Exhibit 10.1

 

EXECUTION

 

 

STOCK PURCHASE AGREEMENT

 

by and among

 

CLARIENT, INC.

 

and

 

OAK INVESTMENT PARTNERS XII, LIMITED PARTNERSHIP

 

March 25, 2009

 

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

1.

PURCHASE AND SALE OF PREFERRED SHARES.

2

 

 

 

 

 

(A)

PURCHASE OF PREFERRED SHARES.

2

 

(B)

THE CLOSING DATES.

2

 

(C)

FORM OF PAYMENT

3

 

 

 

 

2.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

3

 

 

 

 

 

(A)

INVESTMENT PURPOSE

3

 

(B)

ACCREDITED INVESTOR STATUS

3

 

(C)

RELIANCE ON EXEMPTIONS

3

 

(D)

INFORMATION

3

 

(E)

NO GOVERNMENTAL REVIEW

4

 

(F)

TRANSFER OR RESALE

4

 

(G)

LEGENDS

4

 

(H)

AUTHORIZATION; ENFORCEMENT; VALIDITY

5

 

(I)

RESIDENCY

5

 

(J)

OWNERSHIP

5

 

 

 

 

3.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

6

 

 

 

 

 

(A)

ORGANIZATION AND QUALIFICATION

6

 

(B)

AUTHORIZATION; ENFORCEMENT; VALIDITY

7

 

(C)

EQUITY CAPITALIZATION.

7

 

(D)

INDEBTEDNESS AND OTHER CONTRACTS

8

 

(E)

ISSUANCE OF SECURITIES

9

 

(F)

NO CONFLICTS.

9

 

(G)

SEC DOCUMENTS; FINANCIAL STATEMENTS.

10

 

(H)

ABSENCE OF LITIGATION

11

 

(I)

ACKNOWLEDGMENT REGARDING THE PURCHASER’S PURCHASE OF PREFERRED SHARES

11

 

(J)

NO GENERAL SOLICITATION

11

 

(K)

NO INTEGRATED OFFERING

12

 

(L)

EMPLOYEE RELATIONS; BENEFIT PLANS.

12

 

(M)

INTELLECTUAL PROPERTY RIGHTS

13

 

(N)

TITLE

14

 

(O)

INSURANCE

14

 

(P)

REGULATORY PERMITS; COMPLIANCE WITH LAW

14

 

(Q)

DISCLOSURE CONTROLS

15

 

(R)

TAX STATUS

15

 

(S)

TRANSACTIONS WITH AFFILIATES

15

 

(T)

CONTRACTS

16

 

(U)

APPLICATION OF TAKEOVER PROTECTIONS

17

 

(V)

POISON PILL

17

 

(W)

INVESTMENT COMPANY

17

 

 

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(X)

NO MARKET MANIPULATION

17

 

(Y)

SPECIAL REGULATORY AND OTHER MATTERS

17

 

(Z)

SOLVENCY

19

 

(AA)

FOREIGN CORRUPT PRACTICES

19

 

 

 

 

4.

COVENANTS.

19

 

 

 

 

 

(A)

CERTAIN PRE-CLOSING COVENANTS

19

 

(B)

INFORMATION STATEMENT

20

 

(C)

FORM D AND BLUE SKY

20

 

(D)

USE OF PROCEEDS

21

 

(E)

ACCESS

21

 

(F)

RESERVATION OF SHARES

21

 

(G)

LISTING

21

 

(H)

EXPENSES

21

 

(I)

FILING OF FORM 8-K; PRESS RELEASES

22

 

(J)

TRANSACTIONS WITH AFFILIATES

22

 

(K)

LOCK-UP AGREEMENT.

22

 

(L)

CERTAIN TRADING ACTIVITIES

23

 

(M)

OWNERSHIP DISCLOSURE

24

 

(N)

BOARD SEATS

24

 

 

 

 

5.

TRANSFER AGENT INSTRUCTIONS

25

 

 

 

 

6.

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL ON THE CLOSING DATES.

25

 

 

 

 

 

(A)

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL ON THE INITIAL CLOSING DATE

25

 

(B)

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL ON THE SECOND CLOSING DATE

26

 

(C)

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL ON EACH SUBSEQUENT CLOSING DATE

27

 

 

 

 

7.

CONDITIONS TO THE PURCHASER’S OBLIGATION TO PURCHASE ON THE CLOSING DATES.

28

 

 

 

 

 

(A)

CONDITIONS TO THE PURCHASER’S OBLIGATION TO PURCHASE ON THE INITIAL CLOSING DATE

28

 

(B)

CONDITIONS TO THE PURCHASER’S OBLIGATION TO PURCHASE ON THE SECOND CLOSING DATE

30

 

(C)

CONDITIONS TO THE PURCHASER’S OBLIGATION TO PURCHASE ON EACH SUBSEQUENT CLOSING
DATE

31

 

 

 

 

8.

TERMINATION.

32

 

 

 

 

 

(A)

TERMINATION.

32

 

(B)

EFFECT OF TERMINATION

34

 

 

 

 

9.

GOVERNING LAW; MISCELLANEOUS.

34

 

 

 

 

 

(A)

GOVERNING LAW; JURISDICTION; JURY TRIAL

34

 

(B)

COUNTERPARTS

35

 

 

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(C)

HEADINGS

35

 

(D)

SEVERABILITY

35

 

(E)

ENTIRE AGREEMENT; AMENDMENTS

35

 

(F)

NOTICES

35

 

(G)

SUCCESSORS AND ASSIGNS

37

 

(H)

NO THIRD PARTY BENEFICIARIES

37

 

(I)

SURVIVAL

37

 

(J)

PUBLICITY

38

 

(K)

FURTHER ASSURANCES

38

 

(L)

PLACEMENT AGENT

38

 

(M)

NO STRICT CONSTRUCTION

38

 

(N)

REMEDIES

38

 

(O)

RELIANCE

38

 

(P)

PAYMENT SET ASIDE

39

 

(Q)

FORM, REGISTRATION, TRANSFER AND EXCHANGE OF PREFERRED STOCK; LOST PREFERRED
STOCK

39

 

(R)

DEFINITIONS

39

 

 

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SCHEDULES

 

Schedule 3(a)

Subsidiaries of the Company

Schedule 3(c)

No Preemptive Rights, Outstanding Warrants, Etc.

Schedule 3(d)

Indebtedness

Schedule 3(f)

No Violation

Schedule 3(h)

Litigation

Schedule 3(l)

Employee Relations; Benefits Plans

Schedule 3(m)

Intellectual Property Claims

Schedule 3(n)

Title Matters

Schedule 3(s)

Transactions With Affiliates

Schedule 3(t)

Contracts

Schedule 3(y)

Regulatory Matters

 

EXHIBITS

 

Exhibit A

Form of Certificate of Designations, Preferences and Rights of Series A
Convertible Preferred Stock

Exhibit B

Form of Registration Rights Agreement

Exhibit C

Form of Irrevocable Transfer Agent Instructions

Exhibit D

Form of Company Counsel Opinion

Exhibit E

Form of Safeguard Agreement

 

 

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STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of March 25, 2009, by and
among CLARIENT, INC., a Delaware corporation, with headquarters located at 31
Columbia, Aliso Viejo, California 92656 (the “Company”), and OAK INVESTMENT
PARTNERS XII, LIMITED PARTNERSHIP, a Delaware limited partnership, with
headquarters located at One Gorham Island, Westport, Connecticut 06880 (the
“Purchaser”).  Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed thereto in Section 9(r) hereof.

 

RECITALS

 

The Company and the Purchaser are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506 of
Regulation D (“Regulation D”) as promulgated by the United States Securities and
Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended
(the “Securities Act”).  (Unless otherwise indicated, capitalized terms used in
this Agreement shall have the meanings ascribed to such terms herein.)

 

The Company’s Board of Directors has authorized 6,578,948 shares of its
preferred stock, par value $0.01 per share to be denominated as the Company’s
Series A Convertible Preferred Stock (the “Series A Preferred Stock”), which
shall be convertible into shares of the Company’s common stock, par value $0.01
per share (the “Common Stock”), in accordance with the terms of the Company’s
Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock, substantially in the form attached hereto as Exhibit A (the
“Certificate of Designations”).

 

Subject to the terms and conditions set forth in this Agreement, the Purchaser
wishes to purchase an aggregate of up to 5,263,158 shares of the Series A
Preferred Stock in the Initial Closing and Second Closing, and up to an
additional 1,315,790 shares of the Series A Preferred Stock in one or more
Subsequent Closings (the “Preferred Shares”), at a purchase price per share of
$7.60 (the “Purchase Price”).  All of the shares of Common Stock which are
potentially issuable upon conversion of the Preferred Shares are referred to
herein as the “Conversion Shares.”

 

Contemporaneously with the execution and delivery of this Agreement, the Company
and the Purchaser are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit B (the “Registration Rights
Agreement”) pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.

 

NOW THEREFORE, the Company and the Purchaser hereby agree as follows:

 

 

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1.             PURCHASE AND SALE OF PREFERRED SHARES.

 

(A)           PURCHASE OF PREFERRED SHARES.

 

(I)            SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, THE SATISFACTION (OR WAIVER) OF THE CONDITIONS SET FORTH IN
SECTIONS 6(A) AND 7(A) BELOW, THE COMPANY SHALL ISSUE AND SELL TO THE PURCHASER,
AND THE PURCHASER AGREES TO PURCHASE FROM THE COMPANY, AT A PURCHASE PRICE PER
SHARE EQUAL TO THE PURCHASE PRICE, A NUMBER OF PREFERRED SHARES SUCH THAT THE
NUMBER OF CONVERSION SHARES ISSUABLE UPON CONVERSION THEREOF EQUALS 19.9% OF THE
COMPANY’S OUTSTANDING SHARES CALCULATED IN ACCORDANCE WITH NASDAQ RULES AND
REGULATIONS (THE “INITIAL CLOSING”).

 

(II)           SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, THE SATISFACTION (OR WAIVER) OF THE CONDITIONS SET FORTH IN
SECTIONS 6(B) AND 7(B) BELOW, THE COMPANY SHALL ISSUE AND SELL TO THE PURCHASER,
AND THE PURCHASER AGREES TO PURCHASE FROM THE COMPANY, AT A PURCHASE PRICE PER
SHARE EQUAL TO THE PURCHASE PRICE, A NUMBER OF PREFERRED SHARES EQUAL TO
5,263,158 MINUS THE NUMBER OF PREFERRED SHARES PURCHASED AND SOLD AT THE INITIAL
CLOSING (THE “SECOND CLOSING”).  THE INITIAL CLOSING AND THE SECOND CLOSING
COLLECTIVELY ARE REFERRED TO IN THIS AGREEMENT AS THE “CLOSINGS”).

 

(III)          FOLLOWING THE SECOND CLOSING, SUBJECT TO THE MUTUAL AGREEMENT OF
THE COMPANY AND THE PURCHASER, THE PURCHASER WILL PURCHASE, AND THE COMPANY
SHALL ISSUE AND SELL, UP TO AN ADDITIONAL $10,000,000 OF PREFERRED SHARES (WHICH
AMOUNT MAY BE ALLOCATED BETWEEN UP TO TWO SUBSEQUENT $5,000,000 CLOSINGS),
SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, THE SATISFACTION (OR WAIVER) OF THE CONDITIONS SET FORTH IN SECTIONS
6(C) AND 7(C) BELOW (EACH, A “SUBSEQUENT CLOSING”).

 

(B)           THE CLOSING DATES.

 

(I)            THE INITIAL CLOSING SHALL OCCUR AS SOON AS PRACTICABLE, BUT IN NO
EVENT LATER THAN THE SECOND BUSINESS DAY AFTER THE SATISFACTION OR WAIVER OF THE
CONDITIONS TO THE INITIAL CLOSING SET FORTH HEREIN (EXCLUDING CONDITIONS, THAT,
BY THEIR TERMS, CANNOT BE SATISFIED UNTIL THE INITIAL CLOSING) OR SUCH LATER
DATE AS IS MUTUALLY AGREED TO BY THE COMPANY AND THE PURCHASER (THE “INITIAL
CLOSING DATE”).

 

(II)           ONLY IF THE INITIAL CLOSING HAS PREVIOUSLY OCCURRED, THE SECOND
CLOSING SHALL OCCUR AS SOON AS PRACTICABLE, BUT IN NO EVENT LATER THAN THE
SECOND BUSINESS DAY AFTER THE SATISFACTION OR WAIVER OF THE CONDITIONS TO THE
SECOND CLOSING SET FORTH HEREIN (EXCLUDING CONDITIONS, THAT, BY THEIR TERMS,
CANNOT BE SATISFIED UNTIL THE SECOND CLOSING) OR SUCH LATER DATE AS IS MUTUALLY
AGREED TO BY THE COMPANY AND THE PURCHASER (THE “SECOND CLOSING DATE”).

 

(III)          IN THE EVENT THAT THE PARTIES ELECT TO HOLD A SUBSEQUENT CLOSING,
EACH SUBSEQUENT CLOSING SHALL OCCUR ON SUCH DATE MUTUALLY DETERMINED BY THE
PARTIES (THE “SUBSEQUENT CLOSING DATE”).  EACH OF THE CLOSING DATE, THE SECOND
CLOSING DATE AND THE SUBSEQUENT CLOSING DATE MAY ALSO BE REFERRED TO IN THIS
AGREEMENT AS THE “CLOSING DATE”.

 

 

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(IV)          EACH CLOSING SHALL OCCUR ON THE APPLICABLE CLOSING DATE AT THE
OFFICES OF STRADLING, YOCCA, CARLSON & RAUTH LOCATED AT 660 NEWPORT CENTER DRIVE
SUITE 1600, NEWPORT BEACH, CALIFORNIA 92660, OR AT SUCH OTHER LOCATION AS THE
COMPANY AND THE PURCHASER MAY MUTUALLY AGREE.

 

(c)           Form of Payment.  On the applicable Closing Date, (i) the
Purchaser shall pay the Purchase Price to the Company for the applicable
Preferred Shares by wire transfer of immediately available funds in accordance
with the Company’s written wire instructions (to be delivered not less than two
(2) Business Days prior to the applicable Closing) and (ii) the Company shall
deliver to the Purchaser stock certificates (in the denominations as the
Purchaser shall request) (the “Preferred Stock Certificates”) representing such
number of the Preferred Shares which the Purchaser is then purchasing hereunder,
duly executed on behalf of the Company and registered in the name of the
Purchaser.

 

2.             REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.  The Purchaser
represents and warrants, as of the date hereof, as follows:

 

(a)           Investment Purpose.  The Purchaser is acquiring (i) the Preferred
Shares and (ii) upon conversion of the Preferred Shares, the Conversion Shares
(the Preferred Shares and the Conversion Shares collectively are referred to
herein as the “Securities”), for its own account and not with a view towards, or
for resale in connection with, the distribution thereof, provided, however, that
by making the representations herein, the Purchaser 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 the Securities Act, 
the Exchange Act and state securities laws.

 

(b)           Accredited Investor Status.  The Purchaser is an “accredited
investor” as that term is defined in Rule 501(a) of Regulation D and a
“qualified institutional buyer” as that term is defined in Rule 144A promulgated
under the Securities Act.

 

(c)           Reliance on Exemptions.  The Purchaser understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of the United States federal and state
securities laws and that the Company is relying in part upon the truth and
accuracy of, and the Purchaser’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Securities.

 

(d)           Information.  The Purchaser 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 the Purchaser.  The Purchaser and its advisors, if
any, have been afforded the opportunity to ask questions of the Company.  The
Purchaser understands that its investment in the Securities involves a high
degree of risk.  The Purchaser 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.  Nothing contained in this
Section 2(d) (nor any of the inquiries described herein nor any other due
diligence investigations conducted by the Purchaser or its advisors, if any, or
its representatives) shall modify, amend or affect the Purchaser’s right to rely
on the Company’s representations and warranties contained in Sections 3 and
9(l) below or in any certificate delivered hereunder.

