” AS SUCH TERMS ARE DEFINED
IN THE INVESTMENT COMPANY ACT.

 

19

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

 

CC.                                 STOCK OPTIONS.  EXCEPT AS SET FORTH ON
SCHEDULE 3(CC), EVERY OPTION ISSUED BY THE COMPANY PURSUANT TO THE EQUITY PLANS
(I) HAS (OR, IF NO LONGER OUTSTANDING, HAD), WITH RESPECT TO EACH SHARE OF
COMMON STOCK INTO WHICH IT IS CONVERTIBLE OR FOR WHICH IT IS EXERCISABLE OR
EXCHANGEABLE, AN EXERCISE PRICE EQUAL TO OR GREATER THAN THE FAIR MARKET VALUE
PER SHARE OF COMMON STOCK ON THE DATE OF GRANT OF SUCH OPTION, (II) WAS ISSUED
IN COMPLIANCE WITH THE TERMS OF THE PLAN UNDER WHICH IT WAS ISSUED AND IN
COMPLIANCE WITH APPLICABLE LAWS, RULES AND REGULATIONS, INCLUDING THE RULES AND
REGULATIONS OF THE PRINCIPAL MARKET, AND (III) HAS BEEN ACCOUNTED FOR IN
ACCORDANCE WITH GAAP AND OTHERWISE BEEN DISCLOSED ACCURATELY AND COMPLETELY AND
IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES LAWS, INCLUDING RULE 402
OF REGULATION S-K PROMULGATED BY THE SEC, AND THE COMPANY HAS PAID, OR PROPERLY
RESERVED FOR, ALL TAXES PAYABLE WITH RESPECT TO EACH SUCH OPTION (INCLUDING WITH
RESPECT TO THE ISSUANCE AND EXERCISE THEREOF), AND HAS NOT DEDUCTED ANY AMOUNTS
FROM ITS TAXABLE INCOME THAT IT IS NOT ENTITLED TO DEDUCT WITH RESPECT TO ANY
SUCH STOCK OPTION (INCLUDING THE ISSUANCE AND EXERCISE THEREOF).

 

DD.                               CLINICAL SERVICES.  THE CONTRACT RESEARCH
SERVICES PROVIDED BY EACH OF THE COMPANY AND ITS SUBSIDIARIES AND, TO THE
COMPANY’S KNOWLEDGE, ITS FOREIGN SUBSIDIARIES IS PROVIDED IN COMPLIANCE IN ALL
MATERIAL RESPECTS WITH ALL APPLICABLE LAWS, INCLUDING, WITHOUT LIMITATION, ALL
APPLICABLE FDA RULES, REGULATIONS AND REQUIREMENTS AND ALL RULES, REGULATIONS
AND REQUIREMENTS OF COMPARABLE FOREIGN GOVERNMENTAL ENTITIES.

 

4.                                       AFFIRMATIVE COVENANTS.

 

A.                                       BEST EFFORTS.  EACH PARTY SHALL USE ITS
REASONABLE BEST EFFORTS TO TIMELY SATISFY EACH OF THE CONDITIONS TO BE SATISFIED
BY IT AS PROVIDED IN SECTIONS 7 AND 8 OF THIS AGREEMENT.

 

B.                                      FORM D AND BLUE SKY.  THE COMPANY AGREES
TO TIMELY FILE A FORM D WITH RESPECT TO THE SECURITIES AS REQUIRED UNDER
REGULATION D.  THE COMPANY SHALL, ON OR BEFORE THE CLOSING DATE, 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 BUYERS AT THE
CLOSING TO OCCUR ON THE CLOSING DATE PURSUANT TO THIS AGREEMENT UNDER APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES, AND SHALL PROVIDE TO EACH
BUYER EVIDENCE OF ANY SUCH ACTION SO TAKEN ON OR PRIOR TO THE CLOSING DATE.  THE
COMPANY SHALL MAKE ALL FILINGS AND REPORTS RELATING TO THE OFFER AND SALE OF THE
SECURITIES REQUIRED UNDER APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES.

 

C.                                       REPORTING STATUS.  DURING THE PERIOD
COMMENCING ON THE DATE OF THIS AGREEMENT AND ENDING ON THE FIRST DATE AFTER THE
CLOSING DATE THAT IS THE LATEST OF (I) THE DATE THAT IS ONE YEAR AFTER THE DATE
AS OF WHICH THE INVESTORS (AS THAT TERM IS DEFINED IN SECTION 4(J)) MAY SELL ALL
OF THE SHARES WITHOUT RESTRICTION PURSUANT TO RULE 144 PROMULGATED UNDER THE
1933 ACT (OR SUCCESSOR THERETO), (II) THE DATE ON WHICH NO NOTES REMAIN
OUTSTANDING, (III) THE DATE THAT IS THE LAST DAY ON WHICH ANY SHARES MAY BE
ISSUED HEREUNDER, AND (IV) THE DATE ON WHICH THE SECURITY AGREEMENT HAS BEEN
TERMINATED (THE PERIOD ENDING ON SUCH LATEST DATE, THE “REPORTING PERIOD”), THE
COMPANY SHALL TIMELY FILE ALL REPORTS REQUIRED TO BE FILED WITH THE SEC PURSUANT
TO THE 1934 ACT, AND THE COMPANY SHALL NOT TERMINATE ITS STATUS AS AN ISSUER
REQUIRED TO FILE REPORTS UNDER THE 1934 ACT EVEN IF THE SECURITIES LAWS
OTHERWISE WOULD PERMIT SUCH TERMINATION.

 

20

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

 

D.                                      USE OF PROCEEDS.  THE COMPANY WILL USE
THE PROCEEDS FROM THE SALE OF THE NOTES AND THE SHARES FIRST, TO PAY EXPENSES
AND COMMISSIONS RELATED TO THE SALE OF THE SECURITIES, AND SECOND, FOR GENERAL
WORKING CAPITAL NEEDS.

 

E.                                       FINANCIAL INFORMATION.  THE COMPANY
AGREES TO SEND THE FOLLOWING TO EACH INVESTOR (AS DEFINED IN SECTION 4(J))
DURING THE REPORTING PERIOD (I) UNLESS THE FOLLOWING ARE FILED WITH THE SEC
THROUGH EDGAR AND ARE IMMEDIATELY AVAILABLE TO THE PUBLIC THROUGH THE EDGAR
SYSTEM, WITHIN ONE BUSINESS DAY AFTER THE FILING THEREOF WITH THE SEC, A COPY OF
EACH OF ITS QUARTERLY REPORTS ON FORM 10-QSB OR 10-Q AND ANNUAL REPORTS ON
FORM 10-KSB OR 10-K, AS THE CASE MAY BE (EACH, A “PERIODIC REPORT”), CURRENT
REPORTS ON FORM 8-K, REGISTRATION STATEMENTS (OTHER THAN ON FORM S-8) AND
AMENDMENTS AND SUPPLEMENTS TO EACH OF THE FOREGOING, (II) UNLESS IMMEDIATELY
AVAILABLE THROUGH BLOOMBERG OR OTHER NATIONALLY RECOGNIZED MEDIA OUTLET,
FACSIMILE COPIES OF ALL PRESS RELEASES ISSUED BY THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR FOREIGN SUBSIDIARIES, CONTEMPORANEOUSLY WITH THE ISSUANCE
THEREOF, AND (III) COPIES OF ANY NOTICES AND OTHER INFORMATION MADE AVAILABLE OR
GIVEN TO THE STOCKHOLDERS OF THE COMPANY GENERALLY, CONTEMPORANEOUSLY WITH THE
MAKING AVAILABLE OR GIVING THEREOF TO THE STOCKHOLDERS.

 

F.                                         INTERNAL ACCOUNTING CONTROLS.  DURING
THE REPORTING PERIOD, THE COMPANY SHALL, AND, SHALL CAUSE EACH OF ITS
SUBSIDIARIES AND FOREIGN SUBSIDIARIES TO:

 

(I)                                     AT ALL TIMES KEEP BOOKS, RECORDS AND
ACCOUNTS WITH RESPECT TO ALL OF SUCH PERSON’S BUSINESS ACTIVITIES, IN ACCORDANCE
WITH SOUND ACCOUNTING PRACTICES AND GAAP, OR WITH RESPECT TO THE FOREIGN
SUBSIDIARIES, THE APPLICABLE ACCOUNTING STANDARDS, CONSISTENTLY APPLIED;

 

(II)                                  CONTINUE TO UNDERTAKE THE REMEDIATION
ACTIVITIES DISCLOSED IN THE SEC DOCUMENTS SO THAT THE COMPANY IS ULTIMATELY ABLE
TO MAINTAIN A SYSTEM OF INTERNAL ACCOUNTING CONTROLS SUFFICIENT TO PROVIDE
REASONABLE ASSURANCE THAT (A) TRANSACTIONS ARE EXECUTED IN ACCORDANCE WITH
MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATIONS, (B) TRANSACTIONS ARE RECORDED
AS NECESSARY TO PERMIT PREPARATION OF FINANCIAL STATEMENTS IN CONFORMITY WITH
GAAP AND TO MAINTAIN ASSET AND LIABILITY ACCOUNTABILITY, (C) ACCESS TO ASSETS OR
INCURRENCE OF LIABILITY IS PERMITTED ONLY IN ACCORDANCE WITH MANAGEMENT’S
GENERAL OR SPECIFIC AUTHORIZATION AND (D) THE RECORDED ACCOUNTABILITY FOR ASSETS
AND LIABILITIES IS COMPARED WITH THE EXISTING ASSETS AND LIABILITIES AT
REASONABLE INTERVALS AND APPROPRIATE ACTION IS TAKEN WITH RESPECT TO ANY
DIFFERENCES;

 

(III)                               TIMELY FILE AND MAKE PUBLICLY AVAILABLE ON
THE SEC’S EDGAR SYSTEM, ALL CERTIFICATIONS AND STATEMENTS REQUIRED BY
(A) RULE 13A-14 OR RULE 15D-14 UNDER THE 1934 ACT AND (B) SECTION 906 OF
SARBANES OXLEY WITH RESPECT TO ANY PERIODIC REPORTS;

 

(IV)                              CONTINUE TO UNDERTAKE THE REMEDIATION
ACTIVITIES DISCLOSED IN THE SEC DOCUMENTS SO THAT THE COMPANY IS ULTIMATELY ABLE
TO MAINTAIN DISCLOSURE CONTROLS AND PROCEDURES REQUIRED BY RULE 13A-15 OR
RULE 15D-15 UNDER THE 1934 ACT, AND TO CAUSE SUCH DISCLOSURE CONTROLS AND
PROCEDURES TO BE EFFECTIVE AT ALL TIMES TO ENSURE THAT THE INFORMATION REQUIRED
TO BE DISCLOSED BY THE COMPANY IN THE REPORTS THAT IT FILES WITH OR SUBMITS TO
THE SEC (A) IS RECORDED, PROCESSED, SUMMARIZED AND REPORTED ACCURATELY

 

21

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

 

WITHIN THE TIME PERIODS SPECIFIED IN THE SEC’S RULES AND FORMS AND (B) IS
ACCUMULATED AND COMMUNICATED TO THE COMPANY’S MANAGEMENT, INCLUDING ITS
PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER, AS APPROPRIATE TO
ALLOW TIMELY DECISIONS REGARDING REQUIRED DISCLOSURE; AND

 

(V)                                 CONTINUE TO UNDERTAKE THE REMEDIATION
ACTIVITIES DISCLOSED IN THE SEC DOCUMENTS SO THAT THE COMPANY IS ULTIMATELY ABLE
TO MAINTAIN INTERNAL CONTROL OVER FINANCIAL REPORTING REQUIRED BY RULE 13A-14 OR
RULE 15D-14 UNDER THE 1934 ACT, AND TO CAUSE SUCH INTERNAL CONTROL OVER
FINANCIAL REPORTING TO BE EFFECTIVE AT ALL TIMES AND NOT CONTAIN ANY MATERIAL
WEAKNESSES.

 

G.                                      LISTING.  DURING THE REPORTING PERIOD,
THE COMPANY SHALL USE ITS COMMERCIALLY REASONABLE EFFORTS TO PROMPTLY SECURE THE
LISTING OF ALL OF THE SHARES UPON EACH NATIONAL SECURITIES EXCHANGE OR AUTOMATED
QUOTATION SYSTEM, UPON WHICH SHARES OF COMMON STOCK ARE THEN LISTED (SUBJECT TO
OFFICIAL NOTICE OF ISSUANCE) OR QUOTED AND SHALL MAINTAIN, SO LONG AS ANY OTHER
SHARES OF COMMON STOCK SHALL BE SO LISTED, SUCH LISTING OF ALL SHARES FROM TIME
TO TIME ISSUABLE UNDER THE TERMS OF THE TRANSACTION DOCUMENTS. SO LONG AS ANY
SECURITIES ARE OUTSTANDING, THE COMPANY SHALL MAINTAIN THE COMMON STOCK’S
LISTING ON THE PRINCIPAL MARKET AND SHALL NOT TAKE ANY ACTION THAT WOULD
REASONABLY BE EXPECTED TO RESULT IN THE SUSPENSION OR TERMINATION OF TRADING OF
THE COMMON STOCK ON THE PRINCIPAL MARKET.  THE COMPANY SHALL PAY ALL FEES AND
EXPENSES IN CONNECTION WITH SATISFYING ITS OBLIGATIONS UNDER THIS SECTION 4(G).

 

H.                                      EXPENSES.  THE COMPANY SHALL REIMBURSE
EACH BUYER AN AMOUNT EQUAL TO THE AMOUNT OF ALL OF SUCH BUYER’S REASONABLE
LEGAL, DUE DILIGENCE AND OTHER EXPENSES INCURRED IN CONNECTION WITH THE
TRANSACTION DOCUMENTS.  IN ADDITION, IN THE EVENT ANY BUYER’S NOTE IS
OUTSTANDING ON THE FIRST ANNIVERSARY OF THE CLOSING DATE, THE COMPANY SHALL PAY
SUCH BUYER A TRANSACTION FEE IN AN AMOUNT EQUAL TO 2.0% OF THE PURCHASE PRICE OF
SUCH OUTSTANDING NOTE.

 

I.                                          DISCLOSURE OF TRANSACTIONS AND OTHER
MATERIAL INFORMATION.

 

(I)                                     BY THE FOURTH (4TH) BUSINESS DAY
FOLLOWING THE CLOSING DATE, THE COMPANY SHALL FILE A FORM 8-K (THE “ANNOUNCING
FORM 8-K”) WITH THE SEC.  THE  ANNOUNCING FORM 8-K SHALL COMPLY FULLY WITH THE
APPLICABLE 8-K RULES AND SHALL DESCRIBE THE TERMS OF THE TRANSACTIONS
CONTEMPLATED BY THE TRANSACTION DOCUMENTS, INCLUDING THE PURCHASE OF THE NOTES
AND SHARES.  THE COMPANY SHALL FILE ALL EXHIBITS RELATING TO THIS AGREEMENT
REQUIRED TO BE FILED BY THE SEC AND SECURITIES LAWS OR OTHER LAWS AS EXHIBITS TO
THE COMPANY’S QUARTERLY REPORT ON FORM 10-Q TO BE FILED WITH THE SEC ON OR
AROUND AUGUST 14, 2008.

