Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), is dated as of March 28,
2007, by and among Vyyo Inc., a Delaware corporation (the “Company”), and the
investors listed on the Schedule of Investors attached hereto as Exhibit A
(individually, an “Investor” and collectively, the “Investors”).

WHEREAS:

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

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

C.            The holder of all of the Company’s outstanding Senior Secured
Note, dated March 23, 2006, in the aggregate principal amount of $7,500,000 (the
“2006 Senior Secured Note”) wishes to amend and restate such 2006 Senior Secured
Note in the form attached hereto as Exhibit C hereto.

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

E.             Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering an Amended and
Restated Registration Rights Agreement, substantially in the form attached
hereto as Exhibit D (collectively with the Registration Rights Agreement dated
March 23, 2006 by and among the Company and the party thereto, the “Registration
Rights Agreement”), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Conversion Shares under the Securities
Act and the rules and regulations promulgated thereunder, and applicable state
securities laws.

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

 

ARTICLE I
DEFINITIONS

 

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

 

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

 

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

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

“Closing Date” means the date and time of the Closing and shall be 10:00 a.m.,
New York City time, on March 28, 2007 (or such other date and time as is
mutually agreed to by the Company and each Investor).

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

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

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

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

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

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

“Investor Counsel” means Thelen Reid Brown Raysman & Steiner LLP, counsel to the
Investors.

“Knowledge,” including the phrase “to the Company’s knowledge,” and words of
similar import shall mean that which Davidi Gilo, Arik Levi, Avner Kol, and
Tashia Rivard know or should have known using the exercise of reasonable due
diligence.

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

ARTICLE II
PURCHASE AND SALE

2.1 Closing.

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(A)   SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN SECTIONS 5.1(A) AND 5.2
HEREIN, AT THE CLOSING THE COMPANY SHALL ISSUE AND SELL TO EACH INVESTOR, AND
EACH INVESTOR SHALL, SEVERALLY AND NOT JOINTLY, PURCHASE FROM THE COMPANY, SUCH
NUMBER OF CONVERTIBLE NOTES SET FORTH OPPOSITE SUCH INVESTOR’S NAME ON EXHIBIT A
HERETO UNDER THE HEADING “CONVERTIBLE NOTES.”  THE DATE AND TIME OF THE CLOSING
AND SHALL BE 10:00 A.M., NEW YORK CITY TIME, ON THE CLOSING DATE.  THE CLOSING
SHALL TAKE PLACE AT THE OFFICES OF INVESTOR COUNSEL.

(B)   AT THE CLOSING, EACH INVESTOR SHALL DELIVER OR CAUSE TO BE DELIVERED TO
THE COMPANY THE PURCHASE PRICE SET FORTH OPPOSITE SUCH INVESTOR’S NAME ON
EXHIBIT A HERETO UNDER THE HEADING “PURCHASE PRICE” IN UNITED STATES DOLLARS AND
IN IMMEDIATELY AVAILABLE FUNDS, BY WIRE TRANSFER TO AN ACCOUNT DESIGNATED IN
WRITING TO SUCH INVESTOR BY THE COMPANY FOR SUCH PURPOSE.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

3.1   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  THE COMPANY HEREBY
REPRESENTS AND WARRANTS TO EACH INVESTOR THAT, EXCEPT AS SET FORTH IN THE SEC
REPORTS (AS HEREINAFTER DEFINED) OR IN THE SCHEDULE OF EXCEPTIONS ATTACHED AS
EXHIBIT G TO THIS AGREEMENT, WHICH EXCEPTIONS SHALL BE DEEMED TO BE PART OF THE
REPRESENTATIONS AND WARRANTIES MADE HEREUNDER, THE FOLLOWING REPRESENTATIONS ARE
TRUE AND COMPLETE AS OF THE DATE HEREOF.  THE SCHEDULE OF EXCEPTIONS SHALL BE
ARRANGED IN SECTIONS CORRESPONDING TO THE NUMBERED AND LETTERED SECTIONS AND
SUBSECTIONS CONTAINED IN THIS SECTION 3, AND THE DISCLOSURES IN ANY SECTION OR
SUBSECTION OF THE SCHEDULE OF EXCEPTIONS SHALL QUALIFY OTHER SECTIONS AND
SUBSECTIONS IN THIS SECTION 2 ONLY TO THE EXTENT IT IS REASONABLY APPARENT FROM
A READING OF THE DISCLOSURE THAT SUCH DISCLOSURE IS APPLICABLE TO SUCH OTHER
SECTIONS AND SUBSECTIONS:

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

(B)   SUBSIDIARIES.  THE COMPANY HAS NO DIRECT OR INDIRECT SUBSIDIARIES.  THE
COMPANY OWNS, DIRECTLY OR INDIRECTLY, ALL OF THE CAPITAL STOCK OR COMPARABLE
EQUITY INTERESTS OF EACH SUBSIDIARY

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FREE AND CLEAR OF ANY LIEN AND ALL THE ISSUED AND OUTSTANDING SHARES OF CAPITAL
STOCK OR COMPARABLE EQUITY INTEREST OF EACH SUBSIDIARY ARE VALIDLY ISSUED AND
ARE FULLY PAID, NON-ASSESSABLE AND FREE OF PREEMPTIVE AND SIMILAR RIGHTS.  NONE
OF THE INSIGNIFICANT SUBSIDIARIES (I) CARRIES ON ANY SUBSTANTIVE BUSINESS
OPERATIONS OR ACTIVITIES OR (II) HAS ASSETS OR LIABILITIES IN EXCESS OF $50,000.