 

 

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(e)           No Governmental Review.  The Purchaser understands that no court,
administrative agency or commission or other governmental or quasi-governmental
authority or instrumentality, domestic or foreign, Federal, state, county or
local (each a “Governmental Entity”) 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.  The Purchaser understands that: (i) the
Securities have not been and are not being registered under the Securities Act
or any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) the Purchaser
shall have delivered to the Company an opinion of counsel (or such other
evidence reasonably acceptable to the Company), in a generally acceptable form,
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) the Purchaser provides the Company with evidence satisfactory to the
Company that such Securities may be sold, assigned or transferred pursuant to
Rule 144 promulgated under the Securities Act, as amended (or a successor
rule thereto) (“Rule 144”); and (ii) except as provided in the Registration
Rights Agreement, neither the Company nor any other person is under any
obligation to register the Securities under the Securities Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.  Notwithstanding the foregoing, no such registration statement or
opinion of counsel shall be necessary for a transfer by the Purchaser (A) that
is a partnership to a liquidating trust for the benefit of its partners, to its
partners or former partners in accordance with partnership interests or to the
estate of any such partner or former partner, (B) that is a limited liability
company to its members or former members in accordance with their interest in
the limited liability company, (C) that is a corporation to its shareholders in
connection with a distribution of the shares without value or (E) that is an
individual to the Purchaser’s family member or trust for the benefit of the
Purchaser or his or her family members or an entity whose equity owners consist
solely of the Purchaser and his or her family members in a transfer by gift,
will or intestate succession, provided that in each case the transferee will be
subject to the terms of this Agreement to the same extent as if he, she or it
were the original Purchaser hereunder.

 

(g)           Legends.

 

(I)            THE PURCHASER UNDERSTANDS THAT THE CERTIFICATES OR OTHER
INSTRUMENTS REPRESENTING THE PREFERRED SHARES AND, UNTIL SUCH TIME AS THE SALE
OF THE CONVERSION SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT AS
CONTEMPLATED BY THE REGISTRATION RIGHTS AGREEMENT, THE STOCK CERTIFICATES
REPRESENTING THE CONVERSION SHARES, EXCEPT AS SET FORTH BELOW, SHALL BEAR A
RESTRICTIVE LEGEND IN SUBSTANTIALLY THE FOLLOWING FORM (IN ADDITION TO ANY
LEGEND REQUIRED UNDER APPLICABLE STATE SECURITIES LAWS):

 

 

4

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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. 
THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER SAID ACT AND (II) IN COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS.

 

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities, if, unless
otherwise required by state securities laws, (i) such Securities are registered
for resale under the Securities Act, (ii) in connection with a sale transaction,
such holder provides the Company with an opinion of counsel, in form to the
reasonable satisfaction of the Company, to the effect that a public sale,
assignment or transfer of the Securities may be made without registration under
the Securities Act, or (iii) such holder provides the Company with evidence
satisfactory to the Company that the Securities may be sold pursuant to Rule 144
without any restriction as to the number of securities sold or the manner of
sale.

 

(II)           THE PURCHASER UNDERSTANDS THAT THE CERTIFICATES OR OTHER
INSTRUMENTS REPRESENTING THE PREFERRED SHARES AND THE CONVERSION SHARES, EXCEPT
AS SET FORTH BELOW, SHALL BEAR A RESTRICTIVE LEGEND IN SUBSTANTIALLY THE
FOLLOWING FORM:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A STOCK PURCHASE AGREEMENT DATED ON OR
ABOUT MARCH 25, 2009 BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF 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 written
request by the holder thereof following the expiration of the restrictions on
transfer set forth in Section 4(k) hereof.

 

(h)           Authorization; Enforcement; Validity.  Purchaser has full power
and authority to enter into this Agreement and the Registration Rights
Agreement.  This Agreement and the Registration Rights Agreement have been duly
and validly authorized, executed and delivered on behalf of the Purchaser and
are valid and binding agreements of the Purchaser enforceable against the
Purchaser in accordance with their terms, subject as to enforceability to
general principles of equity and to 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.  The Purchaser is a resident of, and has its principal
executive offices located in, the State of Connecticut.

 

(j)            Ownership.  The Purchaser does not own any Common Stock or any
other securities of the Company.

 

 

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3.             REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company
represents and warrants to the Purchaser as follows in this Section 3, except to
the extent (i) disclosed with reasonable specificity on the schedules to this
Agreement, and (ii) with respect to all subsections in this Section 3, other
than Sections 3(b), 3(f) and 3(n), disclosed or incorporated by reference in the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2007, Quarterly Reports on Form 10-Q and current reports on Form 8-K filed since
December 31, 2007 and the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2008 (the “2008 Filings”) filed by the Company (other
than (x) those sections of the 2008 Filings entitled or captioned “Risk
Factors”, (y) any disclosure of risks included in any forward-looking statements
disclaimer or other statements that are similarly non-specific and are
predictive or forward-looking in nature and (z) specific disclosures contained
in those documents which are filed as exhibits to such 2008 Filings).  Without
limiting the generality of the foregoing clause (z), the mere filing or
incorporation by reference of an exhibit to such 2008 Filings shall not be
deemed to adequately disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the exhibit itself, as opposed to the contents thereof).

 

(a)           Organization and Qualification.  The Company and its
“Subsidiaries” (which for purposes of this Agreement means any Person in which
the Company, directly or indirectly, owns fifty percent (50%) or more of the
outstanding voting securities) are corporations, limited partnerships, limited
liability companies or foreign business entities duly organized and validly
existing in good standing under the laws of the jurisdiction in which they are
incorporated or formed, as applicable, and have the requisite corporate, limited
partnership, limited liability company or respective foreign entity power and
authorization to own their respective properties and to carry on their
respective business as now being conducted.  Each of the Company and its
Subsidiaries is duly qualified to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have a Material
Adverse Effect.  As used in this Agreement, “Material Adverse Effect” means any
material adverse effect on the business, properties, assets, operations,
prospects, results of operations or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, or on the authority or ability of the
Company to perform its obligations under the Transaction Documents (as
hereinafter defined) or the Certificate of Designations, other than such
changes, effects or circumstances demonstrably attributable to: (i) economic
conditions generally in the United States, or conditions in general in the
industry and markets in which the Company and its Subsidiaries conducts its
businesses, except to the extent such changes materially and disproportionately
affect, in an adverse manner, the Company and its Subsidiaries considered as a
whole, (ii) any change in the laws or regulations generally applicable to the
industry or markets in which such Person and its Subsidiaries operate, except to
the extent such changes materially and disproportionately affect, in an adverse
manner, the Company and its Subsidiaries considered as a whole, or (iii) the
entry into and consummation of this Agreement or any of the Transaction
Documents or Certificate of Designations.  The Company has no Subsidiaries
except as set forth on Schedule 3(a).

 

 

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(b)           Authorization; Enforcement; Validity.  The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions and each of the other agreements entered
into by the parties hereto in connection with the transactions contemplated by
this Agreement (collectively, the “Transaction Documents”), to execute and file
the Certificate of Designations, and, with respect of the Preferred Shares to be
issued at the Second Closing, after receipt of the NASDAQ Stockholder Approval,
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 it of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Preferred Shares and the
reservation for issuance and the issuance of all Conversion Shares issuable upon
conversion of the Preferred Shares, 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, except the NASDAQ
Stockholder Approval, which shall be obtained prior to the Second Closing.  The
Transaction Documents have been duly executed and delivered by the Company, and
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except that any rights to indemnity
or contribution under the Registration Rights Agreement may be subject to
limitation by public policy under federal securities laws, subject as to
enforceability to general principles of equity and to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.  The Certificate of Designations will be filed as promptly
as practicable with the Secretary of State of the State of Delaware and will be
in full force and effect as of the Initial Closing Date, enforceable against the
Company in accordance with its terms.  Neither the Certificate of Incorporation
nor the Certificate of Designations shall have been amended prior to any Closing
Date.

 

(C)           EQUITY CAPITALIZATION.

 

(I)            AS OF THE DATE HEREOF, THE AUTHORIZED CAPITAL STOCK OF THE
COMPANY CONSISTS OF (A) 150,000,000 SHARES OF COMMON STOCK, OF WHICH AS OF
MARCH 10, 2009, 77,195,120 SHARES ARE ISSUED AND OUTSTANDING AND (B) 8,000,000
SHARES OF PREFERRED STOCK, OF WHICH NO SHARES ARE ISSUED AND OUTSTANDING.  ALL
OF SUCH OUTSTANDING SHARES HAVE BEEN VALIDLY ISSUED AND ARE FULLY PAID AND
NONASSESSABLE.  IMMEDIATELY PRIOR TO THE INITIAL CLOSING DATE, NO SHARES OF
PREFERRED STOCK SHALL BE OUTSTANDING AND AS OF EACH CLOSING DATE THE SERIES A
PREFERRED STOCK SHALL BE THE SOLE AUTHORIZED OR DESIGNATED SERIES OF PREFERRED
STOCK.

 

(II)           EXCEPT AS SET FORTH IN SCHEDULE 3(C), NO SHARES OF THE COMPANY’S
CAPITAL STOCK ARE SUBJECT TO PREEMPTIVE RIGHTS OR ANY OTHER SIMILAR RIGHTS. 
EXCEPT AS SET FORTH IN SCHEDULE 3(C), AND EXCEPT FOR (A) CONTINGENT WARRANTS
ISSUABLE PURSUANT TO THAT CERTAIN SECOND AMENDED AND RESTATED SENIOR
SUBORDINATED REVOLVING CREDIT AGREEMENT, DATED FEBRUARY 27, 2009, BY AND BETWEEN
THE COMPANY AND SAFEGUARD DELAWARE, INC., INCLUDING THE CONTINUANCE WARRANT AND
THE MONTHLY WARRANTS (EACH AS DEFINED THEREIN), (B) OPTIONS TO PURCHASE
2,330,849 SHARES OF COMMON STOCK ISSUED OR ISSUABLE PURSUANT TO THE COMPANY’S
1996 EQUITY INCENTIVE PLAN, (C) OPTIONS TO PURCHASE 3,705,325 SHARES OF COMMON
STOCK ISSUED OR ISSUABLE PURSUANT TO THE COMPANY’S 2007 INCENTIVE AWARD PLAN,
AND (D) OPTIONS TO PURCHASE 1,350,000 SHARES OF COMMON STOCK ISSUED OR ISSUABLE
OUTSIDE OF THE COMPANY’S 1996 EQUITY INCENTIVE PLAN AND

 

 

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2007 INCENTIVE AWARD PLAN, (A) THERE ARE NO OUTSTANDING OPTIONS, WARRANTS,
SCRIP, RIGHTS TO SUBSCRIBE TO, CALLS OR COMMITMENTS OF ANY CHARACTER WHATSOEVER
RELATING TO, OR SECURITIES OR RIGHTS CONVERTIBLE INTO OR EXERCISABLE FOR, ANY
SHARES OF CAPITAL STOCK OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR 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 RELATING TO, OR SECURITIES OR RIGHTS CONVERTIBLE INTO OR
EXERCISABLE FOR, ANY SHARES OF CAPITAL STOCK OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES; (B) 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; (C) THERE
ARE NO SECURITIES OR INSTRUMENTS CONTAINING ANTI-DILUTION OR SIMILAR PROVISIONS
THAT WILL BE TRIGGERED BY THE ISSUANCE OF THE SECURITIES AS DESCRIBED IN THIS
AGREEMENT; AND (D) THE COMPANY DOES NOT HAVE ANY STOCK APPRECIATION RIGHTS OR
“PHANTOM STOCK” PLANS OR AGREEMENTS OR ANY SIMILAR PLAN OR AGREEMENT.

 

(III)          THE COMPANY HAS FURNISHED OR MADE AVAILABLE TO EACH PURCHASER
TRUE AND CORRECT COPIES OF THE COMPANY’S CERTIFICATE OF INCORPORATION, AS
AMENDED AND AS IN EFFECT ON THE DATE HEREOF (THE “CERTIFICATE OF INCORPORATION”)
AND THE COMPANY’S BYLAWS, AS AMENDED AND AS IN EFFECT ON THE DATE HEREOF AND AS
OF THE APPLICABLE CLOSING (THE “BYLAWS”).  THE COMPANY DOES NOT HAVE ANY
CERTIFICATE OF DESIGNATIONS IN EFFECT AS OF THE DATE HEREOF OR AS OF ANY CLOSING
DATE (OTHER THAN THE CERTIFICATE OF DESIGNATIONS, WHICH WILL BE EFFECTIVE PRIOR
TO THE INITIAL CLOSING DATE).

 

(d)           Indebtedness and Other Contracts.  Except as set forth on Schedule
3(d), neither the Company not any of its Subsidiaries (i) has any outstanding
Indebtedness (as defined below), (ii) 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 result,
individually or in the aggregate, in a Material Adverse Effect, or (iii) 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
“Indebtedness” means, with respect to any Person, whether recourse is secured by
or is otherwise available against all or only a portion of such Person’s assets,
and whether or not contingent, (A) all obligations for borrowed money, whether
current, funded, secured or unsecured, and every obligation of such Person
evidenced by bonds, debentures, notes or similar instruments, (B) all
indebtedness of such Person for the deferred purchase price of property or
services (other than trade payables incurred in the ordinary course of
business), (C) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (D) all indebtedness of such Person secured by a Lien
to secure all or part of the purchase price of the property subject to such
mortgage or Lien, (E) all obligations under leases which have been or must be,
in accordance with GAAP, recorded as capital leases in respect of which such
Person is liable as lessee, (F) any liability of such Person in respect of
banker’s acceptances or letters of credit, (G) all interest, fees and other
expenses owed with respect to the indebtedness referred to above, and (H) all
indebtedness referred to above which is directly or indirectly guaranteed by
such Person or which such Person has agreed (contingently or otherwise) to
purchase or otherwise acquire or in respect of which it has otherwise assured a
creditor against loss.

 

 

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(e)           Issuance of Securities.  Upon the filing of the Certificate of
Designations with the Secretary of State of the State of Delaware, as of each
Closing, the applicable Preferred Shares will be duly authorized and, upon
issuance in accordance with the terms hereof, shall be (i) validly issued, fully
paid and non-assessable, (ii) free from all taxes, Liens and charges with
respect to the issuance thereof and (iii) entitled to the rights and preferences
set forth in the Certificate of Designations.  Upon the filing of the
Certificate of Designations with the Secretary of State of the State of
Delaware, and as of each Closing, a sufficient number of shares of Common Stock
to permit the conversion in full of such Preferred Shares shall be duly
authorized and reserved for issuance upon conversion of the Preferred Shares. 
Upon conversion in accordance with the Certificate of Designations, the
Conversion Shares will be validly issued, fully paid and nonassessable and free
from all taxes, Liens and charges with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock. 
Subject only to accuracy of the representations set forth in Section 2, the
issuance by the Company of the Securities is exempt from registration under the
Securities Act and all applicable state securities laws.

 

(F)            NO CONFLICTS.

 

(I)            EXCEPT AS SET FORTH ON SCHEDULE 3(F), THE EXECUTION, DELIVERY AND
PERFORMANCE OF THE TRANSACTION DOCUMENTS BY THE COMPANY, THE PERFORMANCE BY THE
COMPANY OF ITS OBLIGATIONS UNDER THE CERTIFICATE OF DESIGNATIONS AND THE
CONSUMMATION BY THE COMPANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY
(INCLUDING, WITHOUT LIMITATION, THE RESERVATION FOR ISSUANCE AND ISSUANCE OF THE
CONVERSION SHARES) WILL NOT:

 

(A)          RESULT IN A VIOLATION OF THE CERTIFICATE OF INCORPORATION (AFTER
GIVING EFFECT TO THE CERTIFICATE OF DESIGNATIONS), OR THE BYLAWS;

 

(B)           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, OR
INCREMENTAL, ADDITIONAL OR VARIED RIGHTS UNDER, ANY MATERIAL AGREEMENT,
INDENTURE OR INSTRUMENT (INCLUDING, WITHOUT LIMITATION, ANY STOCK OPTION,
EMPLOYEE STOCK PURCHASE OR SIMILAR PLAN OR ANY EMPLOYMENT OR SIMILAR AGREEMENT)
TO WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS A PARTY (INCLUDING, WITHOUT
LIMITATION, TRIGGERING THE APPLICATION OF ANY CHANGE OF CONTROL OR SIMILAR
PROVISION (WHETHER “SINGLE TRIGGER” OR “DOUBLE TRIGGER”)); OR

 

(C)           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 (AS HEREINAFTER DEFINED))
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.

 

 

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(II)           NEITHER THE COMPANY NOR ITS SUBSIDIARIES IS IN VIOLATION OF ANY
TERM OF ITS CERTIFICATE OF INCORPORATION OR BYLAWS OR, IN THE CASE OF
SUBSIDIARIES, THEIR ORGANIZATIONAL CHARTER OR BYLAWS, RESPECTIVELY.