 

(II)                                  SUBJECT TO THE AGREEMENTS AND COVENANTS
SET FORTH IN THIS SECTION 4(I), THE COMPANY SHALL NOT ISSUE ANY PRESS RELEASES
OR ANY OTHER PUBLIC STATEMENTS WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED
HEREBY OR DISCLOSING THE NAME OF ANY BUYER; PROVIDED, HOWEVER, THAT THE COMPANY
SHALL BE ENTITLED, WITHOUT THE PRIOR APPROVAL OF ANY BUYER, TO MAKE ANY PRESS
RELEASE WITH RESPECT TO SUCH TRANSACTIONS (A) IN SUBSTANTIAL CONFORMITY WITH THE
ANNOUNCING FORM 8-K AND CONTEMPORANEOUSLY THEREWITH OR PRIOR THERETO AND (B) AS
IS REQUIRED BY APPLICABLE LAW.

 

22

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

 

(III)                               NOTWITHSTANDING ANY PROVISION HEREIN TO THE
CONTRARY, THE COMPANY SHALL NOT, AND SHALL CAUSE EACH OF ITS SUBSIDIARIES AND
FOREIGN SUBSIDIARIES AND ITS AND EACH OF THEIR RESPECTIVE AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS NOT TO, PROVIDE ANY BUYER WITH ANY MATERIAL
NONPUBLIC INFORMATION REGARDING THE COMPANY OR ANY OF ITS SUBSIDIARIES OR
FOREIGN SUBSIDIARIES FROM AND AFTER THE FILING OF THE ANNOUNCING FORM 8-K WITH
THE SEC, WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF SUCH BUYER, OTHER THAN
NOTICES REQUIRED UNDER THE TRANSACTION DOCUMENTS WHICH MAY CONSTITUTE MATERIAL
NON-PUBLIC INFORMATION.  NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, IN THE
EVENT THAT THE COMPANY BELIEVES THAT A NOTICE OR COMMUNICATION TO ANY BUYER OR
INVESTOR (AS DEFINED IN SECTION 4(J)) CONTAINS MATERIAL, NONPUBLIC INFORMATION
RELATING TO THE COMPANY OR ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES, THE
COMPANY SO SHALL INDICATE TO THE SUCH BUYER OR INVESTOR CONTEMPORANEOUSLY WITH
DELIVERY OF SUCH NOTICE OR COMMUNICATION, AND SUCH INDICATION SHALL PROVIDE SUCH
BUYER OR INVESTOR THE MEANS TO REFUSE TO RECEIVE SUCH NOTICE OR COMMUNICATION
OTHER THAN NOTICES REQUIRED UNDER THE TRANSACTION DOCUMENTS WHICH MAY CONSTITUTE
MATERIAL NON-PUBLIC INFORMATION; AND IN THE ABSENCE OF ANY SUCH INDICATION, THE
HOLDERS OF THE SECURITIES SHALL BE ALLOWED TO PRESUME THAT ALL MATTERS RELATING
TO SUCH NOTICE OR COMMUNICATION DO NOT CONSTITUTE MATERIAL, NONPUBLIC
INFORMATION RELATING TO THE COMPANY OR ANY OF ITS SUBSIDIARIES OR FOREIGN
SUBSIDIARIES.

 

J.                                          PLEDGE OF SECURITIES.  THE COMPANY
ACKNOWLEDGES AND AGREES THAT THE SECURITIES OF A BUYER MAY BE PLEDGED BY SUCH
BUYER OR ITS TRANSFEREES (EACH, INCLUDING EACH BUYER, AN “INVESTOR”) IN
CONNECTION WITH A BONA FIDE MARGIN AGREEMENT OR OTHER LOAN SECURED BY THE
SECURITIES.  THE PLEDGE OF SECURITIES SHALL NOT BE DEEMED TO BE A TRANSFER, SALE
OR ASSIGNMENT OF THE SECURITIES HEREUNDER, AND NO INVESTOR EFFECTING ANY SUCH
PLEDGE OF SECURITIES SHALL BE REQUIRED TO PROVIDE THE COMPANY WITH ANY NOTICE
THEREOF OR OTHERWISE MAKE ANY DELIVERY TO THE COMPANY PURSUANT TO THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT.  THE COMPANY HEREBY AGREES TO EXECUTE AND
DELIVER SUCH DOCUMENTATION AS A PLEDGEE OF THE SECURITIES MAY REASONABLY REQUEST
IN CONNECTION WITH A PLEDGE OF THE SECURITIES TO SUCH PLEDGEE BY AN INVESTOR.

 

K.                                       NOTICES.  FROM THE DATE OF THIS
AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON WHICH NO NOTES ARE
OUTSTANDING AND THE SECURITY AGREEMENT HAS TERMINATED, THE COMPANY SHALL AND
SHALL CAUSE EACH OF ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES TO NOTIFY THE
COLLATERAL AGENT IN WRITING (A) AT LEAST 30 DAYS IN ADVANCE OF ANY CHANGE IN
SUCH PERSON’S LEGAL NAME AND (B) WITHIN 10 DAYS OF THE CHANGE OF THE USE OF ANY
TRADE NAME, ASSUMED NAME, FICTITIOUS NAME OR DIVISION NAME NOT PREVIOUSLY
DISCLOSED TO THE COLLATERAL AGENT IN WRITING.  ALL OF THE FOREGOING NOTICES ALSO
SHALL BE PROVIDED BY THE COMPANY OR THE APPLICABLE SUBSIDIARY OR FOREIGN
SUBSIDIARY TO EACH BUYER IN WRITING.

 

L.                                          COMPLIANCE WITH LAWS AND MAINTENANCE
OF PERMITS.  DURING THE REPORTING PERIOD, THE COMPANY SHALL, AND SHALL CAUSE
EACH OF ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES, AS APPLICABLE, TO, MAINTAIN
ALL GOVERNMENTAL CONSENTS, FRANCHISES, CERTIFICATES, LICENSES, AUTHORIZATIONS,
APPROVALS AND PERMITS, THE LACK OF WHICH WOULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT, AND THE COMPANY AND EACH OF ITS SUBSIDIARIES AND
FOREIGN SUBSIDIARIES, AS APPLICABLE, SHALL REMAIN IN COMPLIANCE WITH ALL LAWS
(INCLUDING ENVIRONMENTAL LAWS AND LAWS RELATING TO HEALTHCARE, HIPAA, TAXES,
EMPLOYER AND EMPLOYEE CONTRIBUTIONS AND SIMILAR ITEMS, SECURITIES, ERISA OR
EMPLOYEE HEALTH AND SAFETY AND ALL APPLICABLE U.S. FOOD AND

 

23

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

 

DRUG ADMINISTRATION (“FDA”) RULES, REGULATIONS AND REQUIREMENTS AND THE RULES,
REGULATIONS AND REQUIREMENTS OF COMPARABLE FOREIGN GOVERNMENTAL ENTITIES) THE
FAILURE WITH WHICH TO COMPLY WOULD HAVE A MATERIAL ADVERSE EFFECT ON SUCH
PERSON.

 

M.                                    INSPECTION AND AUDITS.  FROM THE DATE OF
THIS AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON WHICH NO NOTES
ARE OUTSTANDING AND THE SECURITY AGREEMENT HAS BEEN TERMINATED:

 

(I)                                     THE COMPANY SHALL, AND SHALL CAUSE EACH
OF ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES TO, PERMIT EACH BUYER (AND EACH
BUYER’S DESIGNEES), TO CALL AT THE COMPANY’S AND EACH OF ITS SUBSIDIARIES’ AND
FOREIGN SUBSIDIARIES PLACES OF BUSINESS UPON REASONABLE ADVANCE NOTICE, AND,
WITHOUT HINDRANCE OR DELAY, TO INSPECT, EXAMINE AND AUDIT THE COLLATERAL AND TO
INSPECT, AUDIT, CHECK AND MAKE EXTRACTS FROM SUCH PERSON’S BOOKS, RECORDS,
JOURNALS, ORDERS, RECEIPTS AND ANY CORRESPONDENCE AND OTHER DATA RELATING TO THE
COLLATERAL OR ANY TRANSACTIONS BETWEEN THE PARTIES HERETO, AND EACH BUYER (AND
EACH BUYER’S DESIGNEES) SHALL HAVE THE RIGHT TO MAKE SUCH VERIFICATION
CONCERNING THE COLLATERAL AS SUCH BUYER MAY CONSIDER REASONABLE UNDER THE
CIRCUMSTANCES; AND

 

(II)                                  NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN, UPON WRITTEN REQUEST TO THE COMPANY BY ANY BUYER, THE COMPANY SHALL
PROMPTLY PROVIDE SUCH BUYER WITH ANY FINANCIAL, OPERATING OR OTHER TYPE OF
INFORMATION REASONABLY REQUESTED BY SUCH BUYER, SUBJECT TO A MUTUALLY AGREEABLE
CONFIDENTIALITY AGREEMENT, WHICH REQUEST SHALL CONSTITUTE A WAIVER, WITH RESPECT
TO ANY MATERIAL NON-PUBLIC INFORMATION REGARDING THE COMPANY AND THE
SUBSIDIARIES AND FOREIGN SUBSIDIARIES PROVIDED TO SUCH BUYER DIRECTLY IN
RESPONSE TO SUCH WRITTEN REQUEST, OF THE RESTRICTION HEREIN ON THE COMPANY’S
DISCLOSURE TO SUCH BUYER OF MATERIAL NONPUBLIC INFORMATION.

 

N.                                      COLLATERAL.  FROM THE DATE OF THIS
AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON WHICH THE NOTES ARE
NO LONGER OUTSTANDING AND THE SECURITY AGREEMENT IS TERMINATED, THE COMPANY
SHALL, AND SHALL CAUSE EACH OF ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES TO,
MAINTAIN AND PRESERVE THE COLLATERAL AND THE VALUE THEREOF.

 

O.                                      INSURANCE.  FROM THE DATE OF THIS
AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON WHICH NO NOTES ARE
OUTSTANDING AND THE SECURITY AGREEMENT HAS TERMINATED, THE COMPANY SHALL, AND
SHALL CAUSE EACH OF ITS SUBSIDIARIES AND, IF APPLICABLE, ITS FOREIGN
SUBSIDIARIES, TO:

 

(I)                                     KEEP THE COLLATERAL PROPERLY HOUSED (TO
THE EXTENT POSSIBLE) AND, WITH RESPECT TO TANGIBLE PROPERTY, INSURED FOR THE
FULL INSURABLE VALUE THEREOF AGAINST LOSS OR DAMAGE WITH COMPANIES THAT
REGULARLY INSURE PERSONS ENGAGED IN BUSINESSES SIMILAR TO THAT OF THE COMPANY OR
THE APPLICABLE SUBSIDIARY OR FOREIGN SUBSIDIARY, SUCH COVERAGE AND THE PREMIUMS
PAYABLE IN RESPECT THEREOF TO BE ACCEPTABLE IN SCOPE AND AMOUNT TO THE
COLLATERAL AGENT.  THE COMPANY SHALL OBTAIN AN ENDORSEMENT, OR AN INDEPENDENT
INSTRUMENT FURNISHED TO THE COLLATERAL AGENT, WHICH PROVIDES THAT THE INSURANCE
COMPANY SHALL GIVE THE COLLATERAL AGENT AT LEAST 30 DAYS’ WRITTEN NOTICE BEFORE
ANY SUCH POLICY OF INSURANCE IS CANCELED OR THE COVERAGE UNDER SUCH POLICY IS
REDUCED AND THAT NO ACT, WHETHER WILLFUL OR NEGLIGENT, OR DEFAULT OF SUCH
COMPANY OR THE APPLICABLE SUBSIDIARY OR

 

24

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

 

FOREIGN SUBSIDIARY OR ANY OTHER PERSON SHALL AFFECT THE RIGHT OF THE COLLATERAL
AGENT TO RECOVER UNDER SUCH POLICY OF INSURANCE IN CASE OF LOSS OR DAMAGE.  IN
ADDITION, THE COMPANY OR APPLICABLE SUBSIDIARY OR FOREIGN SUBSIDIARY SHALL, UPON
REQUEST OF THE COLLATERAL AGENT, CAUSE TO BE EXECUTED AND DELIVERED TO THE
COLLATERAL AGENT AN ASSIGNMENT OF PROCEEDS OF ITS BUSINESS INTERRUPTION
INSURANCE POLICIES (IF ANY).

 

(II)                                  MAINTAIN, AT ITS EXPENSE, SUCH INSURANCE
POLICIES (INCLUDING, BUT NOT LIMITED TO, GENERAL LIABILITY, DIRECTORS’ AND
OFFICERS,’ PUBLIC LIABILITY AND THIRD PARTY PROPERTY DAMAGE INSURANCE) WITH
COMPANIES THAT REGULARLY INSURE PERSONS ENGAGED IN BUSINESSES SIMILAR TO THAT OF
THE COMPANY OR THE APPLICABLE SUBSIDIARY OR FOREIGN SUBSIDIARY, SUCH COVERAGE
AND THE PREMIUMS PAYABLE IN RESPECT THEREOF TO BE REASONABLY ACCEPTABLE IN SCOPE
AND AMOUNT TO THE COLLATERAL AGENT, SUCH ACCEPTANCE NOT TO BE UNREASONABLY
WITHHELD.  ANY OF SUCH POLICIES AS MAY BE REQUESTED BY THE COLLATERAL AGENT,
WITH THE EXCEPTION OF DIRECTORS’ AND OFFICERS’ LIABILITY POLICIES, SHALL CONTAIN
AN ENDORSEMENT SHOWING THE COLLATERAL AGENT AS AN ADDITIONAL INSURED THEREUNDER
AND PROVIDING THAT THE INSURANCE COMPANY SHALL GIVE COLLATERAL AGENT AT LEAST 30
DAYS’ WRITTEN NOTICE BEFORE ANY SUCH POLICY SHALL BE CANCELED OR THE COVERAGE
UNDER SUCH POLICY IS REDUCED.

 

If the Company or any of its Subsidiaries, or, to the Company’s Knowledge, any
of its Foreign Subsidiaries, if applicable, at any time or times hereafter shall
fail to obtain or maintain any of the policies of insurance required above or to
pay any premium relating thereto and fails to cure such failures within ten
(10) days of written notice from Buyer, each Buyer, without waiving or releasing
any obligation or default by the Company hereunder, may (but shall be under no
obligation to) obtain and maintain such policies of insurance and pay such
premiums and take such other actions with respect thereto as such Buyer deems
advisable.  Such insurance, if obtained by such Buyer, may, but need not,
protect the Company’s and its Subsidiaries’ and Foreign Subsidiaries’ interests
or pay any claim made by or against the Company and its Subsidiaries and its
Foreign Subsidiaries with respect to the Collateral.  Such insurance may be more
expensive than the cost of insurance the Company and its Subsidiaries and its
Foreign Subsidiaries may be able to obtain on their own and may be cancelled
only upon the Company and its Subsidiaries’ and its Foreign Subsidiaries’, if
applicable, providing evidence that they have obtained the insurance as required
above.  All sums disbursed by a Buyer in connection with any such actions,
including court costs, expenses, other charges relating thereto and reasonable
attorneys’ fees, shall constitute Indebtedness under the Notes, shall be payable
on demand by the Company to such Buyer and, until paid, shall bear interest at
the highest rate then applicable to principal under the Notes.