 

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

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

(E)   AUTHORIZATION OF SECURITIES.  THE SECURITIES ARE DULY AUTHORIZED AND, WHEN
ISSUED AND PAID FOR IN ACCORDANCE WITH THE TRANSACTION DOCUMENTS, WILL BE DULY
AND VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, FREE AND CLEAR OF ALL LIENS
AND SHALL NOT BE SUBJECT TO PREEMPTIVE OR SIMILAR RIGHTS OF STOCKHOLDERS.  UPON
ISSUANCE OR CONVERSION IN ACCORDANCE WITH THE CONVERTIBLE NOTES, THE CONVERSION
SHARES WILL BE VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE AND FREE FROM ALL
PREEMPTIVE

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OR SIMILAR RIGHTS, TAXES, LIENS AND CHARGES WITH RESPECT TO THE ISSUE THEREOF,
WITH THE HOLDERS BEING ENTITLED TO ALL RIGHTS ACCORDED TO A HOLDER OF CONVERSION
SHARES.  AS OF THE CLOSING, THE COMPANY SHALL HAVE RESERVED FROM ITS DULY
AUTHORIZED CAPITAL STOCK THE NUMBER OF CONVERSION SHARES ISSUABLE UPON
CONVERSION OF THE CONVERTIBLE NOTES (WITHOUT TAKING INTO ACCOUNT ANY LIMITATIONS
ON THE CONVERSION, OR REDEMPTION OF THE CONVERTIBLE NOTES SET FORTH IN THE
CONVERTIBLE NOTES).

 

(F)    CAPITALIZATION.  THE AGGREGATE NUMBER OF SHARES AND TYPE OF ALL
AUTHORIZED, ISSUED AND OUTSTANDING CLASSES OF CAPITAL STOCK, OPTIONS AND OTHER
SECURITIES OF THE COMPANY (WHETHER OR NOT PRESENTLY CONVERTIBLE INTO OR
EXERCISABLE OR EXCHANGEABLE FOR SHARES OF CAPITAL STOCK OF THE COMPANY) IS SET
FORTH IN SCHEDULE 3.1(F) HERETO.  ALL OUTSTANDING SHARES OF CAPITAL STOCK ARE
DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE AND HAVE BEEN
ISSUED IN COMPLIANCE WITH SECTION 5 OF THE SECURITIES ACT.  THE COMPANY HAS NOT
ISSUED ANY OTHER OPTIONS, WARRANTS, SCRIPT RIGHTS TO SUBSCRIBE TO, CALLS OR
COMMITMENTS OF ANY CHARACTER WHATSOEVER RELATING TO, OR SECURITIES, RIGHTS OR
OBLIGATIONS CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE FOR, OR ENTERED INTO
ANY AGREEMENT GIVING ANY PERSON ANY RIGHT TO SUBSCRIBE FOR OR ACQUIRE, ANY
SHARES OF COMMON STOCK, OR SECURITIES OR RIGHTS CONVERTIBLE OR EXCHANGEABLE INTO
SHARES OF COMMON STOCK.  EXCEPT FOR CUSTOMARY ADJUSTMENTS AS A RESULT OF STOCK
DIVIDENDS, STOCK SPLITS, COMBINATIONS OF SHARES, REORGANIZATIONS,
RECAPITALIZATIONS, RECLASSIFICATIONS OR OTHER SIMILAR EVENTS, THERE ARE NO
ANTI-DILUTION OR PRICE ADJUSTMENT PROVISIONS CONTAINED IN ANY SECURITY ISSUED BY
THE COMPANY (OR IN ANY AGREEMENT PROVIDING RIGHTS TO SECURITY HOLDERS) AND THE
ISSUANCE AND SALE OF THE SECURITIES WILL NOT OBLIGATE THE COMPANY TO ISSUE
SHARES OF COMMON STOCK OR OTHER SECURITIES TO ANY PERSON (OTHER THAN THE
INVESTORS) AND WILL NOT RESULT IN A RIGHT OF ANY HOLDER OF SECURITIES TO ADJUST
THE EXERCISE, CONVERSION, EXCHANGE OR RESET PRICE UNDER SUCH SECURITIES.  TO THE
KNOWLEDGE OF THE COMPANY, NO PERSON OR GROUP OF RELATED PERSONS BENEFICIALLY
OWNS (AS DETERMINED PURSUANT TO RULE 13D-3 UNDER THE EXCHANGE ACT), OR HAS THE
RIGHT TO ACQUIRE, BY AGREEMENT WITH OR BY OBLIGATION BINDING UPON THE COMPANY,
BENEFICIAL OWNERSHIP OF IN EXCESS OF 5% OF THE OUTSTANDING COMMON STOCK,
IGNORING FOR SUCH PURPOSES ANY LIMITATION ON THE NUMBER OF SHARES OF COMMON
STOCK THAT MAY BE OWNED AT ANY SINGLE TIME.

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

(H)   SEC REPORTS; FINANCIAL STATEMENTS.  THE COMPANY HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY IT UNDER THE EXCHANGE ACT, INCLUDING PURSUANT TO
SECTION 13(A) OR 15(D) THEREOF, FOR THE TWELVE MONTHS PRECEDING THE DATE HEREOF
(THE FOREGOING MATERIALS (TOGETHER WITH ANY MATERIALS FILED BY THE COMPANY UNDER
THE EXCHANGE ACT, WHETHER OR NOT REQUIRED) BEING COLLECTIVELY REFERRED TO