 

(III)          THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES IS NOT BEING
CONDUCTED, IN VIOLATION OF ANY LAW, ORDINANCE OR REGULATION OF ANY GOVERNMENTAL
ENTITY, EXCEPT WHERE SUCH VIOLATIONS WOULD NOT RESULT, EITHER INDIVIDUALLY OR IN
THE AGGREGATE, IN A MATERIAL ADVERSE EFFECT.

 

(IV)          EXCEPT FOR (A) THE FILING OF AN INFORMATION STATEMENT RELATING TO
THE NASDAQ STOCKHOLDER APPROVAL AS REQUIRED UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED (THE “EXCHANGE ACT”) AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER, (B) WITH RESPECT TO THE SECOND CLOSING AND ANY SUBSEQUENT CLOSINGS,
THE NASDAQ STOCKHOLDER APPROVAL, (C) AS MAY BE REQUIRED BY ANY APPLICABLE STATE
SECURITIES LAWS, OR (D) THE FILING OF THE CERTIFICATE OF DESIGNATIONS WITH THE
SECRETARY OF STATE OF THE STATE OF DELAWARE, THE COMPANY IS NOT REQUIRED TO
OBTAIN ANY CONSENT, AUTHORIZATION OR ORDER OF, OR MAKE ANY FILING OR
REGISTRATION WITH, ANY GOVERNMENTAL ENTITY IN ORDER FOR IT TO EXECUTE, DELIVER
OR PERFORM ANY OF ITS OBLIGATIONS UNDER OR CONTEMPLATED BY THE TRANSACTION
DOCUMENTS OR TO PERFORM ITS OBLIGATIONS UNDER THE CERTIFICATE OF DESIGNATIONS,
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 AS DESCRIBED IN THE PRECEDING SENTENCE SHALL HAVE BEEN OBTAINED OR
EFFECTED ON OR PRIOR TO EACH CLOSING DATE AND SHALL NOT BE THE SUBJECT OF ANY
PENDING OR, TO THE KNOWLEDGE OF THE COMPANY, THREATENED PROCEEDING OR OTHER
ACTION.  THE COMPANY IS NOT, AND AS OF EACH CLOSING DATE WILL NOT BE, IN
VIOLATION OF THE LISTING REQUIREMENTS OF THE NASDAQ, AND THE CONVERSION SHARES
SHALL BE AUTHORIZED FOR LISTING THEREON.

 

(G)           SEC DOCUMENTS; FINANCIAL STATEMENTS.

 

(I)            SINCE DECEMBER 31, 2008, 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 EXCHANGE ACT (ALL OF THE
FOREGOING (INCLUDING ALL EXHIBITS INCLUDED THEREIN AND FINANCIAL STATEMENTS AND
SCHEDULES THERETO AND DOCUMENTS INCORPORATED BY REFERENCE THEREIN) AND ALL
FORMS, DOCUMENTS AND INSTRUMENTS FILED BY THE COMPANY WITH THE SEC PURSUANT TO
THE SECURITIES ACT (INCLUDING ALL EXHIBITS INCLUDED THEREIN AND FINANCIAL
STATEMENTS AND SCHEDULES THERETO AND DOCUMENTS INCORPORATED BY REFERENCE
THEREIN) BEING HEREINAFTER REFERRED TO AS THE “SEC DOCUMENTS”).  AS OF THEIR
RESPECTIVE DATES, THE SEC DOCUMENTS COMPLIED IN ALL MATERIAL RESPECTS WITH THE
REQUIREMENTS OF THE SECURITIES ACT OR EXCHANGE ACT AND THE RULES AND REGULATIONS
OF THE SEC PROMULGATED THEREUNDER APPLICABLE TO THE SEC DOCUMENTS.  NONE OF THE
SEC DOCUMENTS, AT THE TIME THEY WERE OR ARE FILED WITH THE SEC, CONTAINED OR
WILL CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITTED OR WILL OMIT TO
STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY IN ORDER TO
MAKE THE STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE
MADE, NOT MISLEADING.

 

(II)           AS OF THEIR RESPECTIVE DATES, THE FINANCIAL STATEMENTS OF THE
COMPANY INCLUDED IN THE SEC DOCUMENTS COMPLIED AS TO FORM (AND WILL COMPLY AS TO
FORM) IN ALL MATERIAL RESPECTS WITH U.S. GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (“GAAP”) AND THE PUBLISHED RULES AND REGULATIONS OF THE SEC WITH
RESPECT THERETO.  SUCH FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE
WITH GAAP, CONSISTENTLY APPLIED, DURING THE PERIODS INVOLVED (EXCEPT (A) AS MAY
BE

 

 

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OTHERWISE SPECIFICALLY INDICATED IN SUCH FINANCIAL STATEMENTS OR THE NOTES
THERETO, OR (B) IN THE CASE OF UNAUDITED STATEMENTS, TO THE EXTENT THEY MAY
EXCLUDE FOOTNOTES OR MAY BE CONDENSED OR SUMMARY STATEMENTS OR AS OTHERWISE, IN
EACH CASE, MAY BE PERMITTED BY THE SEC UNDER THE EXCHANGE ACT) AND FAIRLY
PRESENT IN ALL MATERIAL RESPECTS THE CONSOLIDATED FINANCIAL POSITION OF THE
COMPANY AS OF THE DATES THEREOF AND THE CONSOLIDATED 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).  KPMG LLP, WHICH HAS EXAMINED
CERTAIN OF SUCH FINANCIAL STATEMENTS, IS AN INDEPENDENT CERTIFIED PUBLIC
ACCOUNTING FIRM WITHIN THE MEANING OF THE SECURITIES ACT.  AS OF THE DATE OF
THIS AGREEMENT AND AS OF EACH CLOSING DATE, THE COMPANY MEETS THE REQUIREMENTS
FOR USE OF FORM S-3 FOR REGISTRATION OF THE RESALE OF REGISTRABLE SECURITIES (AS
DEFINED IN THE REGISTRATION RIGHTS AGREEMENT).

 

(III)          SINCE DECEMBER 31, 2008, EXCEPT AS SPECIFIED IN THE 2008 FILINGS,
THE COMPANY HAS NOT INCURRED OR SUFFERED ANY LIABILITY OR OBLIGATION OF ANY
NATURE (ABSOLUTE, ACCRUED, CONTINGENT OR OTHERWISE) WHICH ARE NOT PROPERLY
RESERVED AGAINST IN THE COMPANY’S FINANCIAL STATEMENTS TO THE EXTENT REQUIRED TO
BE SO REFLECTED OR RESERVED AGAINST IN ACCORDANCE WITH GAAP, EXCEPT IN THE
ORDINARY COURSE OF BUSINESS AND EXCEPT ANY SUCH LIABILITY OR OBLIGATION THAT HAS
NOT HAD AND COULD NOT REASONABLY BE EXPECTED TO HAVE, INDIVIDUALLY OR IN THE
AGGREGATE, A MATERIAL ADVERSE EFFECT.

 

(h)           Absence of Litigation.  There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, Governmental
Entity or self-regulatory organization or body pending or, to the knowledge of
the Company or any of its Subsidiaries, threatened against or affecting the
Company, the Common Stock or any of its Subsidiaries, except where any of the
foregoing would not reasonably be expected to result, either individually or in
the aggregate, in a Material Adverse Effect and except as set forth on Schedule
3(h).

 

(i)            Acknowledgment Regarding the Purchaser’s Purchase of Preferred
Shares.  The Company acknowledges and agrees that the Purchaser is acting solely
in the capacity of an arm’s length purchaser with respect to the Company in
connection with the Transaction Documents and the Certificate of Designations
and the transactions contemplated hereby and thereby.  The Company further
acknowledges that the Purchaser is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the Certificate of Designations and the transactions
contemplated hereby and thereby and any advice given by the Purchaser or any
representative or agent in connection with the Transaction Documents and/or the
Certificate of Designations and the transactions contemplated hereby and thereby
is merely incidental to the Purchaser’s purchase of the Securities.  The Company
further represents to the Purchaser 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.

 

(j)            No General Solicitation.  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 under the Securities Act) in connection with the offer or sale of
the Securities.

 

 

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(k)           No Integrated Offering.  Neither the Company, nor any of its
Affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the Securities Act or cause this offering of the Securities
to be integrated with prior offerings by the Company for purposes of the
Securities Act or any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of NASDAQ, nor will the
Company or any of its Subsidiaries take any action or steps (other than by
compliance with the Registration Rights Agreement) that would require
registration of any of the Securities under the Securities Act or cause the
offering of the Securities to be integrated with other offerings.

 

(L)            EMPLOYEE RELATIONS; BENEFIT PLANS.  NEITHER THE COMPANY NOR ANY
OF ITS SUBSIDIARIES IS INVOLVED IN ANY UNION LABOR DISPUTE NOR, TO THE KNOWLEDGE
OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, IS ANY SUCH DISPUTE THREATENED. 
EXCEPT AS SET FORTH ON SCHEDULE 3(L), NONE OF THE COMPANY’S OR ITS SUBSIDIARIES’
EMPLOYEES IS A MEMBER OF A UNION WHICH RELATES TO SUCH EMPLOYEE’S RELATIONSHIP
WITH THE COMPANY, AND NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES IS A PARTY
TO A COLLECTIVE BARGAINING AGREEMENT.  EXCEPT AS SET FORTH ON SCHEDULE 3(L), NO
EXECUTIVE OFFICER OF THE COMPANY OR ANY OF ITS SUBSIDIARIES HAS NOTIFIED THE
COMPANY OR ANY SUCH SUBSIDIARY THAT SUCH EXECUTIVE OFFICER INTENDS TO LEAVE THE
COMPANY OR ANY SUCH SUBSIDIARY OR OTHERWISE TERMINATE SUCH EXECUTIVE OFFICER’S
EMPLOYMENT WITH THE COMPANY OR ANY SUCH SUBSIDIARY.  TO THE KNOWLEDGE OF THE
COMPANY, NO EXECUTIVE OFFICER OF THE COMPANY OR ANY OF ITS SUBSIDIARIES IS 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 THE CONTINUED
EMPLOYMENT OF EACH SUCH EXECUTIVE OFFICER DOES NOT SUBJECT THE COMPANY OR ANY OF
ITS SUBSIDIARIES TO ANY LIABILITY WITH RESPECT TO ANY OF THE FOREGOING MATTERS.

 

(II)           THE COMPANY AND ITS SUBSIDIARIES ARE IN COMPLIANCE WITH ALL
FEDERAL, STATE, LOCAL AND FOREIGN LAWS AND REGULATIONS RESPECTING LABOR,
EMPLOYMENT AND EMPLOYMENT PRACTICES AND BENEFITS, TERMS AND CONDITIONS OF
EMPLOYMENT AND WAGES AND HOURS, EXCEPT WHERE FAILURE TO BE IN COMPLIANCE WOULD
NOT, EITHER INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO RESULT
IN A MATERIAL ADVERSE EFFECT.

 

(III)          THERE ARE NO MATERIAL EMPLOYEE BENEFIT PLANS, AS DEFINED IN
SECTION 3(3) OF ERISA, MAINTAINED BY THE COMPANY OR ANY SUBSIDIARY, OR WITH
RESPECT TO WHICH THE COMPANY OR ANY SUBSIDIARY HAS INCURRED OR HAS REASON TO
EXPECT THAT IT WILL INCUR ANY DIRECT OR INDIRECT MATERIAL LIABILITY, OTHER THAN
THOSE DESCRIBED IN THE 2008 FILINGS OR AS DESCRIBED IN SCHEDULE 3(L) (“BENEFIT
PLANS”).

 

(IV)          NO BENEFIT PLAN IS SUBJECT TO TITLE IV OF ERISA OR SECTION 412 OF
THE CODE.  EXCEPT AS SET FORTH ON SCHEDULE 3(L), NO BENEFIT PLAN IS A “MULTIPLE
EMPLOYER PLAN” WITHIN THE MEANING OF THE CODE OR ERISA.

 

(V)           WITH RESPECT TO EACH BENEFIT PLAN:  (A) IF IT IS INTENDED TO
QUALIFY UNDER SECTION 401(A) OR 403(A) OF THE CODE, THE COMPANY HAS NO KNOWLEDGE
OF ANY CIRCUMSTANCE THAT COULD BE REASONABLY EXPECTED TO RESULT IN SUCH BENEFIT
PLAN’S FAILURE TO BE SO QUALIFIED; (B) SUCH BENEFIT PLAN HAS BEEN MAINTAINED AND
ADMINISTERED AT ALL TIMES IN SUBSTANTIAL COMPLIANCE WITH ITS TERMS AND
APPLICABLE LAWS AND REGULATIONS, EXCEPT WHERE THE FAILURE TO COMPLY WOULD NOT
HAVE A MATERIAL ADVERSE EFFECT; (C) TO THE COMPANY’S KNOWLEDGE NO EVENT HAS
OCCURRED AND THERE EXISTS

 

 

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NO CIRCUMSTANCES UNDER WHICH THE COMPANY OR ANY SUBSIDIARY COULD BE REASONABLY
EXPECTED TO INCUR MATERIAL LIABILITY UNDER ERISA, THE CODE OR OTHERWISE (OTHER
THAN ROUTINE CLAIMS FOR BENEFITS) WITH RESPECT TO SUCH BENEFIT PLAN OR WITH
RESPECT TO ANY OTHER ENTITY’S EMPLOYEE BENEFIT PLAN; AND (D) ALL CONTRIBUTIONS
AND PREMIUMS THAT ARE DUE HAVE BEEN PAID WITH RESPECT TO SUCH BENEFIT PLAN.

 

(VI)          WITH RESPECT TO EACH BENEFIT PLAN WHICH IS AN “EMPLOYEE WELFARE
BENEFIT PLAN” (AS DEFINED IN ERISA SECTION 3(1)) WHICH IS MAINTAINED OR
CONTRIBUTED TO BY THE COMPANY OR ANY SUBSIDIARY OR WITH RESPECT TO WHICH THE
COMPANY OR ANY SUBSIDIARY HAS OR COULD HAVE ANY DIRECT OR INDIRECT LIABILITY AS
OF A CLOSING DATE: (A) NO SUCH PLAN PROVIDES MEDICAL OR DEATH BENEFITS WITH
RESPECT TO CURRENT OR FORMER EMPLOYEES OF THE COMPANY OR ANY SUBSIDIARY BEYOND
THEIR TERMINATION OF EMPLOYMENT (OTHER THAN AS REQUIRED TO AVOID AN EXCISE TAX
UNDER CODE SECTION 4980B); AND (B) TO THE COMPANY’S KNOWLEDGE THE COMPANY AND
EACH SUBSIDIARY HAS SUBSTANTIALLY COMPLIED WITH THE REQUIREMENTS OF CODE SECTION
4980B.

 

(VII)         THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS WILL NOT: (A) ENTITLE ANY EMPLOYEE
OF THE COMPANY TO SEVERANCE OR TERMINATION PAY; (B) ACCELERATE THE TIME OF
PAYMENT OR VESTING, OR INCREASE THE AMOUNT OF COMPENSATION DUE TO ANY EMPLOYEE
OF THE COMPANY; OR (C) RESULT IN THE PAYMENT THAT WILL BE TAKEN INTO ACCOUNT IN
DETERMINING WHETHER THERE IS AN “EXCESS PARACHUTE PAYMENT” UNDER CODE SECTION
280G(B)(1).

 

(VIII)        SCHEDULE 3(L) LISTS EVERY BENEFIT PLAN, POLICY, AGREEMENT OR
ARRANGEMENT, COVERING TWO OR MORE EMPLOYEES OR SERVICE PROVIDERS, SPONSORED OR
CONTRIBUTED TO BY EITHER THE COMPANY OR ANY OF ITS SUBSIDIARIES, WHICH
CONSTITUTES A “NONQUALIFIED DEFERRED COMPENSATION PLAN” (AS DEFINED IN
SECTION 409A(D)(1) OF THE CODE AND REGULATIONS PROMULGATED THEREUNDER) WITH
RESPECT TO ANY SERVICE PROVIDER TO EITHER THE COMPANY OR ANY SUBSIDIARY. 
NEITHER THE COMPANY NOR ANY SUBSIDIARY IS OBLIGATED TO MAKE ANY PAYMENT OR
PAYMENTS AND IS NOT A PARTY TO (OR A PARTICIPATING EMPLOYER IN) ANY PLAN,
POLICY, AGREEMENT OR ARRANGEMENT THAT IT HAS REASON TO EXPECT WOULD GIVE RISE TO
ADDITIONAL TAXES OR INTEREST UNDER SECTION 409A OF THE CODE (OR ANY SIMILAR
PROVISION OF STATE, LOCAL OR FOREIGN LAW), WHETHER OR NOT SUCH PLAN, POLICY,
AGREEMENT OR ARRANGEMENT IS REQUIRED TO BE LISTED ON SCHEDULE 3(L).