 

P.                                      TAXES.  DURING THE REPORTING PERIOD, THE
COMPANY SHALL AND SHALL CAUSE EACH OF ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES
TO FILE ALL REQUIRED TAX RETURNS AND PAY ALL OF ITS TAXES WHEN DUE, SUBJECT TO
ANY EXTENSIONS GRANTED BY THE APPLICABLE TAXING AUTHORITY, INCLUDING TAXES
IMPOSED BY FEDERAL, STATE OR MUNICIPAL AGENCIES, AND SHALL CAUSE ANY LIENS FOR
TAXES TO BE PROMPTLY RELEASED; PROVIDED, HOWEVER, THAT THE COMPANY AND ITS
SUBSIDIARIES AND FOREIGN SUBSIDIARIES SHALL HAVE THE RIGHT TO CONTEST THE
PAYMENT OF SUCH TAXES IN GOOD FAITH BY APPROPRIATE PROCEEDINGS SO LONG AS
(I) THE AMOUNT SO CONTESTED IS SHOWN ON SUCH PERSON’S FINANCIAL STATEMENTS; AND
(II) THE CONTESTING OF ANY SUCH PAYMENT DOES NOT GIVE RISE TO A LIEN FOR TAXES. 
IF THE COMPANY OR THE APPLICABLE SUBSIDIARY OR FOREIGN SUBSIDIARY FAILS TO PAY
ANY SUCH TAXES

 

25

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

 

(OTHER THAN TAXES NOT YET DUE, SUBJECT TO AN EXTENSION OR SUBJECT TO A CONTEST)
AND IN THE ABSENCE OF ANY SUCH CONTEST BY SUCH PERSON AND FAILS TO CURE SUCH
FAILURE WITHIN TEN (10) DAYS OF WRITTEN NOTICE FROM BUYER, EACH BUYER MAY (BUT
SHALL BE UNDER NO OBLIGATION TO) ADVANCE AND PAY ANY SUMS REQUIRED TO PAY ANY
SUCH TAXES AND/OR TO SECURE THE RELEASE OF ANY LIEN THEREFOR, AND ANY SUMS SO
ADVANCED BY SUCH BUYER SHALL CONSTITUTE INDEBTEDNESS UNDER THE NOTES, SHALL BE
PAYABLE BY THE COMPANY TO EACH BUYER ON DEMAND, AND, UNTIL PAID, SHALL BEAR
INTEREST AT THE HIGHEST RATE THEN APPLICABLE TO PRINCIPAL UNDER THE NOTES.

 

Q.                                      INTELLECTUAL PROPERTY.  FROM THE DATE OF
THIS AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON WHICH THE
NOTES ARE NO LONGER OUTSTANDING AND THE SECURITY AGREEMENT HAS TERMINATED, THE
COMPANY SHALL AND SHALL CAUSE EACH OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES
TO MAINTAIN ADEQUATE INTELLECTUAL PROPERTY TO CONTINUE ITS BUSINESS AS PRESENTLY
PROPOSED TO BE CONDUCTED BY IT OR AS HEREAFTER CONDUCTED BY IT.

 

R.                                         PATRIOT ACT, INVESTOR SECRECY ACT AND
OFFICE OF FOREIGN ASSETS CONTROL.  AS REQUIRED BY FEDERAL LAW AND SUCH BUYER’S
POLICIES AND PRACTICES, EACH BUYER MAY NEED TO OBTAIN, VERIFY AND RECORD CERTAIN
CUSTOMER IDENTIFICATION INFORMATION AND DOCUMENTATION IN CONNECTION WITH OPENING
OR MAINTAINING ACCOUNTS, OR ESTABLISHING OR CONTINUING TO PROVIDE SERVICES, AND,
DURING THE REPORTING PERIOD, THE COMPANY AGREES TO, AND SHALL CAUSE EACH OF ITS
SUBSIDIARIES AND FOREIGN SUBSIDIARIES TO, PROVIDE SUCH INFORMATION TO THE EXTENT
IT IS IN POSSESSION OF SUCH INFORMATION AND CAN PROVIDE THE SAME WITHOUT
VIOLATING AN OBLIGATION OF CONFIDENTIALITY TO A THIRD PARTY WITH RESPECT
THERETO.

 

S.                                       SECURITY COVENANTS.  FROM THE DATE OF
THIS AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON WHICH NO NOTES
ARE OUTSTANDING AND THE SECURITY AGREEMENT HAS TERMINATED, THE COMPANY SHALL,
AND SHALL CAUSE EACH OF ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES TO, AT ITS OWN
COST AND EXPENSE, CAUSE TO BE PROMPTLY AND DULY TAKEN, EXECUTED, ACKNOWLEDGED
AND DELIVERED ALL SUCH FURTHER ACTS, DOCUMENTS AND ASSURANCES AS MAY FROM TIME
TO TIME BE NECESSARY OR AS A BUYER OR THE COLLATERAL AGENT MAY FROM TIME TO TIME
REASONABLY REQUEST IN ORDER TO CARRY OUT THE INTENT AND PURPOSES OF THIS
AGREEMENT, THE SECURITY DOCUMENTS AND THE OTHER TRANSACTION DOCUMENTS AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, TO THE EXTENT FEASIBLE BY LOCAL
LAW, INCLUDING ALL SUCH ACTIONS TO ESTABLISH, CREATE, PRESERVE, PROTECT AND
PERFECT A FIRST PRIORITY LIEN IN FAVOR OF THE COLLATERAL AGENT FOR THE BENEFIT
OF SUCH BUYER IN THE COLLATERAL (AS EACH TERM IS DEFINED IN THE SECURITY
AGREEMENT).

 

T.                                         LETTER AGREEMENT.  THE PARTIES
ACKNOWLEDGE THAT THE TERMS OF THE LETTER AGREEMENT, DATED AS OF OCTOBER 31,
2007, RELATING TO THE SECURITIES PURCHASE AGREEMENT, DATED AS OF OCTOBER 31,
2007, AS AMENDED, SHALL BE APPLICABLE TO THIS AGREEMENT AS WELL AS IF THIS
AGREEMENT WAS REFERRED TO THEREIN.  IN ADDITION, THE COMPANY ACKNOWLEDGES AND
AGREES TO USE ITS BEST EFFORTS TO FINALIZE THE PLEDGING OF SHARES OF THE CAPITAL
STOCK OR OWNERSHIP INTERESTS OF AVERION EUROPE GMBH AND AVERION INTERNATIONAL
(SWITZERLAND) LTD. WITHIN SIXTY (60) DAYS FOLLOWING THE CLOSING DATE.

 

U.                                      BOARD OBSERVER RIGHTS.  FROM THE FIRST
DATE FOLLOWING THE CLOSING DATE ON WHICH NO PRIOR NOTES ARE OUTSTANDING, UNTIL
THE FIRST DATE FOLLOWING THE CLOSING DATE ON WHICH NO NOTES ARE OUTSTANDING,
CUMULUS INVESTORS, LLC SHALL HAVE THE RIGHT TO APPOINT ONE (1) PERSON TO ATTEND
AND OBSERVE MEETINGS AND CORRESPONDENCE OF THE COMPANY’S BOARD OF DIRECTORS

 

26

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

 

(INCLUDING ANY AND ALL EXECUTIVE SESSIONS); PROVIDED, HOWEVER, THAT SUCH PERSON
SHALL NOT HAVE THE RIGHT TO VOTE ON ANY MATTERS AT HAND; PROVIDED, FURTHER,
HOWEVER, THAT SUCH RIGHTS SHALL NOT BE TRANSFERABLE TO ANY THIRD PARTY OR
ASSIGNEE.  IN CONNECTION WITH SUCH OBSERVER ROLE, SUCH APPOINTEE SHALL BE
PROVIDED WITH COPIES OF ALL INFORMATION AND DOCUMENTATION PROVIDED TO MEMBERS OF
THE COMPANY’S BOARD OF DIRECTORS AT, OR IN CONNECTION WITH SUCH MEETINGS,
PROVIDED THAT THE COMPANY SHALL HAVE THE RIGHT TO EXCLUDE SUCH OBSERVER FROM ANY
MEETING IF THE COMPANY REASONABLY BELIEVES SUCH EXCLUSION IS REQUIRED BY THE
BOARD OF DIRECTORS’ FIDUCIARY DUTIES OR NOT TO DISCLOSE ANY INFORMATION IT DEEMS
TO BE CONFIDENTIAL OR THAT MAY JEOPARDIZE THE ATTORNEY/CLIENT PRIVILEGE.

 

V.                                      SUBSIDIARY GOOD STANDING.  THE COMPANY
ACKNOWLEDGES AND AGREES THAT THE SUBSIDIARY SHALL BE VALIDLY EXISTING IN GOOD
STANDING UNDER THE LAWS OF THE STATE OF MARYLAND WITHIN FORTY FIVE (45) DAYS
FOLLOWING THE CLOSING DATE.

 

W.                                    QUARTERLY COMPLIANCE CERTIFICATE.  FROM
THE DATE OF THIS AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON
WHICH NO NOTES ARE OUTSTANDING, THE COMPANY SHALL PROVIDE THE BUYERS, NO LATER
THAN 30 DAYS FOLLOWING THE END OF EACH FISCAL QUARTER, A CERTIFICATE EXECUTED BY
THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE COMPANY
CERTIFYING THAT THE COMPANY AND ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES WERE,
AS OF THE END OF SUCH PRECEDING QUARTER, AND AT ALL TIMES DURING SUCH PRECEDING
QUARTER, IN FULL COMPLIANCE WITH THE TERMS OF THIS AGREEMENT.

 

5.                                       NEGATIVE COVENANTS.

 

A.                                       PROHIBITION AGAINST VARIABLE PRICED
SECURITIES.  FROM THE DATE OF THIS AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE
CLOSING DATE ON WHICH NO BUYER HOLDS ANY SECURITIES, THE COMPANY SHALL NOT IN
ANY MANNER ISSUE OR SELL ANY OPTIONS OR CONVERTIBLE SECURITIES THAT ARE
CONVERTIBLE INTO OR EXCHANGEABLE OR EXERCISABLE FOR SHARES OF COMMON STOCK AT A
PRICE THAT VARIES OR MAY VARY WITH THE MARKET PRICE OF SHARES OF COMMON STOCK,
INCLUDING BY WAY OF ONE OR MORE RESETS TO A FIXED PRICE OR INCREASES IN THE
NUMBER OF SHARES OF COMMON STOCK ISSUED OR ISSUABLE, OR AT A PRICE THAT UPON THE
PASSAGE OF TIME OR THE OCCURRENCE OF CERTAIN EVENTS AUTOMATICALLY IS REDUCED OR
IS ADJUSTED OR AT THE OPTION OF ANY PERSON MAY BE REDUCED OR ADJUSTED, WHETHER
OR NOT BASED ON A FORMULATION OF THE THEN-CURRENT MARKET PRICE OF THE COMMON
STOCK.

 

B.                                      STATUS.  FROM THE DATE OF THIS AGREEMENT
UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON WHICH NO NOTES ARE
OUTSTANDING, THE COMPANY SHALL NOT BECOME A USRPHC; AND UPON ANY BUYER’S
REQUEST, THE COMPANY SHALL INFORM SUCH BUYER WHETHER ANY OF THE SECURITIES THEN
HELD BY BUYER CONSTITUTE A U.S. REAL PROPERTY INTEREST PURSUANT TO TREASURY
REGULATION SECTION 1.897-2(H) WITHOUT REGARD TO TREASURY REGULATION
SECTION 1.897-2(H)(3).

 

C.                                       STAY, EXTENSION AND USURY LAWS.  THE
COMPANY COVENANTS (TO THE EXTENT THAT IT MAY LAWFULLY DO SO) THAT IT SHALL NOT
AT ANY TIME INSIST UPON, PLEAD, OR IN ANY MANNER WHATSOEVER CLAIM OR TAKE THE
BENEFIT OR ADVANTAGE OF, ANY STAY, EXTENSION OR USURY LAW OR OTHER LAW THAT
WOULD PROHIBIT OR FORGIVE IT FROM PAYING ALL OR ANY PORTION OF ANY PRINCIPAL OF,
OR INTEREST OR PREMIUM ON ANY OF THE NOTES OR FROM ISSUING THE SHARES AS
CONTEMPLATED HEREIN OR THEREIN, WHEREVER ENACTED, NOW OR AT ANY TIME HEREAFTER
IN FORCE, OR WHICH MAY AFFECT THE COVENANTS UNDER, OR THE PERFORMANCE OF, ANY OF
THE TRANSACTION DOCUMENTS; AND THE COMPANY (TO THE EXTENT

 

27

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

 

IT MAY LAWFULLY DO SO) HEREBY EXPRESSLY WAIVES ALL BENEFIT OR ADVANTAGE OF ANY
SUCH LAW, AND COVENANTS THAT IT WILL NOT, BY RESORT TO ANY SUCH LAW, HINDER,
DELAY OR IMPEDE THE EXECUTION OF ANY POWER GRANTED TO ANY BUYER HEREIN OR IN ANY
OF THE OTHER TRANSACTION DOCUMENTS, BUT WILL SUFFER AND PERMIT THE EXECUTION OF
EVERY SUCH POWER AS THOUGH NO SUCH LAW HAS BEEN ENACTED.

 

D.                                      RESTRICTION ON PURCHASES OR PAYMENTS. 
FROM THE DATE OF THIS AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE
ON WHICH THE NOTES ARE NO LONGER OUTSTANDING AND THE SECURITY AGREEMENT HAS
TERMINATED, THE COMPANY SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS SUBSIDIARIES
OR FOREIGN SUBSIDIARIES TO, (I) DECLARE, SET ASIDE OR PAY ANY DIVIDENDS ON OR
MAKE ANY OTHER DISTRIBUTIONS (WHETHER IN CASH, STOCK, EQUITY SECURITIES OR
PROPERTY) IN RESPECT OF ANY OF THE COMPANY’S OR ANY SUBSIDIARY’S OR FOREIGN
SUBSIDIARY’S CAPITAL STOCK, OR ISSUE OR AUTHORIZE THE ISSUANCE OF ANY OTHER
SECURITIES IN RESPECT OR, IN LIEU OF, OR IN SUBSTITUTION FOR ANY CAPITAL STOCK
OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES, OR ESTABLISH
OR SET ANY RECORD DATE WITH RESPECT TO ANY OF THE FOREGOING; PROVIDED, HOWEVER,
THAT ANY SUBSIDIARY OR FOREIGN SUBSIDIARY MAY DECLARE, SET ASIDE OR PAY
DIVIDENDS ON OR MAKE ANY OTHER DISTRIBUTIONS (WHETHER IN CASH, STOCK, EQUITY
SECURITIES OR PROPERTY) IN RESPECT OF ANY OF ITS CAPITAL STOCK THAT IS HELD
SOLELY BY THE COMPANY OR A SUBSIDIARY OR FOREIGN SUBSIDIARY, PROVIDED THAT ALL
OF THE EQUITY OF SUCH SUBSIDIARY OR FOREIGN SUBSIDIARY IS DIRECTLY OR INDIRECTLY
OWNED BY THE COMPANY AND SUCH SUBSIDIARY OR FOREIGN SUBSIDIARY IS CONTROLLED BY
THE COMPANY, OR (II) PURCHASE, REDEEM OR OTHERWISE ACQUIRE, DIRECTLY OR
INDIRECTLY, ANY SHARES OF THE COMPANY’S OR ANY OF ITS SUBSIDIARIES’ CAPITAL
STOCK, EXCEPT REPURCHASES OF UNVESTED SHARES AT COST IN CONNECTION WITH THE
TERMINATION OF EMPLOYMENT OF AN EMPLOYEE PURSUANT TO OPTIONS OR AGREEMENTS IN
EFFECT ON THE DATE OF THIS AGREEMENT, OR CASHLESS (I.E., NET ISSUE) EXERCISE OF
OPTIONS BY EMPLOYEES UNDER EXISTING OPTIONS.