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HEREIN AS THE “SEC REPORTS” AND, TOGETHER WITH THIS AGREEMENT AND THE SCHEDULES
TO THIS AGREEMENT, THE “DISCLOSURE MATERIALS”) ON A TIMELY BASIS.  AS OF THE
DATE HEREOF, THE COMPANY IS NOT AWARE OF ANY EVENT OCCURRING ON OR PRIOR TO THE
CLOSING DATE (OTHER THAN THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION
DOCUMENTS) THAT REQUIRES THE FILING OF A FORM 8-K AFTER THE CLOSING.  AS OF
THEIR RESPECTIVE DATES, THE SEC REPORTS COMPLIED IN ALL MATERIAL RESPECTS WITH
THE REQUIREMENTS OF THE SECURITIES ACT AND THE EXCHANGE ACT AND THE RULES AND
REGULATIONS OF THE COMMISSION PROMULGATED THEREUNDER, AND NONE OF THE SEC
REPORTS, WHEN FILED, CONTAINED ANY UNTRUE STATEMENT OF A MATERIAL FACT OR
OMITTED TO STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY IN
ORDER TO MAKE THE STATEMENTS THEREIN, IN THE LIGHT OF THE CIRCUMSTANCES UNDER
WHICH THEY WERE MADE, NOT MISLEADING.  THE FINANCIAL STATEMENTS OF THE COMPANY
INCLUDED IN THE SEC REPORTS COMPLY IN ALL MATERIAL RESPECTS WITH APPLICABLE
ACCOUNTING REQUIREMENTS AND THE RULES AND REGULATIONS OF THE COMMISSION WITH
RESPECT THERETO AS IN EFFECT AT THE TIME OF FILING.  SUCH FINANCIAL STATEMENTS
HAVE BEEN PREPARED IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES APPLIED ON A CONSISTENT BASIS DURING THE PERIODS INVOLVED
(“GAAP”), EXCEPT AS MAY BE OTHERWISE SPECIFIED IN SUCH FINANCIAL STATEMENTS OR
THE NOTES THERETO, AND FAIRLY PRESENT IN ALL MATERIAL RESPECTS THE FINANCIAL
POSITION OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES AS OF AND FOR THE
DATES THEREOF AND THE RESULTS OF OPERATIONS AND CASH FLOWS FOR THE PERIODS THEN
ENDED EXCEPT AS MAY BE INDICATED IN THE NOTES THERETO AND EXCEPT, IN THE CASE OF
INTERIM STATEMENTS, FOR THE ABSENCE OF FOOTNOTES AND AS PERMITTED BY FORM 10-Q,
SUBJECT, IN THE CASE OF UNAUDITED STATEMENTS, TO NORMAL, YEAR-END AUDIT
ADJUSTMENTS.  TO THE COMPANY’S KNOWLEDGE, THE FINANCIAL STATEMENTS IN THE
COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2006, SHALL
BE PREPARED ASSUMING THE COMPANY WILL CONTINUE AS A GOING CONCERN AND SHALL NOT
INCLUDE A “GOING CONCERN” QUALIFICATION IN THE OPINION ISSUED BY THE COMPANY’S
ACCOUNTANTS.

(I)    NO ADVERSE CHANGES.  SINCE THE DATE OF THE LATEST UNAUDITED FINANCIAL
STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 2006, (I) THERE HAS BEEN NO
EVENT, OCCURRENCE OR DEVELOPMENT THAT, INDIVIDUALLY OR IN THE AGGREGATE, HAS HAD
OR THAT WOULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT,
(II) THE COMPANY HAS NOT INCURRED ANY MATERIAL LIABILITIES OTHER THAN (A) TRADE
PAYABLES AND ACCRUED EXPENSES INCURRED IN THE ORDINARY COURSE OF BUSINESS
CONSISTENT WITH PAST PRACTICE AND (B) LIABILITIES NOT REQUIRED TO BE REFLECTED
IN THE COMPANY’S FINANCIAL STATEMENTS PURSUANT TO GAAP OR REQUIRED TO BE
DISCLOSED IN FILINGS MADE WITH THE SEC, (III) THE COMPANY HAS NOT ALTERED ITS
METHOD OF ACCOUNTING OR THE IDENTITY OF ITS AUDITORS, (IV) THE COMPANY HAS NOT
DECLARED OR MADE ANY DIVIDEND OR DISTRIBUTION OF CASH OR OTHER PROPERTY TO ITS
STOCKHOLDERS, IN THEIR CAPACITIES AS SUCH, OR PURCHASED, REDEEMED OR MADE ANY
AGREEMENTS TO PURCHASE OR REDEEM ANY SHARES OF ITS CAPITAL STOCK (EXCEPT FOR
REPURCHASES BY THE COMPANY OF SHARES OF CAPITAL STOCK HELD BY EMPLOYEES,
OFFICERS, DIRECTORS, OR CONSULTANTS PURSUANT TO AN OPTION OF THE COMPANY TO
REPURCHASE SUCH SHARES UPON THE TERMINATION OF EMPLOYMENT OR SERVICES) AND
(V) THE COMPANY HAS NOT ISSUED ANY EQUITY SECURITIES TO ANY OFFICER, DIRECTOR OR
AFFILIATE, EXCEPT PURSUANT TO EXISTING COMPANY STOCK-BASED PLANS.

(J)    INTELLECTUAL PROPERTY.  TO THE COMPANY’S KNOWLEDGE, THE COMPANY AND THE
SUBSIDIARIES OWN, POSSESS, LICENSE OR HAVE OTHER RIGHTS TO USE ALL FOREIGN AND
DOMESTIC PATENTS, PATENT APPLICATIONS, REEXAMS, REISSUES, DIVISIONAL
CONTINUATIONS, OR ANY PATENT OR APPLICATION CLAIMING PRIORITY THEREFROM,
INCLUDING ANY PATENT THAT MAY BE ISSUED AS A RESULT OF AN INTERFERENCE ACTION,
TRADE AND SERVICE MARKS, TRADE AND SERVICE MARK REGISTRATIONS, TRADE NAMES,
COPYRIGHTS, LICENSES,

