Exhibit 10.2

 

SECURITIES PURCHASE AGREEMENT

 

SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of July 10, 2003, by
and among Commerce One, Inc., a Delaware corporation, with headquarters located
at 4440 Rosewood Drive, Pleasanton, California 94588 (the “Company”), and the
investors listed on the Schedule of Buyers attached hereto (individually, a
“Buyer” and collectively, the “Buyers”).

 

WHEREAS:

 

A.                                   THE COMPANY HAS AUTHORIZED A NEW SERIES OF
CONVERTIBLE PREFERRED SHARES OF THE COMPANY, THE TERMS OF WHICH ARE SET FORTH IN
THE CERTIFICATE OF DESIGNATIONS FOR SUCH SERIES OF PREFERRED SHARES (THE
“CERTIFICATE OF DESIGNATIONS”) IN THE FORM ATTACHED HERETO AS EXHIBIT A
(TOGETHER WITH ANY CONVERTIBLE PREFERRED SHARES ISSUED IN REPLACEMENT THEREOF IN
ACCORDANCE WITH THE TERMS THEREOF, THE “PREFERRED SHARES”), WHICH PREFERRED
SHARES SHALL BE CONVERTIBLE INTO SHARES OF THE COMPANY’S COMMON STOCK, PAR VALUE
$.0001 PER SHARE (THE “COMMON STOCK”) (AS CONVERTED, THE “CONVERSION SHARES”),
IN ACCORDANCE WITH THE TERMS OF THE CERTIFICATE OF DESIGNATIONS;

 

B.                                     EACH BUYER WISHES TO PURCHASE, AND THE
COMPANY WISHES TO SELL, UPON THE TERMS AND CONDITIONS STATED IN THIS AGREEMENT,
(I) AN AGGREGATE OF 100,000 PREFERRED SHARES IN THE RESPECTIVE AMOUNTS SET FORTH
OPPOSITE EACH BUYER’S NAME IN COLUMN (3) ON THE SCHEDULE OF BUYERS AND (II)
WARRANTS, IN SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT B (THE
“WARRANTS”), TO ACQUIRE THAT NUMBER OF SHARES OF COMMON STOCK SET FORTH OPPOSITE
SUCH BUYER’S NAME IN COLUMN (4) ON THE SCHEDULE OF BUYERS (AS EXERCISED,
COLLECTIVELY, THE “WARRANT SHARES”);

 

C.                                     THE COMPANY AND EACH BUYER IS EXECUTING
AND DELIVERING THIS AGREEMENT IN RELIANCE UPON THE EXEMPTION FROM SECURITIES
REGISTRATION AFFORDED BY SECTION 4(2) OF THE SECURITIES ACT OF 1933, AS AMENDED
(THE “1933 ACT”), AND RULE 506 OF REGULATION D (“REGULATION D”) AS PROMULGATED
BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) UNDER THE
1933 ACT TO THE EXTENT NECESSARY TO ISSUE THE PREFERRED SHARES, THE CONVERSION
SHARES, THE WARRANTS AND THE WARRANT SHARES;

 

D.                                    UPON THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, THE PARTIES HERETO SHALL EXECUTE AND DELIVER A
REGISTRATION RIGHTS AGREEMENT, SUBSTANTIALLY IN THE FORM ATTACHED HERETO AS
EXHIBIT C (THE “REGISTRATION RIGHTS AGREEMENT”), PURSUANT TO WHICH THE COMPANY
WILL AGREE TO PROVIDE CERTAIN REGISTRATION RIGHTS WITH RESPECT TO THE
REGISTRABLE SECURITIES (AS DEFINED IN THE REGISTRATION RIGHTS AGREEMENT) UNDER
THE 1933 ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, AND
APPLICABLE STATE SECURITIES LAWS.

 

E.                                      THE PREFERRED SHARES, THE CONVERSION
SHARES, THE WARRANTS AND THE WARRANT SHARES COLLECTIVELY ARE REFERRED TO HEREIN
AS THE “SECURITIES”.

 

NOW, THEREFORE, the Company and each Buyer hereby agree as follows:

 

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1.                                       PURCHASE AND SALE OF PREFERRED SHARES
AND WARRANTS.

 

(A)                                  PURCHASE OF PREFERRED SHARES AND WARRANTS.

 

(I)                                     PREFERRED SHARES AND WARRANTS.  SUBJECT
TO THE SATISFACTION (OR WAIVER) OF THE CONDITIONS SET FORTH IN SECTIONS 6 AND 7
BELOW, THE COMPANY SHALL ISSUE AND SELL TO EACH BUYER, AND EACH BUYER SEVERALLY,
BUT NOT JOINTLY, AGREES TO PURCHASE FROM THE COMPANY ON THE CLOSING DATE (AS
DEFINED BELOW), THE RESPECTIVE NUMBER OF PREFERRED SHARES SET FORTH OPPOSITE
SUCH BUYER’S NAME IN COLUMN (3) ON THE SCHEDULE OF BUYERS, ALONG WITH WARRANTS
TO ACQUIRE THAT NUMBER OF WARRANT SHARES SET FORTH OPPOSITE SUCH BUYER’S NAME IN
COLUMN (4) ON THE SCHEDULE OF BUYERS (THE “CLOSING”).

 

(II)                                  CLOSING.  THE CLOSING SHALL OCCUR ON THE
CLOSING DATE AT THE OFFICES OF SCHULTE ROTH & ZABEL LLP, 919 THIRD AVENUE, NEW
YORK, NEW YORK 10022.

 

(III)                               PURCHASE PRICE.  THE PURCHASE PRICE FOR EACH
BUYER (THE “PURCHASE PRICE”) OF THE PREFERRED SHARES AND RELATED WARRANTS TO BE
PURCHASED BY EACH SUCH BUYER AT THE CLOSING SHALL BE EQUAL TO $100 FOR EACH
PREFERRED SHARE AND RELATED WARRANTS BEING PURCHASED BY SUCH BUYER AT THE
CLOSING.

 

(B)                                 CLOSING DATE.  THE DATE AND TIME OF THE
CLOSING (THE “CLOSING DATE”) SHALL BE NOON, NEW YORK CITY TIME, ON THE DATE
HEREOF AFTER NOTIFICATION OF SATISFACTION (OR WAIVER) OF THE CONDITIONS TO THE
CLOSING SET FORTH IN SECTIONS 6(A) AND 7(A) BELOW (OR SUCH LATER DATE AS IS
MUTUALLY AGREED TO BY THE COMPANY AND EACH BUYER).

 

(C)                                  FORM OF PAYMENT.  ON THE CLOSING DATE, (A)
EACH BUYER SHALL PAY THE PURCHASE PRICE TO THE COMPANY FOR THE PREFERRED SHARES
AND WARRANTS TO BE ISSUED AND SOLD TO SUCH BUYER AT THE CLOSING, BY WIRE
TRANSFER OF IMMEDIATELY AVAILABLE FUNDS IN ACCORDANCE WITH THE COMPANY’S WRITTEN
WIRE INSTRUCTIONS, LESS ANY AMOUNT WITHHELD AT THE CLOSING FOR EXPENSES PURSUANT
TO SECTION 4(G), AND (B) THE COMPANY SHALL DELIVER TO EACH BUYER STOCK
CERTIFICATES (THE “PREFERRED STOCK CERTIFICATES”) REPRESENTING SUCH NUMBER OF
THE PREFERRED SHARES WHICH SUCH BUYER IS THEN PURCHASING HEREUNDER ALONG WITH
THE WARRANTS (IN THE AMOUNTS AS SUCH BUYER SHALL REQUEST) SUCH BUYER IS
PURCHASING, DULY EXECUTED ON BEHALF OF THE COMPANY AND REGISTERED IN THE NAME OF
SUCH BUYER.

 

2.                                       BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer represents and warrants with respect to only itself that:

 

(A)                                  NO PUBLIC SALE OR DISTRIBUTION.  SUCH BUYER
IS (I) ACQUIRING THE PREFERRED SHARES AND THE WARRANTS AND (II) UPON CONVERSION
OF THE PREFERRED SHARES AND EXERCISE OF THE WARRANTS WILL ACQUIRE THE CONVERSION
SHARES ISSUABLE UPON CONVERSION OF THE PREFERRED SHARES AND THE WARRANT SHARES
ISSUABLE UPON EXERCISE OF THE WARRANTS, FOR ITS 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 OR EXEMPTED UNDER THE 1933 ACT;
PROVIDED, HOWEVER, THAT BY

 

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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 UNITED STATES FEDERAL
AND STATE 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 WHICH 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 HEREIN.  SUCH BUYER UNDERSTANDS THAT
ITS INVESTMENT IN THE SECURITIES INVOLVES A HIGH DEGREE OF RISK.  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.

 

(E)                                  NO GOVERNMENTAL REVIEW.  SUCH BUYER
UNDERSTANDS THAT NO UNITED STATES FEDERAL OR STATE AGENCY OR ANY OTHER
GOVERNMENT OR GOVERNMENTAL AGENCY HAS PASSED ON OR MADE ANY RECOMMENDATION OR
ENDORSEMENT OF THE SECURITIES OR THE FAIRNESS OR SUITABILITY OF THE 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) EXCEPT AS PROVIDED IN THE REGISTRATION RIGHTS AGREEMENT,
THE SECURITIES HAVE NOT BEEN AND ARE NOT BEING REGISTERED UNDER THE 1933 ACT OR
ANY STATE 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 FORM GENERALLY
ACCEPTABLE TO THE COMPANY, TO THE EFFECT THAT SUCH SECURITIES TO BE SOLD,
ASSIGNED OR TRANSFERRED MAY BE SOLD, ASSIGNED OR TRANSFERRED PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION, OR (C) SUCH BUYER SHALL HAVE SATISFIED THE
REQUIREMENTS OF RULE 144(K) PROMULGATED UNDER THE 1933 ACT, AS AMENDED (OR A
SUCCESSOR RULE THERETO); (II) ANY SALE OF THE SECURITIES MADE IN RELIANCE ON
RULE 144 OR RULE 144A PROMULGATED UNDER THE 1933 ACT, AS AMENDED (OR A SUCCESSOR
RULE THERETO) (COLLECTIVELY, “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 (AS
DEFINED IN SECTION 3(R)) 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 THE RULES AND REGULATIONS OF THE
SEC THEREUNDER; AND (III) NEITHER THE COMPANY

 

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NOR ANY OTHER PERSON IS UNDER ANY OBLIGATION TO REGISTER THE SECURITIES UNDER
THE 1933 ACT OR ANY STATE SECURITIES LAWS OR TO COMPLY WITH THE TERMS AND
CONDITIONS OF ANY EXEMPTION THEREUNDER.  THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER BONA FIDE LOAN SECURED BY
THE SECURITIES AND SUCH PLEDGE OF SECURITIES SHALL NOT BE DEEMED TO BE A
TRANSFER, SALE OR ASSIGNMENT OF THE SECURITIES HEREUNDER, AND NO BUYER EFFECTING
A 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, INCLUDING, WITHOUT LIMITATION, THIS SECTION
2(F); PROVIDED, THAT IN ORDER TO MAKE ANY SALE, TRANSFER OR ASSIGNMENT OF
SECURITIES, SUCH BUYER AND ITS PLEDGEE MAKES SUCH DISPOSITION IN ACCORDANCE WITH
OR PURSUANT TO A REGISTRATION STATEMENT OR AN EXEMPTION UNDER THE 1933 ACT. 
NOTWITHSTANDING THE FOREGOING, NO BUYER SHALL TRANSFER ANY PREFERRED SHARES OR
WARRANTS OTHER THAN TO AN AFFILIATE OF SUCH BUYER.

 

(G)                                 LEGENDS.  SUCH BUYER UNDERSTANDS THAT THE
CERTIFICATES OR OTHER INSTRUMENTS REPRESENTING THE PREFERRED SHARES AND THE
WARRANTS AND, UNTIL SUCH TIME AS THE SALE OF THE REGISTRABLE SECURITIES HAVE
BEEN REGISTERED UNDER THE 1933 ACT AS CONTEMPLATED BY THE REGISTRATION RIGHTS
AGREEMENT, THE STOCK CERTIFICATES REPRESENTING THE REGISTRABLE SECURITIES,
EXCEPT AS SET FORTH BELOW, SHALL BEAR ANY LEGEND AS REQUIRED BY THE “BLUE SKY”
LAWS OF ANY STATE AND A RESTRICTIVE LEGEND IN SUBSTANTIALLY THE FOLLOWING FORM
(AND A STOP-TRANSFER ORDER MAY BE PLACED AGAINST TRANSFER OF SUCH STOCK
CERTIFICATES):

 

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, AND APPLICABLE STATE SECURITIES LAWS, OR
(B) AN OPINION OF COUNSEL, IN A FORM GENERALLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS
OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
BONA FIDE 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 upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for sale under the 1933 Act, (ii) in connection with a
sale, assignment or other transfer, such holder provides the Company with an
opinion of counsel, in a generally acceptable form, to the effect that such
sale, assignment or transfer of the Securities may be made without registration
under the 1933 Act, or (iii) such

 

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holder provides the Company with reasonable assurance that the Securities can be
sold, assigned or transferred pursuant to Rule 144(k).

 

(H)                                 AUTHORIZATION; VALIDITY; ENFORCEMENT.  THIS
AGREEMENT HAS BEEN, AND THE REGISTRATION RIGHTS AGREEMENT SHALL HAVE BEEN BY THE
CLOSING DATE, DULY AND VALIDLY AUTHORIZED, EXECUTED AND DELIVERED ON BEHALF OF
SUCH BUYER AND SHALL CONSTITUTE THE LEGAL, VALID AND BINDING OBLIGATIONS OF SUCH
BUYER ENFORCEABLE AGAINST SUCH BUYER IN ACCORDANCE WITH THEIR RESPECTIVE TERMS,
EXCEPT AS SUCH ENFORCEABILITY MAY BE LIMITED BY GENERAL PRINCIPLES OF EQUITY OR
APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM, LIQUIDATION AND
OTHER SIMILAR LAWS RELATING TO, OR AFFECTING GENERALLY, THE ENFORCEMENT OF
APPLICABLE CREDITORS’ RIGHTS AND REMEDIES.

 

(I)                                     RESIDENCY.  SUCH BUYER IS A RESIDENT OF
THAT COUNTRY OR STATE SPECIFIED BELOW ITS ADDRESS ON THE SCHEDULE OF BUYERS.

 

(J)                                     ORGANIZATION.  SUCH BUYER IS DULY
ORGANIZED AND VALIDLY EXISTING IN GOOD STANDING UNDER THE LAWS OF THE
JURISDICTION OF ITS ORGANIZATION, AND HAS THE REQUISITE POWER AND AUTHORIZATION
TO EXECUTE AND DELIVER THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTION
CONTEMPLATED HEREBY.