 

E.                                       PAYMENT AND LIEN RESTRICTIONS.  FROM
THE DATE OF THIS AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON
WHICH THE NOTES ARE NO LONGER OUTSTANDING AND THE SECURITY AGREEMENT HAS
TERMINATED, (I) THE COMPANY SHALL NOT, NOR WILL IT PERMIT ANY OF ITS
SUBSIDIARIES OR FOREIGN SUBSIDIARIES TO, ENTER INTO OR ASSUME ANY AGREEMENT
PROHIBITING OR OTHERWISE RESTRICTING THE CREATION OR ASSUMPTION OF ANY LIEN UPON
ITS PROPERTIES OR ASSETS, WHETHER NOW OWNED OR HEREAFTER ACQUIRED, OR REQUIRING
THE GRANT OF ANY SECURITY FOR AN OBLIGATION, EXCEPT TO THE EXTENT ANY SUCH
AGREEMENT PROVIDES FOR PERMITTED LIENS; AND (II) EXCEPT AS PROVIDED HEREIN, THE
COMPANY SHALL NOT AND SHALL NOT CAUSE OR PERMIT ITS SUBSIDIARIES OR FOREIGN
SUBSIDIARIES TO DIRECTLY OR INDIRECTLY CREATE OR OTHERWISE CAUSE OR SUFFER TO
EXIST OR BECOME EFFECTIVE ANY CONSENSUAL ENCUMBRANCE OR CONSENSUAL RESTRICTION
OF ANY KIND ON THE ABILITY OF ANY SUCH SUBSIDIARY OR FOREIGN SUBSIDIARY TO: 
(1) PAY DIVIDENDS OR MAKE ANY OTHER DISTRIBUTION ON ANY OF SUCH SUBSIDIARY’S OR
FOREIGN SUBSIDIARY’S CAPITAL STOCK OWNED BY THE COMPANY OR ANY OTHER SUBSIDIARY
OR FOREIGN SUBSIDIARY; (2) PAY ANY INDEBTEDNESS OWED TO THE COMPANY OR ANY OTHER
SUBSIDIARY OR FOREIGN SUBSIDIARY; (3) MAKE LOANS OR ADVANCES TO THE COMPANY OR
ANY OTHER SUBSIDIARY OR FOREIGN SUBSIDIARY; OR (4) TRANSFER ANY OF ITS PROPERTY
OR ASSETS TO THE COMPANY OR ANY OTHER SUBSIDIARY OR FOREIGN SUBSIDIARY.

 

F.                                         PREPAYMENTS.  EXCEPT FOR INTERCOMPANY
INDEBTEDNESS AMONG THE COMPANY AND ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES,
FROM THE DATE OF THIS AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE
ON WHICH THE NOTES ARE NO LONGER OUTSTANDING AND THE SECURITY AGREEMENT HAS
TERMINATED, THE COMPANY SHALL NOT, NOR WILL IT PERMIT ANY OF ITS SUBSIDIARIES OR
FOREIGN SUBSIDIARIES TO, PREPAY ANY INDEBTEDNESS THAT IS IN PARITY WITH OR
SUBORDINATE TO THE NOTES BY STRUCTURE OR CONTRACT; PROVIDED, HOWEVER, THAT ANY
SUBSIDIARY OR FOREIGN SUBSIDIARY

 

28

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

 

MAY PREPAY ANY INDEBTEDNESS TO THE COMPANY OR A WHOLLY-OWNED DOMESTIC SUBSIDIARY
OF THE COMPANY AND MAY MAKE (I) SCHEDULED PAYMENTS OF INTEREST AND PRINCIPAL ON
THE HESPERION NOTES; (II) AMORTIZATION PAYMENTS ON THE MILLENNIX NOTES;
(III) SCHEDULED PAYMENTS OF INTEREST AND PRINCIPAL ON THE LAVIN NOTES; AND
(IV) SCHEDULED PAYMENTS OF INTEREST AND PRINCIPAL ON THE PRIOR NOTES, IN EACH
CASE IF NO EVENT OF DEFAULT HAS OCCURRED OR IS CONTINUING DURING THE FORTY-FIVE
(45) DAYS PRIOR TO THE APPLICABLE SCHEDULED PAYMENT DATE.

 

G.                                      INDEBTEDNESS.  FROM THE DATE OF THIS
AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON WHICH THE NOTES ARE
NO LONGER OUTSTANDING AND THE SECURITY AGREEMENT HAS TERMINATED, THE COMPANY
SHALL NOT, AND SHALL CAUSE EACH OF ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES NOT
TO, CREATE, INCUR, ASSUME, EXTEND THE TERM OF, BECOME OBLIGATED ON OR SUFFER TO
EXIST (DIRECTLY OR INDIRECTLY), ANY INDEBTEDNESS OTHER THAN UNDER THE NOTES
ISSUED PURSUANT TO THIS AGREEMENT, EXCEPT THAT THE COMPANY AND ITS SUBSIDIARIES
AND FOREIGN SUBSIDIARIES MAY INCUR OR ENTER INTO THE FOLLOWING (COLLECTIVELY,
“PERMITTED INDEBTEDNESS”):

 

(I)                                     THE PRIOR NOTES AND INDEBTEDNESS LISTED
ON SCHEDULE 3(X);

 

(II)                                  NON-CONVERTIBLE INDEBTEDNESS FOR BORROWED
MONEY, BUT ONLY TO THE EXTENT (A) A SUBORDINATION AGREEMENT IN FAVOR OF AND IN
FORM AND SUBSTANCE SATISFACTORY TO, EACH BUYER IN ITS REASONABLE DISCRETION IS
EXECUTED AND DELIVERED TO SUCH BUYER WITH RESPECT THERETO (WHICH SUBORDINATION
AGREEMENT SHALL PROHIBIT UNSCHEDULED PAYMENTS IN RESPECT OF SUCH SUBORDINATED
INDEBTEDNESS FOR SO LONG AS THE NOTES ARE OUTSTANDING), (B) THE TERMS OF SUCH
SUBORDINATED INDEBTEDNESS DOES NOT REQUIRE OR PERMIT PAYMENT OF PRINCIPAL
THEREON UNTIL FULL PAYMENT OF ANY OUTSTANDING NOTES, AND (C) SUCH SUBORDINATED
INDEBTEDNESS IS NOT SECURED BY ANY OF THE ASSETS OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES AND FOREIGN SUBSIDIARIES;

 

(III)                               UNSECURED INTERCOMPANY INDEBTEDNESS AMONGST
THE COMPANY AND ONE OR MORE OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES;

 

(IV)                              INDEBTEDNESS OF THE COMPANY AND ITS
SUBSIDIARIES AND FOREIGN SUBSIDIARIES FOR TAXES, ASSESSMENTS, MUNICIPAL OR
GOVERNMENTAL CHARGES NOT YET DUE;

 

(V)                                 OBLIGATIONS OF THE COMPANY AND ITS
SUBSIDIARIES AND FOREIGN SUBSIDIARIES FOR COLLECTION OR DEPOSIT IN THE ORDINARY
COURSE OF BUSINESS;

 

(VI)                              UNSECURED ACCOUNT TRADE PAYABLES THAT ARE
(A) ENTERED INTO OR INCURRED IN THE ORDINARY COURSE OF THE COMPANY’S AND ITS
SUBSIDIARIES’ AND FOREIGN SUBSIDIARIES’ BUSINESS, (B) ON TERMS THAT REQUIRE FULL
PAYMENT WITHIN NINETY (90) DAYS FROM THE DATE ENTERED INTO OR INCURRED, (C) NOT
UNPAID IN EXCESS OF SIXTY (60) DAYS FROM THE RECEIPT OF INVOICE, OR ARE BEING
CONTESTED IN GOOD FAITH AND AS TO WHICH SUCH RESERVE AS IS REQUIRED BY GAAP HAS
BEEN MADE AND (D) NOT EXCEEDING AT ANY ONE TIME AN AGGREGATE AMOUNT AMONG THE
COMPANY AND ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES OF $5,000,000 AT ANY TIME;
AND

 

(VII)                           CAPITAL OR EQUIPMENT LEASE FINANCING
ARRANGEMENTS IN THE ORDINARY COURSE OF BUSINESS.

 

29

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

 

H.                                      LIENS.  FROM THE DATE OF THIS AGREEMENT
UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON WHICH NONE OF THE NOTES ARE
OUTSTANDING AND THE SECURITY AGREEMENT HAS TERMINATED, THE COMPANY SHALL NOT,
AND SHALL CAUSE EACH OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES NOT TO, GRANT
OR SUFFER TO EXIST (VOLUNTARILY OR INVOLUNTARILY) ANY LIEN, CLAIM, SECURITY
INTEREST OR OTHER ENCUMBRANCE WHATSOEVER ON ANY OF ITS ASSETS, OTHER THAN
PERMITTED LIENS.

 

I.                                          SALE OF COLLATERAL.  UNTIL THE FIRST
DATE ON WHICH THE NOTES ARE NO LONGER OUTSTANDING AND THE SECURITY AGREEMENT HAS
TERMINATED, NEITHER THE COMPANY NOR ANY OF THE SUBSIDIARIES OR FOREIGN
SUBSIDIARIES SHALL DIRECTLY OR INDIRECTLY SELL, TRANSFER, ASSIGN OR DISPOSE OF
ANY COLLATERAL, OTHER THAN IN THE ORDINARY COURSE OF BUSINESS.  WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, THE COMPANY SHALL NOT DIRECTLY OR INDIRECTLY
SELL, TRANSFER, ASSIGN OR OTHERWISE DISPOSE OF ANY RECEIVABLES OF THE COMPANY OR
ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COLLATERAL AGENT.  THE COMPANY SHALL NOT, AND SHALL CAUSE EACH OF
ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES NOT TO, DIRECTLY OR INDIRECTLY, MERGE
WITH OR CONSOLIDATE WITH ANY PERSON OR PERMIT ANY OTHER PERSON TO MERGE WITH OR
INTO OR CONSOLIDATE WITH IT EXCEPT THAT ANY WHOLLY OWNED SUBSIDIARY OR FOREIGN
SUBSIDIARY MAY MERGE WITH OR INTO ANY OTHER WHOLLY OWNED SUBSIDIARY OR FOREIGN
SUBSIDIARY OF THE COMPANY IF THE COMPANY HAS PROVIDED AT LEAST TEN (10) BUSINESS
DAYS PRIOR NOTICE TO THE COLLATERAL AGENT AND NO EVENT OF DEFAULT SHALL EXIST OR
SHALL EXIST UPON THE CONSUMMATION OF SUCH TRANSACTION.

 

J.                                          CORPORATE EXISTENCE.  DURING THE
REPORTING PERIOD, THE COMPANY SHALL, AND SHALL CAUSE EACH OF ITS SUBSIDIARIES
AND DIRECT FOREIGN SUBSIDIARIES TO, MAINTAIN ITS CORPORATE EXISTENCE AND SHALL
NOT SELL ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS (INCLUDING, FOR THE
AVOIDANCE OF ANY DOUBT, ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE
SUBSIDIARIES IN THE AGGREGATE), EXCEPT IN THE EVENT OF A MERGER OR CONSOLIDATION
OR SALE OR TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS
(INCLUDING, FOR THE AVOIDANCE OF ANY DOUBT, ALL OR SUBSTANTIALLY ALL OF THE
ASSETS OF THE SUBSIDIARIES AND DIRECT FOREIGN SUBSIDIARIES IN THE AGGREGATE)
WHERE (I) THE SURVIVING OR SUCCESSOR ENTITY IN SUCH TRANSACTION (A) ASSUMES THE
COMPANY’S OBLIGATIONS HEREUNDER AND UNDER THE OTHER TRANSACTION DOCUMENTS AND
(B) IS A PUBLICLY TRADED CORPORATION THE COMMON STOCK OF WHICH IS LISTED ON A
NATIONAL SECURITIES EXCHANGE OR QUOTED ON THE OVER-THE-COUNTER BULLETIN BOARD,
AND (II) IMMEDIATELY BEFORE AND IMMEDIATELY AFTER GIVING EFFECT TO SUCH
TRANSACTION, NO EVENT OF DEFAULT (AS DEFINED IN THE NOTES) SHALL HAVE OCCURRED
AND BE CONTINUING.  THE COMPANY SHALL NOT, AND SHALL CAUSE EACH OF ITS
SUBSIDIARIES, AND TO THE COMPANY’S KNOWLEDGE, ITS FOREIGN SUBSIDIARIES NOT TO,
ENGAGE IN ANY BUSINESS OTHER THAN THE BUSINESS ENGAGED IN ON THE DATE HEREOF.

 

K.                                       AFFILIATE TRANSACTIONS.  FROM THE DATE
OF THIS AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON WHICH NO
NOTES ARE OUTSTANDING AND THE SECURITY AGREEMENT HAS TERMINATED, THE COMPANY
SHALL NOT, AND SHALL CAUSE EACH OF ITS SUBSIDIARIES AND FOREIGN SUBSIDIARIES NOT
TO, ENTER INTO, AMEND, MODIFY OR SUPPLEMENT ANY TRANSACTION, CONTRACT,
AGREEMENT, INSTRUMENT, COMMITMENT, UNDERSTANDING OR OTHER ARRANGEMENT WITH ANY
RELATED PARTY, EXCEPT FOR CUSTOMARY EMPLOYMENT ARRANGEMENTS, BENEFIT PROGRAMS
AND INTECOMPANY ARRANGEMENTS, ON REASONABLE TERMS, THAT ARE NOT OTHERWISE
PROHIBITED BY THIS AGREEMENT.