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INVENTIONS, TRADE SECRETS, TECHNOLOGY, INTERNET DOMAIN NAMES, KNOW-HOW AND OTHER
INTELLECTUAL PROPERTY (COLLECTIVELY, THE “INTELLECTUAL PROPERTY RIGHTS”)
NECESSARY FOR THE CONDUCT OF THEIR RESPECTIVE BUSINESSES DESCRIBED IN THE SEC
REPORTS, EXCEPT WHERE SUCH VIOLATIONS OR INFRINGEMENTS WOULD NOT REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT, (A) THERE ARE NO RIGHTS OF
THIRD PARTIES TO ANY SUCH INTELLECTUAL PROPERTY RIGHTS; (B) TO THE COMPANY’S
KNOWLEDGE, THERE IS NO INFRINGEMENT BY THIRD PARTIES OF ANY SUCH INTELLECTUAL
PROPERTY RIGHTS; (C) THERE IS NO PENDING OR, TO THE COMPANY’S KNOWLEDGE,
THREATENED ACTION, SUIT, PROCEEDING OR CLAIM BY OTHERS CHALLENGING THE COMPANY’S
AND ITS SIGNIFICANT SUBSIDIARIES’ RIGHTS IN OR TO ANY SUCH INTELLECTUAL PROPERTY
RIGHTS, AND THE COMPANY IS UNAWARE OF ANY FACTS WHICH WOULD FORM A REASONABLE
BASIS FOR ANY SUCH CLAIM; (D) THERE IS NO PENDING OR, TO THE COMPANY’S
KNOWLEDGE, THREATENED ACTION, SUIT, PROCEEDING OR CLAIM BY OTHERS CHALLENGING
THE VALIDITY OR SCOPE OF ANY SUCH INTELLECTUAL PROPERTY RIGHTS AND (E) THERE IS
NO PENDING OR, TO THE COMPANY’S KNOWLEDGE, THREATENED ACTION, SUIT, PROCEEDING
OR CLAIM BY OTHERS THAT THE COMPANY AND ITS SUBSIDIARIES INFRINGE OR OTHERWISE
VIOLATE ANY PATENT, TRADEMARK, COPYRIGHT, TRADE SECRET OR OTHER PROPRIETARY
RIGHTS OF OTHERS, AND THE COMPANY IS UNAWARE OF ANY OTHER FACT WHICH WOULD FORM
A REASONABLE BASIS FOR ANY SUCH CLAIM.  ALL OF THE LICENSES AND SUBLICENSES AND
CONSENT, ROYALTY OR OTHER AGREEMENTS CONCERNING INTELLECTUAL PROPERTY RIGHTS
WHICH ARE NECESSARY FOR THE CONDUCT OF THE COMPANY’S BUSINESS AS CURRENTLY
CONDUCTED TO WHICH THE COMPANY OR THE SIGNIFICANT SUBSIDIARY IS A PARTY OR BY
WHICH ANY OF THEIR RESPECTIVE ASSETS ARE BOUND (OTHER THAN GENERALLY
COMMERCIALLY AVAILABLE, NON-CUSTOM, OFF THE SHELF SOFTWARE APPLICATION PROGRAMS
HAVING A RETAIL ACQUISITION PRICE OF LESS THAN $25,000 PER LICENSE)
(COLLECTIVELY, “LICENSE AGREEMENTS”) ARE VALID AND BINDING OBLIGATIONS OF THE
COMPANY OR THE SIGNIFICANT SUBSIDIARIES, AS THE CASE MAY BE AND, TO THE
COMPANY’S KNOWLEDGE, THE OTHER PARTIES THERETO, ENFORCEABLE IN ACCORDANCE WITH
THEIR RESPECTIVE TERMS, EXCEPT TO THE EXTENT THAT ENFORCEMENT THEREOF MAY BE
LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM,
FRAUDULENT CONVEYANCE OR OTHER SIMILAR LAWS AFFECTING THE ENFORCEMENT OF
CREDITORS’ RIGHTS GENERALLY, AND THERE EXISTS NO EVENT OR CONDITION WHICH WILL
RESULT IN A MATERIAL VIOLATION OR BREACH OF OR CONSTITUTE (WITH OR WITHOUT DUE
NOTICE OR LAPSE OF TIME OR BOTH) A DEFAULT BY THE COMPANY UNDER SUCH LICENSE
AGREEMENTS.

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

(L)    ABSENCE OF LITIGATION.  EXCEPT AS DISCLOSED IN THE COMPANY’S SEC REPORTS,
THERE IS NO ACTION, SUIT, CLAIM, OR PROCEEDING, OR, TO THE COMPANY’S KNOWLEDGE,
INQUIRY OR INVESTIGATION, BEFORE OR BY ANY COURT, PUBLIC BOARD, GOVERNMENT
AGENCY, SELF-REGULATORY ORGANIZATION OR BODY

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PENDING OR, TO THE KNOWLEDGE OF THE COMPANY, THREATENED AGAINST OR AFFECTING THE
COMPANY OR ANY OF ITS SIGNIFICANT SUBSIDIARIES THAT WOULD REASONABLY BE EXPECTED
TO HAVE, INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL ADVERSE EFFECT.

 

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

(N)   COMPLIANCE.  NONE OF THE COMPANY NOR ANY SIGNIFICANT SUBSIDIARY, EXCEPT IN
EACH CASE AS WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED
TO HAVE OR RESULT IN A MATERIAL ADVERSE EFFECT, (I) IS IN DEFAULT UNDER OR IN
VIOLATION OF (AND NO EVENT HAS OCCURRED THAT HAS NOT BEEN WAIVED THAT, WITH
NOTICE OR LAPSE OF TIME OR BOTH, WOULD RESULT IN A DEFAULT BY THE COMPANY OR ANY
SIGNIFICANT SUBSIDIARY UNDER), NOR HAS THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY
RECEIVED WRITTEN NOTICE OF A CLAIM THAT IT IS IN DEFAULT UNDER OR THAT IT IS IN
VIOLATION OF, ANY INDENTURE, LOAN OR CREDIT AGREEMENT OR ANY OTHER AGREEMENT OR
INSTRUMENT TO WHICH IT IS A PARTY OR BY WHICH IT OR ANY OF ITS PROPERTIES IS
BOUND (WHETHER OR NOT SUCH DEFAULT OR VIOLATION HAS BEEN WAIVED), (II) IS IN
VIOLATION OF ANY ORDER OF ANY COURT, ARBITRATOR OR GOVERNMENTAL BODY OR (III) IS
OR HAS BEEN IN VIOLATION OF ANY STATUTE, RULE OR REGULATION OF ANY GOVERNMENTAL
AUTHORITY.

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

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

 

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

(R)    FORM S-3 ELIGIBILITY.  THE COMPANY IS ELIGIBLE TO REGISTER THE CONVERSION
SHARES FOR RESALE BY THE INVESTORS USING FORM S-3 PROMULGATED UNDER THE
SECURITIES ACT.

(S)   LISTING AND MAINTENANCE REQUIREMENTS.  THE COMPANY HAS NOT, IN THE TWELVE
MONTHS PRECEDING THE DATE HEREOF, RECEIVED NOTICE (WRITTEN OR ORAL) FROM ANY
TRADING MARKET ON WHICH THE COMMON STOCK IS OR HAS BEEN LISTED OR QUOTED TO THE
EFFECT THAT THE COMPANY IS NOT IN COMPLIANCE WITH THE LISTING OR MAINTENANCE
REQUIREMENTS OF SUCH TRADING MARKET.  THE COMPANY IS IN COMPLIANCE WITH ALL SUCH
LISTING AND MAINTENANCE REQUIREMENTS.