 

(K)                                  NO CONFLICTS.  THE EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT BY SUCH
BUYER AND THE CONSUMMATION BY SUCH BUYER OF THE TRANSACTIONS CONTEMPLATED HEREBY
AND THEREBY WILL NOT (I) RESULT IN A VIOLATION OF THE CONSTITUENT DOCUMENTS OF
SUCH BUYER OR (II) CONFLICT WITH, OR CONSTITUTE A DEFAULT (OR AN EVENT WHICH
WITH NOTICE OR LAPSE OF TIME OR BOTH WOULD BECOME A DEFAULT) UNDER, OR GIVE TO
OTHERS ANY RIGHTS OF TERMINATION, AMENDMENT, ACCELERATION OR CANCELLATION OF,
ANY MATERIAL AGREEMENT, INDENTURE OR INSTRUMENT TO WHICH SUCH BUYER IS A PARTY,
OR (III) RESULT IN A VIOLATION OF ANY LAW, RULE, REGULATION, ORDER, JUDGMENT OR
DECREE APPLICABLE TO SUCH BUYER OR BY WHICH ANY PROPERTY OR ASSET OF SUCH BUYER
IS BOUND OR AFFECTED, EXCEPT IN THE CASE OF CLAUSES (II) AND (III), FOR SUCH
BREACHES OR DEFAULTS AS WOULD NOT BE REASONABLY EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT ON SUCH BUYER’S ABILITY TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

3.                                       REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.

 

Other than as set forth in the SEC Documents (as defined below) and in a
Schedule of Exceptions delivered by the Company to the Buyers concurrently with
the execution of this Agreement, the Company represents and warrants to each
Buyer as of the Closing, or such other date as specified, that (for the purposes
of this Section 3, “knowledge” of the Company shall mean the actual knowledge of
the officers of the Company):

 

(A)                                  ORGANIZATION AND QUALIFICATION.  THE
COMPANY AND ITS “SUBSIDIARIES” (WHICH FOR PURPOSES OF THIS AGREEMENT MEANS ANY
ENTITY IN WHICH THE COMPANY, DIRECTLY OR INDIRECTLY, OWNS MORE THAN 50% OF THE
CAPITAL STOCK OR HOLDS A MORE THAN 50% EQUITY OR SIMILAR INTEREST) ARE ENTITIES
DULY ORGANIZED AND VALIDLY EXISTING IN GOOD STANDING UNDER THE LAWS OF THE
JURISDICTION IN WHICH THEY ARE ORGANIZED, AND HAVE THE REQUISITE CORPORATE OR
OTHER POWER AND AUTHORIZATION TO OWN THEIR PROPERTIES AND TO CARRY ON THEIR
BUSINESS AS NOW BEING CONDUCTED.  EACH OF THE COMPANY AND ITS SUBSIDIARIES IS
DULY QUALIFIED AS A FOREIGN ENTITY TO DO

 

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BUSINESS AND IS IN GOOD STANDING IN EVERY JURISDICTION IN WHICH ITS OWNERSHIP OF
PROPERTY OR THE NATURE OF THE BUSINESS CONDUCTED BY IT MAKES SUCH QUALIFICATION
NECESSARY, EXCEPT TO THE EXTENT THAT THE FAILURE TO BE SO QUALIFIED OR BE IN
GOOD STANDING WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT.  AS USED IN THIS AGREEMENT, “MATERIAL ADVERSE EFFECT” MEANS ANY MATERIAL
ADVERSE EFFECT ON THE BUSINESS, PROPERTIES, ASSETS, OPERATIONS, RESULTS OF
OPERATIONS OR CONDITION (FINANCIAL OR OTHERWISE) OF THE COMPANY AND ITS
SUBSIDIARIES, TAKEN AS A WHOLE, OR ON THE TRANSACTIONS CONTEMPLATED HEREBY OR BY
THE AGREEMENTS AND INSTRUMENTS TO BE ENTERED INTO IN CONNECTION HEREWITH, OR ON
THE AUTHORITY OR ABILITY OF THE COMPANY TO PERFORM ITS OBLIGATIONS UNDER THE
TRANSACTION DOCUMENTS (AS DEFINED BELOW).  THE COMPANY HAS NO SUBSIDIARIES
EXCEPT AS SET FORTH ON SCHEDULE 3(A).

 

(B)                                 AUTHORIZATION; ENFORCEMENT; VALIDITY.  THE
COMPANY HAS THE REQUISITE CORPORATE POWER AND AUTHORITY TO ENTER INTO AND
PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT, THE CERTIFICATE OF DESIGNATIONS,
THE REGISTRATION RIGHTS AGREEMENT, THE IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
(AS DEFINED IN SECTION 5(B)) AND THE WARRANTS (COLLECTIVELY, THE “TRANSACTION
DOCUMENTS”) 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 THE EXECUTION AND FILING OF THE CERTIFICATE OF DESIGNATIONS BY THE COMPANY
AND THE CONSUMMATION BY THE COMPANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY, INCLUDING, WITHOUT LIMITATION, THE ISSUANCE OF THE PREFERRED SHARES AND
THE WARRANTS AND THE RESERVATION FOR ISSUANCE AND THE ISSUANCE OF THE CONVERSION
SHARES AND THE WARRANT SHARES ISSUABLE UPON CONVERSION OR EXERCISE THEREOF, AS
THE CASE MAY BE, HAVE BEEN DULY AUTHORIZED BY THE COMPANY’S BOARD OF DIRECTORS
AND NO FURTHER CONSENT OR AUTHORIZATION IS REQUIRED BY THE COMPANY, ITS BOARD OF
DIRECTORS OR ITS STOCKHOLDERS.  THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS OF EVEN DATE HEREWITH HAVE BEEN DULY EXECUTED AND DELIVERED BY THE
COMPANY, AND CONSTITUTE THE LEGAL, VALID AND BINDING OBLIGATIONS OF THE COMPANY
ENFORCEABLE AGAINST THE COMPANY IN ACCORDANCE WITH THEIR RESPECTIVE TERMS,
EXCEPT AS SUCH ENFORCEABILITY MAY BE LIMITED BY GENERAL PRINCIPLES OF EQUITY OR
APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM, LIQUIDATION OR
SIMILAR LAWS RELATING TO, OR AFFECTING GENERALLY, THE ENFORCEMENT OF APPLICABLE
CREDITORS’ RIGHTS AND REMEDIES.  THE CERTIFICATE OF DESIGNATIONS HAS BEEN FILED
ON OR PRIOR TO THE CLOSING DATE WITH THE SECRETARY OF STATE OF THE STATE OF
DELAWARE AND WILL BE IN FULL FORCE AND EFFECT, ENFORCEABLE AGAINST THE COMPANY
IN ACCORDANCE WITH ITS TERMS AND SHALL NOT HAVE BEEN AMENDED UNLESS IN
COMPLIANCE WITH ITS TERMS.

 

(C)                                  ISSUANCE OF SECURITIES.  THE PREFERRED
SHARES AND WARRANTS ARE DULY AUTHORIZED AND, UPON ISSUANCE IN ACCORDANCE WITH
THE TERMS HEREOF, SHALL BE VALIDLY ISSUED, FREE FROM ALL DOCUMENTARY STAMP,
TRANSFER OR SIMILAR TAXES (PROVIDED THAT SUCH TAXES SHALL BE LIMITED TO UNITED
STATES FEDERAL TAXES, STATE TAXES AND TAXES OF THE JURISDICTION OF INCORPORATION
OF THE COMPANY), LIENS AND CHARGES WITH RESPECT TO THE ISSUE THEREOF (OTHER THAN
RESTRICTIONS ON TRANSFER CONTAINED IN THIS AGREEMENT AND THE REGISTRATION RIGHTS
AGREEMENT), AND THE PREFERRED SHARES SHALL BE ENTITLED TO THE RIGHTS AND
PREFERENCES SET FORTH IN THE CERTIFICATE OF DESIGNATIONS.  AS OF THE CLOSING, A
NUMBER OF SHARES OF COMMON STOCK SHALL HAVE BEEN DULY AUTHORIZED AND RESERVED
FOR ISSUANCE WHICH EQUALS 7,300,000.  UPON CONVERSION OR EXERCISE IN ACCORDANCE
WITH THE PREFERRED SHARES OR THE WARRANTS, AS THE CASE MAY BE, THE CONVERSION
SHARES AND THE WARRANT SHARES, RESPECTIVELY, WILL BE VALIDLY ISSUED, FULLY PAID
AND NONASSESSABLE AND FREE FROM ALL DOCUMENTARY STAMP, TRANSFER OR SIMILAR TAXES
(PROVIDED THAT SUCH TAXES SHALL BE LIMITED TO UNITED STATES FEDERAL TAXES, STATE
TAXES AND TAXES OF THE JURISDICTION OF INCORPORATION OF THE COMPANY),

 

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LIENS AND CHARGES WITH RESPECT TO THE ISSUE THEREOF (OTHER THAN RESTRICTIONS ON
TRANSFER CONTAINED IN THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT),
WITH THE HOLDERS BEING ENTITLED TO ALL RIGHTS ACCORDED TO A HOLDER OF COMMON
STOCK.  ASSUMING THE ACCURACY OF EACH OF THE REPRESENTATIONS AND WARRANTIES OF
BUYER CONTAINED IN SECTION 2, THE ISSUANCE BY THE COMPANY OF THE SECURITIES IS
EXEMPT FROM REGISTRATION UNDER THE 1933 ACT.

 

(D)                                 NO CONFLICTS.  THE EXECUTION, DELIVERY AND
PERFORMANCE OF THE TRANSACTION DOCUMENTS, INCLUDING THE CERTIFICATE OF
DESIGNATIONS, BY THE COMPANY AND THE CONSUMMATION BY THE COMPANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY (INCLUDING, WITHOUT LIMITATION, THE
ISSUANCE OF THE PREFERRED SHARES AND WARRANTS AND RESERVATION FOR ISSUANCE AND
ISSUANCE OF THE CONVERSION SHARES AND THE WARRANT SHARES) WILL NOT (I) RESULT IN
A VIOLATION OF THE CERTIFICATE OF INCORPORATION, ANY CERTIFICATE OF
DESIGNATIONS, PREFERENCES AND RIGHTS OF ANY OUTSTANDING SERIES OF PREFERRED
STOCK OR BYLAWS OF THE COMPANY OR ANY SUBSIDIARY, (II) CONFLICT WITH, OR
CONSTITUTE A DEFAULT (OR AN EVENT WHICH WITH NOTICE OR LAPSE OF TIME OR BOTH
WOULD BECOME A DEFAULT) UNDER, OR GIVE TO OTHERS ANY RIGHTS OF TERMINATION,
AMENDMENT, ACCELERATION OR CANCELLATION OF, ANY MATERIAL AGREEMENT, INDENTURE OR
INSTRUMENT TO WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS A PARTY, OR (III)
RESULT IN A VIOLATION OF ANY LAW, RULE, REGULATION, ORDER, JUDGMENT OR DECREE
(INCLUDING FEDERAL AND STATE SECURITIES LAWS AND REGULATIONS AND THE RULES AND
REGULATIONS OF THE PRINCIPAL MARKET) APPLICABLE TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR BY WHICH ANY PROPERTY OR ASSET OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES IS BOUND OR AFFECTED.

 

(E)                                  CONSENTS.  ALL CONSENTS, AUTHORIZATIONS,
ORDERS, FILINGS AND REGISTRATIONS WHICH THE COMPANY IS REQUIRED AS OF THE
CLOSING DATE TO OBTAIN TO EXECUTE, DELIVER OR PERFORM ANY OF ITS OBLIGATIONS
UNDER OR CONTEMPLATED BY THE TRANSACTION DOCUMENTS IN ACCORDANCE WITH THEIR
TERMS HAVE BEEN OBTAINED OR EFFECTED ON OR PRIOR TO THE CLOSING DATE.  THE
COMPANY AND ITS SUBSIDIARIES ARE UNAWARE OF ANY FACTS OR CIRCUMSTANCES WHICH
MIGHT REASONABLY BE EXPECTED TO PREVENT THE COMPANY FROM OBTAINING OR EFFECTING
ANY OF THE FOREGOING.  THE COMPANY IS NOT IN VIOLATION OF THE LISTING
REQUIREMENTS OF THE PRINCIPAL MARKET AND HAS NO KNOWLEDGE OF ANY FACTS WHICH
WOULD REASONABLY LEAD TO DELISTING OR SUSPENSION OF THE COMMON STOCK IN THE
FORESEEABLE FUTURE.

 

(F)                                    ACKNOWLEDGMENT REGARDING BUYER’S PURCHASE
OF SECURITIES.  THE COMPANY ACKNOWLEDGES AND AGREES THAT EACH BUYER IS ACTING
SOLELY IN THE CAPACITY OF ARM’S LENGTH PURCHASER WITH RESPECT TO THE TRANSACTION
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, AND THAT NO
BUYER IS AN OFFICER OR DIRECTOR OF THE COMPANY.  THE COMPANY FURTHER
ACKNOWLEDGES THAT NO BUYER IS ACTING AS A FINANCIAL ADVISOR OR FIDUCIARY OF THE
COMPANY (OR IN ANY SIMILAR CAPACITY) WITH RESPECT TO THE TRANSACTION DOCUMENTS,
INCLUDING THE CERTIFICATE OF DESIGNATIONS, AND THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY, AND ANY ADVICE GIVEN BY A BUYER OR ANY OF ITS
REPRESENTATIVES OR AGENTS IN CONNECTION WITH THE TRANSACTION DOCUMENTS,
INCLUDING THE CERTIFICATE OF DESIGNATIONS, 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 COMPANY’S
DECISION TO ENTER INTO THE TRANSACTION DOCUMENTS HAS BEEN BASED SOLELY ON THE
INDEPENDENT EVALUATION BY THE COMPANY AND ITS REPRESENTATIVES.