 

L.                                          RESTRICTION ON LOANS; INVESTMENTS;
SUBSIDIARY EQUITY.  FROM THE DATE OF THIS AGREEMENT UNTIL THE FIRST DATE
FOLLOWING THE CLOSING DATE ON WHICH NO NOTES ARE OUTSTANDING AND THE SECURITY
AGREEMENT HAS TERMINATED, THE COMPANY SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS
SUBSIDIARIES OR FOREIGN SUBSIDIARIES TO:

 

30

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

 

(I)                                     MAKE ANY LOANS OR ADVANCES TO, OR
INVESTMENTS IN, ANY OTHER PERSON (OTHER THAN TO OR IN THE COMPANY OR IN ANY
SUBSIDIARY OR FOREIGN SUBSIDIARY), INCLUDING THROUGH LENDING MONEY, DEFERRING
THE PURCHASE PRICE OF PROPERTY OR SERVICES (OTHER THAN TRADE ACCOUNTS RECEIVABLE
ON TERMS OF NINETY (90) DAYS OR LESS), PURCHASING ANY NOTE, BOND, DEBENTURE OR
SIMILAR INSTRUMENT, ENTERING INTO ANY LETTER OF CREDIT, GUARANTEEING (OR TAKING
ANY ACTION THAT HAS THE EFFECT OF GUARANTEEING) ANY OBLIGATIONS OF ANY OTHER
PERSON, OR ACQUIRING ANY EQUITY SECURITIES OF, OR OTHER OWNERSHIP INTEREST IN,
OR MAKING ANY CAPITAL CONTRIBUTION TO ANY OTHER ENTITY; PROVIDED, HOWEVER, THAT
THE COMPANY MAY CREATE NEW SUBSIDIARIES; OR

 

(II)                                  ISSUE, TRANSFER OR PLEDGE ANY CAPITAL
STOCK OR EQUITY INTEREST IN ANY SUBSIDIARY OR FOREIGN SUBSIDIARY TO ANY PERSON
OTHER THAN THE COMPANY.

 

M.                                    INVESTMENT COMPANY.  FROM THE DATE OF THIS
AGREEMENT UNTIL THE FIRST DATE FOLLOWING THE CLOSING DATE ON WHICH NO NOTES ARE
OUTSTANDING AND NO BUYER HOLDS ANY SECURITIES, THE COMPANY SHALL NOT BECOME AN
“INVESTMENT COMPANY,” A COMPANY CONTROLLED BY AN “INVESTMENT COMPANY,” OR AN
“AFFILIATED PERSON” OF, OR “PROMOTER” OR “PRINCIPAL UNDERWRITER” FOR, AN
“INVESTMENT COMPANY,” AS SUCH TERMS ARE DEFINED IN THE INVESTMENT COMPANY ACT.

 

N.                                      NO AVOIDANCE OF OBLIGATIONS.  DURING THE
REPORTING PERIOD, THE COMPANY SHALL NOT, AND SHALL CAUSE EACH OF ITS
SUBSIDIARIES AND FOREIGN SUBSIDIARIES NOT TO, ENTER INTO ANY AGREEMENT WHICH
WOULD LIMIT OR RESTRICT THE COMPANY’S OR ANY OF ITS SUBSIDIARIES’ OR FOREIGN
SUBSIDIARIES’ ABILITY TO PERFORM UNDER, OR TAKE ANY OTHER VOLUNTARY ACTION TO
AVOID OR SEEK TO AVOID THE OBSERVANCE OR PERFORMANCE OF ANY OF THE TERMS TO BE
OBSERVED OR PERFORMED BY IT UNDER, THIS AGREEMENT, THE NOTES AND THE OTHER
TRANSACTION DOCUMENTS.

 

O.                                      REGULATION M.  NEITHER THE COMPANY, NOR
ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES NOR ANY OF THEIR RESPECTIVE
AFFILIATES WILL TAKE ANY ACTION PROHIBITED BY REGULATION M UNDER THE 1934 ACT IN
CONNECTION WITH THE OFFER, SALE AND DELIVERY OF THE SECURITIES CONTEMPLATED
HEREBY.

 

P.                                      NO INTEGRATED OFFERING.  NEITHER THE
COMPANY, NOR ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES, NOR ANY OF THEIR
RESPECTIVE AFFILIATES, NOR ANY PERSON ACTING ON BEHALF OF ANY OF THE FOREGOING
SHALL, DIRECTLY OR INDIRECTLY, MAKE ANY OFFERS OR SALES OF ANY SECURITY OR
SOLICIT ANY OFFER TO PURCHASE ANY SECURITY, UNDER ANY CIRCUMSTANCES THAT WOULD
REQUIRE REGISTRATION OF ANY OF THE SECURITIES UNDER THE 1933 ACT.

 

Q.                                      EXCEPTIONS.  NOTWITHSTANDING ANYTHING TO
THE CONTRARY SET FORTH IN THIS AGREEMENT OR IN ANY OF THE TRANSACTION DOCUMENTS,
THE COMPANY IS NOT PRECLUDED FROM AND NO CONSENT IS REQUIRED FROM ANY PARTY
PRIOR TO THE TAKING OF ANY OF THE FOLLOWING ACTIONS:

 

(I)                                     AN EQUITY OR DEBT FINANCING, THE
PROCEEDS OF WHICH ARE USED IN WHOLE OR IN PART TO REPAY ALL OUTSTANDING
PRINCIPAL AND INTEREST UNDERLYING THE NOTES; PROVIDED, HOWEVER, THAT THE COMPANY
MUST COMPLY WITH THE PROVISIONS OF SECTION 4(T) OF THE SECURITIES PURCHASE
AGREEMENT, DATED AS OF OCTOBER 31, 2007, AS AMENDED;

 

(II)                                  A REVERSE STOCK SPLIT DULY APPROVED BY THE
BOARD OF DIRECTORS AND STOCKHOLDERS OF THE COMPANY;

 

31

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

 

(III)                               ANY TRANSFERS BETWEEN AFFILIATES OR
INTERCOMPANY LOANS;

 

(IV)                              CREATE ANY NEW WHOLLY OWNED SUBSIDIARY,
SUBJECT TO THE TERMS OF THIS AGREEMENT AND THE TRANSACTION DOCUMENTS;

 

(V)                                 DISSOLVE ANY SUBSIDIARY OR FOREIGN
SUBSIDIARY WHOSE CAPITAL STOCK HAS BEEN PLEDGED TO THE BUYERS; PROVIDED HOWEVER,
THAT THE COMPANY OBTAIN PRIOR WRITTEN CONSENT FROM THE BUYERS WHICH CONSENT IS
NOT UNREASONABLY WITHHELD; PROVIDED, FURTHER, THAT THE ASSETS OF SUCH SUBSIDIARY
ARE TRANSFERRED TO THE COMPANY, THE SUBSIDIARIES OR A FOREIGN SUBSIDIARY.

 

(VI)                              DISSOLVE ANY FOREIGN SUBSIDIARY; PROVIDED,
HOWEVER, THAT THE ASSETS OF SUCH FOREIGN SUBSIDIARY ARE TRANSFERRED TO THE
COMPANY, THE SUBSIDIARIES OR A FOREIGN SUBSIDIARY.

 

6.                                       TRANSFER AGENT INSTRUCTIONS.  THE
COMPANY SHALL ISSUE INSTRUCTIONS TO ITS TRANSFER AGENT AND ANY SUBSEQUENT
TRANSFER AGENT, TO ISSUE CERTIFICATES OR CREDIT SHARES TO THE APPLICABLE BALANCE
ACCOUNTS AT THE DEPOSITORY TRUST COMPANY (“DTC”), REGISTERED IN THE NAME OF EACH
BUYER OR ITS RESPECTIVE NOMINEE(S), FOR THE SHARES IN SUCH AMOUNTS AS SPECIFIED
FROM TIME TO TIME BY SUCH BUYER TO THE COMPANY.  PRIOR TO REGISTRATION OF THE
SHARES UNDER THE 1933 ACT, ALL SUCH CERTIFICATES SHALL BEAR THE RESTRICTIVE
LEGEND SPECIFIED IN SECTION 2(G).  THE COMPANY WARRANTS THAT NO INSTRUCTION
OTHER THAN THE TRANSFER AGENT INSTRUCTIONS REFERRED TO IN THIS SECTION 6 AND
STOP TRANSFER INSTRUCTIONS TO GIVE EFFECT TO SECTION 2(F) (IN THE CASE OF THE
SHARES PRIOR TO REGISTRATION THEREOF UNDER THE 1933 ACT) WILL BE GIVEN BY THE
COMPANY TO ITS TRANSFER AGENT AND THAT THE SECURITIES SHALL OTHERWISE BE FREELY
TRANSFERABLE ON THE BOOKS AND RECORDS OF THE COMPANY AS AND TO THE EXTENT
PROVIDED IN THIS AGREEMENT.  IF A BUYER PROVIDES THE COMPANY WITH AN OPINION OF
COUNSEL, IN A GENERALLY ACCEPTABLE FORM, TO THE EFFECT THAT A PUBLIC SALE,
ASSIGNMENT OR TRANSFER OF THE SECURITIES MAY BE MADE WITHOUT REGISTRATION UNDER
THE 1933 ACT OR THE BUYER PROVIDES THE COMPANY WITH REASONABLE ASSURANCE THAT
THE SECURITIES CAN BE SOLD PURSUANT TO RULE 144 WITHOUT ANY RESTRICTION AS TO
THE NUMBER OF SECURITIES ACQUIRED AS OF A PARTICULAR DATE THAT CAN THEN BE
IMMEDIATELY SOLD, THE COMPANY SHALL PERMIT THE TRANSFER AND, IN THE CASE OF THE
SHARES, PROMPTLY INSTRUCT ITS TRANSFER AGENT TO ISSUE ONE OR MORE SHARE
CERTIFICATES OR CREDIT SHARES TO THE APPLICABLE BALANCE ACCOUNTS AT DTC IN SUCH
NAME AND IN SUCH DENOMINATIONS AS SPECIFIED BY SUCH BUYER AND WITHOUT ANY
RESTRICTIVE LEGEND.  THE COMPANY ACKNOWLEDGES THAT A BREACH BY IT OF ITS
OBLIGATIONS HEREUNDER WILL CAUSE IRREPARABLE HARM TO THE BUYERS BY VITIATING THE
INTENT AND PURPOSE OF THE TRANSACTIONS CONTEMPLATED HEREBY.  ACCORDINGLY, THE
COMPANY ACKNOWLEDGES THAT THE REMEDY AT LAW FOR A BREACH OF ITS OBLIGATIONS
UNDER THIS SECTION 6 WILL BE INADEQUATE AND AGREES, IN THE EVENT OF A BREACH OR
THREATENED BREACH BY THE COMPANY OF THE PROVISIONS OF THIS SECTION 6, THAT EACH
BUYER SHALL BE ENTITLED, IN ADDITION TO ALL OTHER AVAILABLE REMEDIES, TO AN
INJUNCTIVE ORDER AND/OR INJUNCTION RESTRAINING ANY BREACH AND REQUIRING
IMMEDIATE ISSUANCE AND TRANSFER, WITHOUT THE NECESSITY OF SHOWING ECONOMIC LOSS
AND WITHOUT ANY BOND OR OTHER SECURITY BEING REQUIRED.

 

7.                                       CONDITIONS TO THE OBLIGATIONS OF THE
COMPANY TO SELL.  THE OBLIGATION OF THE COMPANY TO ISSUE AND SELL THE NOTES AND
SHARES TO EACH BUYER AT THE CLOSING IS SUBJECT TO THE SATISFACTION, AT OR BEFORE
THE CLOSING DATE (UNLESS OTHERWISE SPECIFICALLY PROVIDED IN THIS SECTION 7), OF
EACH OF THE FOLLOWING CONDITIONS, PROVIDED THAT THESE CONDITIONS ARE FOR THE

 

32

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

 

COMPANY’S SOLE BENEFIT AND MAY BE WAIVED BY THE COMPANY AT ANY TIME IN ITS SOLE
DISCRETION BY PROVIDING EACH BUYER WITH PRIOR WRITTEN NOTICE THEREOF:

 

A.                                       SUCH BUYER AND THE COLLATERAL AGENT
SHALL HAVE EXECUTED EACH OF THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY AND
DELIVERED THE SAME TO THE COMPANY.

 

B.                                      SUCH BUYER SHALL HAVE DELIVERED TO THE
COMPANY SUCH BUYER’S ALLOCATION PERCENTAGE OF THE PURCHASE PRICE (LESS THE
AMOUNT WITHHELD BY SUCH BUYER PURSUANT TO SECTION 4(H)) FOR THE NOTES AND SHARES
BEING PURCHASED BY SUCH BUYER AT SUCH CLOSING BY WIRE TRANSFER OF IMMEDIATELY
AVAILABLE FUNDS PURSUANT TO THE WIRE INSTRUCTIONS PROVIDED BY THE COMPANY.

 

C.                                       THE REPRESENTATIONS AND WARRANTIES OF
SUCH BUYER HEREIN SHALL BE TRUE AND CORRECT AS OF THE DATE WHEN MADE AND AS OF
THE CLOSING DATE AS THOUGH MADE AT THAT TIME (EXCEPT FOR REPRESENTATIONS AND
WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE, WHICH SHALL BE TRUE AND CORRECT AS
OF SUCH DATE), AND SUCH BUYER SHALL HAVE PERFORMED, SATISFIED AND COMPLIED WITH
THE COVENANTS, AGREEMENTS AND CONDITIONS REQUIRED BY THE TRANSACTION DOCUMENTS
TO BE PERFORMED, SATISFIED OR COMPLIED WITH BY SUCH BUYER AT OR PRIOR TO THE
CLOSING DATE.

 

8.                                       CONDITIONS TO BUYERS’ OBLIGATIONS TO
PURCHASE.

 

A.                                       CLOSING DATE.                       
THE OBLIGATION OF EACH BUYER HEREUNDER TO PURCHASE THE NOTES AND THE SHARES FROM
THE COMPANY AT THE CLOSING IS SUBJECT TO THE SATISFACTION, AT OR BEFORE THE
CLOSING DATE, OF EACH OF THE FOLLOWING CONDITIONS, PROVIDED THAT THESE
CONDITIONS ARE FOR EACH BUYER’S SOLE BENEFIT AND MAY BE WAIVED ONLY BY SUCH
BUYER AT ANY TIME IN ITS SOLE DISCRETION BY PROVIDING THE COMPANY WITH PRIOR
WRITTEN NOTICE THEREOF:

 

(I)                                     EACH OF THE COMPANY AND ITS SUBSIDIARIES
SHALL HAVE EXECUTED EACH OF THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY AND
DELIVERED THE SAME TO SUCH BUYER.

 

(II)                                  THE REPRESENTATIONS AND WARRANTIES OF THE
COMPANY HEREIN SHALL BE TRUE AND CORRECT AS OF THE DATE WHEN MADE AND AS OF THE
CLOSING DATE AS THOUGH MADE AT THAT TIME (EXCEPT FOR REPRESENTATIONS AND
WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE, WHICH SHALL BE TRUE AND CORRECT AS
OF SUCH DATE) AND THE COMPANY AND ITS SUBSIDIARIES SHALL HAVE PERFORMED,
SATISFIED AND COMPLIED WITH THE COVENANTS, AGREEMENTS AND CONDITIONS REQUIRED BY
THE TRANSACTION DOCUMENTS TO BE PERFORMED, SATISFIED OR COMPLIED WITH BY THE
COMPANY AT OR PRIOR TO THE CLOSING DATE.  SUCH BUYER SHALL HAVE RECEIVED A
CERTIFICATE, EXECUTED BY THE CHIEF EXECUTIVE OFFICER OR CHIEF FINANCIAL OFFICER
OF THE COMPANY, DATED AS OF THE CLOSING DATE, TO THE FOREGOING EFFECT AND AS TO
SUCH OTHER MATTERS AS MAY BE REASONABLY REQUESTED BY SUCH BUYER, INCLUDING AN
UPDATE AS OF A DATE AS CLOSE TO THE CLOSING DATE AS PRACTICABLE OF THE
REPRESENTATIONS CONTAINED IN SECTIONS 3(C) AND 3(Y) ABOVE.