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

(U)   APPLICATION OF TAKEOVER PROTECTIONS.  THERE IS NO CONTROL SHARE
ACQUISITION, BUSINESS COMBINATION, POISON PILL (INCLUDING ANY DISTRIBUTION UNDER
A RIGHTS AGREEMENT) OR OTHER SIMILAR ANTI-TAKEOVER PROVISION UNDER THE COMPANY’S
CHARTER DOCUMENTS OR THE LAWS OF ITS STATE OF INCORPORATION THAT IS OR WOULD
BECOME APPLICABLE TO ANY OF THE INVESTORS AS A RESULT OF THE INVESTORS AND THE
COMPANY FULFILLING THEIR OBLIGATIONS OR EXERCISING THEIR RIGHTS UNDER THE
TRANSACTION DOCUMENTS, INCLUDING, WITHOUT LIMITATION, AS A RESULT OF THE
COMPANY’S ISSUANCE OF THE SECURITIES AND THE INVESTORS’ OWNERSHIP OF THE
SECURITIES.

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

(W)  ACKNOWLEDGMENT REGARDING INVESTORS’ PURCHASE OF SECURITIES.  BASED UPON THE
ASSUMPTION THAT THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE CONSUMMATED
IN ALL MATERIAL RESPECTS IN CONFORMITY WITH THE TRANSACTION DOCUMENTS, THE
COMPANY ACKNOWLEDGES AND AGREES THAT EACH OF THE INVESTORS IS ACTING SOLELY IN
THE CAPACITY OF AN ARM’S LENGTH PURCHASER WITH RESPECT TO THE

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

 

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

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

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

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

(BB) QUESTIONABLE PAYMENTS.  NEITHER THE COMPANY NOR ANY SIGNIFICANT SUBSIDIARY,
NOR, TO THE COMPANY’S KNOWLEDGE, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR OTHER
PERSONS ACTING ON BEHALF OF THE COMPANY OR ANY SIGNIFICANT SUBSIDIARY HAS, IN
THE COURSE OF ITS ACTIONS FOR, OR ON BEHALF

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OF, THE COMPANY:  (I) USED ANY CORPORATE FUNDS FOR UNLAWFUL CONTRIBUTIONS,
GIFTS, ENTERTAINMENT OR OTHER UNLAWFUL EXPENSES RELATING TO FOREIGN OR DOMESTIC
POLITICAL ACTIVITY; (II) MADE ANY DIRECT OR INDIRECT UNLAWFUL PAYMENTS TO ANY
FOREIGN OR DOMESTIC GOVERNMENTAL OFFICIALS OR EMPLOYEES FROM CORPORATE FUNDS;
(III) VIOLATED IN ANY RESPECT ANY PROVISION OF THE FOREIGN CORRUPT PRACTICES ACT
OF 1977, AS AMENDED OR (IV) MADE ANY OTHER UNLAWFUL BRIBE, REBATE, PAYOFF,
INFLUENCE PAYMENT, KICKBACK OR OTHER UNLAWFUL PAYMENT TO ANY FOREIGN OR DOMESTIC
GOVERNMENT OFFICIAL OR EMPLOYEE WHICH, IN THE AGGREGATE OF CLAUSES (I) THROUGH
(IV) WOULD HAVE A MATERIAL ADVERSE EFFECT.

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

(DD) SARBANES-OXLEY ACT.  THE COMPANY IS IN COMPLIANCE WITH APPLICABLE
REQUIREMENTS OF THE SARBANES-OXLEY ACT OF 2002 AND APPLICABLE RULES AND
REGULATIONS PROMULGATED BY THE SEC THEREUNDER, EXCEPT WHERE SUCH NONCOMPLIANCE
WOULD NOT HAVE, INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL ADVERSE EFFECT.

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

(FF)           MARGIN STOCK.  NEITHER THE COMPANY NOR ANY OF THE SIGNIFICANT
SUBSIDIARIES IS ENGAGED PRINCIPALLY, OR AS ONE OF THEIR IMPORTANT ACTIVITIES, IN
THE BUSINESS OF EXTENDING CREDIT FOR THE PURPOSE OF BUYING OR CARRYING MARGIN
STOCK (AS SUCH TERM IS DEFINED IN REGULATION U).  IMMEDIATELY BEFORE AND AFTER
GIVING EFFECT TO THE SALE OF THE CONVERTIBLE NOTES, MARGIN STOCK WILL CONSTITUTE
LESS THAN 25% OF THE COMPANY’S ASSETS AS DETERMINED IN ACCORDANCE WITH
REGULATION U.  NO PART OF THE PROCEEDS OF THE CONVERTIBLE NOTES WILL BE USED,
WHETHER DIRECTLY OR INDIRECTLY, AND WHETHER IMMEDIATELY, INCIDENTALLY OR
ULTIMATELY, TO PURCHASE, ACQUIRE OR CARRY ANY MARGIN STOCK OR FOR ANY PURPOSE
THAT ENTAILS A VIOLATION OF, OR THAT IS INCONSISTENT WITH, THE PROVISIONS OF THE
REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM OF THE
UNITED STATES OF AMERICA, INCLUDING REGULATION T, U OR X.