 

(m)          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 all other intellectual property rights
necessary to conduct their respective businesses as now, or as contemplated to
be, conducted, except where the failure to own or possess such rights would not
result, either individually or in the aggregate, in a Material Adverse Effect. 
Neither the Company nor its Subsidiaries has infringed trademarks, trade names,
service marks, service mark registrations, service names, copyrights,
inventions, licenses, trade secrets or, to its knowledge (after consultation
with the Company’s senior officer in charge of patents and patent applications),
patents, patent rights or other intellectual property rights of others, or of
any development of similar or identical trade secrets or technical information
by others and, except as set forth on Schedule 3(m), there is no claim, action
or proceeding being made or brought against, the Company or its Subsidiaries
regarding its trademarks, trade names, service marks, service mark
registrations, service names, patents,

 

 

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patent rights, copyrights, inventions, licenses, trade secrets, or infringement
of other intellectual property rights, except where any of the foregoing would
not result, either individually or in the aggregate, in a Material Adverse
Effect.  The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties.

 

(n)           Title.  The Company and its Subsidiaries have good and marketable
title to the leasehold estate in all real property described in the 2008 Filings
as being leased by them and 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 (other than Permitted
Liens) except (i) such as are set forth on Schedule 3(n), (ii) 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
Subsidiaries, (iii) such Liens against any landlord’s or owner’s interest in any
leased property, and (iv) for taxes not yet due and payable.  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 facilities by the Company and its Subsidiaries.

 

(o)           Insurance.  All of the insurance policies covering the Company and
its Subsidiaries are in full force and effect, neither the Company nor any of
its Subsidiaries is in material default with respect to its obligations under
any of such insurance policies and neither the Company nor any of its
Subsidiaries has received any notification of cancellation or modification of
any of such insurance policies.  The Company and its Subsidiaries maintain
insurance coverage of a type and amount customary for entities of similar size
engaged in similar lines of business.  Neither the Company nor any of its
Subsidiaries is or ever has been a party to, or a beneficiary of, any other
policy, insurance pool or sharing agreement whereby any other
Person(s) maintains or maintained insurance covering the business of the
Company.

 

(p)           Regulatory Permits; Compliance with Law.  Except the absence of
which would not result or be expected to result, either individually or in the
aggregate, in a Material Adverse Effect, (i) the Company and its Subsidiaries
possess all licenses, certificates, authorizations, permits, consents, orders
and approvals issued by, and have made all filings, applications and
registrations with, the appropriate Governmental Entities necessary to own or
lease their respective properties and assets and to conduct their respective
businesses as conducted and as contemplated to be conducted, and (ii) neither
the Company nor any such Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such license, certificate,
authorization, permit, consent, order or approval.  The Company and each of its
Subsidiaries has complied in all material respects and is not in default or
violation in any material respect of, and none of them is, to the knowledge of
the Company, under investigation with respect to or, to the knowledge of the
Company, has been threatened to be charged with or given notice of any material
violation of, any applicable material domestic (federal, state or local) or
foreign law, statute, ordinance, license, rule, regulation, policy or guideline,
order, demand, writ, injunction, decree or judgment of any Governmental Entity,
other than such noncompliance, defaults or violations that would not reasonably
be expected to have a Material Adverse Effect.  Except for statutory or
regulatory restrictions of general application, no Governmental Entity has
placed any material restriction on the business or properties of the Company or
any of its Subsidiaries.

 

 

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(q)           Disclosure Controls.  The Company (A) has implemented and
maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of
the Exchange Act) to ensure that material information relating to the Company
and its Subsidiaries, is made known to the chief executive officer and the chief
financial officer of the Company by others within those entities, and (B) has
disclosed, based on its most recent evaluation prior to the date hereof, to the
Company’s outside auditors and the audit committee of the Board of Directors
that there were no (x) significant deficiencies or material weaknesses in the
design or operation of internal controls over financial reporting (as defined in
Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely
affect the Company’s ability to record, process, summarize and report financial
information and (y) fraud, whether or not material, that involves management or
other employees who have a significant role in the Company’s internal controls
over financial reporting.  Since December 31, 2008 and until the date of this
Agreement, (A) to the knowledge of the Company, none of the Company, any Company
Subsidiary, or any director or executive officer of the Company or any Company
Subsidiary has received or otherwise been made aware of any written material
complaint, allegation, assertion or claim, regarding the accounting or auditing
practices, procedures, methodologies or methods of the Company or any Company
Subsidiary or their respective internal accounting controls, and (B) to the
Company’s knowledge, no attorney representing the Company or any Company
Subsidiary, whether or not employed by the Company or any Company Subsidiary,
has reported evidence of a material violation of securities laws, breach of
fiduciary duty or similar violation by the Company or any of its executive
officers, directors, employees or agents to the Board of Directors or any
committee thereof or to any director or executive officer of the Company.

 

(r)            Tax Status.  The Company and each of its Subsidiaries (i) has
timely 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 and
all such tax returns, reports and declarations were complete and correct in all
material respects and were prepared in substantial compliance with all
applicable laws and regulations, (ii) other than taxes that in an aggregate
amount would not be material (and the nonpayment of which would not have a
Material Adverse Effect), has paid all taxes and other governmental assessments
owed, except those being contested in good faith and for which the Company has
made appropriate reserves on its books and financial statements, and (iii) other
than accruals for taxes in an aggregate amount that would not be material (and
the nonpayment of which would not have a Material Adverse Effect), has set aside
on its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
(referred to in clause (i) above) apply.

 

(s)           Transactions With Affiliates.  Except (i) as set forth on Schedule
3(s), (ii) in the SEC Documents filed with the SEC prior to the date of this
Agreement, (iii) routine compensation to directors in accordance with policies
duly adopted by the Company’s Board of Directors, (iv) the grant of incentive
equity issued under duly adopted incentive equity plans, and (v) transactions
between the Company and its Subsidiaries and parent companies, as of the date
hereof, to the knowledge of the Company, none of the executive officers or
directors of the Company is presently a party to any transaction with the
Company (other than for services as

 

 

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employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any such executive officer or director or, to the knowledge of the
Company, any Person in which any such executive officer or director has a
substantial interest or is an officer, director, trustee or partner.

 

(t)            Contracts.  Except for the contracts, agreements and commitments,
whether written or oral, described on Schedule 3(t), or filed as exhibits to the
SEC Documents filed with the SEC prior to the date of this Agreement (other than
with respect to the contracts described in Section 3(t)(ii), if any, which shall
be described on Schedule 3(t)), neither the Company nor any Subsidiary is a
party to or bound by any of the following contracts, agreements or commitments,
whether written or oral (the “Material Contracts”):

 

(I)            ANY CONTRACT OR AGREEMENT WHICH IS A “MATERIAL CONTRACT” WITHIN
THE MEANING OF ITEM 601(B)(10) OF REGULATION S-K TO BE PERFORMED IN WHOLE OR IN
PART AFTER THE DATE OF THIS AGREEMENT;

 

(II)           ANY CONTRACT WHICH LIMITS OR PURPORTS TO LIMIT THE FREEDOM OF THE
COMPANY OR ANY SUBSIDIARY TO ENGAGE IN ANY LINE OF BUSINESS OR TO COMPETE WITH
ANY OTHER PERSON;

 

(III)          ANY AGREEMENT OF GUARANTEE, SUPPORT, INDEMNIFICATION, ASSUMPTION
OR ENDORSEMENT OF, OR ANY SIMILAR COMMITMENT WITH RESPECT TO, THE OBLIGATIONS,
LIABILITIES (WHETHER ACCRUED, ABSOLUTE, CONTINGENT OR OTHERWISE) OR INDEBTEDNESS
OF ANY OTHER PERSON;

 

(IV)          ANY CONTRACT OR AGREEMENT THAT GRANTS ANY PERSON A RIGHT OF FIRST
REFUSAL, RIGHT OF FIRST OFFER OR SIMILAR RIGHT WITH RESPECT TO ANY MATERIAL
PROPERTIES, ASSETS OR BUSINESS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES;

 

(V)           ANY CONTRACT RELATING TO THE ACQUISITION OR DISPOSITION OR ANY
MATERIAL BUSINESS OR MATERIAL ASSETS (WHETHER BY MERGER, SALE OF STOCK OR ASSETS
OR OTHERWISE), WHICH ACQUISITION OR DISPOSITION IS NOT YET COMPLETE OR WHERE
SUCH CONTRACT CONTAINS CONTINUING MATERIAL OBLIGATIONS, INCLUDING CONTINUING
MATERIAL INDEMNITY OBLIGATIONS, OF THE COMPANY OR ANY OF ITS SUBSIDIARIES; AND

 

(VI)          ANY CONTRACT WITH ANY AFFILIATE OF THE COMPANY (A) WITH A VALUE IN
EXCESS OF $50,000, (B) WHICH PROVIDES ANY PERSON WITH MATERIAL CONSENT RIGHTS OR
MATERIAL CONTROL RIGHTS, OR (C) WHICH WAS NOT ENTERED INTO IN THE ORDINARY
COURSE OF BUSINESS OR WAS ENTERED INTO ON TERMS LESS FAVORABLE THAN WOULD HAVE
BEEN OBTAINABLE BY THE COMPANY OR IT SUBSIDIARIES IN A COMPARABLE ARM’S LENGTH
TRANSACTION WITH AN UNRELATED PERSON.

 

All of the Material Contracts are in full force and effect and binding upon the
parties thereto in accordance with their terms.  Neither the Company nor any
Subsidiary, nor, to the knowledge of the Company, any other party to such
Material Contracts, is in default thereunder, nor to the knowledge of the
Company does any condition exist that with notice or lapse of time or both would
constitute a default thereunder.  Except as set forth on Schedule 3(t), the
Company has no knowledge of any proposed or pending cancellation or termination
of any such Material Contract.

 

 

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(u)           Application of Takeover Protections.  The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement), interested shareholder or
other similar anti-takeover provision under the Certificate of Incorporation or
the laws of the State of Delaware (including, without limitation, Section 203 of
the Delaware General Corporation Law, or any successor statute thereto) or the
State of California (collectively, “Takeover Provisions”) which is or could
become applicable to the Purchaser as a result of the transactions contemplated
by this Agreement, including, without limitation, the Company’s issuance of the
Securities, the Purchaser’s ownership of the Securities and/or the Purchaser’s
acquisition of the Conversion Shares.

 

(v)           Poison Pill.  The Company’s Rights Agreement, dated as of
February, 10, 1999, between the Company and Harris Trust Company of California,
as amended, expired by its terms on February 19, 2009.

 

(w)          Investment Company.  The Company is not, and after giving effect to
the offering and sale of the Securities hereunder and the application of the
proceeds thereof as described in this Agreement will not be, an “investment
company” as such term is defined in the Investment Company Act of 1940, as
amended.

 

(x)            No Market Manipulation.  Neither the Company nor its Subsidiaries
nor, to the knowledge of the Company, any of such entities’ directors, officers,
employees, agents or controlling persons have taken, directly or indirectly, any
action designed, or that might reasonably be expected, to cause or result in,
under the Securities Act or otherwise, or that has constituted, stabilization or
manipulation of the price of the Common Stock.

 

(y)           Special Regulatory and Other Matters.  Except as set forth in
Schedule 3(y), the Company represents and warrants to the Purchaser as follows:

 

(I)            THE COMPANY AND EACH OF ITS SUBSIDIARIES (COLLECTIVELY, THE 
“REGULATED COMPANIES,” AND EACH, A “REGULATED COMPANY”) EACH HOLD ALL LICENSES
AND OTHER RIGHTS, ACCREDITATIONS, PERMITS, APPROVALS AND AUTHORIZATIONS
(“PERMITS”) REQUIRED BY LAW, ORDINANCE, REGULATION, RULING, GUIDANCE OR MANUAL
OF ANY GOVERNMENTAL ENTITY NECESSARY TO OPERATE EACH LINE OF BUSINESS OR
FACILITY PRESENTLY CONDUCTED AND PRESENTLY PROPOSED TO BE CONDUCTED BY EACH OF
THE REGULATED COMPANIES (EACH SUCH LINE OR FACILITY, A “BUSINESS” AND
COLLECTIVELY, THE “BUSINESSES”), EXCEPT FOR PERMITS, THE ABSENCE OF WHICH WOULD
NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT. ALL PERMITS ARE IN
FULL FORCE AND EFFECT AND WILL REMAIN SO IMMEDIATELY AFTER THE CLOSING AND NO
SUSPENSION OR CANCELLATION OF ANY PERMIT IS PENDING OR, TO THE KNOWLEDGE OF ANY
REGULATED COMPANY, THREATENED.  NONE OF THE REGULATED COMPANIES HAS RECEIVED ANY
NOTICE OR OTHER COMMUNICATION FROM ANY GOVERNMENTAL ENTITY REGARDING (I) ANY
ACTUAL OR POSSIBLE VIOLATION OF OR FAILURE TO COMPLY WITH ANY TERM OR
REQUIREMENT OF ANY PERMIT, OR (II) ANY ACTUAL OR POSSIBLE REVOCATION,
WITHDRAWAL, SUSPENSION, CANCELLATION, TERMINATION OR MODIFICATION OF ANY PERMIT.

 

 

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(II)           EACH REGULATED COMPANY THAT DIRECTLY RECEIVES REIMBURSEMENT OR
PAYMENTS UNDER TITLE XVIII OR XIX OF THE SOCIAL SECURITY ACT (THE “MEDICARE AND
MEDICAID PROGRAMS”) IS ENROLLED FOR PARTICIPATION AND REIMBURSEMENT UNDER THE
MEDICARE AND MEDICAID PROGRAMS.  EACH REGULATED COMPANY THAT DIRECTLY OR
INDIRECTLY RECEIVES REIMBURSEMENT OR PAYMENTS UNDER THE MEDICARE AND MEDICAID
PROGRAMS, THE  TRICARE PROGRAM AND SUCH OTHER SIMILAR FEDERAL, STATE OR LOCAL
REIMBURSEMENT OR GOVERNMENTAL PROGRAMS (COLLECTIVELY THE “GOVERNMENT PROGRAMS”)
HAS CURRENT PROVIDER NUMBERS AND PROVIDER ENROLLMENTS AND AGREEMENTS REQUIRED
FOR EACH OF SUCH GOVERNMENT PROGRAMS.  EACH REGULATED COMPANY THAT RECEIVES
DIRECT PAYMENTS UNDER ANY NON-GOVERNMENTAL PROGRAM, INCLUDING WITHOUT LIMITATION
ANY PRIVATE INSURANCE PROGRAM (COLLECTIVELY, THE “PRIVATE PROGRAMS”) HAS ALL
PROVIDER AGREEMENTS AND PROVIDER NUMBERS THAT ARE REQUIRED UNDER SUCH PRIVATE
PROGRAMS.

 

(III)          EACH REGULATED COMPANY HAS NOT CLAIMED OR RECEIVED REIMBURSEMENTS
FROM GOVERNMENT PROGRAMS OR PRIVATE PROGRAMS IN EXCESS OF AMOUNTS PERMITTED BY
LAW OR APPLICABLE CONTRACT, AND HAS NO LIABILITY UNDER ANY GOVERNMENT PROGRAM OR
PRIVATE PROGRAM (KNOWN OR UNKNOWN, CONTINGENT OR OTHERWISE) FOR ANY REFUND,
OVERPAYMENT, DISCOUNT OR ADJUSTMENT, EXCEPT FOR ANY OF THE FOREGOING THAT WOULD
NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE BUSINESS,
RESULTS OF OPERATIONS OR PROSPECTS OF ANY PARTICULAR REGULATED COMPANY OR GROUP
THEREOF, INCLUDING BY VIRTUE OF HAVING A MATERIAL ADVERSE EFFECT ON THE ABILITY
TO OPERATE IN THE ORDINARY COURSE OR BY VIRTUE OF RESULTING IN A MATERIAL
LIABILITY.  EXCEPT AS DESCRIBED ON SCHEDULE 3(Y), NO REGULATED COMPANY HAS ANY
REIMBURSEMENT OR PAYMENT RATE APPEALS, DISPUTES OR CONTESTED POSITIONS CURRENTLY
PENDING BEFORE ANY GOVERNMENTAL ENTITY OR ANY ADMINISTRATOR OF ANY PRIVATE
PROGRAMS WITH RESPECT TO ANY BUSINESS.