 

(III)                               SUCH BUYER SHALL HAVE RECEIVED THE OPINION
OF THE GENERAL COUNSEL OF THE COMPANY, DATED AS OF THE CLOSING DATE, WHICH
OPINION WILL ADDRESS, AMONG OTHER THINGS, LAWS OF THE STATES OF DELAWARE AND NEW
YORK APPLICABLE TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN FORM, SCOPE AND
SUBSTANCE REASONABLY SATISFACTORY TO SUCH BUYER AND APPLICABLE TO THE SECURITY
INTEREST PROVIDED PURSUANT TO THE SECURITY AGREEMENT, IN THE

 

33

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

 

FORM OF EXHIBIT D HERETO, AND OTHERWISE IN FORM, SCOPE AND SUBSTANCE REASONABLY
SATISFACTORY TO SUCH BUYER.

 

(IV)                              THE COMPANY SHALL HAVE EXECUTED AND DELIVERED
TO SUCH BUYER THE NOTES AND THE SHARE CERTIFICATES (IN SUCH DENOMINATIONS AS
SUCH BUYER SHALL REQUEST) FOR THE NOTES AND THE SHARES TO BE ISSUED TO SUCH
BUYER AT THE CLOSING.

 

(V)                                 THE BOARDS OF DIRECTORS (OR A COMMITTEE
THEREOF) OF THE COMPANY AND ITS SUBSIDIARIES SHALL HAVE ADOPTED RESOLUTIONS
CONSISTENT WITH SECTION 3(B) ABOVE AND IN A FORM REASONABLY ACCEPTABLE TO SUCH
BUYER (THE “RESOLUTIONS”).

 

(VI)                              THE TRANSFER AGENT INSTRUCTIONS SHALL HAVE
BEEN DELIVERED TO THE COMPANY’S TRANSFER AGENT, AND THE COMPANY SHALL HAVE
DELIVERED A COPY THEREOF TO SUCH BUYER.

 

(VII)                           THE COMPANY SHALL HAVE DELIVERED TO SUCH BUYER A
CERTIFICATE EVIDENCING THE INCORPORATION AND GOOD STANDING OF THE COMPANY IN
SUCH ENTITY’S STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION
ISSUED BY THE SECRETARY OF STATE (OR OTHER APPLICABLE AUTHORITY) OF SUCH STATE
OR JURISDICTION OF INCORPORATION OR ORGANIZATION AS OF A DATE WITHIN TEN
(10) DAYS OF THE CLOSING DATE.

 

(VIII)                        THE COMPANY SHALL HAVE DELIVERED TO SUCH BUYER A
SECRETARY’S CERTIFICATE, DATED AS OF THE CLOSING DATE, CERTIFYING AS TO (A) THE
RESOLUTIONS, AND (B) THE BYLAWS, EACH AS IN EFFECT AT THE CLOSING.

 

(IX)                                THE COMPANY SHALL HAVE MADE ALL FILINGS
UNDER ALL APPLICABLE SECURITIES LAWS NECESSARY TO CONSUMMATE THE ISSUANCE OF THE
SECURITIES PURSUANT TO THIS AGREEMENT IN COMPLIANCE WITH SUCH LAWS.

 

(X)                                   THE COMPANY SHALL HAVE MADE ALL FILINGS
UNDER ALL APPLICABLE FEDERAL, STATE, PROVINCIAL, TERRITORIAL AND FOREIGN
SECURITIES LAWS NECESSARY TO CONSUMMATE THE ISSUANCE OF THE SECURITIES PURSUANT
TO THIS AGREEMENT IN COMPLIANCE WITH SUCH LAWS.

 

(XI)                                THE COMPANY AND ITS SUBSIDIARIES SHALL HAVE
DELIVERED AND PLEDGED TO SUCH BUYER ANY AND ALL INSTRUMENTS, NEGOTIABLE
DOCUMENTS, CHATTEL PAPER (EACH OF THE FOREGOING TERMS, AS DEFINED IN THE
SECURITY AGREEMENT) AND CERTIFICATED SECURITIES (ACCOMPANIED BY STOCK POWERS
EXECUTED IN BLANK), DULY ENDORSED AND/OR ACCOMPANIED BY SUCH INSTRUMENTS OF
ASSIGNMENT AND TRANSFER EXECUTED BY THE COMPANY AND ITS SUBSIDIARIES, IN SUCH
FORM AND SUBSTANCE AS SUCH BUYER MAY REASONABLY REQUEST.

 

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

 

9.                                       INDEMNIFICATION.  IN CONSIDERATION OF
EACH BUYER’S EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS TO BE EXECUTED BY SUCH BUYER AND ACQUIRING THE SECURITIES HEREUNDER
AND THEREUNDER AND IN ADDITION TO ALL OF THE COMPANY’S AND ITS SUBSIDIARIES’ AND
FOREIGN SUBSIDIARIES’ OTHER OBLIGATIONS UNDER THE TRANSACTION DOCUMENTS, THE

 

34

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

 

COMPANY SHALL DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS SUCH BUYER AND EACH
OTHER HOLDER OF THE SECURITIES AND ALL OF THEIR STOCKHOLDERS, PARTNERS,
OFFICERS, DIRECTORS, MEMBERS, MANAGERS, EMPLOYEES AND DIRECT OR INDIRECT
INVESTORS AND ANY OF THE FOREGOING PERSONS’ AGENTS OR OTHER REPRESENTATIVES
(INCLUDING THOSE RETAINED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT) (COLLECTIVELY, THE “INDEMNITEES”) FROM AND AGAINST ANY AND ALL
ACTIONS, CAUSES OF ACTION, SUITS, CLAIMS, LOSSES, COSTS, PENALTIES, FEES,
LIABILITIES AND DAMAGES, AND REASONABLE EXPENSES IN CONNECTION THEREWITH
(IRRESPECTIVE OF WHETHER ANY SUCH INDEMNITEES IS A PARTY TO THE ACTION FOR WHICH
INDEMNIFICATION HEREUNDER IS SOUGHT), AND INCLUDING REASONABLE ATTORNEYS’ FEES
AND DISBURSEMENTS (COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”), INCURRED BY ANY
INDEMNITEES AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO (A) ANY
MISREPRESENTATION OR BREACH OF ANY REPRESENTATION OR WARRANTY MADE BY THE
COMPANY OR ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES IN ANY OF 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 OR ANY OF ITS SUBSIDIARIES OR FOREIGN SUBSIDIARIES
CONTAINED IN THE TRANSACTION DOCUMENTS OR ANY OTHER CERTIFICATE, INSTRUMENT OR
DOCUMENT CONTEMPLATED HEREBY OR THEREBY, (C) ANY CAUSE OF ACTION, SUIT OR CLAIM
BROUGHT OR MADE AGAINST SUCH INDEMNITEES AND ARISING OUT OF OR RESULTING FROM
THE EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THE TRANSACTION DOCUMENTS
IN ACCORDANCE WITH THE TERMS THEREOF OR ANY OTHER CERTIFICATE, INSTRUMENT OR
DOCUMENT CONTEMPLATED HEREBY OR THEREBY IN ACCORDANCE WITH THE TERMS THEREOF
(OTHER THAN A CAUSE OF ACTION, SUIT OR CLAIM BROUGHT OR MADE AGAINST AN
INDEMNITEE BY SUCH INDEMNITEE’S OWNERS, INVESTORS OR AFFILIATES), (D) ANY OTHER
TRANSACTION FINANCED OR TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, WITH THE PROCEEDS OF THE ISSUANCE OF THE SECURITIES, OR (E) THE
STATUS OF SUCH BUYER OR HOLDER OF THE SECURITIES AS AN INVESTOR IN THE COMPANY. 
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 THAT IS PERMISSIBLE
UNDER APPLICABLE LAW.

 

10.                                 CROSS-DEFAULT.  NOTWITHSTANDING ANYTHING IN
THIS AGREEMENT, ANY BREACH BY THE COMPANY AND/OR ANY OF ITS SUBSIDIARIES OR
FOREIGN SUBSIDIARIES OF ANY TERM OR PROVISION OF THIS AGREEMENT SHALL CONSTITUTE
AN “EVENT OF DEFAULT” UNDER THE NOTES WHICH, IF NOT CURED IN ACCORDANCE WITH THE
TERMS THEREOF, SHALL PROVIDE THE BUYERS WITH ALL OF THE RIGHTS AND REMEDIES
CONTEMPLATED THEREUNDER AND UNDER THE TRANSACTION DOCUMENTS.

 

11.                                 GOVERNING LAW; MISCELLANEOUS.

 

A.                                       GOVERNING LAW; JURISDICTION; JURY
TRIAL.  ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND
INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE NEW YORK CITY,
BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN, 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 BROUGHT
IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER.  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND

 

35

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

 

consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law. 
The parties acknowledge that each Buyer has an office in the State of New York
and will have made the payment of the Purchase Price from its bank account
located in the State of New York.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

B.                                      COUNTERPARTS.  THIS AGREEMENT AND ANY
AMENDMENTS HERETO MAY BE EXECUTED AND DELIVERED IN ONE OR MORE COUNTERPARTS, AND
BY THE DIFFERENT PARTIES HERETO IN SEPARATE COUNTERPARTS, EACH OF WHICH WHEN
EXECUTED SHALL BE DEEMED TO BE AN ORIGINAL, BUT ALL OF WHICH TAKEN TOGETHER
SHALL CONSTITUTE ONE AND THE SAME AGREEMENT, AND SHALL BECOME EFFECTIVE WHEN
COUNTERPARTS HAVE BEEN SIGNED BY EACH PARTY HERETO AND DELIVERED TO THE OTHER
PARTIES HERETO, IT BEING UNDERSTOOD THAT ALL PARTIES NEED NOT SIGN THE SAME
COUNTERPART.  IN THE EVENT THAT ANY SIGNATURE TO THIS AGREEMENT OR ANY AMENDMENT
HERETO IS DELIVERED BY FACSIMILE TRANSMISSION OR BY E-MAIL DELIVERY OF A “.PDF”
FORMAT DATA FILE, SUCH SIGNATURE SHALL CREATE A VALID AND BINDING OBLIGATION OF
THE PARTY EXECUTING (OR ON WHOSE BEHALF SUCH SIGNATURE IS EXECUTED) WITH THE
SAME FORCE AND EFFECT AS IF SUCH FACSIMILE OR “.PDF” SIGNATURE PAGE WERE AN
ORIGINAL THEREOF.  AT THE REQUEST OF ANY PARTY EACH OTHER PARTY SHALL PROMPTLY
RE-EXECUTE AN ORIGINAL FORM OF THIS AGREEMENT OR ANY AMENDMENT HERETO AND
DELIVER THE SAME TO THE OTHER PARTY.  NO PARTY HERETO SHALL RAISE THE USE OF A
FACSIMILE MACHINE OR E-MAIL DELIVERY OF A “.PDF” FORMAT DATA FILE TO DELIVER A
SIGNATURE TO THIS AGREEMENT OR ANY AMENDMENT HERETO OR THE FACT THAT SUCH
SIGNATURE WAS TRANSMITTED OR COMMUNICATED THROUGH THE USE OF A FACSIMILE MACHINE
OR E-MAIL DELIVERY OF A “.PDF” FORMAT DATA FILE AS A DEFENSE TO THE FORMATION OR
ENFORCEABILITY OF A CONTRACT, AND EACH PARTY HERETO FOREVER WAIVES ANY SUCH
DEFENSE.

 

C.                                       HEADINGS.  THE HEADINGS OF THIS
AGREEMENT ARE FOR CONVENIENCE OF REFERENCE AND SHALL NOT FORM PART OF, OR AFFECT
THE INTERPRETATION OF, THIS AGREEMENT.

 

D.                                      SEVERABILITY.  IF ANY PROVISION OF THIS
AGREEMENT SHALL BE INVALID OR UNENFORCEABLE IN ANY JURISDICTION, SUCH INVALIDITY
OR UNENFORCEABILITY SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF THE
REMAINDER OF THIS AGREEMENT IN THAT JURISDICTION OR THE VALIDITY OR
ENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT IN ANY OTHER JURISDICTION.

 

E.                                       ENTIRE AGREEMENT; AMENDMENTS.  THIS
AGREEMENT SUPERSEDES ALL OTHER PRIOR ORAL OR WRITTEN AGREEMENTS BETWEEN EACH
BUYER, THE COMPANY, ITS SUBSIDIARIES, THEIR AFFILIATES AND PERSONS ACTING ON
THEIR BEHALF WITH RESPECT TO THE MATTERS DISCUSSED HEREIN, AND THIS AGREEMENT
AND THE INSTRUMENTS REFERENCED HEREIN CONTAIN THE ENTIRE UNDERSTANDING OF THE
PARTIES WITH RESPECT TO THE MATTERS COVERED HEREIN AND THEREIN AND, EXCEPT AS
SPECIFICALLY SET FORTH HEREIN OR THEREIN, NEITHER THE COMPANY NOR ANY BUYER
MAKES ANY REPRESENTATION, WARRANTY, COVENANT OR UNDERTAKING WITH RESPECT TO SUCH
MATTERS.  NO PROVISION OF THIS AGREEMENT MAY BE AMENDED, MODIFIED OR
SUPPLEMENTED OTHER THAN BY AN INSTRUMENT IN WRITING SIGNED BY THE COMPANY AND
THE BUYERS THAT PURCHASED MORE THAN SIXTY SIX AND TWO THIRDS PERCENT (66 2/3%)
OF THE AGGREGATE

 

36

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

 

original principal amount of the Notes on the Closing Date, or if prior to the
Closing, by the Buyers listed on the Schedule of Buyers as being obligated to
purchase more than sixty six and two thirds percent (66 2/3%) of the aggregate
original principal amount of the Notes.  Any such amendment shall bind all
holders of the Notes and the Shares.  No such amendment shall be effective to
the extent that it applies to less than all of the holders of the Notes or
Shares then outstanding.