 

(G)                                 NO GENERAL SOLICITATION; PLACEMENT AGENT’S
FEES.  NEITHER THE COMPANY, NOR ANY OF ITS AFFILIATES, NOR ANY PERSON ACTING ON
ITS OR THEIR BEHALF, HAS ENGAGED IN

 

7

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ANY FORM OF GENERAL SOLICITATION OR GENERAL ADVERTISING (WITHIN THE MEANING OF
REGULATION D) IN CONNECTION WITH THE OFFER OR SALE OF THE SECURITIES.  THE
COMPANY SHALL BE RESPONSIBLE FOR THE PAYMENT OF ANY PLACEMENT AGENT’S FEES,
FINANCIAL ADVISORY FEES, OR BROKERS’ COMMISSIONS (OTHER THAN FOR PERSONS ENGAGED
BY ANY BUYER OR ITS INVESTMENT ADVISOR) RELATING TO OR ARISING OUT OF THE
TRANSACTIONS CONTEMPLATED HEREBY.  THE COMPANY SHALL PAY, AND HOLD EACH BUYER
HARMLESS AGAINST, ANY LIABILITY, LOSS OR EXPENSE (INCLUDING, WITHOUT LIMITATION,
ATTORNEY’S FEES AND OUT-OF-POCKET EXPENSES) ARISING IN CONNECTION WITH ANY SUCH
CLAIM.  THE COMPANY HAS NOT ENGAGED ANY PLACEMENT AGENT OR OTHER AGENT IN
CONNECTION WITH THE SALE OF THE PREFERRED SHARES AND THE WARRANTS.

 

(H)                                 NO INTEGRATED OFFERING.  NONE OF THE
COMPANY, ITS SUBSIDIARIES, ANY OF THEIR AFFILIATES, AND ANY PERSON ACTING ON
THEIR BEHALF HAS, DIRECTLY OR INDIRECTLY, MADE ANY OFFERS OR SALES OF ANY
SECURITY OR SOLICITED ANY OFFERS TO BUY ANY SECURITY, UNDER CIRCUMSTANCES THAT
WOULD REQUIRE REGISTRATION OF ANY OF THE SECURITIES UNDER THE 1933 ACT OR CAUSE
THIS OFFERING OF THE SECURITIES TO BE INTEGRATED WITH PRIOR OFFERINGS BY THE
COMPANY FOR PURPOSES OF THE 1933 ACT OR ANY APPLICABLE STOCKHOLDER APPROVAL
PROVISIONS, INCLUDING, WITHOUT LIMITATION, UNDER THE RULES AND REGULATIONS OF
ANY EXCHANGE OR AUTOMATED QUOTATION SYSTEM ON WHICH ANY OF THE SECURITIES OF THE
COMPANY ARE LISTED OR DESIGNATED.

 

(I)                                     [RESERVED]

 

(J)                                     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, POISON PILL (INCLUDING ANY DISTRIBUTION UNDER
A RIGHTS AGREEMENT) OR OTHER SIMILAR ANTI-TAKEOVER PROVISION UNDER THE
CERTIFICATE OF INCORPORATION (AS DEFINED IN SECTION 3(Q)) OR THE LAWS OF THE
STATE OF ITS INCORPORATION WHICH IS OR COULD BECOME APPLICABLE TO ANY BUYER AS A
RESULT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, THE COMPANY’S ISSUANCE OF THE SECURITIES AND ANY BUYER’S OWNERSHIP
OF THE SECURITIES.  OTHER THAN THE AMENDED AND RESTATED PREFERRED STOCK RIGHTS
AGREEMENT, DATED AS OF JULY 11, 2001, BY AND AMONG THE COMPANY, NEW COMMERCE ONE
HOLDING, INC. AND FLEET NATIONAL BANK, AS RIGHTS AGENT, 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.

 

(K)                                  SEC DOCUMENTS; FINANCIAL STATEMENTS.  SINCE
DECEMBER 31, 2002, THE COMPANY HAS FILED ALL REPORTS, SCHEDULES, FORMS,
STATEMENTS AND OTHER DOCUMENTS REQUIRED TO BE FILED BY IT WITH THE SEC PURSUANT
TO THE REPORTING REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
(THE “1934 ACT”) (ALL OF THE FOREGOING FILED PRIOR TO THE DATE HEREOF AND ALL
EXHIBITS INCLUDED THEREIN AND FINANCIAL STATEMENTS AND SCHEDULES THERETO AND
DOCUMENTS INCORPORATED BY REFERENCE THEREIN BEING HEREINAFTER REFERRED TO AS THE
“SEC DOCUMENTS”).  THE COMPANY HAS MADE AVAILABLE TO THE BUYERS OR THEIR
RESPECTIVE REPRESENTATIVES TRUE, CORRECT AND COMPLETE COPIES OF THE SEC
DOCUMENTS NOT AVAILABLE ON THE EDGAR SYSTEM.  AS OF THEIR RESPECTIVE DATES, THE
SEC DOCUMENTS COMPLIED IN ALL MATERIAL RESPECTS WITH THE REQUIREMENTS OF THE
1934 ACT AND THE RULES AND REGULATIONS OF THE SEC PROMULGATED THEREUNDER
APPLICABLE TO THE SEC DOCUMENTS, AND 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 THE LIGHT OF THE

 

8

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CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING.  AS OF THEIR
RESPECTIVE DATES, THE FINANCIAL STATEMENTS OF THE COMPANY INCLUDED IN THE SEC
DOCUMENTS COMPLIED AS TO FORM IN ALL MATERIAL RESPECTS WITH APPLICABLE
ACCOUNTING REQUIREMENTS AND THE PUBLISHED RULES AND REGULATIONS OF THE SEC WITH
RESPECT THERETO.  SUCH FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE
WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, 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 OR MAY BE CONDENSED OR
SUMMARY STATEMENTS) AND FAIRLY PRESENT IN ALL MATERIAL RESPECTS THE FINANCIAL
POSITION OF THE COMPANY AS OF THE DATES THEREOF AND THE RESULTS OF ITS
OPERATIONS AND CASH FLOWS FOR THE PERIODS THEN ENDED (SUBJECT, IN THE CASE OF
UNAUDITED STATEMENTS, TO NORMAL YEAR-END AUDIT ADJUSTMENTS).  TAKEN AS A WHOLE,
THE INFORMATION PROVIDED BY OR ON BEHALF OF THE COMPANY TO THE BUYERS WHEN READ
TOGETHER WITH THE SEC DOCUMENTS DOES NOT CONTAIN ANY UNTRUE STATEMENT OF A
MATERIAL FACT OR OMIT TO STATE ANY MATERIAL FACT NECESSARY IN ORDER TO MAKE THE
STATEMENTS THEREIN, IN THE LIGHT OF THE CIRCUMSTANCE UNDER WHICH THEY ARE OR
WERE MADE, NOT MISLEADING.

 

(L)                                     ABSENCE OF CERTAIN CHANGES.  EXCEPT AS
DISCLOSED IN SCHEDULE 3(L), SINCE MARCH 31, 2003, THERE HAVE BEEN NO CHANGES OR
DEVELOPMENTS IN THE BUSINESS, PROPERTIES, OPERATIONS, CONDITION (FINANCIAL OR
OTHERWISE) OR RESULTS OF OPERATIONS OF THE COMPANY OR ITS SUBSIDIARIES THAT HAVE
HAD OR WOULD, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT.  SINCE MARCH 31, 2003, THE COMPANY HAS NOT (I) DECLARED
OR PAID ANY DIVIDENDS, (II) SOLD ANY ASSETS, INDIVIDUALLY OR IN THE AGGREGATE,
IN EXCESS OF $200,000 OUTSIDE OF THE ORDINARY COURSE OF BUSINESS OR (III) HAD
CAPITAL EXPENDITURES, INDIVIDUALLY OR IN THE AGGREGATE, IN EXCESS OF $200,000. 
THE COMPANY HAS NOT TAKEN ANY STEPS TO SEEK PROTECTION PURSUANT TO ANY
BANKRUPTCY LAW NOR DOES THE COMPANY HAVE ANY KNOWLEDGE OR REASON TO BELIEVE THAT
ITS CREDITORS INTEND TO INITIATE INVOLUNTARY BANKRUPTCY PROCEEDINGS OR ANY
ACTUAL KNOWLEDGE OF ANY FACT WHICH WOULD REASONABLY LEAD A CREDITOR TO DO SO. 
THE COMPANY IS NOT AS OF THE DATE HEREOF, AND AFTER GIVING EFFECT TO THE
TRANSACTIONS CONTEMPLATED HEREBY TO OCCUR AT THE CLOSING WILL NOT BE, INSOLVENT
(AS DEFINED BELOW).  FOR PURPOSES OF THIS SECTION 3(L), “INSOLVENT” MEANS (I)
THE PRESENT FAIR SALEABLE VALUE OF THE COMPANY’S ASSETS IS LESS THAN THE AMOUNT
REQUIRED TO PAY THE COMPANY’S TOTAL INDEBTEDNESS, CONTINGENT OR OTHERWISE, (II)
THE COMPANY IS UNABLE TO PAY ITS DEBTS AND LIABILITIES, SUBORDINATED, CONTINGENT
OR OTHERWISE, AS SUCH DEBTS AND LIABILITIES BECOME ABSOLUTE AND MATURED OR (III)
THE COMPANY INTENDS TO INCUR OR BELIEVES THAT IT WILL INCUR DEBTS THAT WOULD BE
BEYOND ITS ABILITY TO PAY AS SUCH DEBTS MATURE.

 

(M)                               NO UNDISCLOSED EVENTS, LIABILITIES,
DEVELOPMENTS OR CIRCUMSTANCES.  EXCEPT FOR THE TRANSACTIONS CONTEMPLATED HEREBY,
NO EVENT, LIABILITY, DEVELOPMENT OR CIRCUMSTANCE HAS OCCURRED OR EXISTS, OR IS
CONTEMPLATED TO OCCUR, WITH RESPECT TO THE COMPANY OR ITS SUBSIDIARIES OR THEIR
RESPECTIVE BUSINESS, PROPERTIES, PROSPECTS, OPERATIONS OR FINANCIAL CONDITION,
THAT WOULD BE REQUIRED TO BE DISCLOSED BY THE COMPANY UNDER APPLICABLE
SECURITIES LAWS ON A REGISTRATION STATEMENT ON FORM S-1 FILED WITH THE SEC
RELATING TO AN ISSUANCE AND SALE BY THE COMPANY OF ITS COMMON STOCK AND WHICH
HAS NOT BEEN PUBLICLY ANNOUNCED.

 

(N)                                 CONDUCT OF BUSINESS; REGULATORY PERMITS. 
NEITHER THE COMPANY NOR ITS SUBSIDIARIES IS IN VIOLATION OF ANY TERM OF OR IN
DEFAULT UNDER ITS CERTIFICATE OF INCORPORATION, ANY CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF ANY OUTSTANDING SERIES

 

9

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OF PREFERRED STOCK OF THE COMPANY OR BYLAWS OR THEIR ORGANIZATIONAL CHARTER OR
BYLAWS, RESPECTIVELY (EXCEPT, WITH RESPECT TO THE SUBSIDIARIES, FOR VIOLATIONS
THAT WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE
A MATERIAL ADVERSE EFFECT).  NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES IS
IN VIOLATION OF ANY JUDGMENT, DECREE OR ORDER OR ANY STATUTE, ORDINANCE, RULE OR
REGULATION APPLICABLE TO THE COMPANY OR ITS SUBSIDIARIES, AND NEITHER THE
COMPANY NOR ANY OF ITS SUBSIDIARIES WILL CONDUCT ITS BUSINESS IN VIOLATION OF
ANY OF THE FOREGOING, EXCEPT FOR POSSIBLE VIOLATIONS WHICH WOULD NOT,
INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE COMPANY
IS NOT IN VIOLATION OF ANY OF THE MATERIAL RULES, REGULATIONS OR REQUIREMENTS OF
THE NASDAQ NATIONAL MARKET (THE “PRINCIPAL MARKET”) CURRENTLY IN EFFECT AND HAS
NO KNOWLEDGE OF ANY FACTS OR CIRCUMSTANCES WHICH WOULD REASONABLY LEAD TO
DELISTING OR SUSPENSION OF THE COMMON STOCK BY THE PRINCIPAL MARKET IN THE
FORESEEABLE FUTURE.  SINCE DECEMBER 31, 2002, (I) THE COMMON STOCK HAS BEEN
DESIGNATED FOR QUOTATION OR LISTED ON THE PRINCIPAL MARKET, (II) TRADING IN THE
COMMON STOCK HAS NOT BEEN SUSPENDED BY THE SEC OR 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 DELISTING OF THE COMMON STOCK FROM
THE PRINCIPAL MARKET.  THE COMPANY AND ITS SUBSIDIARIES POSSESS ALL
CERTIFICATES, AUTHORIZATIONS AND PERMITS ISSUED BY THE APPROPRIATE FEDERAL,
STATE OR FOREIGN REGULATORY AUTHORITIES NECESSARY TO CONDUCT THEIR RESPECTIVE
BUSINESSES, EXCEPT WHERE THE FAILURE TO POSSESS SUCH CERTIFICATES,
AUTHORIZATIONS OR PERMITS WOULD NOT REASONABLY BE EXPECTED TO HAVE, INDIVIDUALLY
OR IN THE AGGREGATE, A MATERIAL ADVERSE EFFECT, AND NEITHER THE COMPANY NOR ANY
SUCH SUBSIDIARY HAS RECEIVED ANY NOTICE OF PROCEEDINGS RELATING TO THE
REVOCATION OR MODIFICATION OF ANY SUCH CERTIFICATE, AUTHORIZATION OR PERMIT.

 

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

 

(P)                                 TRANSACTIONS WITH AFFILIATES.  EXCEPT AS SET
FORTH ON SCHEDULE 3(P) AND IN THE SEC DOCUMENTS FILED AT LEAST TEN DAYS PRIOR TO
THE DATE HEREOF AND OTHER THAN THE GRANT OF STOCK OPTIONS DISCLOSED ON SCHEDULE
3(Q), NONE OF THE OFFICERS, DIRECTORS OR EMPLOYEES OF THE COMPANY IS PRESENTLY A
PARTY TO ANY TRANSACTION WITH THE COMPANY OR ANY OF ITS SUBSIDIARIES (OTHER THAN
FOR ORDINARY COURSE SERVICES AS EMPLOYEES, OFFICERS OR DIRECTORS), INCLUDING ANY
CONTRACT, AGREEMENT OR OTHER ARRANGEMENT PROVIDING FOR THE FURNISHING OF
SERVICES TO OR BY, PROVIDING FOR RENTAL OF REAL OR PERSONAL PROPERTY TO OR FROM,
OR OTHERWISE REQUIRING PAYMENTS TO OR FROM ANY SUCH OFFICER, DIRECTOR OR
EMPLOYEE OR, TO THE KNOWLEDGE OF THE COMPANY, ANY CORPORATION, PARTNERSHIP,
TRUST OR OTHER ENTITY IN WHICH ANY SUCH OFFICER, DIRECTOR, OR EMPLOYEE HAS A
SUBSTANTIAL INTEREST OR IS AN OFFICER, DIRECTOR, TRUSTEE OR PARTNER.