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

(A)   ORGANIZATION; AUTHORITY.  SUCH INVESTOR IS AN ENTITY DULY ORGANIZED,
VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS
ORGANIZATION WITH THE REQUISITE CORPORATE OR PARTNERSHIP POWER AND AUTHORITY TO
ENTER INTO AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION
DOCUMENTS AND OTHERWISE TO CARRY OUT ITS OBLIGATIONS HEREUNDER AND

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THEREUNDER.  THE PURCHASE BY SUCH INVESTOR OF THE SECURITIES HEREUNDER HAS BEEN
DULY AUTHORIZED BY ALL NECESSARY ACTION ON THE PART OF SUCH INVESTOR.  THIS
AGREEMENT HAS BEEN DULY EXECUTED AND DELIVERED BY SUCH INVESTOR AND CONSTITUTES
THE VALID AND BINDING OBLIGATION OF SUCH INVESTOR, ENFORCEABLE AGAINST IT IN
ACCORDANCE WITH ITS TERMS, EXCEPT AS MAY BE LIMITED BY (I) APPLICABLE
BANKRUPTCY, INSOLVENCY, REORGANIZATION OR OTHER LAWS OF GENERAL APPLICATION
RELATING TO OR AFFECTING THE ENFORCEMENT OF CREDITORS RIGHTS GENERALLY AND
(II) THE EFFECT OF RULES OF LAW GOVERNING THE AVAILABILITY OF SPECIFIC
PERFORMANCE AND OTHER EQUITABLE REMEDIES.

 

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

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

ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES

4.1   TRANSFER RESTRICTIONS.

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

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

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE

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CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR (B) IF REASONABLY REQUESTED BY THE COMPANY,
AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT.

 

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

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

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

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

4.5   SECURITIES LAWS DISCLOSURE; PUBLICITY.  THE COMPANY SHALL, ON OR BEFORE
8:30 A.M., NEW YORK TIME, ON THE FIRST TRADING DAY FOLLOWING EXECUTION OF THIS
AGREEMENT, ISSUE A PRESS RELEASE ACCEPTABLE TO THE INVESTORS DISCLOSING ALL
MATERIAL TERMS OF THE TRANSACTIONS CONTEMPLATED HEREBY.  THE COMPANY SHALL FILE
A CURRENT REPORT ON FORM 8-K WITH THE SEC (THE “8-K FILING”) WITHIN FOUR (4)
BUSINESS DAYS OF EXECUTION OF THIS AGREEMENT DESCRIBING THE TERMS OF THE
TRANSACTIONS

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CONTEMPLATED BY THE TRANSACTION DOCUMENTS AND INCLUDING AS EXHIBITS TO SUCH
CURRENT REPORT ON FORM 8-K THIS AGREEMENT IN THE FORM REQUIRED BY THE EXCHANGE
ACT.  THEREAFTER, THE COMPANY SHALL TIMELY FILE ANY FILINGS AND NOTICES REQUIRED
BY THE SEC OR APPLICABLE LAW WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED
HEREBY AND PROVIDE COPIES THEREOF TO THE INVESTORS PROMPTLY AFTER FILING. 
INVESTORS COMPANY SHALL, AT LEAST TWO TRADING DAYS PRIOR TO THE FILING OR
DISSEMINATION OF ANY DISCLOSURE REQUIRED BY THIS PARAGRAPH, PROVIDE A COPY
THEREOF TO THE INVESTORS FOR THEIR REVIEW.  THE COMPANY AND THE INVESTORS SHALL
CONSULT WITH EACH OTHER IN ISSUING ANY PRESS RELEASES OR OTHERWISE MAKING PUBLIC
STATEMENTS OR FILINGS AND OTHER COMMUNICATIONS WITH THE SEC OR ANY REGULATORY
AGENCY OR TRADING MARKET WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY,
AND NEITHER PARTY SHALL ISSUE ANY SUCH PRESS RELEASE OR OTHERWISE MAKE ANY SUCH
PUBLIC STATEMENT, FILING OR OTHER COMMUNICATION WITHOUT THE PRIOR CONSENT OF THE
OTHER, EXCEPT IF SUCH DISCLOSURE IS REQUIRED BY LAW, IN WHICH CASE THE
DISCLOSING PARTY SHALL PROMPTLY PROVIDE THE OTHER PARTY WITH PRIOR NOTICE OF
SUCH PUBLIC STATEMENT, FILING OR OTHER COMMUNICATION.  NOTWITHSTANDING THE
FOREGOING, THE COMPANY SHALL NOT PUBLICLY DISCLOSE THE NAME OF ANY INVESTOR, OR
INCLUDE THE NAME OF ANY INVESTOR IN ANY PRESS RELEASE WITHOUT THE PRIOR WRITTEN
CONSENT OF SUCH INVESTOR.  EXCEPT AS REQUIRED UNDER THE TRANSACTION DOCUMENTS,
THE COMPANY SHALL NOT, AND SHALL CAUSE EACH OF ITS SUBSIDIARIES AND ITS AND EACH
OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS NOT TO, PROVIDE
ANY INVESTOR WITH ANY MATERIAL NONPUBLIC INFORMATION REGARDING THE COMPANY OR
ANY OF ITS SUBSIDIARIES FROM AND AFTER THE ISSUANCE OF THE ABOVE REFERENCED
PRESS RELEASE WITHOUT THE EXPRESS WRITTEN CONSENT OF SUCH INVESTOR.

4.6   USE OF PROCEEDS.  WITHIN TWO BUSINESS DAYS OF THE CLOSING, THE COMPANY
SHALL USE THE NET PROCEEDS FROM THE SALE OF THE SECURITIES TO REDEEM THE
OUTSTANDING PRINCIPAL AMOUNT, PLUS ALL ACCRUED AND UNPAID INTEREST ON SUCH
PRINCIPAL AMOUNT (THE “REDEMPTION”), UNDER (A) THE 2006 SENIOR SECURED NOTE AND
(B) THAT CERTAIN PROMISSORY NOTE, DATED MARCH 23, 2006, AS AMENDED ON MARCH 27,
2007 AND ATTACHED HERETO AS EXHIBIT E (THE “2006 PROMISSORY NOTE”, AND TOGETHER
WITH THE 2006 SENIOR SECURED NOTE, THE “2006 NOTES”).  THE COMPANY SHALL USE THE
REMAINING NET PROCEEDS FROM THE SALE OF THE SECURITIES FOR WORKING CAPITAL AND
GENERAL CORPORATE PURPOSES.  PENDING USE FOR WORKING CAPITAL AND GENERAL
CORPORATE PURPOSES, THE COMPANY INTENDS TO INVEST THE NET PROCEEDS FROM THIS
OFFERING IN SHORT-TERM, INTEREST-BEARING, INVESTMENT-GRADE SECURITIES, OR AS
OTHERWISE PURSUANT TO THE COMPANY’S CUSTOMARY INVESTMENT POLICIES.