 

(IV)          ALL ACTIVITIES OF EACH BUSINESS OF EACH REGULATED COMPANY AND OF
ANY OFFICERS, DIRECTORS, AGENTS AND EMPLOYEES OF ANY OF THE REGULATED COMPANIES
UNDERTAKEN ON BEHALF OF ANY BUSINESS, HAVE BEEN, AND ARE CURRENTLY BEING,
CONDUCTED IN COMPLIANCE IN ALL RESPECTS WITH ALL APPLICABLE LEGAL REQUIREMENTS,
PERMITS, LICENSES, CERTIFICATES, GOVERNMENTAL REQUIREMENTS, GOVERNMENT PROGRAM
MANUALS AND GUIDANCE, ORDERS AND OTHER SIMILAR ITEMS OF ANY GOVERNMENTAL ENTITY
INCLUDING, WITHOUT LIMITATION, REQUIREMENTS UNDER LAWS ADMINISTERED BY THE FOOD
AND DRUG ADMINISTRATION, REQUIREMENTS UNDER THE CLINICAL LABORATORY IMPROVEMENT
AMENDMENTS, AND ALL LEGAL REQUIREMENTS CURRENTLY IN EFFECT PERTAINING TO
CONFIDENTIALITY OF PATIENT INFORMATION, OCCUPATIONAL SAFETY AND HEALTH, WORKERS’
COMPENSATION, UNEMPLOYMENT, BUILDING AND ZONING CODES (COLLECTIVELY,
“REGULATIONS”), OTHER THAN ANY NON-COMPLIANCE THAT DOES NOT OR WOULD NOT HAVE A
MATERIAL ADVERSE EFFECT ON THE ASSETS, BUSINESS, PROPERTIES, PROSPECTS,
OPERATIONS OR FINANCIAL OR OTHER CONDITION OF ANY BUSINESS.  NONE OF THE
BUSINESSES OF ANY OF THE REGULATED COMPANIES HAS VIOLATED OR BECOME LIABLE FOR,
OR RECEIVED ANY UNRESOLVED NOTICE OR CHARGE ASSERTING ANY SUCH VIOLATION OR
LIABILITY WITH RESPECT TO, ANY REGULATION, NOR ARE THERE ANY FACTS OR
CIRCUMSTANCES THAT ARE KNOWN OR THAT REASONABLY SHOULD BE KNOWN TO THE REGULATED
COMPANIES THAT COULD FORM THE BASIS FOR ANY SUCH VIOLATION OR LIABILITY, WHICH
VIOLATION OR LIABILITY WOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT ON THE BUSINESS, RESULTS OF OPERATIONS OR PROSPECTS OF ANY PARTICULAR
REGULATED COMPANY OR GROUP THEREOF, INCLUDING BY VIRTUE OF HAVING A MATERIAL
ADVERSE EFFECT ON THE ABILITY TO OPERATE IN THE ORDINARY COURSE OR BY VIRTUE OF
RESULTING IN A MATERIAL LIABILITY.

 

(V)           NONE OF THE REGULATED COMPANIES, OR ANY OFFICER, DIRECTOR OR
MANAGING EMPLOYEE OF ANY OF THE REGULATED COMPANIES, AND, TO THE KNOWLEDGE OF
THE REGULATED COMPANIES AFTER DUE AND REASONABLE INQUIRY, NO PERSON OR ENTITY
PROVIDING PROFESSIONAL SERVICES IN CONNECTION WITH ANY BUSINESS, HAS ENGAGED
WITH RESPECT TO THE REGULATED COMPANIES IN ANY

 

 

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ACTIVITIES THAT ARE PROHIBITED, OR CAUSE FOR THE IMPOSITION OF PENALTIES OR
MANDATORY OR PERMISSIVE EXCLUSION, UNDER 42 U.S.C. §§ 1320A-7, 1320A-7A,
1320A-7B, 1395NN, OR 1396B, 31 U.S.C. §§ 3729-3733, OR THE FEDERAL TRICARE
STATUTE (OR OTHER FEDERAL OR STATE STATUTES RELATED TO FALSE OR FRAUDULENT
CLAIMS) OR THE REGULATIONS PROMULGATED THEREUNDER PURSUANT TO SUCH STATUTES, OR
SIMILAR STATE OR LOCAL STATUTES OR REGULATIONS, OR UNDER ANY CRIMINAL LAWS,
STATUTES, ORDINANCES, REGULATIONS, RULINGS OR MANUALS OF ANY GOVERNMENTAL ENTITY
RELATING TO HEALTH CARE SERVICES OR PAYMENTS, OR THAT ARE PROHIBITED BY RULES OF
PROFESSIONAL CONDUCT, OTHER THAN ANY OF THE FOREGOING THAT WOULD NOT REASONABLY
BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

 

(z)            Solvency.  Immediately after the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents, the fair
value and present fair saleable value of the assets of each of the Company and
its Subsidiaries will exceed the sum of their stated liabilities and identified
contingent liabilities.  The Company and its Subsidiaries are not, nor will they
be, after giving effect to the execution, delivery and performance of this
Agreement and the other Transaction Documents, and the consummation of the
transactions contemplated hereby and thereby, (i) left with unreasonably small
capital with which to carry on their business as it is proposed to be conducted,
(ii) unable to pay their debts (contingent or otherwise) as they mature or
(iii) otherwise insolvent.

 

(aa)         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.

 

4.             COVENANTS.

 

(a)           Certain Pre-Closing Covenants.  The parties agree as follows with
respect to the period between the execution of this Agreement and each Closing:

 

(I)            GENERAL.  EACH OF THE PARTIES WILL USE ITS COMMERCIALLY
REASONABLE EFFORTS TO TAKE ALL ACTION AND TO DO ALL THINGS NECESSARY, PROPER, OR
ADVISABLE IN ORDER TO CONSUMMATE AND MAKE EFFECTIVE THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT (INCLUDING SATISFACTION, BUT NOT WAIVER, OF THE
CONDITIONS TO EACH CLOSING SET FORTH IN SECTIONS 6(A) AND/OR 6(B) AND SECTIONS
7(B) AND/OR 7(C), AS APPLICABLE; PROVIDED, HOWEVER, THAT NOTHING IN THIS
SECTION 4(A) SHALL BE DEEMED TO REQUIRE THE PURCHASER TO PURCHASE, OR THE
COMPANY TO SELL, THE PREFERRED SHARES UNLESS AND UNTIL THE CONDITIONS SET FORTH
IN SECTIONS 6(A) AND/OR 6(B) AND SECTION 7(B) AND/OR 7(C), RESPECTIVELY, ARE
SATISFIED OR, IN THE SOLE DISCRETION OF THE COMPANY OR PURCHASER, AS THE CASE
MAY BE, WAIVED.

 

(II)           NOTICES AND CONSENTS.  THE COMPANY WILL GIVE ANY NOTICES TO THIRD
PARTIES AND GOVERNMENTAL ENTITIES AND SHALL USE COMMERCIALLY REASONABLE EFFORTS
TO OBTAIN ANY THIRD PARTY CONSENTS THAT THE PURCHASER MAY REASONABLY REQUEST IN
CONNECTION WITH THE MATTERS REFERRED TO IN SECTION 3(F) HEREOF.  EACH OF THE
PARTIES WILL GIVE ANY NOTICES TO, MAKE ANY FILINGS WITH, AND USE ITS
COMMERCIALLY REASONABLE EFFORTS TO OBTAIN ANY AUTHORIZATIONS, CONSENTS, AND
APPROVALS OF GOVERNMENT ENTITIES IN CONNECTION WITH THE MATTERS REFERRED TO IN
SECTION 3(F) HEREOF.

 

 

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(III)          FULL ACCESS.  THE COMPANY WILL PERMIT REPRESENTATIVES OF THE
PURCHASER TO HAVE REASONABLE ACCESS AT REASONABLE TIMES TO ITS PREMISES,
PROPERTIES, PERSONNEL AND OTHER THIRD PARTIES WHOSE CONSENT IS REQUIRED IN ORDER
TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE BOOKS AND
DOCUMENTS OF OR PERTAINING TO THE COMPANY.

 

(IV)          NOTICE OF DEVELOPMENTS.  THE COMPANY WILL GIVE PROMPT WRITTEN
NOTICE TO THE PURCHASER OF ANY DEVELOPMENT CAUSING A BREACH OF ANY OF THE
REPRESENTATIONS AND WARRANTIES IN SECTION 3.  THE PURCHASER SHALL GIVE PROMPT
WRITTEN NOTICE TO THE COMPANY OF ANY DEVELOPMENT CAUSING A BREACH OF ANY OF ITS
OWN REPRESENTATIONS AND WARRANTIES IN SECTION 2.  NO DISCLOSURE BY ANY PARTY
PURSUANT TO THIS SECTION 4(A)(IV), HOWEVER, SHALL BE DEEMED TO AMEND OR
SUPPLEMENT THE SCHEDULES HERETO OR TO PREVENT OR CURE ANY MISREPRESENTATION,
BREACH OF WARRANTY, OR BREACH OF COVENANT, UNLESS THE OTHER PARTIES CONSENT TO
THE INCORPORATION OF SUCH AMENDMENT OR SUPPLEMENT OR DISCLOSURE BY CONSUMMATING
THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(V)           BOARD OF DIRECTORS; INDEMNIFICATION AGREEMENT.  EFFECTIVE UPON THE
INITIAL CLOSING THE COMPANY WILL CAUSE ANN H. LAMONT AND ANDREW ADAMS (OR OTHER
DESIGNEES OF THE PURCHASER) (THE “PURCHASER DESIGNEES”) TO BE APPOINTED TO FILL
SUCH VACANCIES.  CONCURRENTLY WITH THE APPOINTMENT OF THE PURCHASER DESIGNEES,
THE COMPANY, THE PURCHASER AND THE PURCHASER DESIGNEES SHALL ENTER INTO AN
INDEMNIFICATION AGREEMENT IN FORM AND SUBSTANCE MUTUALLY AGREEABLE TO THE
PURCHASER AND ITS COUNSEL ON THE ONE HAND, AND THE COMPANY AND ITS COUNSEL, ON
THE OTHER HAND, FOR THE BENEFIT OF THE PURCHASER DESIGNEES (THE “INDEMNIFICATION
AGREEMENT”).  IT IS UNDERSTOOD THAT THE APPOINTMENT OF ANDREW ADAMS AS A
DIRECTOR WILL BE SUBJECT TO SATISFACTION OF THE “INDEPENDENT DIRECTOR”
REQUIREMENTS AS SUCH TERM IS DEFINED IN THE RULES AND REGULATIONS PROMULGATED BY
NASDAQ, AS WELL AS ALL LEGAL AND GOVERNANCE REQUIREMENTS REGARDING SERVICE AS A
DIRECTOR OF THE COMPANY AND TO THE REASONABLE APPROVAL OF THE NOMINATING AND
GOVERNANCE COMMITTEE OF THE BOARD OF DIRECTORS, ALL OF WHICH SHALL OCCUR PRIOR
TO THE INITIAL CLOSING.

 

(b)           Information Statement.  Promptly following the written consent of
Safeguard to the transactions contemplated hereby, the Company shall use its
commercially reasonable efforts to (i) promptly prepare and file with the SEC an
information statement in conformance with the rules and regulations under the
Exchange Act and in accordance with Delaware law, and mail such information
statement to its stockholders of record and (ii) obtain the NASDAQ Stockholder
Approval, each within 45 days of the Initial Closing.  The Company shall inform
the Purchaser upon the completion of the information statement and shall
distribute a copy of the information statement to the Purchaser.

 

(c)           Form D and Blue Sky.  The Company agrees to file a Form D with
respect to the Securities as required under Regulation D.  The Company shall, on
or before each 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 Purchaser at the Closings pursuant to this Agreement
under applicable securities or “Blue Sky” laws of the state of residence of
Purchaser as disclosed by the Purchaser in this Agreement, and shall provide
evidence of any such action so taken to the Purchaser on or prior to each
Closing Date.  The Company shall make all filings and reports relating to the
offer and sale of the Securities to the Purchaser required under applicable
securities or “Blue Sky” laws of the states of the United States following each
Closing Date.

 

 

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(d)           Use of Proceeds.  The Company will use the proceeds from the sale
of the Preferred Shares (i) to repay in full the outstanding Indebtedness of the
Company under that certain Amended and Restated Loan Agreement, dated as of
February 28, 2008 (as modified and amended from time to time), by and between
Comerica Bank and the Company (the “Comerica Loan” and that certain Second
Amended and Restated Senior Subordinated Revolving Credit Agreement, dated as of
February 27, 2009, by and between the Company and Safeguard Delaware, Inc. (the
“Safeguard Loan”) and (ii) for general working capital.  In addition, the
Company may use the proceeds from the sale of the Preferred Shares to repay all
or part of the Indebtedness of the Company under that certain Credit Agreement,
dated as of July 31, 2008 (as modified and amended from time to time, by and
among Gemino Healthcare Finance, LLC and the Company, Clarient Diagnostic
Services, Inc. and ChromaVision International, Inc. (the “Gemino Loan”).  No
portion of the proceeds from the issuance of Preferred Shares shall be used in
any manner which would violate Regulation U, T or X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board or to violate
the Exchange Act, as in effect on the date or dates of such use of proceeds.

 

(e)           Access.  So long as the Purchaser holds at least 2,105,263 shares
of Preferred Stock (as adjusted for any stock split, consolidation,
reorganization, merger, dissolution and the like with respect to such shares),
and subject to customary confidentiality terms, the Company shall permit the
Purchaser and its designated representatives, upon reasonable notice, to visit
and inspect any of the properties of the Company or any of its Subsidiaries, to
examine the books of account of the Company and its Subsidiaries (and to make
copies thereof and extracts therefrom), and to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with, and to be advised as to the
same by, their officers and accountants, all at such reasonable times and
intervals during normal business hours as any the Purchaser may reasonably
request.

 

(f)            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 100% of the number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares upon full conversion of all
outstanding Preferred Shares.

 

(g)           Listing.  The Company shall use its best efforts to maintain the
Common Stock’s authorization for quotation of the Common Stock on NASDAQ or to
obtain and maintain a listing on The New York Stock Exchange, Inc. or another
national securities exchange (collectively, as applicable, the “Principal
Market”).  The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(g).

 

(h)           Expenses.  At each Closing, and, if applicable, upon termination
of this Agreement or termination of the obligation to consummate the Second
Closing (but, in the case of either such termination, only if the termination is
not a result of a material breach by the Purchaser), the Company shall reimburse
the Purchaser for its reasonable legal fees and expenses actually incurred in
due diligence and negotiating and preparing the Transaction Documents and all
related documents and consummating the transactions contemplated hereby and
thereby, up to

 

 

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an aggregate of $100,000 for all payments pursuant to this sentence; provided,
however, if the Closing (or Initial Closing, as applicable) does not occur for
any reason, the aforementioned aggregate cap shall be reduced to $50,000.  In
the event of litigation related to this Agreement, if a court of competent
jurisdiction determines in a final, non-appealable order in favor of a party,
the non-prevailing party shall reimburse the prevailing party for all reasonable
costs and expenses (including legal fees) incurred in connection with such
litigation.  In the event the court order results in both parties prevailing in
part, the court shall determine the appropriate allocation of fees and expenses
to be reimbursed by the parties or may determine to instead have each party bear
their own respective fees and costs if such result is the most equitable in
light of the court order.

 

(i)            Filing of Form 8-K; Press Releases.  On or before the third (3rd)
Business Day following the date hereof, the Company shall file a Form 8-K with
the SEC (the “Initial 8-K”) describing the terms of the transactions
contemplated by the Transaction Documents and including as exhibits to such
Form 8-K this Agreement, the Certificate of Designations and the Registration
Rights Agreement, in the form required by the Exchange Act.  The Company shall
file a press release or other announcement of this Agreement or the transactions
contemplated hereby concurrently with the filing of the Initial 8-K with the
SEC.  On or before the third (3rd) Business Day following the Second Closing
Date, the Company shall file a Form 8-K with the SEC describing the transaction
consummated on such date.