 

F.                                         NOTICES.  ANY NOTICES, CONSENTS,
WAIVERS OR OTHER COMMUNICATIONS REQUIRED OR PERMITTED TO BE GIVEN UNDER THE
TERMS OF THIS AGREEMENT MUST BE IN WRITING AND WILL BE DEEMED TO HAVE BEEN
DELIVERED:  (I) UPON RECEIPT, WHEN DELIVERED PERSONALLY; (II) UPON RECEIPT, WHEN
SENT BY FACSIMILE (PROVIDED CONFIRMATION OF TRANSMISSION IS MECHANICALLY OR
ELECTRONICALLY GENERATED AND KEPT ON FILE BY THE SENDING PARTY); OR (III) ONE
BUSINESS DAY AFTER DEPOSIT WITH A NATIONALLY RECOGNIZED OVERNIGHT DELIVERY
SERVICE, IN EACH CASE PROPERLY ADDRESSED TO THE PARTY TO RECEIVE THE SAME.  THE
ADDRESSES AND FACSIMILE NUMBERS FOR SUCH COMMUNICATIONS SHALL BE:

 

If to the Company:

 

Averion International Corp.
225 Turnpike Road
Southborough, MA  01772
Attention:        Chief Executive Officer
Facsimile:        (508)  597-5836

 

If to a Buyer, to it at the address and facsimile number set forth on the
Schedule of Buyers, with copies to such Buyer’s representatives as set forth on
the Schedule of Buyers, or, in the case of a Buyer or any party named above, at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party five days prior to the effectiveness of such change.  Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
nationally recognized overnight delivery service shall be rebuttable evidence of
personal service, receipt by facsimile or deposit with a nationally recognized
overnight delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

G.                                      SUCCESSORS AND ASSIGNS.  THIS AGREEMENT
SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS, INCLUDING ANY PURCHASERS OF THE SECURITIES. 
THE COMPANY SHALL NOT ASSIGN THIS AGREEMENT OR ANY RIGHTS OR OBLIGATIONS
HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE HOLDERS OF AT LEAST TWO
THIRDS (2/3) OF THE AGGREGATE PRINCIPAL OF THE NOTES THEN OUTSTANDING, INCLUDING
BY MERGER OR CONSOLIDATION, SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD. 
SUBJECT TO COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS, A BUYER MAY ASSIGN
SOME OR ALL OF ITS RIGHTS HEREUNDER UPON WRITTEN NOTICE TO THE COMPANY;
PROVIDED, HOWEVER, THAT ANY SUCH ASSIGNMENT SHALL NOT RELEASE SUCH BUYER FROM
ITS OBLIGATIONS HEREUNDER UNLESS SUCH OBLIGATIONS ARE ASSUMED BY SUCH ASSIGNEE
(AS EVIDENCED IN WRITING) AND THE COMPANY HAS CONSENTED TO SUCH ASSIGNMENT AND
ASSUMPTION, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD.  NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THE

 

37

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

 

Transaction Documents, a Buyer shall be entitled to pledge the Securities in
connection with a bona fide margin account or other loan or financing
arrangement secured by the Securities.

 

H.                                      NO THIRD PARTY BENEFICIARIES.  THIS
AGREEMENT IS INTENDED FOR THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE
PERMITTED SUCCESSORS AND ASSIGNS AND, TO THE EXTENT PROVIDED IN SECTION 9
HEREOF, EACH INDEMNITEE, AND IS NOT FOR THE BENEFIT OF, NOR MAY ANY PROVISION
HEREOF BE ENFORCED BY, ANY OTHER PERSON.

 

I.                                          SURVIVAL.  UNLESS THIS AGREEMENT IS
TERMINATED UNDER SECTION 10(K), THE REPRESENTATIONS AND WARRANTIES OF EACH BUYER
AND THE COMPANY CONTAINED IN SECTIONS 2 AND 3, THE AGREEMENTS AND COVENANTS SET
FORTH IN SECTIONS 4, 5, 6 AND 10, AND THE INDEMNIFICATION AND CONTRIBUTION
PROVISIONS SET FORTH IN SECTION 9, SHALL SURVIVE THE CLOSING IN ACCORDANCE WITH
THEIR TERMS.  EACH BUYER SHALL BE RESPONSIBLE ONLY FOR ITS OWN REPRESENTATIONS,
WARRANTIES, AGREEMENTS AND COVENANTS HEREUNDER.  THE COMPANY ACKNOWLEDGES AND
AGREES THAT THE PROVISIONS OF SECTION 16 OF THE NOTES SHALL SURVIVE THE
REDEMPTION, REPAYMENT OR SURRENDER OF SUCH NOTE.

 

J.                                          FURTHER ASSURANCES.  EACH PARTY
SHALL DO AND PERFORM, OR CAUSE TO BE DONE AND PERFORMED, ALL SUCH FURTHER ACTS
AND THINGS, AND SHALL EXECUTE AND DELIVER ALL SUCH OTHER AGREEMENTS,
CERTIFICATES, INSTRUMENTS AND DOCUMENTS, AS THE OTHER PARTY MAY REASONABLY
REQUEST IN ORDER TO CARRY OUT THE INTENT AND ACCOMPLISH THE PURPOSES OF THIS
AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY.

 

K.                                       TERMINATION.  IN THE EVENT THAT THE
CLOSING SHALL NOT HAVE OCCURRED WITH RESPECT TO A BUYER ON OR BEFORE THE THIRD
(3RD) BUSINESS DAY FOLLOWING THE DATE OF THIS AGREEMENT DUE TO THE COMPANY’S OR
SUCH BUYER’S FAILURE TO SATISFY THE CONDITIONS SET FORTH IN SECTIONS 7 AND 8
ABOVE (AND THE NONBREACHING PARTY’S FAILURE TO WAIVE SUCH UNSATISFIED
CONDITION(S)), THE NONBREACHING PARTY SHALL HAVE THE OPTION TO TERMINATE THIS
AGREEMENT WITH RESPECT TO SUCH BREACHING PARTY AT THE CLOSE OF BUSINESS ON SUCH
DATE WITHOUT LIABILITY OF ANY PARTY TO ANY OTHER PARTY.

 

L.                                          PLACEMENT AGENT.  THE COMPANY
REPRESENTS AND WARRANTS TO EACH BUYER THAT IT HAS NOT ENGAGED ANY PLACEMENT
AGENT, BROKER OR FINANCIAL ADVISOR IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY. THE COMPANY SHALL PAY, AND HOLD EACH BUYER HARMLESS
AGAINST, ANY LIABILITY, LOSS OR EXPENSE (INCLUDING ATTORNEYS’ FEES AND
OUT-OF-POCKET EXPENSES) ARISING IN CONNECTION WITH ANY CLAIM FOR ANY PAYMENT BY
ANY PLACEMENT AGENT, BROKER OR FINANCIAL ADVISOR.

 

M.                                    NO STRICT CONSTRUCTION.  THE LANGUAGE USED
IN THIS AGREEMENT WILL BE DEEMED TO BE THE LANGUAGE CHOSEN BY THE PARTIES TO
EXPRESS THEIR MUTUAL INTENT, AND NO RULES OF STRICT CONSTRUCTION WILL BE APPLIED
AGAINST ANY PARTY.

 

N.                                      REMEDIES.  EACH BUYER AND EACH HOLDER OF
THE SECURITIES SHALL HAVE ALL RIGHTS AND REMEDIES SET FORTH IN THE TRANSACTION
DOCUMENTS AND ALL RIGHTS AND REMEDIES THAT SUCH BUYER AND HOLDERS HAVE BEEN
GRANTED AT ANY TIME UNDER ANY OTHER AGREEMENT OR CONTRACT AND ALL OF THE RIGHTS
THAT SUCH BUYER AND HOLDERS HAVE UNDER ANY LAW.  ANY PERSON HAVING ANY RIGHTS
UNDER ANY PROVISION OF THIS AGREEMENT SHALL BE ENTITLED TO ENFORCE SUCH RIGHTS
SPECIFICALLY (WITHOUT POSTING A BOND OR OTHER SECURITY OR PROVING ACTUAL
DAMAGES), TO RECOVER DAMAGES BY

 

38

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

 

reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law, or in equity.

 

O.                                      RESCISSION AND WITHDRAWAL RIGHT. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN (AND WITHOUT LIMITING ANY
SIMILAR PROVISIONS OF) THE TRANSACTION DOCUMENTS, WHENEVER ANY BUYER EXERCISES A
RIGHT, ELECTION, DEMAND OR OPTION UNDER A TRANSACTION DOCUMENT AND THE COMPANY
OR ANY OF ITS SUBSIDIARIES DOES NOT TIMELY PERFORM ITS RELATED OBLIGATIONS
WITHIN THE PERIODS THEREIN PROVIDED, THEN SUCH BUYER 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.

 

P.                                      PAYMENT SET ASIDE.  TO THE EXTENT THAT
THE COMPANY OR ANY OF ITS SUBSIDIARIES MAKES A PAYMENT OR PAYMENTS TO A BUYER
PURSUANT TO THIS AGREEMENT, THE NOTES, THE SHARES, THE GUARANTY OR ANY OTHER
TRANSACTION DOCUMENT OR A BUYER ENFORCES OR EXERCISES ITS RIGHTS HEREUNDER OR
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 OR ANY OF
ITS SUBSIDIARIES, BY A TRUSTEE, RECEIVER OR ANY OTHER PERSON UNDER ANY LAW
(INCLUDING ANY BANKRUPTCY LAW, STATE OR FEDERAL LAW, COMMON LAW OR EQUITABLE
CAUSE OF ACTION), THEN TO THE EXTENT OF ANY SUCH RESTORATION THE OBLIGATION OR
PART THEREOF ORIGINALLY INTENDED TO BE SATISFIED SHALL BE REVIVED AND CONTINUED
IN FULL FORCE AND EFFECT AS IF SUCH PAYMENT HAD NOT BEEN MADE OR SUCH
ENFORCEMENT OR SETOFF HAD NOT OCCURRED.

 

Q.                                      INDEPENDENT NATURE OF BUYERS.  THE
OBLIGATIONS OF EACH BUYER HEREUNDER ARE SEVERAL AND NOT JOINT WITH THE
OBLIGATIONS OF ANY OTHER BUYER, AND NO BUYER SHALL BE RESPONSIBLE IN ANY WAY FOR
THE PERFORMANCE OF THE OBLIGATIONS OF ANY OTHER BUYER HEREUNDER.  EACH BUYER
SHALL BE RESPONSIBLE ONLY FOR ITS OWN REPRESENTATIONS, WARRANTIES, AGREEMENTS
AND COVENANTS HEREUNDER.  THE DECISION OF EACH BUYER TO PURCHASE THE SECURITIES
PURSUANT TO THIS AGREEMENT HAS BEEN MADE BY SUCH BUYER INDEPENDENTLY OF ANY
OTHER BUYER AND INDEPENDENTLY OF ANY INFORMATION, MATERIALS, STATEMENTS OR
OPINIONS AS TO THE BUSINESS, AFFAIRS, OPERATIONS, ASSETS, PROPERTIES,
LIABILITIES, RESULTS OF OPERATIONS, CONDITION (FINANCIAL OR OTHERWISE) OR
PROSPECTS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES WHICH MAY HAVE BEEN MADE OR
GIVEN BY ANY OTHER BUYER OR BY ANY AGENT OR EMPLOYEE OF ANY OTHER BUYER, AND NO
BUYER OR ANY OF ITS AGENTS OR EMPLOYEES SHALL HAVE ANY LIABILITY TO ANY OTHER
BUYER (OR ANY OTHER PERSON OR ENTITY) RELATING TO OR ARISING FROM ANY SUCH
INFORMATION, MATERIALS, STATEMENTS OR OPINIONS.  NOTHING CONTAINED HEREIN, AND
NO ACTION TAKEN BY ANY BUYER PURSUANT HERETO OR THERETO, SHALL BE DEEMED TO
CONSTITUTE THE BUYERS AS A PARTNERSHIP, AN ASSOCIATION, A JOINT VENTURE OR ANY
OTHER KIND OF ENTITY, OR CREATE A PRESUMPTION THAT THE BUYERS ARE IN ANY WAY
ACTING IN CONCERT OR AS A GROUP WITH RESPECT TO SUCH OBLIGATIONS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.  EACH BUYER SHALL BE ENTITLED TO INDEPENDENTLY
PROTECT AND ENFORCE ITS RIGHTS, INCLUDING THE RIGHTS ARISING OUT OF THIS
AGREEMENT, THE NOTES, THE SHARES, AND THE OTHER TRANSACTION DOCUMENTS, AND IT
SHALL NOT BE NECESSARY FOR ANY OTHER BUYER TO BE JOINED AS AN ADDITIONAL PARTY
IN ANY PROCEEDING FOR SUCH PURPOSE.

 

R.                                         INTERPRETATIVE MATTERS.  UNLESS THE
CONTEXT OTHERWISE REQUIRES, (I) ALL REFERENCES TO SECTIONS, SCHEDULES,
APPENDICES OR EXHIBITS ARE TO SECTIONS, SCHEDULES, APPENDICES OR EXHIBITS
CONTAINED IN OR ATTACHED TO THIS AGREEMENT, (B) EACH ACCOUNTING TERM NOT

 

39

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

 

otherwise defined in this Agreement has the meaning assigned to it in accordance
with GAAP, (c) words in the singular or plural include the singular and plural
and pronouns stated in either the masculine, the feminine or neuter gender shall
include the masculine, feminine and neuter, (d) the words “hereof,” “herein” and
words of similar effect shall reference this Agreement in its entirety, and
(e) the use of the word “including” in this Agreement shall be by way of example
rather than limitation.

 

*  *  *  *  *  *

 

40

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

 

IN WITNESS WHEREOF, Buyers and the Company have caused this Securities Purchase
Agreement to be duly executed as of the date first written above.

 

 

 

COMPANY:

 

 

 

 

 

AVERION INTERNATIONAL CORP.

 

 

 

 

 

By:

/s/ Lawrence R. Hoffman

 

 

 

Name:

Lawrence R. Hoffman

 

 

 

Title:

Chief Financial Officer

 

[Company Signature Page to Securities Purchase Agreement]

 

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

 

 

BUYER:

 

 

 

 

 

COMVEST INVESTMENT PARTNERS II,
LLC, a Delaware limited liability company

 

 

 

 

 

By:

/s/ Cecilio M. Rodriguez

  

Name:

Cecilio M. Rodrigez

 

Title:

Chief Financial Officer

 

 

 

 

 

CUMULUS INVESTORS, LLC, a Nevada
limited liability company

 

 

 

 

 

By:

/s/ Nader J. Kazeminy

 

Name:

Nader J. Kazeminy

 

Title:

Chairman and President

 

[Buyer Signature Page to Securities Purchase Agreement]

 

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

 

SCHEDULE OF BUYERS

 

Buyer’s Name

 

Buyer Address
and Contact Info

 

Principal
Amount
of Notes

 

Allocation
Percentage

 

Number of
Shares
to be Delivered
at Closing

 

Buyer’s Representative’s
Address and Facsimile Number
(to receive copies of notices)

 

 

 

 

 

 

 

 

 

 

 

ComVest Investment Partners II LLC

 

One North Clematis St.,
Suite 300
West Palm Beach, FL 33409
Attn: Michael Falk
Tel: 561-868-6074
Fax:

 

$

1,00,000

 

50

%

4,800,000

 

Akerman Senterfitt
One S.E. Third Avenue
Miami, Florida 33131
Attn: Carl Roston, Esq.
Tel: 305-374-5600
Fax: 305-374-5095

 

 

 

 

 

 

 

 

 

 

 

Cumulus Investors, LLC

 

8500 Normandale Lake Boulevard
Suite 650
Bloomington MN 55437
Attn: Nader J. Kazeminy
Tel: 952-831-7777
Fax: 952-831-9072

 

$

1,000,000

 

50

%

4,800,000

 

 

 

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

 

APPENDIX

 

CERTAIN DEFINED TERMS

 

For purposes of this Agreement, the following terms shall have the following
meanings:

 

“Affiliate” means, with respect to any Person, another Person that, directly or
indirectly, (i) has a 5% equity interest in that Person, (ii) has a common
ownership with that Person, (iii) controls that Person, (iv) is controlled by
that Person or (v) shares common control with that Person; and “control” or
“controls” means that a Person has the power, direct or indirect, to conduct or
govern the policies of another Person.