4.7   .  SHORT SALES.  THE INVESTOR REPRESENTS, WARRANTS AND AGREES THAT, SINCE
THE DATE ON WHICH ANY OF THE COMPANY OR FIRST CONTACTED THE INVESTOR ABOUT THE
POTENTIAL SALE OF THE SECURITIES, IT HAS NOT ENGAGED IN ANY TRANSACTIONS IN THE
SECURITIES OF THE COMPANY (INCLUDING, WITHOUT LIMITATION, ANY SHORT SALES
INVOLVING THE COMPANY’S SECURITIES).  SUCH INVESTOR COVENANTS THAT IT WILL NOT
ENGAGE IN ANY TRANSACTIONS IN THE SECURITIES OF THE COMPANY (INCLUDING SHORT
SALES) PRIOR TO THE TIME THAT THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
ARE PUBLICLY DISCLOSED.  SUCH INVESTOR FURTHER COVENANTS THAT IT WILL NOT ENGAGE
IN ANY SHORT SALES IN THE COMPANY’S SECURITIES FOR A PERIOD OF 180 DAYS FROM THE
CLOSING DATE.  FOR PURPOSES HEREOF, “SHORT SALES” INCLUDE, WITHOUT LIMITATION,
ALL “SHORT SALES” AS DEFINED IN RULE 3B-3 OF THE EXCHANGE ACT AND RULE 200
PROMULGATED UNDER REGULATION SHO UNDER THE EXCHANGE ACT, WHETHER OR NOT AGAINST
THE BOX, AND ALL TYPES OF DIRECT AND INDIRECT STOCK PLEDGES, FORWARD SALES
CONTRACTS, OPTIONS, PUTS, CALLS, SHORT SALES, SWAPS, “PUT EQUIVALENT POSITIONS”
(AS DEFINED IN RULE 16A-1(H) UNDER THE EXCHANGE ACT) AND SIMILAR ARRANGEMENTS
(INCLUDING ON A TOTAL RETURN BASIS), AND SALES AND OTHER TRANSACTIONS THROUGH
NON-US BROKER DEALERS OR FOREIGN REGULATED BROKERS.

15

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4.8   . WAIVER; TERMINATION OF LIENS.  UPON REDEMPTION, EACH HOLDER OF THE 2006
NOTES IRREVOCABLY WAIVES ANY DEFAULT OR BREACH ARISING FROM OR RELATED TO THE
2006 NOTES AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING, WITHOUT
EXCEPTION, THE REGISTRATION RIGHTS AGREEMENT DATED MARCH 23, 2006, THE WARRANT
AND THE 2006 NOTES.  UPON REDEMPTION, EACH INVESTOR PREVIOUSLY HOLDING 2006
NOTES SHALL TAKE ALL ACTION REASONABLY NECESSARY TO TERMINATE ANY LIENS ARISING
FROM OR RELATING TO THE 2006 NOTES.

ARTICLE V
CONDITIONS

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

(A)           THE COMPANY SHALL HAVE DULY EXECUTED AND DELIVERED TO EACH
INVESTOR:

(I)    ONE OR MORE CONVERTIBLE NOTES WITH AN AGGREGATE PRINCIPAL AMOUNT AS IS
SET FORTH OPPOSITE SUCH INVESTOR’S NAME ON THE SCHEDULE OF INVESTORS; AND

(II)   THE REGISTRATION RIGHTS AGREEMENT.

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

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

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

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(E)   THE COMMON STOCK (I) SHALL BE AUTHORIZED FOR QUOTATION ON THE NASDAQ
GLOBAL MARKET (II) SHALL NOT HAVE BEEN SUSPENDED, AS OF THE CLOSING DATE, BY THE
SEC OR THE NASDAQ GLOBAL MARKET FROM TRADING ON THE NASDAQ GLOBAL MARKET NOR
SHALL SUSPENSION BY THE SEC OR THE NASDAQ GLOBAL MARKET HAVE BEEN THREATENED, AS
OF THE CLOSING DATE, EITHER (A) IN WRITING BY THE SEC OR THE NASDAQ GLOBAL
MARKET OR (B) BY FALLING BELOW THE MINIMUM LISTING MAINTENANCE REQUIREMENTS OF
THE NASDAQ GLOBAL MARKET.

 

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

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

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

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

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

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

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

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

 

 

 

17

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ARTICLE VI
MISCELLANEOUS

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

6.2   FEES AND EXPENSES.  AT THE CLOSING, THE COMPANY SHALL PAY TO THE INVESTOR
COUNSEL AN AGGREGATE OF UP TO $25,000 FOR THE LEGAL FEES AND EXPENSES INCURRED
OR TO BE INCURRED IN CONNECTION WITH ITS DUE DILIGENCE AND THE PREPARATION AND
NEGOTIATION OF THE TRANSACTION DOCUMENTS.  THE COMPANY FURTHER AGREES IT SHALL
PAY TO THE INVESTOR COUNSEL AN AGGREGATE OF UP TO $50,000 FOR THE LEGAL FEES AND
EXPENSES INCURRED OR TO BE INCURRED IN CONNECTION AND THE REGISTRATION OF THE
SECURITIES UNDER THE REGISTRATION RIGHTS AGREEMENT UPON THE EFFECTIVENESS OF
SUCH REGISTRATION STATEMENT.  IN LIEU OF THE FOREGOING PAYMENT, THE INVESTOR MAY
RETAIN SUCH AMOUNT AT THE CLOSING OR REQUIRE THE COMPANY TO PAY SUCH AMOUNT
DIRECTLY TO INVESTOR COUNSEL.  EXCEPT AS EXPRESSLY SET FORTH IN THE TRANSACTION
DOCUMENTS TO THE CONTRARY, EACH PARTY SHALL PAY THE FEES AND EXPENSES OF ITS
ADVISERS, COUNSEL, ACCOUNTANTS AND OTHER EXPERTS, IF ANY, AND ALL OTHER EXPENSES
INCURRED BY SUCH PARTY INCIDENT TO THE NEGOTIATION, PREPARATION, EXECUTION,
DELIVERY AND PERFORMANCE OF THIS AGREEMENT.  THE COMPANY SHALL PAY ALL TRANSFER
AGENT FEES, STAMP TAXES AND OTHER TAXES AND DUTIES LEVIED IN CONNECTION WITH THE
INITIAL SALE AND ISSUANCE OF THEIR APPLICABLE SECURITIES TO THE INVESTORS,
INCLUDING THE CONVERSION OF THE CONVERTIBLE NOTES.