 

(j)            Transactions With Affiliates.  So long as at least 2,105,263
shares of Series A Preferred Stock remain outstanding (as adjusted for stock
splits, reverse stock splits, stock dividends and similar transactions with
respect to the Series A Preferred Stock), the Company shall not, and shall cause
each of its Subsidiaries not to, enter into, amend, modify or supplement any
material agreement, transaction, commitment or arrangement that is an interested
party transaction (A) having a value in excess of $50,000, (B) which provides a
Person with material consent rights or material control rights, or (C) is
outside the ordinary course of business or contains terms less favorable that
would be obtained by the Company or its Subsidiaries in a comparable arm’s
length transaction with an unrelated Person, in each case unless such agreement,
transaction, commitment or arrangement is approved by a majority of the
disinterested directors of the Company.

 

(K)           LOCK-UP AGREEMENT.

 

(I)            (A)          THE PURCHASER HEREBY AGREES THAT FROM THE CLOSING
DATE (OR THE INITIAL CLOSING DATE, AS APPLICABLE) UNTIL THE DATE WHICH IS ONE
YEAR AFTER THE CLOSING DATE (OR THE INITIAL CLOSING DATE, AS APPLICABLE), THE
PURCHASER WILL NOT OFFER, SELL, CONTRACT TO SELL, PLEDGE, TRANSFER, OR OTHERWISE
DISPOSE OF, DIRECTLY OR INDIRECTLY, ANY OF THE PREFERRED SHARES OR THE
CONVERSION SHARES ACTUALLY ISSUED UPON CONVERSION THEREOF (COLLECTIVELY, THE
“RESTRICTED SECURITIES”), ENTER INTO A TRANSACTION THAT WOULD HAVE THE SAME
EFFECT, OR ENTER INTO ANY SWAP, HEDGE OR OTHER ARRANGEMENT THAT TRANSFERS, IN
WHOLE OR IN PART, ANY OF THE ECONOMIC CONSEQUENCES OF OWNERSHIP OF THE
RESTRICTED SECURITIES, WITHOUT, IN EACH CASE, THE PRIOR WRITTEN CONSENT OF THE
COMPANY.

 

 

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(B)           AS OF THE 12-MONTH ANNIVERSARY OF THE CLOSING DATE (OR THE INITIAL
CLOSING DATE, AS APPLICABLE), THE RESTRICTIONS IN SECTION 4(K)(I)(A) SHALL LAPSE
AND BE OF NO FURTHER EFFECT AS TO THE RESTRICTED SECURITIES.

 

(II)           THE RESTRICTIONS IN SECTION 4(K)(I) SHALL NOT APPLY TO
(A) TRANSACTIONS RELATING TO ANY SECURITIES OF THE COMPANY ACQUIRED BY ANY THE
PURCHASER OR ANY OF ITS AFFILIATES (1) PRIOR TO THE EXECUTION OF THIS AGREEMENT
OR (2) IN THE OPEN MARKET AFTER THE DATE OF THIS AGREEMENT, OR (B) WITH RESPECT
TO TRANSFERS TO IMMEDIATE FAMILY MEMBERS, AFFILIATES, PARTNERS, MEMBERS, FORMER
PARTNERS OR MEMBERS OR SHAREHOLDERS OF THE PURCHASER IN PRIVATE TRANSACTIONS IN
WHICH THE TRANSFEREE AGREES TO BE BOUND BY THE PROVISIONS OF THIS
SECTION 4(K) AS IF SUCH TRANSFEREE WERE THE PURCHASER.

 

(III)          THE RESTRICTIONS IN THIS SECTION 4(K) SHALL EXPIRE IN THEIR
ENTIRETY:

 

(A)          IMMEDIATELY BEFORE THE ACQUISITION OF A MAJORITY OF THE OUTSTANDING
VOTING SECURITIES OF THE COMPANY BY ANOTHER PERSON OR ENTITY, WHETHER BY MERGER,
ASSET SALE OR OTHERWISE, EXCLUDING ANY STRATEGIC TRANSACTION PREVIOUSLY
DISCLOSED TO THE PURCHASER BY THE COMPANY OR ITS ADVISORS AND AFFIRMATIVELY
ACCEPTED BY THE PURCHASER ON OR BEFORE THE INITIAL CLOSING (THE “STRATEGIC
TRANSACTION”).

 

(B)           IMMEDIATELY (1) UPON THE BREACH BY THE COMPANY OF ANY MATERIAL
OBLIGATION TO THE PURCHASER IN THE TRANSACTION DOCUMENTS OR THE CERTIFICATE OF
DESIGNATIONS, UNLESS SUCH BREACH IS CAPABLE OF BEING AND IS CURED WITHIN TWENTY
(20) BUSINESS DAYS AFTER WRITTEN NOTICE TO THE COMPANY OF SUCH BREACH FROM ANY
PURCHASER, (2) UPON THE FAILURE TO ELECT EITHER PURCHASER NOMINEE TO THE BOARD
OF DIRECTORS OF THE COMPANY IN ACCORDANCE WITH SECTION 9(D) OF THE CERTIFICATE
OF DESIGNATIONS (IF THE PURCHASER HAS EXERCISED ITS RIGHT TO ELECT EITHER SUCH
DIRECTOR) UNLESS SUCH FAILURE IS CURED WITHIN TWENTY (20) BUSINESS DAYS AFTER
WRITTEN NOTICE TO THE COMPANY OF SUCH FAILURE FROM THE PURCHASER, (3) UPON
EVIDENCE THAT ANY REPRESENTATION OR WARRANTY SET FORTH IN SECTION 3 WAS
MATERIALLY UNTRUE WHEN MADE OR DEEMED MADE, AND SUCH BREACH HAS HAD OR IS
REASONABLY LIKELY TO HAVE A MATERIALLY ADVERSE EFFECT ON THE VALUE OF THE
PURCHASER’S INVESTMENT IN THE COMPANY PURSUANT TO THIS AGREEMENT, AND THE
PURCHASER HAS NOTIFIED THE COMPANY IN WRITING OF SUCH EVENT AND EVIDENCE AND
(4) UPON A MATERIAL BREACH BY THE COMPANY OF ANY OF THE PROTECTIVE PROVISIONS IN
SECTION 9(B) OF THE CERTIFICATE OF DESIGNATIONS, UNLESS SUCH BREACH IS CAPABLE
OF BEING AND IS CURED WITHIN FIFTEEN (15) BUSINESS DAYS AFTER WRITTEN NOTICE TO
THE COMPANY OF SUCH BREACH FROM THE PURCHASER.

 

(l)            Certain Trading Activities.  Other than signing this Agreement,
the Purchaser nor any Affiliate of the Purchaser which (x) had knowledge of the
transactions contemplated hereby, (y) has or shares discretion relating to the
Purchaser’s investments or trading or information concerning the Purchaser’s
investments, including in respect of the Securities, and (z) is subject to the
Purchaser’s review or input concerning such Affiliate’s investments or trading
(collectively, “Trading Affiliates”) has directly or indirectly, nor has any
Person acting on behalf of or pursuant to any understanding with the Purchaser
or Trading Affiliate, effected or agreed to effect any sales or purchases of the
securities of the Company or derivatives of the Company’s securities (including,
without limitation, any Short Sales (as defined below) involving the Company’s
securities, but not including the location and/or reservation of

 

 

23

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borrowable shares of Common Stock). Notwithstanding the foregoing, in the case
of the Purchaser and/or Trading Affiliate that is, individually or collectively,
a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of the Purchaser’s or Trading Affiliate’s assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of the Purchaser’s or Trading
Affiliate’s assets, the representation set forth above shall apply only with
respect to the portion of assets managed by the portfolio manager that have
knowledge about the financing transaction contemplated by this Agreement.  Until
the Second Closing hereunder or the earlier termination of this Agreement prior
to the Second Closing, Purchaser shall not effect any sales or purchases of the
securities of the Company or derivatives of the Company’s securities (including,
without limitation, any Short Sales (as defined below) involving the Company’s
securities, but not including the location and/or reservation of borrowable
shares of Common Stock). For purposes of this Section 4(l), “Short Sales”
include, without limitation, (i) all “short sales” as defined in 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 sale
contracts, options, puts, calls, short sales, “naked” 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 (ii) sales and
other transactions through non-U.S. broker dealers or foreign regulated brokers,
but, with respect to clause (i) and (ii) above, not including the location
and/or reservation of borrowable shares of Common Stock.

 

(m)          Ownership Disclosure.  At the time of each Closing, Purchaser shall
disclose in writing to the Company its holdings of any of the Company’s
securities, including its Common Stock.

 

(N)           BOARD SEATS.  IN THE EVENT THAT ALL OF THE SHARES OF SERIES A
PREFERRED STOCK ARE CONVERTED INTO COMMON STOCK, (A) THE COMPANY SHALL NOT
INCREASE THE NUMBER OF MEMBERS OF THE BOARD OF DIRECTORS IN EXCESS OF NINE
(9) MEMBERS AND (B) TO THE EXTENT NOT INCONSISTENT WITH THE FIDUCIARY DUTIES OF
THE BOARD OF DIRECTORS UPON THE REQUEST OF PURCHASER IN A WRITING SIGNED BY
PURCHASER AND REFERENCING THIS SECTION 4(N) (A “DESIGNATION NOTICE”), THE
COMPANY WILL REQUEST THAT THE BOARD OF DIRECTORS APPOINT (IN THE CASE OF
VACANCIES) OR NOMINATE FOR ELECTION BY THE STOCKHOLDERS TO THE BOARD OF
DIRECTORS, UP TO TWO (2) NOMINEES DESIGNATED BY PURCHASER IN THE DESIGNATION
NOTICE (AS WELL AS REPLACEMENT NOMINEES FOR VACANCIES CREATED BY THE DEATH,
RESIGNATION OR REMOVAL OF ANY DIRECTOR SERVING AS A RESULT OF SUCH A
NOMINATION).

 

(II)           AFTER THE EARLIER OF THE EXPIRATION OF THE LOCK-UP PERIOD SET
FORTH IN SECTION 4(K) AND THE SECOND CLOSING, AT SUCH TIME AS THE PURCHASER AND
ITS AFFILIATES SELL OR OTHERWISE TRANSFER SECURITIES OF THE COMPANY CAUSING THEM
TO OWN LESS THAN 16.67% OF THE VOTING POWER OF ALL OUTSTANDING SECURITIES OF THE
COMPANY ENTITLING THE HOLDERS THEREOF TO VOTE GENERALLY IN THE ELECTION OF
DIRECTORS, PURCHASER SHALL NEGOTIATE IN GOOD FAITH WITH THE COMPANY AN
APPROPRIATE AMENDMENT TO THE TERMS OF THIS SECTION 4(N) AND, IF APPLICABLE, THE
CERTIFICATE OF DESIGNATIONS IN LIGHT OF SUCH DIMINISHED OWNERSHIP.

 

(III)          SO LONG AS SAFEGUARD IS ENTITLED TO ELECT AT LEAST ONE DIRECTOR
OF THE COMPANY PURSUANT TO THE SECURITIES PURCHASE AGREEMENT, DATED AS OF
JUNE 13, 2002, BETWEEN THE COMPANY AND SAFEGUARD, AS AMENDED, THIS
SECTION 4(N) MAY NOT BE AMENDED WITHOUT THE PRIOR WRITTEN CONSENT OF SAFEGUARD.

 

 

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(IV)          THIS SECTION 4(N) SHALL TERMINATE ON THE DATE THAT PURCHASER AND
ITS AFFILIATES OWN LESS THAN 5% OF THE VOTING POWER OF ALL OUTSTANDING
SECURITIES OF THE COMPANY ENTITLING THE HOLDERS THEREOF TO VOTE GENERALLY IN THE
ELECTION OF DIRECTORS.

 

5.             TRANSFER AGENT INSTRUCTIONS.  As of the date hereof, and
conditioned only upon the issuance of the applicable Preferred Shares at each
Closing, the Company shall issue irrevocable instructions to its transfer agent
in the form attached hereto as Exhibit C (the “Irrevocable Transfer Agent
Instructions”), and any subsequent transfer agent, to promptly issue
certificates, registered in the name of the Purchaser or its respective
nominee(s), for the Conversion Shares in such amounts as specified from time to
time by the Purchaser to the Company upon conversion of the Preferred Shares.

 

6.             CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL ON THE CLOSING
DATES.

 

(a)           Conditions to the Company’s Obligation to Sell on the Initial
Closing Date.  The obligation of the Company to issue and sell the applicable
Preferred Shares to the Purchaser at the Initial Closing is subject to the
satisfaction, at or before the Initial Closing Date, of each of the following
conditions, provided 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 the
Purchaser with prior written notice thereof:

 

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

 

(II)           THE CERTIFICATE OF DESIGNATIONS SHALL HAVE BEEN FILED WITH THE
SECRETARY OF STATE OF THE STATE OF DELAWARE.

 

(III)          THE PURCHASER SHALL HAVE DELIVERED TO THE COMPANY THE PURCHASE
PRICE FOR THE PREFERRED SHARES BEING PURCHASED BY THE PURCHASER AT THE INITIAL
CLOSING BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS PURSUANT TO THE WIRE
INSTRUCTIONS PROVIDED BY THE COMPANY.

 

(IV)          THE REPRESENTATIONS AND WARRANTIES OF THE PURCHASER SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS AS OF THE DATE WHEN MADE AND AS OF THE
INITIAL CLOSING DATE AS THOUGH MADE AT THAT TIME (EXCEPT FOR REPRESENTATIONS AND
WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE), AND THE PURCHASER 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 PURCHASER AT OR PRIOR TO THE INITIAL CLOSING
DATE.

 

(V)           ALL GOVERNMENTAL ENTITY, THIRD PARTY AND SELF-REGULATORY
ORGANIZATIONS APPROVALS (OR NOTICES OR FILINGS THEREWITH) LISTED ON SCHEDULE
3(F) OR OTHERWISE REQUIRED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THE TRANSACTION DOCUMENTS SHALL HAVE BEEN OBTAINED OR MADE ON TERMS REASONABLY
SATISFACTORY TO THE COMPANY AND SHALL BE IN FULL FORCE AND EFFECT, AND ALL
APPLICABLE WAITING PERIODS SHALL HAVE EXPIRED WITHOUT ANY ACTION BEING TAKEN OR
THREATENED BY ANY COMPETENT AUTHORITY THAT WOULD MATERIALLY RESTRAIN, PREVENT OR
OTHERWISE IMPOSE MATERIAL ADVERSE CONDITIONS ON THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENTS.

 

 

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(VI)          NO STATUTE, RULE, REGULATION, EXECUTIVE ORDER, DECREE, RULING OR
INJUNCTION SHALL HAVE BEEN ENACTED, ENTERED, PROMULGATED OR ENDORSED BY ANY
COURT OR GOVERNMENTAL ENTITY OF COMPETENT JURISDICTION WHICH PROHIBITS THE
CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENTS.

 

(VII)         NO ACTION, SUIT OR PROCEEDING BEFORE ANY ARBITRATOR OR ANY
GOVERNMENTAL ENTITY SHALL HAVE BEEN COMMENCED, AND NO INVESTIGATION BY ANY
GOVERNMENTAL ENTITY SHALL HAVE BEEN THREATENED, AGAINST THE COMPANY, OR ANY OF
THE OFFICERS, DIRECTORS OR AFFILIATES OF THE COMPANY SEEKING TO RESTRAIN,
PREVENT OR CHANGE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENTS, OR SEEKING DAMAGES IN CONNECTION WITH SUCH TRANSACTIONS.

 

(b)           Conditions to the Company’s Obligation to Sell on the Second
Closing Date.  The obligation of the Company to issue and sell the applicable
Preferred Shares to the Purchaser at the Second Closing is subject to the
satisfaction, at or before the Second Closing Date, of each of the following
conditions, provided 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 the
Purchaser with prior written notice thereof:

 

(I)            THE PURCHASER SHALL HAVE DELIVERED TO THE COMPANY THE PURCHASE
PRICE FOR THE PREFERRED SHARES BEING PURCHASED BY THE PURCHASER AT THE SECOND
CLOSING BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS PURSUANT TO THE WIRE
INSTRUCTIONS PROVIDED BY THE COMPANY.