 

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(Q)                                 EQUITY CAPITALIZATION.  AS OF THE DATE
HEREOF, THE AUTHORIZED CAPITAL STOCK OF THE COMPANY CONSISTS OF (X) 950,000,000
SHARES OF COMMON STOCK, OF WHICH AS OF THE DATE HEREOF, 31,398,715 ARE ISSUED
AND OUTSTANDING, 28,939 ARE ISSUED BUT NOT OUTSTANDING AS TREASURY SHARES,
10,161,504 SHARES ARE RESERVED FOR ISSUANCE PURSUANT TO THE COMPANY’S STOCK
OPTION AND PURCHASE PLANS AND 20,000 SHARES ARE RESERVED FOR ISSUANCE PURSUANT
TO SECURITIES (OTHER THAN THE PREFERRED SHARES AND THE WARRANTS) EXERCISABLE OR
EXCHANGEABLE FOR, OR CONVERTIBLE INTO, SHARES OF COMMON STOCK, AND (Y)
50,000,000 SHARES OF PREFERRED STOCK, OF WHICH AS OF THE DATE HEREOF, 300,000
ARE DESIGNATED SERIES A PARTICIPATING PREFERRED STOCK AND NONE ARE ISSUED OR
OUTSTANDING.  ALL OF SUCH OUTSTANDING SHARES HAVE BEEN, OR UPON ISSUANCE WILL
BE, VALIDLY ISSUED AND ARE FULLY PAID AND NONASSESSABLE.  EXCEPT AS DISCLOSED ON
SCHEDULE 3(Q) AND UNDER THE CAPTION “RELATIONSHIP WITH SAP — EQUITY
RELATIONSHIP” IN THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2002: (I) NO SHARES OF THE COMPANY’S CAPITAL STOCK ARE SUBJECT TO
PREEMPTIVE RIGHTS OR ANY OTHER SIMILAR RIGHTS OR ANY LIENS OR ENCUMBRANCES
SUFFERED OR PERMITTED BY THE COMPANY; (II) 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
OR EXCHANGEABLE FOR, ANY SHARES OF CAPITAL STOCK OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES, OR CONTRACTS, COMMITMENTS, UNDERSTANDINGS OR ARRANGEMENTS BY WHICH
THE COMPANY OR ANY OF ITS SUBSIDIARIES IS OR MAY BECOME BOUND TO ISSUE
ADDITIONAL SHARES OF CAPITAL STOCK OF THE COMPANY OR ANY OF ITS 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 OR EXCHANGEABLE FOR, ANY SHARES OF CAPITAL STOCK OF THE COMPANY OR
ANY OF ITS SUBSIDIARIES; (III) THERE ARE NO OUTSTANDING DEBT SECURITIES, NOTES,
CREDIT AGREEMENTS, CREDIT FACILITIES OR OTHER AGREEMENTS, DOCUMENTS OR
INSTRUMENTS EVIDENCING INDEBTEDNESS (AS DEFINED IN SECTION 3(R)) OF THE COMPANY
OR ANY OF ITS SUBSIDIARIES OR BY WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS
OR MAY BECOME BOUND; (IV) THERE ARE NO FINANCING STATEMENTS SECURING OBLIGATIONS
IN ANY MATERIAL AMOUNTS, EITHER SINGLY OR IN THE AGGREGATE, FILED IN CONNECTION
WITH THE COMPANY; (V) THERE ARE NO AGREEMENTS OR ARRANGEMENTS UNDER WHICH THE
COMPANY OR ANY OF ITS SUBSIDIARIES IS OBLIGATED TO REGISTER THE SALE OF ANY OF
THEIR SECURITIES UNDER THE 1933 ACT (EXCEPT THE REGISTRATION RIGHTS AGREEMENT);
(VI) THERE ARE NO OUTSTANDING SECURITIES OR INSTRUMENTS OF THE COMPANY OR ANY OF
ITS SUBSIDIARIES WHICH CONTAIN ANY REDEMPTION OR SIMILAR PROVISIONS, AND THERE
ARE NO CONTRACTS, COMMITMENTS, UNDERSTANDINGS OR ARRANGEMENTS BY WHICH THE
COMPANY OR ANY OF ITS SUBSIDIARIES IS OR MAY BECOME BOUND TO REDEEM A SECURITY
OF THE COMPANY OR ANY OF ITS SUBSIDIARIES; (VII) THERE ARE NO SECURITIES OR
INSTRUMENTS CONTAINING ANTI-DILUTION OR SIMILAR PROVISIONS THAT WILL BE
TRIGGERED BY THE ISSUANCE OF THE SECURITIES; (VIII) THE COMPANY DOES NOT HAVE
ANY STOCK APPRECIATION RIGHTS OR “PHANTOM STOCK” PLANS OR AGREEMENTS OR ANY
SIMILAR PLAN OR AGREEMENT; AND (IX) THE COMPANY AND ITS SUBSIDIARIES HAVE NO
LIABILITIES OR OBLIGATIONS REQUIRED TO BE DISCLOSED IN THE SEC DOCUMENTS (AS
DEFINED HEREIN) BUT NOT SO DISCLOSED IN THE SEC DOCUMENTS, OTHER THAN THOSE
INCURRED IN THE ORDINARY COURSE OF THE COMPANY’S OR ITS SUBSIDIARIES’ RESPECTIVE
BUSINESSES AND WHICH, INDIVIDUALLY OR IN THE AGGREGATE, DO NOT OR WOULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.  THE COMPANY HAS MADE
AVAILABLE TO THE BUYER TRUE, CORRECT AND COMPLETE COPIES OF THE COMPANY’S
RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED AND AS IN EFFECT ON THE DATE
HEREOF (TOGETHER WITH ANY CERTIFICATE OF DESIGNATIONS OF ANY OUTSTANDING SERIES
OF PREFERRED STOCK OF THE COMPANY, THE “CERTIFICATE OF INCORPORATION”), AND THE
COMPANY’S BYLAWS, AS AMENDED AND AS IN EFFECT ON THE DATE HEREOF (THE “BYLAWS”),
AND THE TERMS OF ALL

 

11

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SECURITIES CONVERTIBLE INTO, OR EXERCISABLE OR EXCHANGEABLE FOR, COMMON STOCK
AND THE MATERIAL RIGHTS OF THE HOLDERS THEREOF IN RESPECT THERETO.

 

(R)                                    INDEBTEDNESS AND OTHER CONTRACTS.  EXCEPT
AS SET FORTH ON SCHEDULE 3(R), NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES
(I) HAS ANY OUTSTANDING INDEBTEDNESS IN EXCESS OF $200,000 (AS DEFINED BELOW),
(II) IS A PARTY TO ANY CONTRACT, AGREEMENT OR INSTRUMENT, THE VIOLATION OF
WHICH, OR DEFAULT UNDER WHICH, BY THE OTHER PARTY(IES) TO SUCH CONTRACT,
AGREEMENT OR INSTRUMENT WOULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL
ADVERSE EFFECT, OTHER THAN CONTRACTS, AGREEMENTS OR INSTRUMENTS ENTERED INTO IN
THE ORDINARY COURSE OF BUSINESS WHICH TO THE COMPANY’S KNOWLEDGE, NEITHER IT NOR
ANY OTHER PARTY THERETO IS IN DEFAULT OR OTHER VIOLATION OF, (III) IS IN
VIOLATION OF ANY TERM OF OR IN DEFAULT UNDER ANY CONTRACT, AGREEMENT OR
INSTRUMENT RELATING TO ANY INDEBTEDNESS, EXCEPT WHERE SUCH VIOLATIONS AND
DEFAULTS WOULD NOT REASONABLY BE EXPECTED TO RESULT, INDIVIDUALLY OR IN THE
AGGREGATE, IN A MATERIAL ADVERSE EFFECT, OR (IV) IS A PARTY TO ANY CONTRACT,
AGREEMENT OR INSTRUMENT RELATING TO ANY INDEBTEDNESS, THE PERFORMANCE OF WHICH,
IN THE JUDGMENT OF THE COMPANY’S OFFICERS, HAS OR IS EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT.  FOR PURPOSES OF THIS AGREEMENT:  (X) “INDEBTEDNESS” OF ANY
PERSON MEANS, WITHOUT DUPLICATION (A) ALL INDEBTEDNESS FOR BORROWED MONEY, (B)
ALL OBLIGATIONS ISSUED, UNDERTAKEN OR ASSUMED AS THE DEFERRED PURCHASE PRICE OF
PROPERTY OR SERVICES (OTHER THAN TRADE PAYABLES ENTERED INTO IN THE ORDINARY
COURSE OF BUSINESS), (C) ALL REIMBURSEMENT OR PAYMENT OBLIGATIONS WITH RESPECT
TO LETTERS OF CREDIT, SURETY BONDS AND OTHER SIMILAR INSTRUMENTS, (D) ALL
OBLIGATIONS EVIDENCED BY NOTES, BONDS, DEBENTURES OR SIMILAR INSTRUMENTS,
INCLUDING OBLIGATIONS SO EVIDENCED INCURRED IN CONNECTION WITH THE ACQUISITION
OF PROPERTY, ASSETS OR BUSINESSES, (E) 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 OR BANK UNDER SUCH AGREEMENT IN THE EVENT OF DEFAULT ARE LIMITED TO
REPOSSESSION OR SALE OF SUCH PROPERTY), (F) ALL MONETARY OBLIGATIONS UNDER ANY
LEASING OR SIMILAR ARRANGEMENT WHICH, IN CONNECTION WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES, CONSISTENTLY APPLIED FOR THE PERIODS COVERED THEREBY, IS
CLASSIFIED AS A CAPITAL LEASE, (G) ALL INDEBTEDNESS REFERRED TO IN CLAUSES (A)
THROUGH (F) 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, CHANGE, 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 WHICH OWNS SUCH ASSETS OR PROPERTY HAS NOT ASSUMED OR
BECOME LIABLE FOR THE PAYMENT OF SUCH INDEBTEDNESS, AND (H) ALL CONTINGENT
OBLIGATIONS IN RESPECT OF INDEBTEDNESS OR OBLIGATIONS OF OTHERS OF THE KINDS
REFERRED TO IN CLAUSES (A) THROUGH (G) ABOVE; (Y) “CONTINGENT OBLIGATION” MEANS,
AS TO ANY PERSON, ANY DIRECT OR INDIRECT LIABILITY, CONTINGENT OR OTHERWISE, OF
THAT PERSON WITH RESPECT TO ANY INDEBTEDNESS, LEASE, DIVIDEND OR OTHER
OBLIGATION OF ANOTHER PERSON IF THE PRIMARY PURPOSE OR INTENT OF THE PERSON
INCURRING SUCH LIABILITY, OR THE 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; AND (Z) “PERSON” MEANS AN INDIVIDUAL, A LIMITED LIABILITY
COMPANY, A PARTNERSHIP, A JOINT VENTURE, A CORPORATION, A TRUST, AN
UNINCORPORATED ORGANIZATION AND A GOVERNMENT OR ANY DEPARTMENT OR AGENCY
THEREOF.

 

(S)                                  ABSENCE OF LITIGATION.  THERE IS NO ACTION,
SUIT, PROCEEDING, INQUIRY OR INVESTIGATION BEFORE OR BY THE PRINCIPAL MARKET,
ANY COURT, PUBLIC BOARD, GOVERNMENT AGENCY,

 

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SELF-REGULATORY ORGANIZATION OR BODY PENDING OR, TO THE KNOWLEDGE OF THE
COMPANY, THREATENED AGAINST THE COMPANY, THE COMMON STOCK OR ANY OF THE
COMPANY’S SUBSIDIARIES OR ANY OF THE COMPANY’S OR THE COMPANY’S SUBSIDIARIES’
OFFICERS OR DIRECTORS IN THEIR CAPACITIES AS SUCH, EXCEPT (I) AS DISCLOSED IN
ITEM 3 OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2002 AND IN PART II, ITEM 1 OF THE COMPANY’S QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003 OR (II) SUCH AS ARE NOT REASONABLY
EXPECTED TO HAVE, INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL ADVERSE EFFECT. 
TO THE KNOWLEDGE OF THE COMPANY, NONE OF THE DIRECTORS OR OFFICERS OF THE
COMPANY HAVE BEEN A PARTY TO ANY SECURITIES RELATED LITIGATION DURING THE PAST
FIVE YEARS, OTHER THAN AS DISCLOSED IN THE SEC DOCUMENTS.

 

(T)                                    INSURANCE.  THE COMPANY AND EACH OF ITS
SUBSIDIARIES ARE INSURED BY INSURERS OF RECOGNIZED FINANCIAL RESPONSIBILITY
AGAINST SUCH LOSSES AND RISKS AND IN SUCH AMOUNTS AS MANAGEMENT OF THE COMPANY
BELIEVES TO BE PRUDENT AND CUSTOMARY IN THE BUSINESSES IN WHICH THE COMPANY AND
ITS SUBSIDIARIES ARE ENGAGED.  NEITHER THE COMPANY NOR ANY SUCH SUBSIDIARY HAS
BEEN REFUSED ANY INSURANCE COVERAGE SOUGHT OR APPLIED FOR AND NEITHER THE
COMPANY NOR ANY SUCH 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 HAVE A MATERIAL ADVERSE EFFECT.

 

(U)                                 EMPLOYEE RELATIONS.  NEITHER THE COMPANY NOR
ANY OF ITS SUBSIDIARIES IS A PARTY TO ANY COLLECTIVE BARGAINING AGREEMENT OR, TO
ITS KNOWLEDGE, EMPLOYS ANY MEMBER OF A UNION.  THE COMPANY AND ITS SUBSIDIARIES
BELIEVE THAT THEIR RELATIONS WITH THEIR EMPLOYEES ARE GOOD.  NO EXECUTIVE
OFFICER OF THE COMPANY (AS DEFINED IN RULE 501(F) OF THE 1933 ACT) HAS NOTIFIED
THE COMPANY THAT SUCH OFFICER INTENDS TO LEAVE THE COMPANY OR OTHERWISE
TERMINATE SUCH OFFICER’S EMPLOYMENT WITH THE COMPANY.  NO EXECUTIVE OFFICER OF
THE COMPANY, TO THE KNOWLEDGE OF THE COMPANY, IS, OR IS NOW EXPECTED TO BE, IN
VIOLATION OF ANY MATERIAL TERM OF ANY EMPLOYMENT CONTRACT, CONFIDENTIALITY,
DISCLOSURE OR PROPRIETARY INFORMATION AGREEMENT, NON-COMPETITION AGREEMENT, OR
ANY OTHER CONTRACT OR AGREEMENT OR ANY RESTRICTIVE COVENANT, AND, TO THE
KNOWLEDGE OF THE COMPANY, THE CONTINUED EMPLOYMENT OF EACH SUCH EXECUTIVE
OFFICER DOES NOT SUBJECT THE COMPANY OR ANY OF ITS SUBSIDIARIES TO ANY MATERIAL
LIABILITY WITH RESPECT TO ANY OF THE FOREGOING MATTERS.  THE COMPANY AND ITS
SUBSIDIARIES ARE IN COMPLIANCE WITH ALL FEDERAL, STATE, LOCAL AND FOREIGN LAWS
AND REGULATIONS RESPECTING EMPLOYMENT AND EMPLOYMENT PRACTICES, TERMS AND
CONDITIONS OF EMPLOYMENT AND WAGES AND HOURS, EXCEPT WHERE THE FAILURE TO BE IN
COMPLIANCE WOULD NOT REASONABLY EXPECTED TO RESULT, INDIVIDUALLY OR IN THE
AGGREGATE, IN A MATERIAL ADVERSE EFFECT.