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

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

18

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6.5   AMENDMENTS; WAIVERS.  ANY TERM OF THIS AGREEMENT MAY BE AMENDED AND THE
OBSERVANCE OF ANY TERM OF THIS AGREEMENT MAY BE WAIVED (EITHER GENERALLY OR IN A
PARTICULAR INSTANCE AND EITHER RETROACTIVELY OR PROSPECTIVELY), WITH THE WRITTEN
CONSENT OF THE COMPANY AND THE INVESTORS HOLDING A MAJORITY OF THE PRINCIPAL
AMOUNT OF THE CONVERTIBLE NOTES.  SUBJECT TO THE PRECEDING SENTENCE, ANY
AMENDMENT OR WAIVER EFFECTED IN ACCORDANCE WITH THIS SECTION SHALL BE BINDING
UPON ALL PARTIES TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY INVESTORS
WHO MAY NOT HAVE EXECUTED SUCH AMENDMENT OR WAIVER.

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

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

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

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

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

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

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

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

6.14 OTHER ENGAGEMENTS AND ACTIVITIES.  THE INVESTMENT IN THE COMPANY MADE BY
GOLDMAN, SACHS & CO. (“GOLDMAN SACHS” AND, TOGETHER WITH ANY OTHER AFFILIATE OF
GOLDMAN SACHS, THE “GS ENTITIES” OR THE “GS ENTITY”) PURSUANT TO THIS AGREEMENT,
AND ANY SUBSEQUENT INVESTMENTS IN THE COMPANY BY ANY GS ENTITY AFTER THE DATE
HEREOF, IS MADE NOTWITHSTANDING ANY ENGAGEMENT, PRIOR TO OR SUBSEQUENT TO THE
DATE HEREOF, BY THE COMPANY, OF ANY GS ENTITY AS FINANCIAL ADVISOR, AGENT OR
UNDERWRITER TO THE COMPANY.  NOTWITHSTANDING ANYTHING IN THE TRANSACTION
DOCUMENTS TO

20

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the contrary, no GS Entity shall be restricted in any way from engaging in any
brokerage, investment advisory, financial advisory, financing, asset management,
trading, market making, arbitrage and other similar activities conducted in the
ordinary course of Goldman Sachs’ business.  Further, neither the Company nor
any Subsidiary shall have any right, by virtue of any of the Transaction
Documents to, in or to such other ventures or activities of any GS Entity, or to
the income or proceeds derived therefrom, and the pursuit of such ventures, even
if competitive with the business of the Company, shall not be deemed wrongful or
improper.  Any GS Entity shall have the right to take for its own account or to
recommend to others, any investment opportunity including investment
opportunities that may be competitive with or involve the same line of business
as that conducted or proposed to be conducted from time to time by the Company.

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

[SIGNATURE PAGES TO FOLLOW]

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

 

VYYO INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ Wayne H. Davis

 

 

Name: Wayne H. Davis

 

 

Title: CEO

 

 

 

 

 

 

 

 

 

 

 

 

Address for Notice:

 

 

 

 

 

 

 

6625 The Corners Parkway
Suite 100
Norcross, Georgia 30092
Telephone:  (678) 282-8000
Facsimile:  (770) 446-1110
Attention:  General Counsel

 

 

 

 

 

 

 

 

 

 

 

 

With a copy to:

 

 

 

 

 

 

 

Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue
Palo Alto, CA 94301
Telephone:  (650) 470-4500
Facsimile:  (650) 470-4570
Attention:  Gregory Smith, Esq.

 

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Investor Signature Page

 

By its execution and delivery of this signature page, the undersigned Investor
hereby joins in and agrees to be bound by the terms and conditions of the
Securities Purchase Agreement dated as of March 28, 2007 (the “Purchase
Agreement”) by and among Vyyo Inc. and the Investors (as defined therein), as to
the number of shares of Convertible Notes set forth below, and authorizes this
signature page to be attached to the Purchase Agreement or counterparts thereof.

 

GOLDMAN, SACHS & CO.

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ Nick Advani

 

 

 

 

Name:  Nick Advani

 

 

 

 

Title:  Managing Director

 

 

 

 

 

 

 

 

 

 

 

 

Address for Notice:

 

 

 

 

 

 

 

Goldman, Sachs & Co.
One New York Plaza
New York, NY  10004
Telephone:  (212) 902-4934
Facsimile:  (212) 346-3124
Attention:  Nick Advani

 

 

 

 

 

 

 

with a copy to:

 

 

 

 

 

 

 

Goldman, Sachs & Co.
One New York Plaza
New York, NY  10004
Facsimile:  (212) 256-4104
Telephone:  (212) 902-7952
Attention:  Connie J. Shoemaker

 

 

 

 

 

 

 

and

 

 

 

 

 

 

 

Thelen Reid Brown Raysman & Steiner LLP
875 Third Avenue
New York, NY  10022
Facsimile:  (212) 603-2001
Telephone:  (212) 603-2108
Attention:  Stuart Bressman, Esq.

 

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Exhibits:

A

 

Schedule of Investors

 

 

 

B

 

Form of Convertible Note

 

 

 

C

 

Form of Amended and Restated Senior Secured Note

 

 

 

D

 

Form of Registration Rights Agreement

 

 

 

E

 

Promissory Note, dated March 23, 2006, as amended on March 27, 2007

 

 

 

F

 

Form of Opinion of Company’s General Counsel

 

 

 

G

 

Schedule of Exceptions

 

24

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Exhibit A

Schedule of Investors

 

Investor

 

Convertible Note Purchase Price

 

Goldman, Sachs & Co.

 

$

35,000,000

 

TOTAL

 

$

35,000,000

 

 

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