 

(II)           THE REPRESENTATIONS AND WARRANTIES OF THE PURCHASER SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS AS OF THE DATE WHEN MADE AND AS OF THE
SECOND CLOSING DATE AS THOUGH MADE AT THAT TIME (EXCEPT FOR REPRESENTATIONS AND
WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE), AND THE PURCHASER 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 PURCHASER AT OR PRIOR TO THE SECOND CLOSING
DATE.

 

(III)          THE COMPANY SHALL HAVE RECEIVED THE NASDAQ STOCKHOLDER APPROVAL.

 

(IV)          ALL GOVERNMENTAL ENTITY, THIRD PARTY AND SELF-REGULATORY
ORGANIZATIONS APPROVALS (OR NOTICES OR FILINGS THEREWITH) LISTED ON SCHEDULE
3(F) OR OTHERWISE REQUIRED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THE TRANSACTION DOCUMENTS SHALL HAVE BEEN OBTAINED OR MADE ON TERMS REASONABLY
SATISFACTORY TO THE COMPANY AND SHALL BE IN FULL FORCE AND EFFECT, AND ALL
APPLICABLE WAITING PERIODS SHALL HAVE EXPIRED WITHOUT ANY ACTION BEING TAKEN OR
THREATENED BY ANY COMPETENT AUTHORITY THAT WOULD MATERIALLY RESTRAIN, PREVENT OR
OTHERWISE IMPOSE MATERIAL ADVERSE CONDITIONS ON THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENTS.

 

(V)           NO STATUTE, RULE, REGULATION, EXECUTIVE ORDER, DECREE, RULING OR
INJUNCTION SHALL HAVE BEEN ENACTED, ENTERED, PROMULGATED OR ENDORSED BY ANY
COURT OR GOVERNMENTAL ENTITY OF COMPETENT JURISDICTION WHICH PROHIBITS THE
CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENTS.

 

 

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(VI)          NO ACTION, SUIT OR PROCEEDING BEFORE ANY ARBITRATOR OR ANY
GOVERNMENTAL ENTITY SHALL HAVE BEEN COMMENCED, AND NO INVESTIGATION BY ANY
GOVERNMENTAL ENTITY SHALL HAVE BEEN THREATENED, AGAINST THE COMPANY, OR ANY OF
THE OFFICERS, DIRECTORS OR AFFILIATES OF THE COMPANY SEEKING TO RESTRAIN,
PREVENT OR CHANGE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENTS, OR SEEKING DAMAGES IN CONNECTION WITH SUCH TRANSACTIONS.

 

(c)           Conditions to the Company’s Obligation to Sell on each Subsequent
Closing Date.  The obligation of the Company to issue and sell the applicable
Preferred Shares to the Purchaser at each Subsequent Closing is subject to the
satisfaction, at or before such Subsequent Closing Date, of each of the
following conditions, provided 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 the Purchaser with prior written notice thereof:

 

(I)            THE PURCHASER SHALL HAVE DELIVERED TO THE COMPANY THE PURCHASE
PRICE FOR THE PREFERRED SHARES BEING PURCHASED BY THE PURCHASER AT SUCH
SUBSEQUENT CLOSING BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS PURSUANT TO
THE WIRE INSTRUCTIONS PROVIDED BY THE COMPANY.

 

(II)           THE REPRESENTATIONS AND WARRANTIES OF THE PURCHASER SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS AS OF THE DATE WHEN MADE AND AS OF SUCH
SUBSEQUENT CLOSING DATE AS THOUGH MADE AT THAT TIME (EXCEPT FOR REPRESENTATIONS
AND WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE), AND THE PURCHASER 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 PURCHASER AT OR PRIOR TO SUCH SUBSEQUENT
CLOSING DATE.

 

(III)          THE COMPANY SHALL HAVE RECEIVED THE NASDAQ STOCKHOLDER APPROVAL.

 

(IV)          ALL GOVERNMENTAL ENTITY, THIRD PARTY AND SELF-REGULATORY
ORGANIZATIONS APPROVALS (OR NOTICES OR FILINGS THEREWITH) LISTED ON SCHEDULE
3(F) OR OTHERWISE REQUIRED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THE TRANSACTION DOCUMENTS SHALL HAVE BEEN OBTAINED OR MADE ON TERMS REASONABLY
SATISFACTORY TO THE COMPANY AND SHALL BE IN FULL FORCE AND EFFECT, AND ALL
APPLICABLE WAITING PERIODS SHALL HAVE EXPIRED WITHOUT ANY ACTION BEING TAKEN OR
THREATENED BY ANY COMPETENT AUTHORITY THAT WOULD MATERIALLY RESTRAIN, PREVENT OR
OTHERWISE IMPOSE MATERIAL ADVERSE CONDITIONS ON THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENTS.

 

(V)           NO STATUTE, RULE, REGULATION, EXECUTIVE ORDER, DECREE, RULING OR
INJUNCTION SHALL HAVE BEEN ENACTED, ENTERED, PROMULGATED OR ENDORSED BY ANY
COURT OR GOVERNMENTAL ENTITY OF COMPETENT JURISDICTION WHICH PROHIBITS THE
CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENTS.

 

(VI)          NO ACTION, SUIT OR PROCEEDING BEFORE ANY ARBITRATOR OR ANY
GOVERNMENTAL ENTITY SHALL HAVE BEEN COMMENCED, AND NO INVESTIGATION BY ANY
GOVERNMENTAL ENTITY SHALL HAVE BEEN THREATENED, AGAINST THE COMPANY, OR ANY OF
THE OFFICERS, DIRECTORS OR AFFILIATES OF THE COMPANY SEEKING TO RESTRAIN,
PREVENT OR CHANGE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENTS, OR SEEKING DAMAGES IN CONNECTION WITH SUCH TRANSACTIONS.

 

 

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(VII)         SUCH OTHER CONDITIONS AS ARE MUTUALLY AGREEABLE BETWEEN THE
PURCHASER AND THE COMPANY.

 

7.             CONDITIONS TO THE PURCHASER’S OBLIGATION TO PURCHASE ON THE
CLOSING DATES.

 

(a)           Conditions to the Purchaser’s Obligation to Purchase on the
Initial Closing Date.  The obligation of the Purchaser hereunder to purchase the
applicable Preferred Shares from the Company at the Initial Closing is subject
to the satisfaction, at or before the Initial Closing Date, of each of the
following conditions.  These conditions are for the Purchaser’s sole benefit and
may be waived by the Purchaser at any time in its sole discretion:

 

(I)            THE PURCHASER SHALL HAVE RECEIVED A FACSIMILE COPY OF A FORM OF
STOCK CERTIFICATE REPRESENTING THE SERIES A PREFERRED STOCK TO BE ISSUED TO THE
PURCHASER ON THE INITIAL CLOSING DATE, WITH THE ORIGINAL CERTIFICATE HELD IN
TRUST BY COUNSEL FOR THE COMPANY UNTIL DELIVERY THEREOF ON THE FOURTH (4TH)
BUSINESS DAY FOLLOWING THE INITIAL CLOSING.

 

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

 

(III)          THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS AS OF THE DATE WHEN MADE AND AS OF THE
INITIAL CLOSING DATE (BOTH BEFORE AND AFTER GIVING EFFECT TO THE INITIAL
CLOSING) AS THOUGH MADE AT THAT TIME (EXCEPT TO THE EXTENT THAT ANY OF SUCH
REPRESENTATIONS AND WARRANTIES IS ALREADY QUALIFIED AS TO MATERIALITY OR
MATERIAL ADVERSE EFFECT IN SECTION 3 ABOVE, IN WHICH CASE, SUCH REPRESENTATIONS
AND WARRANTIES SHALL BE TRUE AND CORRECT IN ALL RESPECTS).

 

(IV)          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 INITIAL CLOSING DATE.

 

(V)           THE PURCHASER SHALL HAVE RECEIVED A CERTIFICATE, EXECUTED BY BOTH
THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE COMPANY, DATED AS
OF THE INITIAL CLOSING DATE AND INCLUDING AN UPDATE AS OF SUCH CLOSING DATE,
CERTIFYING AS TO THE MATTERS IN CLAUSES (I) AND (II) OF THE REPRESENTATION
CONTAINED IN SECTION 3(C) AND CERTIFYING AS TO THE SATISFACTION OF SECTIONS
7(B)(III) AND 7(B)(IV) (SUBJECT TO UPDATE OF CLAUSES (I) AND (II) OF
SECTION 3(C)).

 

(VI)          THE PURCHASER SHALL HAVE RECEIVED THE OPINION OF STRADLING, YOCCA,
CARLSON & RAUTH, COUNSEL TO THE COMPANY, DATED AS OF THE INITIAL CLOSING DATE,
IN FORM, SCOPE AND SUBSTANCE REASONABLY SATISFACTORY TO THE PURCHASER AND IN
SUBSTANTIALLY THE FORM OF EXHIBIT D ATTACHED HERETO.

 

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

 

 

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(VIII)        THE PURCHASER SHALL HAVE RECEIVED A CERTIFICATE, EXECUTED BY THE
SECRETARY OF THE COMPANY, CERTIFYING THE FOLLOWING:

 

(A)          A COPY OF THE RESOLUTIONS OF THE BOARD OF DIRECTORS OF THE COMPANY
APPROVING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (THE “RESOLUTIONS”),

 

(B)           THE COMPANY’S CERTIFICATE OF INCORPORATION, TOGETHER WITH ALL
AMENDMENTS THEREOF AND RESTATEMENTS THERETO, AND

 

(C)           A COPY OF ITS BYLAWS, AS THEN IN FULL EFFECT AND FORCE.

 

(IX)           AS OF THE INITIAL CLOSING DATE, 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, AT LEAST 21,052,623 SHARES OF
COMMON STOCK (SUBJECT TO ADJUSTMENT FOR SPLITS, REVERSE SPLITS, STOCK DIVIDENDS,
COMBINATIONS AND THE LIKE).

 

(X)            THE COMPANY SHALL HAVE DELIVERED TO THE PURCHASER A COPY OF THE
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS, EXECUTED BY EACH OF THE COMPANY AND ITS
TRANSFER AGENT.  THE COMPANY SHALL HAVE DELIVERED TO THE PURCHASER A LETTER FROM
THE COMPANY’S TRANSFER AGENT CERTIFYING THE NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING AS OF A DATE WITHIN FIVE (5) DAYS OF THE INITIAL CLOSING DATE.

 

(XI)           THE COMPANY SHALL HAVE DELIVERED TO THE PURCHASER A CERTIFICATE
EVIDENCING THE INCORPORATION AND GOOD STANDING OF THE COMPANY IN DELAWARE ISSUED
BY THE SECRETARY OF STATE OF THE STATE OF DELAWARE AS OF A DATE WITHIN TEN
(10) DAYS OF THE INITIAL CLOSING DATE.

 

(XII)          THE COMPANY SHALL HAVE DELIVERED TO THE PURCHASER EVIDENCE
REASONABLY ACCEPTABLE TO THE PURCHASER THAT THE COMPANY HAS TAKEN APPROPRIATE
CORPORATE ACTION TO RENDER INAPPLICABLE ANY TAKEOVER PROVISION WHICH IS OR COULD
BECOME APPLICABLE TO THE PURCHASER AS A RESULT OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE COMPANY’S ISSUANCE OF
SECURITIES, THE PURCHASER’S OWNERSHIP OF THE SECURITIES AND/OR THE ISSUANCE OF
THE CONVERSION SHARES.

 

(XIII)         SAFEGUARD SHALL HAVE ENTERED INTO THE SAFEGUARD AGREEMENT.

 

(XIV)        WITH RESPECT TO INDEBTEDNESS OF THE COMPANY UNDER THE COMERICA LOAN
(INCLUDING, FOR THE AVOIDANCE OF DOUBT, ANY GUARANTEES OR INDEMNIFICATION
OBLIGATIONS OF THE COMPANY RELATED TO THE COMERICA LOAN), THE PURCHASER SHALL
HAVE RECEIVED SUCH PAY-OFF LETTERS, TERMINATION AGREEMENTS, TERMINATION
STATEMENTS, RELEASES OF FUNDED MORTGAGES AND OTHER RELEASES TO BE DELIVERED
AGAINST REPAYMENT BY THE COMPANY AT OR PRIOR TO THE INITIAL CLOSING AS THE
PURCHASER SHALL HAVE REASONABLY REQUESTED, ALL IN FORM AND SUBSTANCE
SATISFACTORY TO THE LENDER(S) TO THE COMPANY (IN THEIR SOLE DISCRETION) AND
REASONABLY SATISFACTORY TO THE PURCHASER.  THE PURCHASER SHALL HAVE RECEIVED
DULY EXECUTED RELEASES (INCLUDING UCC-3 TERMINATION STATEMENTS) OF ALL LIENS
(OTHER THAN PERMITTED LIENS) ON THE ASSETS OF THE COMPANY RELATING TO THE
COMERICA LOAN IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE PURCHASER AND
ITS COUNSEL.

 

 

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(XV)         THERE SHALL NOT HAVE OCCURRED ANY EVENTS OR CHANGES (A) SINCE
DECEMBER 31, 2008 THAT, INDIVIDUALLY OR IN THE AGGREGATE, HAVE HAD OR COULD
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT, BEFORE AND AFTER
GIVING EFFECT TO THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS OR
(B) THAT HAVE HAD OR COULD REASONABLY BE EXPECTED TO HAVE AN ADVERSE EFFECT ON
THE RIGHTS OR REMEDIES OF THE PURCHASER, OR ON THE ABILITY OF THE COMPANY TO
PERFORM ITS OBLIGATIONS TO THE PURCHASER; AND TRADING IN ANY SECURITIES OF THE
COMPANY SHALL NOT HAVE BEEN SUSPENDED OR MATERIALLY LIMITED BY THE SEC OR THE
PRINCIPAL MARKET.

 

(XVI)        ALL GOVERNMENTAL ENTITY, THIRD PARTY AND SELF-REGULATORY
ORGANIZATIONS APPROVALS (OR NOTICES OR FILINGS THEREWITH) LISTED ON SCHEDULE
3(F) OR OTHERWISE REQUIRED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THE TRANSACTION DOCUMENTS SHALL HAVE BEEN OBTAINED OR MADE ON TERMS REASONABLY
SATISFACTORY TO THE PURCHASER AND SHALL BE IN FULL FORCE AND EFFECT, AND ALL
APPLICABLE WAITING PERIODS SHALL HAVE EXPIRED WITHOUT ANY ACTION BEING TAKEN OR
THREATENED BY ANY COMPETENT AUTHORITY THAT WOULD MATERIALLY RESTRAIN, PREVENT OR
OTHERWISE IMPOSE MATERIAL ADVERSE CONDITIONS ON THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENTS.

 

(XVII)       NO STATUTE, RULE, REGULATION, EXECUTIVE ORDER, DECREE, RULING OR
INJUNCTION SHALL HAVE BEEN ENACTED, ENTERED, PROMULGATED OR ENDORSED BY ANY
COURT OR GOVERNMENTAL ENTITY OF COMPETENT JURISDICTION WHICH PROHIBITS THE
CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENTS.

 

(XVIII)      NO ACTION, SUIT OR PROCEEDING BEFORE ANY ARBITRATOR OR ANY
GOVERNMENTAL ENTITY SHALL HAVE BEEN COMMENCED, AND NO INVESTIGATION BY ANY
GOVERNMENTAL ENTITY SHALL HAVE BEEN THREATENED, AGAINST THE COMPANY, OR ANY OF
THE OFFICERS, DIRECTORS OR AFFILIATES OF THE COMPANY SEEKING TO RESTRAIN,
PREVENT OR CHANGE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENTS, OR SEEKING DAMAGES IN CONNECTION WITH SUCH TRANSACTIONS.

 

(XIX)         THE PURCHASER DESIGNEES SHALL HAVE BEEN APPOINTED TO SERVE ON THE
COMPANY’S BOARD OF DIRECTORS EFFECTIVE AS OF THE INITIAL CLOSING DATE, AND THE
COMPANY SHALL HAVE EXECUTED AND DELIVERED TO THE PURCHASER THE INDEMNIFICATION
AGREEMENT FOR EACH PURCHASER DESIGNEE, EFFECTIVE AS OF THE INITIAL CLOSING DATE.

 

(XX)          SAFEGUARD AND THE COMPANY SHALL HAVE ENTERED INTO THAT CERTAIN
AMENDMENT TO SECURITIES PURCHASE AGREEMENT IN FORM AND SUBSTANCE REASONABLY
ACCEPTABLE TO PURCHASER.