 

(V)                                 TITLE. EXCEPT AS SET FORTH IN SCHEDULE 3(V),
THE COMPANY AND ITS SUBSIDIARIES HAVE GOOD AND MARKETABLE TITLE TO ALL PERSONAL
PROPERTY OWNED BY THEM WHICH IS MATERIAL TO THE BUSINESS OF THE COMPANY AND ITS
SUBSIDIARIES, IN EACH CASE FREE AND CLEAR OF ALL LIENS, ENCUMBRANCES AND DEFECTS
EXCEPT (I) IMMATERIAL LIENS FOR TAXES NOT YET DELINQUENT, (II) IMMATERIAL
MECHANICS’ AND MATERIALMEN’S LIENS (AND OTHER SIMILAR LIENS), AND IMMATERIAL
LIENS UNDER OPERATING AND SIMILAR AGREEMENTS, TO THE EXTENT THE SAME RELATE TO
EXPENSES INCURRED IN THE ORDINARY COURSE OF BUSINESS AND THAT ARE NOT YET DUE,
(III) THAT ARE ROUTINE GOVERNMENTAL APPROVALS, OR (IV) SUCH AS DO NOT MATERIALLY
AFFECT THE VALUE OF SUCH PROPERTY AND DO NOT INTERFERE WITH THE USE MADE AND
PROPOSED TO BE MADE OF SUCH PROPERTY BY THE COMPANY AND ANY OF ITS

 

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SUBSIDIARIES.  NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES OWNS ANY REAL
PROPERTY.  ANY REAL PROPERTY AND FACILITIES HELD UNDER LEASE BY THE COMPANY AND
ANY OF ITS SUBSIDIARIES ARE HELD BY THEM UNDER VALID, SUBSISTING AND ENFORCEABLE
LEASES WITH SUCH EXCEPTIONS AS ARE NOT MATERIAL AND DO NOT INTERFERE WITH THE
USE MADE AND PROPOSED TO BE MADE OF SUCH PROPERTY AND BUILDINGS BY THE COMPANY
AND ITS SUBSIDIARIES.

 

(W)                               INTELLECTUAL PROPERTY RIGHTS. THE COMPANY AND
ITS SUBSIDIARIES OWN OR POSSESS ADEQUATE RIGHTS OR LICENSES TO USE ALL
TRADEMARKS, TRADE NAMES, SERVICE MARKS, SERVICE MARK REGISTRATIONS, SERVICE
NAMES, PATENTS, PATENT RIGHTS, COPYRIGHTS, INVENTIONS, LICENSES, APPROVALS,
GOVERNMENTAL AUTHORIZATIONS, TRADE SECRETS AND OTHER INTELLECTUAL PROPERTY
RIGHTS (“INTELLECTUAL PROPERTY RIGHTS”) NECESSARY TO CONDUCT THEIR RESPECTIVE
BUSINESSES AS NOW CONDUCTED.  NONE OF THE COMPANY’S INTELLECTUAL PROPERTY RIGHTS
HAVE EXPIRED OR TERMINATED, OR ARE EXPECTED TO EXPIRE OR TERMINATE WITHIN TWO
YEARS FROM THE DATE OF THIS AGREEMENT, EXCEPT FOR THOSE WHICH WOULD NOT
REASONABLY BE EXPECTED TO HAVE, INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL
ADVERSE EFFECT.  THE COMPANY DOES NOT HAVE ANY KNOWLEDGE OF ANY INFRINGEMENT BY
THE COMPANY OR ITS SUBSIDIARIES OF INTELLECTUAL PROPERTY RIGHTS OF OTHERS. 
EXCEPT AS SET FORTH IN SCHEDULE 3(W), THERE IS NO CLAIM, ACTION OR PROCEEDING
BEING MADE OR BROUGHT, OR TO THE KNOWLEDGE OF THE COMPANY, BEING THREATENED,
AGAINST THE COMPANY OR ITS SUBSIDIARIES REGARDING ITS INTELLECTUAL PROPERTY
RIGHTS.  THE COMPANY DOES NOT HAVE ANY KNOWLEDGE OF ANY FACTS OR CIRCUMSTANCES
WHICH MIGHT GIVE RISE TO ANY OF THE FOREGOING INFRINGEMENTS OR CLAIMS, ACTIONS
OR PROCEEDINGS.  THE COMPANY AND ITS SUBSIDIARIES HAVE TAKEN REASONABLE SECURITY
MEASURES TO PROTECT THE SECRECY, CONFIDENTIALITY AND VALUE OF ALL OF THEIR
INTELLECTUAL PROPERTIES.

 

(X)                                   ENVIRONMENTAL LAWS.  THE COMPANY AND ITS
SUBSIDIARIES (I) ARE IN COMPLIANCE WITH ANY AND ALL ENVIRONMENTAL LAWS (AS
HEREINAFTER DEFINED), (II) HAVE RECEIVED ALL PERMITS, LICENSES OR OTHER
APPROVALS REQUIRED OF THEM UNDER APPLICABLE ENVIRONMENTAL LAWS TO CONDUCT THEIR
RESPECTIVE BUSINESSES AND (III) ARE IN COMPLIANCE WITH ALL TERMS AND CONDITIONS
OF ANY SUCH PERMIT, LICENSE OR APPROVAL WHERE, IN EACH OF THE FOREGOING CLAUSES
(I), (II) AND (III), THE FAILURE TO SO COMPLY COULD BE REASONABLY EXPECTED TO
HAVE, INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL ADVERSE EFFECT.  THE TERM
“ENVIRONMENTAL LAWS” MEANS ALL FEDERAL, STATE, LOCAL OR FOREIGN LAWS RELATING TO
POLLUTION OR PROTECTION OF HUMAN HEALTH OR THE ENVIRONMENT (INCLUDING, WITHOUT
LIMITATION, AMBIENT AIR, SURFACE WATER, GROUNDWATER, LAND SURFACE OR SUBSURFACE
STRATA), INCLUDING, WITHOUT LIMITATION, LAWS RELATING TO EMISSIONS, DISCHARGES,
RELEASES OR THREATENED RELEASES OF CHEMICALS, POLLUTANTS, CONTAMINANTS, OR TOXIC
OR HAZARDOUS SUBSTANCES OR WASTES (COLLECTIVELY, “HAZARDOUS MATERIALS”) INTO THE
ENVIRONMENT, OR OTHERWISE RELATING TO THE MANUFACTURE, PROCESSING, DISTRIBUTION,
USE, TREATMENT, STORAGE, DISPOSAL, TRANSPORT OR HANDLING OF HAZARDOUS MATERIALS,
AS WELL AS ALL AUTHORIZATIONS, CODES, DECREES, DEMANDS OR DEMAND LETTERS,
INJUNCTIONS, JUDGMENTS, LICENSES, NOTICES OR NOTICE LETTERS, ORDERS, PERMITS,
PLANS OR REGULATIONS ISSUED, ENTERED, PROMULGATED OR APPROVED THEREUNDER.

 

(Y)                                 TAX STATUS.  THE COMPANY AND EACH OF ITS
SUBSIDIARIES (I) HAS MADE OR FILED ALL FEDERAL AND STATE INCOME AND ALL OTHER
TAX RETURNS, REPORTS AND DECLARATIONS REQUIRED BY ANY JURISDICTION TO WHICH IT
IS SUBJECT, (II) HAS PAID ALL TAXES AND OTHER GOVERNMENTAL ASSESSMENTS AND
CHARGES THAT ARE MATERIAL IN AMOUNT, SHOWN OR DETERMINED TO BE DUE ON SUCH
RETURNS, REPORTS AND DECLARATIONS, EXCEPT THOSE BEING CONTESTED IN GOOD FAITH
AND (III) HAS SET ASIDE ON ITS BOOKS PROVISION REASONABLY ADEQUATE FOR THE
PAYMENT OF ALL TAXES FOR PERIODS SUBSEQUENT TO

 

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THE PERIODS TO WHICH SUCH RETURNS, REPORTS OR DECLARATIONS APPLY.  THERE ARE NO
UNPAID TAXES IN ANY MATERIAL AMOUNT CLAIMED TO BE DUE BY THE TAXING AUTHORITY OF
ANY JURISDICTION, AND THE OFFICERS OF THE COMPANY KNOW OF NO SPECIFIC BASIS FOR
ANY SUCH PARTICULAR CLAIM.

 

(Z)                                   INTERNAL ACCOUNTING CONTROLS.  THE COMPANY
AND EACH OF ITS SUBSIDIARIES MAINTAIN A SYSTEM OF INTERNAL ACCOUNTING CONTROLS
SUFFICIENT TO PROVIDE REASONABLE ASSURANCE THAT (I) TRANSACTIONS ARE EXECUTED IN
ACCORDANCE WITH MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATIONS, (II)
TRANSACTIONS ARE RECORDED AS NECESSARY TO PERMIT PREPARATION OF FINANCIAL
STATEMENTS IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND TO
MAINTAIN ASSET AND LIABILITY ACCOUNTABILITY, (III) ACCESS TO ASSETS OR
INCURRENCE OF LIABILITIES IS PERMITTED ONLY IN ACCORDANCE WITH MANAGEMENT’S
GENERAL OR SPECIFIC AUTHORIZATION AND (IV) 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
DIFFERENCE.

 

(AA)                            SARBANES-OXLEY ACT.  THE COMPANY IS IN
COMPLIANCE WITH ANY AND ALL APPLICABLE REQUIREMENTS OF THE SARBANES-OXLEY ACT OF
2002 THAT ARE EFFECTIVE AS OF THE DATE HEREOF, AND ANY AND ALL APPLICABLE RULES
AND REGULATIONS PROMULGATED BY THE SEC THEREUNDER THAT ARE EFFECTIVE AS OF THE
DATE HEREOF, EXCEPT WHERE SUCH NONCOMPLIANCE WOULD NOT HAVE A MATERIAL ADVERSE
EFFECT.

 

(BB)                          INVESTMENT COMPANY STATUS.  THE COMPANY IS NOT,
AND UPON CONSUMMATION OF THE SALE OF THE SECURITIES 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 OF 1940, AS
AMENDED.

 

4.                                       COVENANTS.

 

(A)                                  REASONABLE BEST EFFORTS.  EACH PARTY SHALL
USE ITS REASONABLE BEST EFFORTS TO SATISFY TIMELY EACH OF THE CONDITIONS TO BE
SATISFIED BY IT AS PROVIDED IN SECTIONS 6 AND 7 OF THIS AGREEMENT.

 

(B)                                 FORM D AND BLUE SKY.  THE COMPANY AGREES TO
FILE A FORM D WITH RESPECT TO THE SECURITIES AS REQUIRED UNDER REGULATION D AND
TO PROVIDE A COPY THEREOF TO EACH BUYER PROMPTLY AFTER SUCH FILING.  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 PURSUANT TO THIS
AGREEMENT UNDER APPLICABLE SECURITIES OR “BLUE SKY” LAWS OF THE STATES OF THE
UNITED STATES (OR TO OBTAIN AN EXEMPTION FROM SUCH QUALIFICATION), AND SHALL
PROVIDE EVIDENCE OF ANY SUCH ACTION SO TAKEN TO THE BUYERS 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 OR “BLUE
SKY” LAWS OF THE STATES OF THE UNITED STATES FOLLOWING THE CLOSING DATE.

 

(C)                                  REPORTING STATUS.  UNTIL THE DATE ON WHICH
THE INVESTORS (AS DEFINED IN THE REGISTRATION RIGHTS AGREEMENT) SHALL HAVE SOLD
ALL THE CONVERSION SHARES AND WARRANT SHARES AND NONE OF THE PREFERRED SHARES OR
WARRANTS IS OUTSTANDING, (THE “REPORTING PERIOD”), THE COMPANY SHALL FILE ALL
REPORTS REQUIRED TO BE FILED WITH THE SEC PURSUANT TO THE 1934 ACT, AND

 

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THE COMPANY SHALL NOT TERMINATE ITS STATUS AS AN ISSUER REQUIRED TO FILE REPORTS
UNDER THE 1934 ACT EVEN IF THE 1934 ACT OR THE RULES AND REGULATIONS THEREUNDER
WOULD OTHERWISE PERMIT SUCH TERMINATION.

 

(D)                                 USE OF PROCEEDS.  THE COMPANY WILL USE THE
PROCEEDS FROM THE SALE OF THE SECURITIES FOR WORKING CAPITAL PURPOSES.

 

(E)                                  FINANCIAL INFORMATION.  THE COMPANY AGREES
TO SEND THE FOLLOWING TO EACH INVESTOR DURING THE REPORTING PERIOD UNLESS THE
FOLLOWING ARE FILED WITH THE SEC THROUGH EDGAR AND ARE AVAILABLE TO THE PUBLIC
THROUGH THE EDGAR SYSTEM, WITHIN ONE (1) BUSINESS DAY AFTER THE FILING THEREOF
WITH THE SEC, A COPY OF ITS ANNUAL REPORTS ON FORM 10-K, ITS QUARTERLY REPORTS
ON FORM 10-Q, ANY CURRENT REPORTS ON FORM 8-K AND ANY REGISTRATION STATEMENTS
(OTHER THAN ON FORM S-8) OR AMENDMENTS FILED PURSUANT TO THE 1933 ACT; PROVIDED,
THAT IN NO CASE WILL THE COMPANY BE REQUIRED TO FURNISH ANY EXHIBITS TO SUCH
REPORTS OR OTHER MATERIALS THAT ARE SUBJECT TO A CONFIDENTIAL TREATMENT
REQUEST.  “BUSINESS DAY” MEANS ANY DAY OTHER THAN SATURDAY, SUNDAY OR OTHER DAY
ON WHICH COMMERCIAL BANKS IN THE CITY OF NEW YORK ARE AUTHORIZED OR REQUIRED BY
LAW TO REMAIN CLOSED.