 

“Bloomberg” means Bloomberg Financial Markets (or any successor thereto).

 

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

 

“Capital Lease Obligation” means, as to any Person, any obligation that is
required to be classified and accounted for as a capital lease on a balance
sheet of such Person prepared in accordance with GAAP, and the amount of such
obligation shall be the capitalized amount thereof, determined in accordance
with GAAP.

 

“Capital Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, and any and
all equivalent ownership interests in a Person (other than a corporation).

 

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

 

“Common Stock” means the Company’s common stock, par value $0.001 per share.

 

“Contingent Obligation” means, as to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if a primary
purpose or intent of the Person incurring such liability, or a primary effect
thereof, is to provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such liability will be protected
(in whole or in part) against loss with respect thereto.

 

“Convertible Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exchangeable or exercisable for
shares of Common Stock.

 

“Environmental Laws” means all Laws relating to any matter arising out of or
relating to public health and safety, or pollution or protection of the
environment (including  ambient air, surface water, groundwater, land surface or
subsurface strata) or workplace, including any of the foregoing relating to the
presence, use, production, generation, handling, transport, treatment, storage,
disposal, distribution, discharge, emission, release, threatened release,
control or cleanup of any Hazardous Materials.

 

1

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

 

“ERISA” means the Employee Retirement Security Act of 1974, as amended.

 

“GAAP” means U.S. generally accepted accounting principles.

 

“Foreign Subsidiary” means, as to any Person, any other Person organized or
formed in any jurisdiction outside of the United States of America of which
fifty percent (50%) or more of the outstanding voting securities or other equity
interests are owned, directly or indirectly, by such Person.

 

“Governmental Entity” means the government of the United States or any other
nation, or any political subdivision thereof, whether state, provincial or
local, or any agency (including any self-regulatory agency or organization),
authority, instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administration powers or functions of or pertaining to government.

 

“Hazardous Materials” means any hazardous, toxic or dangerous substance,
materials and wastes, including hydrocarbons (including naturally occurring or
man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, biological substances,
polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type
of pollutants or contaminants (including materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any other
similar substances, materials, or wastes and including any other substances,
materials or wastes that are or become regulated under any Environmental Law
(including any that are or become classified as hazardous or toxic under any
Environmental Law).

 

“Indebtedness” of any Person means, without duplication:

 

(I)            ALL INDEBTEDNESS FOR BORROWED MONEY;

 

(II)           ALL OBLIGATIONS ISSUED, UNDERTAKEN OR ASSUMED AS THE DEFERRED
PURCHASE PRICE OF PROPERTY OR SERVICES;

 

(III)          ALL REIMBURSEMENT OR PAYMENT OBLIGATIONS WITH RESPECT TO LETTERS
OF CREDIT, SURETY BONDS AND OTHER SIMILAR INSTRUMENTS;

 

(IV)          ALL OBLIGATIONS EVIDENCED BY NOTES, BONDS, DEBENTURES, REDEEMABLE
CAPITAL STOCK OR SIMILAR INSTRUMENTS, INCLUDING OBLIGATIONS SO EVIDENCED
INCURRED IN CONNECTION WITH THE ACQUISITION OF PROPERTY, ASSETS OR BUSINESSES;

 

(V)           ALL INDEBTEDNESS CREATED OR ARISING UNDER ANY CONDITIONAL SALE OR
OTHER TITLE RETENTION AGREEMENT, OR INCURRED AS FINANCING, IN EITHER CASE WITH
RESPECT TO ANY PROPERTY OR ASSETS ACQUIRED WITH THE PROCEEDS OF SUCH
INDEBTEDNESS (EVEN THOUGH THE RIGHTS AND REMEDIES OF THE SELLER, BANK OR OTHER
FINANCING SOURCE UNDER SUCH AGREEMENT IN THE EVENT OF DEFAULT ARE LIMITED TO
REPOSSESSION OR SALE OF SUCH PROPERTY);

 

(VI)          ALL CAPITAL LEASE OBLIGATIONS;

 

2

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

 

(VII)         ALL INDEBTEDNESS REFERRED TO IN CLAUSES (I) THROUGH (VI) ABOVE
SECURED BY (OR FOR WHICH THE HOLDER OF SUCH INDEBTEDNESS HAS AN EXISTING RIGHT,
CONTINGENT OR OTHERWISE, TO BE SECURED BY) ANY MORTGAGE, LIEN, PLEDGE, CHARGE,
SECURITY INTEREST OR OTHER ENCUMBRANCE UPON OR IN ANY PROPERTY OR ASSETS
(INCLUDING ACCOUNTS AND CONTRACT RIGHTS) OWNED BY ANY PERSON, EVEN THOUGH THE
PERSON THAT OWNS SUCH ASSETS OR PROPERTY HAS NOT ASSUMED OR BECOME LIABLE FOR
THE PAYMENT OF SUCH INDEBTEDNESS; AND

 

(VIII)        ALL CONTINGENT OBLIGATIONS IN RESPECT OF INDEBTEDNESS OR
OBLIGATIONS OF OTHERS OF THE KINDS REFERRED TO IN CLAUSES (I) THROUGH
(VII) ABOVE.

 

“Insolvent” means, with respect to any Person as of any date, (i) the present
fair saleable value of such Person’s assets is less than the amount required to
pay such Person’s total indebtedness, contingent or otherwise, (ii) such Person
is unable to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured, (iii) such
Person intends to incur, prior to the second anniversary of such date, or
believes that it will incur, prior to the second anniversary of such date, debts
that would be beyond its ability to pay as such debts mature, or (iv) such
Person has unreasonably small capital with which to conduct the business in
which it is engaged as such business is then conducted and is then proposed to
be conducted.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended.

 

“Knowledge,” “Knowledge of the Company,” “to the Company’s Knowledge” and
similar language means the actual knowledge of any “officer” (as such term is
defined in Rule 16a-1 under the 1934 Act) of the Company or of any Subsidiary
after a reasonable inquiry.

 

“Lavin Notes” shall mean those certain promissory notes originally issued by
IT&E International Group, Inc., a Delaware corporation and predecessor to the
Company, dated July 31, 2006, as follows: (i) promissory notes with a repayment
term of two (2) years in the original aggregate principal amount of $700,000 (of
which $566,242 in principal amount was issued directly to Dr. Philip T. Lavin);
and (ii) promissory notes with a repayment term of five (5) years in the
original aggregate principal amount of $5,700,000 (of which $4,610,828 in
principal amount was issued directly to Dr. Philip T. Lavin).

 

“Laws” means all present or future federal, state, local or foreign laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative or judicial orders, judgments, decrees, rulings, consent
agreements, directed duties, requests, licenses, authorizations and permits of,
and agreements with, any Governmental Entity.

 

“Lien” means with respect to any asset or property, any mortgage, lien, pledge,
hypothecation, charge, security interest, encumbrance or adverse claim of any
kind and any restrictive covenant, condition, restriction or exception of any
kind that has the practical effect of creating a mortgage, lien, pledge,
hypothecation, charge, security interest, encumbrance or adverse claim of any
kind (including any of the foregoing created by, arising under or evidenced by
any conditional sale or other title retention agreement, the interest of a
lessor with respect to a Capital Lease Obligation, or any financing lease having
substantially the same economic effect as any of the foregoing).

 

3

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

 

“Material Adverse Effect” means any changes, circumstances, effects, occurrences
or events that, individually or in the aggregate, have or could reasonably be
expected to have, a material adverse effect on (i) the business, properties,
assets, operations, results of operations, condition (financial or otherwise),
credit worthiness or prospects of the Company and its Subsidiaries, taken as a
whole, (ii) any of the transactions contemplated by the Transaction Documents,
or (iii) the authority or ability of the Company or any of its Subsidiaries to
enter into the Transaction Documents and perform its obligations thereunder.

 

“Millennix Notes” means those certain subordinated promissory notes originally
issued and still outstanding by IT&E International Group, Inc., a Delaware
corporation and predecessor to the Company, dated November 9, 2005, in the
original aggregate principal amount of $980,820.58 (all of which was issued
directly to Dr. Gene Resnick).

 

“Options” means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.

 

“Permitted Lien” means:

 

(I)            LIENS CREATED BY THE SECURITY DOCUMENTS;

 

(II)           LIENS FOR TAXES OR OTHER GOVERNMENTAL CHARGES NOT AT THE TIME DUE
AND PAYABLE, OR WHICH ARE BEING CONTESTED IN GOOD FAITH BY APPROPRIATE
PROCEEDINGS DILIGENTLY PROSECUTED, SO LONG AS FORECLOSURE, DISTRAINT, SALE OR
OTHER SIMILAR PROCEEDINGS HAVE NOT BEEN INITIATED, AND IN EACH CASE FOR WHICH
THE COMPANY AND ITS SUBSIDIARIES MAINTAIN ADEQUATE RESERVES IN ACCORDANCE WITH
GAAP IN RESPECT OF SUCH TAXES AND CHARGES;

 

(III)          LIENS ARISING IN THE ORDINARY COURSE OF BUSINESS IN FAVOR OF
CARRIERS, WAREHOUSEMEN, MECHANICS AND MATERIALMEN, OR OTHER SIMILAR LIENS
IMPOSED BY LAW, WHICH REMAIN PAYABLE WITHOUT PENALTY OR WHICH ARE BEING
CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS DILIGENTLY PROSECUTED, WHICH
PROCEEDINGS HAVE THE EFFECT OF PREVENTING THE FORFEITURE OR SALE OF THE PROPERTY
SUBJECT THERETO, AND IN EACH CASE FOR WHICH ADEQUATE RESERVES IN ACCORDANCE WITH
GAAP ARE BEING MAINTAINED;

 

(IV)          LIENS ARISING IN THE ORDINARY COURSE OF BUSINESS IN CONNECTION
WITH WORKER’S COMPENSATION, UNEMPLOYMENT COMPENSATION AND OTHER TYPES OF SOCIAL
SECURITY (EXCLUDING LIENS ARISING UNDER ERISA);

 

(V)           LIENS ARISING FROM LINES OF CREDIT SECURED BY RESTRICTED CASH
DEPOSITS FOR PROPERTY LEASES;

 

(VI)          ATTACHMENTS, APPEAL BONDS (AND CASH COLLATERAL SECURING SUCH
BONDS), JUDGMENTS AND OTHER SIMILAR LIENS, FOR SUMS NOT EXCEEDING ONE HUNDRED
THOUSAND DOLLARS ($100,000) IN THE AGGREGATE FOR THE COMPANY AND ITS
SUBSIDIARIES, ARISING IN CONNECTION WITH COURT PROCEEDINGS, PROVIDED THAT THE
EXECUTION OR OTHER ENFORCEMENT OF SUCH LIENS IS EFFECTIVELY STAYED;

 

(VII)         EASEMENTS, RIGHTS OF WAY, RESTRICTIONS, MINOR DEFECTS OR
IRREGULARITIES IN TITLE AND OTHER SIMILAR LIENS ARISING IN THE ORDINARY COURSE
OF BUSINESS AND NOT MATERIALLY

 

4

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

 

DETRACTING FROM THE VALUE OF THE PROPERTY SUBJECT THERETO AND NOT INTERFERING IN
ANY MATERIAL RESPECT WITH THE ORDINARY CONDUCT OF THE BUSINESS OF THE COMPANY OR
ANY OF ITS SUBSIDIARIES; AND

 

(VIII)        LIENS ARISING SOLELY BY VIRTUE OF ANY STATUTORY OR COMMON LAW
PROVISION RELATING TO BANKER’S LIENS, RIGHTS OF SET-OFF OR SIMILAR RIGHTS AND
REMEDIES AND BURDENING ONLY DEPOSIT ACCOUNTS OR OTHER FUNDS MAINTAINED WITH A
CREDITOR DEPOSITORY INSTITUTION, PROVIDED THAT NO SUCH DEPOSIT ACCOUNT IS A
DEDICATED CASH COLLATERAL ACCOUNT OR IS SUBJECT TO RESTRICTIONS AGAINST ACCESS
BY THE DEPOSITOR IN EXCESS OF THOSE SET FORTH BY REGULATIONS PROMULGATED BY THE
BOARD OF GOVERNORS OF THE U.S. FEDERAL RESERVE SYSTEM AND THAT NO SUCH DEPOSIT
ACCOUNT IS INTENDED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES TO PROVIDE
COLLATERAL TO THE DEPOSITORY INSTITUTION.

 

“Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, a
Governmental Entity or any other legal entity.

 

“Prior Notes” means the notes issued by the  Company pursuant to the Securities
Purchase Agreement, dated as of October 31, 2007, as amended.

 

“Public Disclosure” or “Publicly Disclose” means the Company’s public
dissemination of information through the filing via the Electronic Data
Gathering, Analysis, and Retrieval system of the SEC of a Periodic Report or
Current Report disclosing such information pursuant to the requirements of the
1934 Act.

 

“Related Party” means a Person’s or any of its subsidiary’s officers, directors,
persons who were officers or directors at any time during the previous two
years, stockholders (other than any holder of less than 5% of the outstanding
shares of such Person), or Affiliates of such Person or any of its subsidiaries,
or any individual related by blood, marriage or adoption to any such individual
or any entity in which any such entity or individual owns a beneficial interest.

 

“Securities Laws” means the securities laws (including “Blue Sky” laws),
legislation and regulations of, and the instruments, policies, rules, orders,
codes, notices and interpretation notes of, the securities regulatory
authorities (including the SEC) of the United States and any applicable states
and other jurisdictions.

 

“Security Documents” means the Security Agreement, the Guarantees and any other
agreements, documents and instruments executed concurrently herewith or at any
time hereafter pursuant to which the Company, its Subsidiaries, or any other
Person either (i) guarantees payment or performance of all or any portion of the
obligations hereunder or under any other instruments delivered in connection
with the transactions contemplated hereby and by the other Transaction
Documents, and/or (ii) provides, as security for all or any portion of such
obligations, a Lien on any of its assets in favor of a Buyer, as any or all of
the same may be amended, supplemented, restated or otherwise modified from time
to time.

 

“Subsidiaries” shall only mean Hesperion US, Inc., a Maryland corporation.

 

“Transaction Documents” means this Agreement, the Notes, the Security Agreement,
the Guaranty, and each of the other agreements or instruments to which the
Company or any of its Subsidiaries is a party or by which it is bound and which
is entered into by the parties hereto

 

5

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

 

or thereto in connection with the transactions contemplated hereby and thereby,
or which is otherwise delivered by the Buyers, the Company or any of its
Subsidiaries in connection with the transactions contemplated hereby and
thereby.

 

6

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

 

EXHIBIT A

 

FORM OF NOTES

 

(See Exhibit 4.14)

 

1

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

 

EXHIBIT B

 

SECURITY AGREEMENT

 

(See Exhibit 10.63)

 

1

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

 

EXHIBIT C

 

GUARANTY

 

(See Exhibit 10.64)

 

1

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

 

EXHIBIT D

 

FORM OF COMPANY COUNSEL’S OPINION

 

(Omitted)

 

1

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