 

(F)                                    LISTING.  THE COMPANY SHALL PROMPTLY
SECURE THE LISTING OF ALL OF THE REGISTRABLE SECURITIES (AS DEFINED IN THE
REGISTRATION RIGHTS AGREEMENT) UPON EACH NATIONAL SECURITIES EXCHANGE AND
AUTOMATED QUOTATION SYSTEM, IF ANY, UPON WHICH SHARES OF COMMON STOCK ARE THEN
LISTED (SUBJECT TO OFFICIAL NOTICE OF ISSUANCE) AND SHALL MAINTAIN, SO LONG AS
ANY OTHER SHARES OF COMMON STOCK SHALL BE SO LISTED, SUCH LISTING OF ALL
REGISTRABLE SECURITIES FROM TIME TO TIME ISSUABLE UNDER THE TERMS OF THE
TRANSACTION DOCUMENTS.  THE COMPANY SHALL MAINTAIN THE COMMON STOCK’S
AUTHORIZATION FOR QUOTATION ON THE PRINCIPAL MARKET OR THE NASDAQ SMALLCAP
MARKET.  NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES SHALL TAKE ANY ACTION
WHICH WOULD BE REASONABLY EXPECTED TO RESULT IN THE COMMON STOCK NOT BEING
LISTED ON THE PRINCIPAL MARKET OR THE NASDAQ SMALLCAP MARKET.  THE COMPANY SHALL
PAY ALL FEES AND EXPENSES IN CONNECTION WITH SATISFYING ITS OBLIGATIONS UNDER
THIS SECTION 4(F).

 

(G)                                 FEES.  SUBJECT TO SECTION 8 BELOW, AT THE
CLOSING, THE COMPANY SHALL PAY BAYSTAR CAPITAL II, L.P. OR ITS DESIGNEE(S) FOR
ITS REASONABLE, ACCOUNTABLE EXPENSES IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY IN AN AMOUNT UP TO $60,000 (OF WHICH $25,000 HAS PREVIOUSLY
BEEN PAID), WHICH AMOUNT SHALL BE WITHHELD BY SUCH BUYER FROM ITS PURCHASE PRICE
AT THE CLOSING.  EACH PARTY SHALL BE RESPONSIBLE FOR THE PAYMENT OF ANY
PLACEMENT AGENT’S FEES, FINANCIAL ADVISORY FEES, OR BROKER’S COMMISSIONS
INCURRED BY IT AND RELATING TO OR ARISING OUT OF THE TRANSACTIONS CONTEMPLATED
HEREBY.  THE COMPANY SHALL PAY, AND HOLD EACH BUYER HARMLESS AGAINST, ANY
LIABILITY, LOSS OR EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEY’S
FEES AND OUT-OF-POCKET EXPENSES) ARISING IN CONNECTION WITH CLAIM RELATING TO
ANY SUCH PAYMENT.  EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT OR IN THE
REGISTRATION RIGHTS AGREEMENT, EACH PARTY TO THIS AGREEMENT SHALL BEAR ITS OWN
EXPENSES IN CONNECTION WITH THE SALE OF THE SECURITIES TO THE BUYERS.

 

(H)                                 PLEDGE OF SECURITIES.  THE COMPANY
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT WILL PREVENT AN INVESTOR
(AS DEFINED IN THE REGISTRATION RIGHTS AGREEMENT) FROM PLEDGING THE SECURITIES
IN CONNECTION WITH A BONA FIDE MARGIN AGREEMENT OR OTHER BONA FIDE LOAN OR
FINANCING ARRANGEMENT THAT IS SECURED BY SUCH SECURITIES.  THE PLEDGE OF

 

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the Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Investor effecting a 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, including, without limitation, Section 2(f) of this Agreement;
provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 2(f) hereof in order to effect a sale, transfer or
assignment of Securities to such pledgee.  The Company hereby agrees to execute
and deliver such documentation as a pledgee of Securities may reasonably request
in connection with a pledge of such Securities to such pledgee by an Investor.

 

(I)                                     DISCLOSURE OF TRANSACTIONS AND OTHER
MATERIAL INFORMATION.  ON OR BEFORE 8:30 A.M., NEW YORK CITY TIME, ON THE
BUSINESS DAY FOLLOWING THE CLOSING DATE, THE COMPANY SHALL FILE A CURRENT REPORT
ON FORM 8-K DESCRIBING THE TERMS OF THE TRANSACTIONS CONTEMPLATED BY THE
TRANSACTION DOCUMENTS IN THE FORM REQUIRED BY THE 1934 ACT, AND ATTACHING THE
MATERIAL TRANSACTION DOCUMENTS (INCLUDING, WITHOUT LIMITATION, THIS AGREEMENT,
THE FORM OF THE CERTIFICATE OF DESIGNATIONS, THE FORM OF WARRANT AND THE FORM OF
THE REGISTRATION RIGHTS AGREEMENT) AS EXHIBITS TO SUCH FILING (THE “8-K
FILING”).  FROM AND AFTER THE FILING OF THE 8-K FILING WITH THE SEC, SO LONG AS
A BUYER DOES NOT EXERCISE ITS RIGHT TO HAVE AN OBSERVER AT MEETINGS OF THE
COMPANY’S BOARD OF DIRECTORS, SUCH BUYER SHALL NOT BE IN POSSESSION OF ANY
MATERIAL, NONPUBLIC INFORMATION ACTUALLY PROVIDED BY THE COMPANY, ANY OF ITS
SUBSIDIARIES OR ANY OF ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS,
THAT WAS NOT SPECIFICALLY REQUESTED BY SUCH BUYER AND THAT IS NOT DISCLOSED IN
THE 8-K FILING.  THE COMPANY SHALL NOT, AND SHALL CAUSE EACH OF ITS SUBSIDIARIES
AND ITS AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS,
NOT TO, PROVIDE ANY BUYER WITH ANY MATERIAL, NONPUBLIC INFORMATION REGARDING THE
COMPANY OR ANY OF ITS SUBSIDIARIES FROM AND AFTER THE FILING OF THE 8-K FILING
WITH THE SEC NOT DIRECTLY SOLICITED BY SUCH BUYER, EXCEPT IN CONNECTION WITH
SUCH BUYER’S EXERCISE OF ITS RIGHT TO HAVE AN OBSERVER ATTEND MEETINGS OF THE
COMPANY’S BOARD OF DIRECTORS.  SUBJECT TO THE FOREGOING, NEITHER THE COMPANY NOR
ANY BUYER SHALL ISSUE ANY PRESS RELEASES OR ANY OTHER PUBLIC STATEMENTS WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY; PROVIDED, HOWEVER, THAT THE
COMPANY SHALL BE ENTITLED, WITHOUT THE PRIOR APPROVAL OF ANY BUYER, TO MAKE ANY
PRESS RELEASE OR OTHER PUBLIC DISCLOSURE WITH RESPECT TO SUCH TRANSACTIONS (I)
IN SUBSTANTIAL CONFORMITY WITH THE 8-K FILING AND CONTEMPORANEOUSLY THEREWITH
AND (II) AS IS REQUIRED BY APPLICABLE LAW AND REGULATIONS, INCLUDING THE
APPLICABLE RULES AND REGULATIONS OF THE PRINCIPAL MARKET (PROVIDED THAT IN THE
CASE OF CLAUSE (I) EACH BUYER SHALL BE CONSULTED BY THE COMPANY (ALTHOUGH THE
CONSENT OF SUCH BUYER SHALL NOT BE REQUIRED) IN CONNECTION WITH ANY SUCH PRESS
RELEASE OR OTHER PUBLIC DISCLOSURE PRIOR TO ITS RELEASE).

 

(J)                                     NO INTEGRATED OFFERING.  NONE OF THE
COMPANY, ITS SUBSIDIARIES, THEIR AFFILIATES AND ANY PERSON ACTING ON THEIR
BEHALF WILL, DIRECTLY OR INDIRECTLY, MAKE ANY OFFERS OR SALES OF ANY SECURITY OR
SOLICIT ANY OFFERS TO BUY ANY SECURITY, UNDER CIRCUMSTANCES THAT WOULD REQUIRE
REGISTRATION OF THE COMPANY’S SALE OF ANY OF THE SECURITIES UNDER THE 1933 ACT
OR CAUSE THIS OFFERING TO BE SUBJECT TO ANY APPLICABLE STOCKHOLDER APPROVAL
PROVISIONS, INCLUDING, WITHOUT LIMITATION, UNDER THE RULES AND REGULATIONS OF
ANY EXCHANGE OR AUTOMATED QUOTATION SYSTEM ON WHICH ANY OF THE SECURITIES OF THE
COMPANY ARE LISTED OR DESIGNATED.

 

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(K)                                  RESERVATION OF SHARES.  THE COMPANY SHALL
TAKE ALL ACTION NECESSARY TO AT ALL TIMES HAVE AUTHORIZED, AND RESERVED FOR THE
PURPOSE OF ISSUANCE, NO LESS THAN THE NUMBER OF SHARES OF COMMON STOCK NEEDED TO
PROVIDE FOR THE ISSUANCE OF THE SHARES OF COMMON STOCK UPON CONVERSION OF ALL
OUTSTANDING PREFERRED SHARES, INCLUDING PAYMENT OF PAID-IN-KIND DIVIDENDS
(WITHOUT REGARD TO ANY LIMITATIONS ON CONVERSIONS) AND THE NUMBER OF SHARES OF
COMMON STOCK NEEDED TO PROVIDE FOR THE ISSUANCE OF THE SHARES OF COMMON STOCK
UPON EXERCISE OF ALL OUTSTANDING WARRANTS (WITHOUT REGARD TO ANY LIMITATIONS ON
EXERCISES).

 

(L)                                     OBSERVER RIGHTS.  SO LONG AS THE BUYERS
(TOGETHER WITH THEIR AFFILIATES) HOLD AT LEAST 50% OF THE PREFERRED SHARES
INITIALLY ISSUED TO THEM HEREUNDER, THE BUYERS SHALL HAVE THE RIGHT, BUT NOT THE
OBLIGATION, TO APPOINT ONE INDIVIDUAL MUTUALLY AGREEABLE TO THE BUYERS AND THE
COMPANY (A “PREFERRED OBSERVER”) TO OBSERVE AND PARTICIPATE IN THE DISCUSSION OF
ANY PROCEEDING OF THE COMPANY’S BOARD OF DIRECTORS IN A NONVOTING OBSERVER
CAPACITY; PROVIDED, THAT THE PREFERRED OBSERVER MAY NOT BE A MEMBER OF OR
OBSERVER OF THE BOARD OF DIRECTORS OF A COMPETITOR OF THE COMPANY.  EACH
PREFERRED OBSERVER SHALL HAVE THE RIGHT TO RECEIVE (I) ANY WRITTEN MATERIAL OR
OTHER INFORMATION PROVIDED TO MEMBERS OF THE BOARD OF DIRECTORS (OR THAT ANY
DIRECTOR HAS THE RIGHT TO REQUEST); PROVIDED, THAT SUCH PREFERRED OBSERVER SHALL
ACKNOWLEDGE AND AGREE THAT HE OR SHE WILL BE BOUND TO SATISFY THE SAME DUTIES
AND OBLIGATIONS OF CONFIDENTIALITY WITH RESPECT TO SUCH INFORMATION THAT MEMBERS
OF THE BOARD OF DIRECTORS MUST SATISFY AND (II) ANY NOTICE PROVIDED TO THE BOARD
OF DIRECTORS OF THE COMPANY AT THE SAME TIME IN THE SAME MANNER AS SUCH BOARD OF
DIRECTORS.  IF THE COMPANY PROPOSES TO TAKE ANY ACTION BY WRITTEN CONSENT IN
LIEU OF A MEETING OF ITS BOARD OF DIRECTORS, THE COMPANY SHALL GIVE WRITTEN
NOTICE THEREOF TO EACH PREFERRED OBSERVER PROMPTLY FOLLOWING THE EFFECTIVE DATE
OF SUCH CONSENT DESCRIBING IN REASONABLE DETAIL THE NATURE AND SUBSTANCE OF SUCH
ACTION.  EACH PREFERRED OBSERVER SHALL BE ENTITLED TO BE THE SAME REIMBURSEMENT
FOR EXPENSES ASSOCIATED WITH ATTENDING BOARD MEETINGS PROVIDED TO THE MEMBERS OF
THE BOARD OF DIRECTORS.  NOTWITHSTANDING THE FOREGOING, IF THE COMPANY
DETERMINES IN GOOD FAITH THAT PARTICIPATION BY THE PREFERRED OBSERVER IN ANY
MEETING OR THE DISTRIBUTION TO THE PREFERRED OBSERVER OF ANY WRITTEN MATERIALS
DESCRIBED IN THIS SECTION 4(L) RELATES TO INFORMATION DEEMED CONFIDENTIAL, 
PROPRIETARY OR ATTORNEY-CLIENT PRIVILEGED (“PROTECTED INFORMATION”), THE COMPANY
SHALL HAVE THE RIGHT TO EXCLUDE THE PREFERRED OBSERVER FROM THE PORTION OF SUCH
MEETING AND FROM ACCESS TO SUCH INFORMATION IN WHICH PROTECTED INFORMATION IS
DISCUSSED OR PRESENTED.

 

5.                                       REGISTER; TRANSFER AGENT INSTRUCTIONS.

 

(A)                                  REGISTER.  THE COMPANY SHALL MAINTAIN AT
ITS PRINCIPAL EXECUTIVE OFFICES (OR SUCH OTHER OFFICE OR AGENCY OF THE COMPANY
AS IT MAY DESIGNATE BY NOTICE TO EACH HOLDER OF PREFERRED SHARES OR WARRANTS), A
REGISTER FOR THE PREFERRED SHARES AND THE WARRANTS, IN WHICH THE COMPANY SHALL
RECORD THE NAME AND ADDRESS OF THE PERSON IN WHOSE NAME THE PREFERRED SHARES AND
THE WARRANTS HAVE BEEN ISSUED (INCLUDING THE NAME AND ADDRESS OF EACH
TRANSFEREE), THE NUMBER OF PREFERRED SHARES HELD BY SUCH PERSON AND THE NUMBER
OF WARRANT SHARES ISSUABLE UPON EXERCISE OF THE WARRANTS HELD BY SUCH PERSON. 
THE COMPANY SHALL KEEP THE REGISTER OPEN AND AVAILABLE AT ALL TIMES DURING
BUSINESS HOURS FOR INSPECTION OF ANY BUYER OR ITS LEGAL REPRESENTATIVES.

 

(B)                                 TRANSFER AGENT INSTRUCTIONS.  THE COMPANY
SHALL ISSUE IRREVOCABLE INSTRUCTIONS TO ITS TRANSFER AGENT, AND ANY SUBSEQUENT
TRANSFER AGENT, TO ISSUE CERTIFICATES OR CREDIT

 

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SHARES TO THE APPLICABLE BALANCE ACCOUNTS AT DTC, REGISTERED IN THE NAME OF EACH
BUYER OR ITS RESPECTIVE NOMINEE(S), FOR THE CONVERSION SHARES AND THE WARRANT
SHARES IN SUCH AMOUNTS AS SPECIFIED FROM TIME TO TIME BY EACH BUYER TO THE
COMPANY UPON CONVERSION OF THE PREFERRED SHARES OR EXERCISE OF THE WARRANTS IN
THE FORM OF EXHIBIT D ATTACHED HERETO (THE “IRREVOCABLE TRANSFER AGENT
INSTRUCTIONS”).  THE COMPANY WARRANTS THAT NO INSTRUCTION OTHER THAN THE
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS REFERRED TO IN THIS SECTION 5(B), AND
STOP TRANSFER INSTRUCTIONS TO GIVE EFFECT TO SECTIONS 2(F) AND 2(G) HEREOF, 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 AND THE OTHER TRANSACTION DOCUMENTS. 
IF A BUYER EFFECTS A SALE, ASSIGNMENT OR TRANSFER OF THE SECURITIES IN
ACCORDANCE WITH SECTION 2(F), THE COMPANY SHALL PERMIT THE TRANSFER AND SHALL
PROMPTLY INSTRUCT ITS TRANSFER AGENT TO ISSUE ONE OR MORE CERTIFICATES OR CREDIT
SHARES TO THE APPLICABLE BALANCE ACCOUNTS AT DTC IN SUCH NAME AND IN SUCH
DENOMINATIONS AS SPECIFIED BY SUCH BUYER TO EFFECT SUCH SALE, TRANSFER OR
ASSIGNMENT.  IN THE EVENT THAT SUCH SALE, ASSIGNMENT OR TRANSFER INVOLVES
CONVERSION SHARES OR WARRANT SHARES SOLD, ASSIGNED OR TRANSFERRED PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN COMPLIANCE WITH RULE 144, THE TRANSFER
AGENT SHALL ISSUE SUCH SECURITIES TO THE BUYER, ASSIGNEE OR TRANSFEREE, AS THE
CASE MAY BE, WITHOUT ANY RESTRICTIVE LEGEND.  THE COMPANY ACKNOWLEDGES THAT A
BREACH BY IT OF ITS OBLIGATIONS HEREUNDER WILL CAUSE IRREPARABLE HARM TO A
BUYER.  ACCORDINGLY, THE COMPANY ACKNOWLEDGES THAT THE REMEDY AT LAW FOR A
BREACH OF ITS OBLIGATIONS UNDER THIS SECTION 5(B) WILL BE INADEQUATE AND AGREES,
IN THE EVENT OF A BREACH OR THREATENED BREACH BY THE COMPANY OF THE PROVISIONS
OF THIS SECTION 5(B), THAT A BUYER SHALL BE ENTITLED, IN ADDITION TO ALL OTHER
AVAILABLE REMEDIES, TO AN 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.

 

6.                                       CONDITIONS TO THE COMPANY’S OBLIGATION
TO SELL.  THE OBLIGATION OF THE COMPANY HEREUNDER TO ISSUE AND SELL THE
PREFERRED SHARES AND THE RELATED WARRANTS TO EACH BUYER 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 THE 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:

 

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

 

(II)                                  SUCH BUYER AND EACH OTHER BUYER SHALL HAVE
DELIVERED TO THE COMPANY THE PURCHASE PRICE (LESS, IN THE CASE OF BAYSTAR
CAPITAL II, L.P., THE AMOUNTS WITHHELD PURSUANT TO SECTION 4(G)) FOR THE
PREFERRED SHARES AND THE RELATED WARRANTS BEING PURCHASED BY SUCH BUYER AND EACH
OTHER BUYER AT THE CLOSING BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS
PURSUANT TO THE WIRE INSTRUCTIONS PROVIDED BY THE COMPANY.

 

(III)                               THE REPRESENTATIONS AND WARRANTIES OF SUCH
BUYER SHALL BE TRUE AND CORRECT IN ALL MATERIAL RESPECTS AS OF THE DATE WHEN
MADE AND AS OF THE CLOSING DATE AS THOUGH MADE AT THAT TIME (EXCEPT FOR
REPRESENTATIONS AND WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE), AND SUCH BUYER
SHALL HAVE PERFORMED, SATISFIED AND COMPLIED IN ALL MATERIAL RESPECTS (EXCEPT
FOR COVENANTS, AGREEMENTS AND CONDITIONS THAT ARE QUALIFIED BY

 

19

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MATERIALITY, WHICH SHALL BE COMPLIED WITH IN ALL RESPECTS) WITH THE COVENANTS,
AGREEMENTS AND CONDITIONS REQUIRED BY THIS AGREEMENT TO BE PERFORMED, SATISFIED
OR COMPLIED WITH BY SUCH BUYER AT OR PRIOR TO THE CLOSING DATE.

 

(IV)                              NO STATUTE, RULE, REGULATION, EXECUTIVE ORDER,
DECREE, RULING OR INJUNCTION SHALL HAVE BEEN ENACTED, ENTERED, PROMULGATED OR
ENDORSED BY ANY COURT OR GOVERNMENTAL AUTHORITY OF COMPETENT JURISDICTION OR ANY
SELF-REGULATORY ORGANIZATION HAVING AUTHORITY OVER THE MATTERS CONTEMPLATED
HEREBY WHICH PROHIBITS THE CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.

 

7.                                       CONDITIONS TO EACH BUYER’S OBLIGATION
TO PURCHASE.  THE OBLIGATION OF EACH BUYER HEREUNDER TO PURCHASE THE PREFERRED
SHARES AND THE RELATED WARRANTS 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 BY
SUCH BUYER AT ANY TIME IN ITS SOLE DISCRETION BY PROVIDING THE COMPANY WITH
PRIOR WRITTEN NOTICE THEREOF:

 

(I)                                     THE COMPANY SHALL HAVE EXECUTED AND
DELIVERED TO SUCH BUYER EACH OF THE TRANSACTION DOCUMENTS.

 

(II)                                  THE CERTIFICATE OF DESIGNATIONS SHALL HAVE
BEEN FILED WITH THE SECRETARY OF STATE OF THE STATE OF DELAWARE, AND A COPY
THEREOF CERTIFIED BY THE SECRETARY OF STATE OF THE STATE OF DELAWARE SHALL HAVE
BEEN DELIVERED TO SUCH BUYER.

 

(III)                               THE COMPANY SHALL HAVE EXECUTED AND
DELIVERED TO SUCH BUYER THE PREFERRED STOCK CERTIFICATES (IN SUCH DENOMINATIONS
AS SUCH BUYER SHALL REQUEST) FOR THE PREFERRED SHARES BEING PURCHASED BY SUCH
BUYER AT THE CLOSING.

 

(IV)                              SUCH BUYER SHALL HAVE RECEIVED THE OPINION OF
WILSON SONSINI GOODRICH & ROSATI, THE COMPANY’S COUNSEL, DATED AS OF THE CLOSING
DATE, IN SUBSTANTIALLY THE FORM OF EXHIBIT E ATTACHED HERETO.

 

(V)                                 THE COMPANY SHALL HAVE RESERVED OUT OF ITS
AUTHORIZED AND UNISSUED COMMON STOCK, SOLELY FOR THE PURPOSE OF EFFECTING THE
CONVERSION OF THE PREFERRED SHARES AND EXERCISE OF THE WARRANTS, AT LEAST
7,300,000 SHARES OF COMMON STOCK.

 

(VI)                              THE COMPANY SHALL HAVE DELIVERED TO SUCH BUYER
A COPY OF THE IRREVOCABLE TRANSFER AGENT INSTRUCTIONS, IN THE FORM OF EXHIBIT D
ATTACHED HERETO, WHICH INSTRUCTIONS SHALL HAVE BEEN DELIVERED TO AND
ACKNOWLEDGED IN WRITING BY THE COMPANY’S TRANSFER AGENT.

 

(VII)                           THE COMPANY SHALL HAVE DELIVERED TO SUCH BUYER A
CERTIFICATE EVIDENCING THE INCORPORATION AND GOOD STANDING OF THE COMPANY IN
SUCH CORPORATION’S STATE OF INCORPORATION ISSUED BY THE SECRETARY OF STATE OF
SUCH STATE OF INCORPORATION AS OF A DATE WITHIN 10 DAYS OF THE CLOSING DATE.

 

20

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(VIII)                        THE COMPANY SHALL HAVE DELIVERED TO SUCH BUYER A
CERTIFICATE EVIDENCING THE COMPANY’S QUALIFICATION AS A FOREIGN CORPORATION AND
GOOD STANDING ISSUED BY THE SECRETARY OF STATE OF THE STATE OF CALIFORNIA AS OF
A DATE WITHIN 10 DAYS OF THE CLOSING DATE.

 

(IX)                                THE COMPANY SHALL HAVE DELIVERED TO SUCH
BUYER A CERTIFIED COPY OF THE CERTIFICATE OF INCORPORATION AS CERTIFIED BY THE
SECRETARY OF STATE OF THE STATE OF DELAWARE WITHIN 10 DAYS OF THE CLOSING DATE.

 

(X)                                   THE COMPANY SHALL HAVE DELIVERED TO SUCH
BUYER A CERTIFICATE, EXECUTED BY THE SECRETARY OF THE COMPANY AND DATED AS OF
THE CLOSING DATE, AS TO (I) THE RESOLUTIONS CONSISTENT WITH SECTION 3(B) AS
ADOPTED BY THE COMPANY’S BOARD OF DIRECTORS IN A FORM REASONABLY ACCEPTABLE TO
SUCH BUYER, (II) THE CERTIFICATE OF INCORPORATION AND (III) THE BYLAWS, EACH AS
IN EFFECT AT THE CLOSING, IN THE FORM ATTACHED HERETO AS EXHIBIT F.

 

(XI)                                THE REPRESENTATIONS AND WARRANTIES OF THE
COMPANY 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) AND THE COMPANY SHALL HAVE PERFORMED, SATISFIED AND
COMPLIED IN ALL MATERIAL RESPECTS (EXCEPT FOR COVENANTS, AGREEMENTS AND
CONDITIONS THAT ARE QUALIFIED BY MATERIALITY, WHICH SHALL BE COMPLIED WITH IN
ALL RESPECTS) WITH THE COVENANTS, AGREEMENTS AND CONDITIONS REQUIRED BY THE
TRANSACTION DOCUMENTS TO BE PERFORMED, SATISFIED OR COMPLIED WITH BY THE COMPANY
AT OR PRIOR TO THE CLOSING DATE.  SUCH BUYER SHALL HAVE RECEIVED A CERTIFICATE,
EXECUTED BY THE CHIEF EXECUTIVE OFFICER OR THE 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 IN THE FORM ATTACHED
HERETO AS EXHIBIT G.

 

(XII)                             THE COMPANY SHALL HAVE DELIVERED TO SUCH BUYER
A LETTER FROM THE COMPANY’S TRANSFER AGENT CERTIFYING THE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING AS OF A DATE WITHIN FIVE DAYS OF THE CLOSING DATE.

 

(XIII)                          THE COMMON STOCK (X) SHALL BE DESIGNATED FOR
QUOTATION OR LISTED ON THE PRINCIPAL MARKET AND (Y) SHALL NOT HAVE BEEN
SUSPENDED BY THE SEC OR THE PRINCIPAL MARKET FROM TRADING ON THE PRINCIPAL
MARKET NOR SHALL SUSPENSION BY THE SEC OR THE PRINCIPAL MARKET HAVE BEEN
THREATENED EITHER (A) IN WRITING BY THE SEC OR THE PRINCIPAL MARKET OR (B) BY
FALLING BELOW THE MINIMUM LISTING MAINTENANCE REQUIREMENTS OF THE PRINCIPAL
MARKET; AND THE CONVERSION SHARES ISSUABLE UPON CONVERSION OF THE PREFERRED
SHARES (WITHOUT REGARD TO ANY LIMITATIONS ON CONVERSIONS) AND THE WARRANT SHARES
ISSUABLE UPON EXERCISE OF THE WARRANTS (WITHOUT REGARD TO ANY LIMITATIONS ON
EXERCISE) SHALL BE LISTED (SUBJECT FILING AN OFFICIAL NOTICE OF ISSUANCE OF
ADDITIONAL SHARES) UPON THE PRINCIPAL MARKET.

 

(XIV)                         THE COMPANY SHALL HAVE OBTAINED ALL GOVERNMENTAL,
REGULATORY OR THIRD PARTY CONSENTS AND APPROVALS, IF ANY, NECESSARY FOR THE SALE
OF THE PREFERRED SHARES AND THE WARRANTS.

 

21

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(XV)                            NO STATUTE, RULE, REGULATION, EXECUTIVE ORDER,
DECREE, RULING OR INJUNCTION SHALL HAVE BEEN ENACTED, ENTERED, PROMULGATED OR
ENDORSED BY ANY COURT OR GOVERNMENTAL AUTHORITY OF COMPETENT JURISDICTION OR ANY
SELF-REGULATORY ORGANIZATION HAVING AUTHORITY OVER THE MATTERS CONTEMPLATED
HEREBY WHICH PROHIBITS THE CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.

 

8.                                       TERMINATION.  IN THE EVENT THAT THE
CLOSING SHALL NOT HAVE OCCURRED WITH RESPECT TO A BUYER ON OR BEFORE FIVE (5)
BUSINESS DAYS FROM THE DATE HEREOF DUE TO THE COMPANY’S OR SUCH BUYER’S FAILURE
TO SATISFY THE CONDITIONS SET FORTH IN SECTIONS 6 AND 7 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; PROVIDED, HOWEVER, THIS IF THIS
AGREEMENT IS TERMINATED PURSUANT TO THIS SECTION 8, THE COMPANY SHALL REMAIN
OBLIGATED TO REIMBURSE THE NON-BREACHING BUYERS FOR THE EXPENSES DESCRIBED IN
SECTION 4(G) ABOVE.

 

9.                                       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 DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTIONS)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTIONS OTHER THAN THE
STATE OF DELAWARE.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN DELAWARE, 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 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.  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 WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(B)                                 COUNTERPARTS.  THIS AGREEMENT MAY BE
EXECUTED IN TWO OR MORE IDENTICAL COUNTERPARTS, ALL OF WHICH SHALL BE CONSIDERED
ONE AND THE SAME AGREEMENT AND SHALL BECOME EFFECTIVE WHEN COUNTERPARTS HAVE
BEEN SIGNED BY EACH PARTY AND DELIVERED TO THE OTHER PARTY; PROVIDED THAT A
FACSIMILE SIGNATURE SHALL BE CONSIDERED DUE EXECUTION AND SHALL BE BINDING UPON
THE SIGNATORY THERETO WITH THE SAME FORCE AND EFFECT AS IF THE SIGNATURE WERE AN
ORIGINAL, NOT A FACSIMILE SIGNATURE.

 

22

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(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 THE
BUYERS, THE COMPANY, 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 OTHER THAN BY AN INSTRUMENT IN WRITING SIGNED BY
THE COMPANY AND THE HOLDERS OF A MAJORITY OR MORE OF THE PREFERRED SHARES, OR,
IF PRIOR TO THE CLOSING DATE, THE COMPANY AND THE BUYERS LISTED ON THE SCHEDULE
OF BUYERS AS BEING OBLIGATED TO PURCHASE A MAJORITY OR MORE OF THE PREFERRED
SHARES.  NO PROVISION HEREOF MAY BE WAIVED OTHER THAN BY AN INSTRUMENT IN
WRITING SIGNED BY THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT.  NO SUCH
AMENDMENT SHALL BE EFFECTIVE TO THE EXTENT THAT IT APPLIES TO LESS THAN ALL OF
THE HOLDERS OF THE PREFERRED SHARES THEN OUTSTANDING.  NO CONSIDERATION SHALL BE
OFFERED OR PAID TO ANY PERSON TO AMEND OR CONSENT TO A WAIVER OR MODIFICATION OF
ANY PROVISION OF ANY OF THE TRANSACTION DOCUMENTS UNLESS THE SAME CONSIDERATION
ALSO IS OFFERED TO ALL OF THE PARTIES TO THE TRANSACTION DOCUMENTS, HOLDERS OF
PREFERRED SHARES OR HOLDERS OF THE WARRANTS, AS THE CASE MAY BE.  THE COMPANY
HAS NOT, DIRECTLY OR INDIRECTLY, MADE ANY AGREEMENTS WITH ANY BUYERS RELATING TO
THE TERMS OR CONDITIONS OF THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION
DOCUMENTS EXCEPT AS SET FORTH IN THE TRANSACTION DOCUMENTS.

 

(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 AN OVERNIGHT COURIER 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:

 

Commerce One, Inc.

4440 Rosewood Drive

Pleasanton, California 94588

Telephone:

(925) 520-6000

Facsimile:

(925) 520-6060

Attention:

Chief Financial Officer

 

and a separate notice to

 

23

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

 

 

Commerce One, Inc.

4440 Rosewood Drive

Pleasanton, California  94588

Telephone:

(925) 520-6000

Facsimile:

(925) 520-6060

Attention:

General Counsel

 

with a copy to:

 

Wilson Sonsini Goodrich & Rosati

650 Page Mill Road

Palo Alto, California  94304-1050

Telephone:

(650) 849-3223

Facsimile:

(650) 493-6811

Attention:

N. Anthony Jeffries, Esq.

 

If to the Transfer Agent:

 

Equiserve

150 Royall Street

Canton, Massachusetts

Telephone:

(781) 575-2394

Facsimile:

(781) 575-2149

Attention:

Norris Richardson

 

If to a Buyer, to its 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 to 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 (5) 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 an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier 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 PREFERRED
SHARES OR THE WARRANTS.  THE COMPANY SHALL NOT ASSIGN THIS AGREEMENT OR ANY
RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE HOLDERS
OF A MAJORITY OR MORE OF THE PREFERRED SHARES THEN OUTSTANDING, INCLUDING BY
MERGER OR CONSOLIDATION, EXCEPT PURSUANT TO A CHANGE OF CONTROL (AS DEFINED IN
SECTION 4(A) OF THE CERTIFICATE OF DESIGNATIONS) WITH RESPECT TO WHICH THE
COMPANY IS IN COMPLIANCE WITH SUCH SECTION AND SECTION 4(B) OF THE WARRANTS.  A
BUYER MAY ASSIGN SOME OR ALL OF ITS RIGHTS HEREUNDER IN CONNECTION WITH A
TRANSFER OF SUCH BUYER’S SECURITIES TO ANY AFFILIATE OR LENDER WITHOUT THE

 

24

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CONSENT OF THE COMPANY; PROVIDED THAT SUCH ASSIGNMENT IS IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS AND THIS AGREEMENT, AND UPON CONSUMMATION OF A
PERMITTED ASSIGNMENT AND THE WRITTEN AGREEMENT OF SUCH ASSIGNEE (IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY) TO THE TERMS AND CONDITIONS OF
THIS AGREEMENT, SUCH ASSIGNEE SHALL BE DEEMED TO BE A BUYER HEREUNDER WITH
RESPECT TO SUCH ASSIGNED RIGHTS.

 

(H)                                 NO THIRD PARTY BENEFICIARIES.  THIS
AGREEMENT IS INTENDED FOR THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE
PERMITTED SUCCESSORS AND ASSIGNS, AND IS NOT FOR THE BENEFIT OF, NOR MAY ANY
PROVISION HEREOF BE ENFORCED BY, ANY OTHER PERSON.

 

(I)                                     SURVIVAL.  UNLESS THIS AGREEMENT IS
TERMINATED UNDER SECTION 8, THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE BUYERS CONTAINED IN SECTIONS 2 AND 3, THE AGREEMENTS AND COVENANTS SET
FORTH IN SECTIONS 4, 5 AND 9 SHALL SURVIVE THE CLOSING.  EACH BUYER SHALL BE
RESPONSIBLE ONLY FOR ITS OWN REPRESENTATIONS, WARRANTIES, AGREEMENTS AND
COVENANTS HEREUNDER.

 

(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)                                  INDEMNIFICATION.  IN CONSIDERATION OF EACH
BUYER’S EXECUTION AND DELIVERY OF THE TRANSACTION DOCUMENTS AND ACQUIRING THE
SECURITIES THEREUNDER AND IN ADDITION TO ALL OF THE COMPANY’S OTHER OBLIGATIONS
UNDER THE TRANSACTION DOCUMENTS, THE COMPANY SHALL DEFEND, PROTECT, INDEMNIFY
AND HOLD HARMLESS EACH BUYER AND EACH OTHER HOLDER OF THE SECURITIES AND ALL OF
THEIR STOCKHOLDERS, PARTNERS, MEMBERS, OFFICERS, DIRECTORS, EMPLOYEES AND DIRECT
OR INDIRECT INVESTORS AND ANY OF THE FOREGOING PERSONS’ AGENTS OR OTHER
REPRESENTATIVES (INCLUDING, WITHOUT LIMITATION, 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 EXPENSES IN
CONNECTION THEREWITH (IRRESPECTIVE OF WHETHER ANY SUCH INDEMNITEE IS A PARTY TO
THE ACTION FOR WHICH INDEMNIFICATION HEREUNDER IS SOUGHT), AND INCLUDING
REASONABLE ATTORNEYS’ FEES AND DISBURSEMENTS (THE “INDEMNIFIED LIABILITIES”),
INCURRED BY ANY INDEMNITEE AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO (A)
ANY MATERIAL INACCURACY OF ANY REPRESENTATION OR WARRANTY MADE BY THE COMPANY IN
THE TRANSACTION DOCUMENTS, (B) ANY MATERIAL BREACH OF ANY COVENANT, AGREEMENT OR
OBLIGATION OF THE COMPANY CONTAINED IN THE TRANSACTION DOCUMENTS OR (C) ANY
CAUSE OF ACTION, SUIT OR CLAIM BROUGHT OR MADE AGAINST SUCH INDEMNITEE BY A
THIRD PARTY (INCLUDING FOR THESE PURPOSES A DERIVATIVE ACTION BROUGHT ON BEHALF
OF THE COMPANY) AND ARISING OUT OF OR RESULTING FROM (I) THE EXECUTION,
DELIVERY, PERFORMANCE OR ENFORCEMENT OF THE TRANSACTION DOCUMENTS, (II) ANY
TRANSACTION FINANCED OR TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, WITH THE PROCEEDS OF THE ISSUANCE OF THE SECURITIES, (III) ANY
DISCLOSURE MADE BY SUCH BUYER PURSUANT TO SECTION 4(I), OR (IV) THE STATUS OF
SUCH BUYER OR HOLDER OF THE SECURITIES AS AN INVESTOR IN THE COMPANY (OTHER
THAN, IN EACH OF (I) THROUGH (IV) ABOVE, IN CONNECTION WITH ANY ACTION SUCH
BUYER MAY HAVE TAKEN OR RESULTING FROM ANY GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT BY THE BUYER).  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

 

25

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PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED LIABILITIES WHICH IS
PERMISSIBLE UNDER APPLICABLE LAW.  EXCEPT AS OTHERWISE SET FORTH HEREIN, THE
MECHANICS AND PROCEDURES WITH RESPECT TO THE RIGHTS AND OBLIGATIONS UNDER THIS
SECTION 9(K) SHALL BE THE SAME AS THOSE SET FORTH IN SECTION 6 OF THE
REGISTRATION RIGHTS AGREEMENT.

 

(L)                                     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.

 

(M)                               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 WHICH SUCH HOLDERS HAVE BEEN GRANTED AT
ANY TIME UNDER ANY OTHER AGREEMENT OR CONTRACT AND ALL OF THE RIGHTS WHICH SUCH
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), TO RECOVER DAMAGES BY REASON OF ANY BREACH OF
ANY PROVISION OF THIS AGREEMENT AND TO EXERCISE ALL OTHER RIGHTS GRANTED BY
LAW.  FURTHERMORE, THE COMPANY RECOGNIZES THAT IN THE EVENT THAT IT FAILS TO
PERFORM, OBSERVE, OR DISCHARGE ANY OR ALL OF ITS OBLIGATIONS UNDER THIS
AGREEMENT, ANY REMEDY AT LAW MAY PROVE TO BE INADEQUATE RELIEF TO THE BUYERS. 
THE COMPANY THEREFORE AGREES THAT THE BUYERS SHALL BE ENTITLED TO SEEK TEMPORARY
AND PERMANENT INJUNCTIVE RELIEF IN ANY SUCH CASE WITHOUT THE NECESSITY OF
PROVING ACTUAL DAMAGES AND WITHOUT POSTING A BOND OR OTHER SECURITY.

 

(N)                                 PAYMENT SET ASIDE.  TO THE EXTENT THAT THE
COMPANY MAKES A PAYMENT OR PAYMENTS TO THE BUYERS HEREUNDER OR PURSUANT TO ANY
OF THE OTHER TRANSACTION DOCUMENTS OR THE BUYERS ENFORCE OR EXERCISE THEIR
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,
A TRUSTEE, RECEIVER OR ANY OTHER PERSON UNDER ANY LAW (INCLUDING, WITHOUT
LIMITATION, ANY BANKRUPTCY LAW, STATE OR FEDERAL LAW, COMMON LAW OR EQUITABLE
CAUSE OF ACTION), THEN TO THE EXTENT OF ANY SUCH RESTORATION THE OBLIGATION OR
PART THEREOF ORIGINALLY INTENDED TO BE SATISFIED SHALL BE REVIVED AND CONTINUED
IN FULL FORCE AND EFFECT AS IF SUCH PAYMENT HAD NOT BEEN MADE OR SUCH
ENFORCEMENT OR SETOFF HAD NOT OCCURRED.

 

(O)                                 INDEPENDENT NATURE OF BUYERS’ OBLIGATIONS
AND RIGHTS.  THE OBLIGATIONS OF EACH BUYER UNDER ANY TRANSACTION DOCUMENT 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 UNDER ANY TRANSACTION DOCUMENT.  NOTHING CONTAINED HEREIN OR IN ANY
OTHER TRANSACTION DOCUMENT, 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 BY THE TRANSACTION
DOCUMENTS.  EACH BUYER CONFIRMS THAT IT HAS INDEPENDENTLY PARTICIPATED IN THE
NEGOTIATION OF THE TRANSACTION CONTEMPLATED HEREBY WITH THE ADVICE OF ITS OWN
COUNSEL AND ADVISORS.  EACH BUYER SHALL BE ENTITLED TO INDEPENDENTLY PROTECT AND
ENFORCE ITS RIGHTS, INCLUDING, WITHOUT LIMITATIONS, THE RIGHTS ARISING OUT OF
THIS AGREEMENT OR OUT OF ANY OTHER

 

26

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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.

 

[Signature Page Follows]

 

27

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

 

 

COMPANY:

 

BUYERS:

 

 

 

COMMERCE ONE, INC.

 

BAYSTAR CAPITAL II, L.P.

 

 

 

 

 

By:  BayStar Capital Management LLC

 

 

 

By:

/s/ Charles Boynton

 

 

 

Name:  Charles Boynton

 

By:

/s/ Steven M. Lamar

 

Title:    Senior Vice President and

 

Name:  Steven M. Lamar

Chief Financial Officer

 

Title:    Managing Member

 

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

 

SCHEDULE OF BUYERS

 

(1)

 

(2)

 

(3)

 

(4)

 

(5)

 

Buyer

 

Address and Facsimile Number

 

Number of
Preferred
Shares

 

Aggregate
Amount of
Warrants

 

Legal Representative’s
Address and Facsimile
Number

 

 

 

 

 

 

 

 

 

 

 

BayStar Capital II, L.P.

 

80 E. Sir Francis Drake Boulevard,
Suite 2B
Larkspur, California 94939
Attention:  Steven M. Lamar
Facsimile: (415) 834-4601
Telephone: (415) 834-4620
Residence:  California

 

100,000

 

2,209,945

 

Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attention:  Eleazer Klein, Esq.
Facsimile: (212) 593-5955
Telephone:  (212) 756-2376

 

 

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EXHIBITS

 

Exhibit A

 

Form of Certificate of Designations

Exhibit B

 

Form of Warrants

Exhibit C

 

Form of Registration Rights Agreement

Exhibit D

 

Form of Irrevocable Transfer Agent Instructions

Exhibit E

 

Form of Opinion

Exhibit F

 

Form of Secretary’s Certificate

Exhibit G

 

Form of Officers Certificate

 

SCHEDULES

 

Schedule 3(a)

 

Subsidiaries

Schedule 3(l)

 

Absence of Certain Changes

Schedule 3(p)

 

Transactions with Affiliates

Schedule 3(q)

 

Capitalization

Schedule 3(r)

 

Indebtedness and Other Contracts

Schedule 3(w)

 

Intellectual Property

 

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