 

(b)           Conditions to the Purchaser’s Obligation to Purchase on the Second
Closing Date.  The Obligation of the Purchaser hereunder to purchase the
applicable Preferred Shares from the Company at the Second Closing is subject to
the satisfaction, at or before the Second Closing, of each of the following
conditions.  These conditions are for the Purchaser’s sole benefit and may be
waived by the Purchaser at any time in its sole discretion:

 

(I)            THE COMPANY SHALL HAVE OBTAINED THE NASDAQ STOCKHOLDER APPROVAL
PRIOR TO THE DATE THAT IS FORTY-FIVE (45) DAYS AFTER THE INITIAL CLOSING.

 

 

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(II)           THERE SHALL NOT HAVE OCCURRED OR BECOME KNOWN TO THE PURCHASER
ANY EVENTS OR CHANGES SINCE THE INITIAL CLOSING DATE THAT, INDIVIDUALLY OR IN
THE AGGREGATE, (A) HAVE HAD OR COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT, BEFORE AND AFTER GIVING EFFECT TO THE TRANSACTIONS CONTEMPLATED
BY THE TRANSACTION DOCUMENTS OR (B) THAT HAVE HAD OR COULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE RIGHTS OR REMEDIES OF THE
PURCHASER, OR ON THE ABILITY OF THE COMPANY TO PERFORM ITS OBLIGATIONS TO THE
PURCHASER; AND TRADING IN ANY SECURITIES OF THE COMPANY SHALL NOT HAVE BEEN
SUSPENDED OR MATERIALLY LIMITED BY THE SEC OR THE PRINCIPAL MARKET.

 

(III)          THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS AS OF THE DATE WHEN MADE AND AS OF THE
SECOND CLOSING DATE AS THOUGH MADE AT THAT TIME (EXCEPT TO THE EXTENT THAT ANY
OF SUCH REPRESENTATIONS AND WARRANTIES IS ALREADY QUALIFIED AS TO MATERIALITY OR
MATERIAL ADVERSE EFFECT IN SECTION 3 ABOVE, IN WHICH CASE, SUCH REPRESENTATIONS
AND WARRANTIES SHALL BE TRUE AND CORRECT IN ALL RESPECTS).

 

(IV)          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 SECOND CLOSING DATE.

 

(V)           THE PURCHASER SHALL HAVE RECEIVED A CERTIFICATE, EXECUTED BY BOTH
THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE COMPANY, DATED AS
OF THE SECOND CLOSING DATE AND INCLUDING AN UPDATE AS OF SUCH SECOND CLOSING
DATE, CERTIFYING AS TO THE MATTERS IN CLAUSES (I) AND (II) OF THE REPRESENTATION
CONTAINED IN SECTION 3(C) AND CERTIFYING AS TO THE SATISFACTION OF SECTIONS
7(B)(III) AND 7(B)(IV) (SUBJECT TO UPDATE OF CLAUSES (I) AND (II) OF
SECTION 3(C)).

 

(VI)          THE COMPANY SHALL NOT HAVE BREACHED ANY MATERIAL PROVISION OF ANY
OF THE TRANSACTION DOCUMENTS OR THE CERTIFICATE OF DESIGNATIONS.

 

(VII)         WITH RESPECT TO INDEBTEDNESS OF THE COMPANY UNDER THE SAFEGUARD
LOAN (INCLUDING, FOR THE AVOIDANCE OF DOUBT, ANY GUARANTEES OR INDEMNIFICATION
OBLIGATIONS OF THE COMPANY RELATED TO THE SAFEGUARD LOAN), THE PURCHASER SHALL
HAVE RECEIVED SUCH PAY-OFF LETTERS, TERMINATION AGREEMENTS, TERMINATION
STATEMENTS, RELEASES OF FUNDED MORTGAGES AND OTHER RELEASES TO BE DELIVERED
AGAINST REPAYMENT BY THE COMPANY AT OR PRIOR TO THE SECOND CLOSING AS THE
PURCHASER SHALL HAVE REASONABLY REQUESTED, ALL IN FORM AND SUBSTANCE
SATISFACTORY TO THE LENDER(S) TO THE COMPANY (IN THEIR SOLE DISCRETION) AND
REASONABLY SATISFACTORY TO THE PURCHASER.  THE PURCHASER SHALL HAVE RECEIVED
DULY EXECUTED RELEASES (INCLUDING UCC-3 TERMINATION STATEMENTS) OF ALL LIENS
(OTHER THAN PERMITTED LIENS) ON THE ASSETS OF THE COMPANY RELATING TO THE
SAFEGUARD LOAN IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE PURCHASER
AND ITS COUNSEL.

 

(c)           Conditions to the Purchaser’s Obligation to Purchase on each
Subsequent Closing Date.  The Obligation of the Purchaser hereunder to purchase
the applicable Preferred Shares from the Company at each Subsequent Closing is
subject to the satisfaction, at or before each Subsequent Closing, of each of
the following conditions.  These conditions are for the Purchaser’s sole benefit
and may be waived by the Purchaser at any time in its sole discretion:

 

 

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(I)            THERE SHALL NOT HAVE OCCURRED OR BECOME KNOWN TO THE PURCHASER
ANY EVENTS OR CHANGES SINCE THE INITIAL CLOSING DATE THAT, INDIVIDUALLY OR IN
THE AGGREGATE, (A) HAVE HAD OR COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT, BEFORE AND AFTER GIVING EFFECT TO THE TRANSACTIONS CONTEMPLATED
BY THE TRANSACTION DOCUMENTS OR (B) THAT HAVE HAD OR COULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE RIGHTS OR REMEDIES OF THE
PURCHASER, OR ON THE ABILITY OF THE COMPANY TO PERFORM ITS OBLIGATIONS TO THE
PURCHASER; AND TRADING IN ANY SECURITIES OF THE COMPANY SHALL NOT HAVE BEEN
SUSPENDED OR MATERIALLY LIMITED BY THE SEC OR THE PRINCIPAL MARKET.

 

(II)           THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS AS OF THE DATE WHEN MADE AND AS OF SUCH
SUBSEQUENT CLOSING DATE AS THOUGH MADE AT THAT TIME (EXCEPT TO THE EXTENT THAT
ANY OF SUCH REPRESENTATIONS AND WARRANTIES IS ALREADY QUALIFIED AS TO
MATERIALITY OR MATERIAL ADVERSE EFFECT IN SECTION 3 ABOVE, IN WHICH CASE, SUCH
REPRESENTATIONS AND WARRANTIES SHALL BE TRUE AND CORRECT IN ALL RESPECTS).

 

(III)          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 SUCH SUBSEQUENT CLOSING DATE.

 

(IV)          THE PURCHASER SHALL HAVE RECEIVED A CERTIFICATE, EXECUTED BY BOTH
THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE COMPANY, DATED AS
OF SUCH SUBSEQUENT CLOSING DATE AND INCLUDING AN UPDATE AS OF SUCH SUBSEQUENT
CLOSING DATE, CERTIFYING AS TO THE MATTERS IN CLAUSES (I) AND (II) OF THE
REPRESENTATION CONTAINED IN SECTION 3(C) AND CERTIFYING AS TO THE SATISFACTION
OF SECTIONS 7(B)(III) AND 7(B)(IV) (SUBJECT TO UPDATE OF CLAUSES (I) AND (II) OF
SECTION 3(C)).

 

(V)           THE COMPANY SHALL NOT HAVE BREACHED ANY MATERIAL PROVISION OF ANY
OF THE TRANSACTION DOCUMENTS OR THE CERTIFICATE OF DESIGNATIONS.

 

(VI)          SUCH OTHER CONDITIONS AS ARE MUTUALLY AGREEABLE BETWEEN THE
PURCHASER AND THE COMPANY.

 

8.             TERMINATION.

 

(A)           TERMINATION.

 

(I)            THE PURCHASER AND THE COMPANY MAY TERMINATE THIS AGREEMENT BY
MUTUAL WRITTEN CONSENT AT ANY TIME PRIOR TO THE INITIAL CLOSING.

 

(II)           THE PURCHASER MAY TERMINATE THIS AGREEMENT BY GIVING WRITTEN
NOTICE TO THE COMPANY AT ANY TIME PRIOR TO THE INITIAL CLOSING:

 

(A)          IN THE EVENT THAT THE COMPANY HAS BREACHED ANY REPRESENTATION,
WARRANTY, OR COVENANT CONTAINED IN THIS AGREEMENT OR IN ANY OTHER TRANSACTION
DOCUMENT IN ANY MATERIAL RESPECT, THE PURCHASER HAS NOTIFIED THE COMPANY OF THE
BREACH, AND THE BREACH HAS CONTINUED WITHOUT CURE FOR A PERIOD OF FIFTEEN (15)
DAYS AFTER THE NOTICE OF BREACH, OR

 

 

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(B)           IF THE INITIAL CLOSING SHALL NOT HAVE OCCURRED ON OR BEFORE THE
INITIAL CLOSING DATE, BY REASON OF THE FAILURE OF ANY CONDITION PRECEDENT UNDER
SECTION 7(B) HEREOF OR IF SATISFACTION OF ANY SUCH CONDITION BY SUCH DATE IS OR
BECOMES IMPOSSIBLE (UNLESS THE FAILURE RESULTS PRIMARILY FROM ANY PURCHASER
ITSELF BREACHING ANY REPRESENTATION, WARRANTY, OR COVENANT CONTAINED IN THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT).

 

(III)          THE COMPANY MAY TERMINATE THIS AGREEMENT BY GIVING WRITTEN NOTICE
TO THE PURCHASER AT ANY TIME PRIOR TO THE INITIAL CLOSING:

 

(A)          IN THE EVENT THAT THE PURCHASER HAS BREACHED ANY REPRESENTATION,
WARRANTY, OR COVENANT CONTAINED IN THIS AGREEMENT OR IN ANY OTHER TRANSACTION
DOCUMENT IN ANY MATERIAL RESPECT, THE COMPANY HAS NOTIFIED THE PURCHASER OF THE
BREACH, AND THE BREACH HAS CONTINUED WITHOUT CURE FOR A PERIOD OF FIFTEEN (15)
DAYS AFTER THE NOTICE OF BREACH, OR

 

(B)           IF THE INITIAL CLOSING SHALL NOT HAVE OCCURRED ON OR BEFORE THE
INITIAL CLOSING DATE, BY REASON OF THE FAILURE OF ANY CONDITION PRECEDENT UNDER
SECTION 6(B) HEREOF OR IF SATISFACTION OF ANY SUCH CONDITION BY SUCH DATE IS OR
BECOMES IMPOSSIBLE (UNLESS THE FAILURE RESULTS PRIMARILY FROM THE COMPANY
BREACHING ANY REPRESENTATION, WARRANTY, OR COVENANT CONTAINED IN THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT).

 

(IV)          AFTER THE INITIAL CLOSING, THE PURCHASER MAY TERMINATE ITS
OBLIGATION TO PURCHASE THE APPLICABLE PREFERRED SHARES AT THE SECOND CLOSING BY
GIVING WRITTEN NOTICE TO THE COMPANY AT ANY TIME PRIOR TO THE SECOND CLOSING:

 

(A)          IN THE EVENT THAT THE COMPANY HAS BREACHED ANY REPRESENTATION,
WARRANTY, OR COVENANT CONTAINED IN THIS AGREEMENT OR IN ANY OTHER TRANSACTION
DOCUMENT IN ANY MATERIAL RESPECT, THE PURCHASER HAS NOTIFIED THE COMPANY OF THE
BREACH, AND THE BREACH HAS CONTINUED WITHOUT CURE FOR A PERIOD OF FIFTEEN (15)
DAYS AFTER THE NOTICE OF BREACH, OR

 

(B)           IF THE SECOND CLOSING SHALL NOT HAVE OCCURRED ON OR BEFORE THE
SECOND CLOSING DATE, BY REASON OF THE FAILURE OF ANY CONDITION PRECEDENT UNDER
SECTION 7(C) HEREOF OR IF SATISFACTION OF ANY SUCH CONDITION BY SUCH DATE IS OR
BECOMES IMPOSSIBLE (UNLESS THE FAILURE RESULTS PRIMARILY FROM ANY PURCHASER
ITSELF BREACHING ANY REPRESENTATION, WARRANTY, OR COVENANT CONTAINED IN THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT).

 

(V)           AFTER THE INITIAL CLOSING, THE COMPANY MAY TERMINATE ITS
OBLIGATION TO SELL THE APPLICABLE PREFERRED SHARES AT THE SECOND CLOSING BY
GIVING WRITTEN NOTICE TO THE PURCHASER AT ANY TIME PRIOR TO THE SECOND CLOSING:

 

 

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(A)          IN THE EVENT THAT THE PURCHASER HAS BREACHED ANY REPRESENTATION,
WARRANTY, OR COVENANT CONTAINED IN THIS AGREEMENT IN ANY MATERIAL RESPECT, THE
COMPANY HAS NOTIFIED THE PURCHASER OF THE BREACH, AND THE BREACH HAS CONTINUED
WITHOUT CURE FOR A PERIOD OF FIFTEEN (15) DAYS AFTER THE NOTICE OF BREACH, OR

 

(B)           IF THE SECOND CLOSING SHALL NOT HAVE OCCURRED ON OR BEFORE THE
SECOND CLOSING DATE, BY REASON OF THE FAILURE OF ANY CONDITION PRECEDENT UNDER
SECTION 6(C) HEREOF OR IF SATISFACTION OF ANY SUCH CONDITION BY SUCH DATE IS OR
BECOMES IMPOSSIBLE (UNLESS THE FAILURE RESULTS PRIMARILY FROM THE COMPANY
BREACHING ANY REPRESENTATION, WARRANTY, OR COVENANT CONTAINED IN THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT).

 

(b)           Effect of Termination.  Each party’s right of termination under
Section 8(a) is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of such right of termination will not be an
election of remedies.  If:

 

(I)            THIS AGREEMENT IS TERMINATED PURSUANT TO SECTIONS 8(A)(I),
(II) OR (III), ALL OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT WILL
TERMINATE, EXCEPT THAT THE OBLIGATIONS OF THE PARTIES IN SECTION 4(H) (INCLUDING
WITH RESPECT TO LEGAL FEES AND EXPENSES) AND SECTION 9 WILL SURVIVE; OR

 

(II)           THE PURCHASER’S OBLIGATION TO PURCHASE, OR THE COMPANY’S
OBLIGATION TO SELL, AS THE CASE MAY BE, PREFERRED SHARES AT THE SECOND CLOSING
IS TERMINATED PURSUANT TO SECTION 8(A)(IV) OR (V), (A) THE SECOND CLOSING SHALL
NOT OCCUR, AND (B) OTHERWISE, THIS AGREEMENT, WILL SURVIVE PROVIDED HOWEVER THAT
THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY SHALL ONLY SURVIVE FOR A
PERIOD OF ONE (1) YEAR FOLLOWING THE DATE THIS AGREEMENT AT WHICH TIME SUCH
REPRESENTATIONS AND WARRANTIES SHALL TERMINATE.

 

Notwithstanding clauses (i) or (ii) above, if this Agreement (or the Purchaser’s
obligation to purchase, or the Company’s obligation to sell, Preferred Shares at
the Second Closing, as the case may be) is terminated because of a breach of
this Agreement by the non-terminating party or because one or more of the
conditions of the terminating party’s obligations under this Agreement is not
satisfied as a result of the non-terminating party’s failure to comply with its
obligations under this Agreement, the terminating party’s right to pursue all
legal remedies will survive such termination unimpaired.

 

9.             GOVERNING LAW; MISCELLANEOUS.

 

(a)           Governing Law; Jurisdiction; Jury Trial.  The corporate laws of
the State of Delaware shall govern all issues concerning the relative rights of
the Company and its stockholders.  All other 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 jurisdiction) that would cause the application of the
laws of any jurisdiction 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

 

 

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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 HEREWITH 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, with respect to a particular party, when
counterparts have been signed by such 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.

 

(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 and the instruments
referenced herein supersede all other prior oral or written agreements,
negotiations or correspondence between Purchaser, the Company, their Affiliates
and persons acting on their behalf with respect to the matters discussed herein
(including the term sheet related hereto), 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 Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters.  This Agreement may only be amended, waived or modified by an
instrument in writing signed by the Company and (i) prior to the Initial
Closing, the Purchaser and (ii) from and after the Initial Closing, the holders
of at least a majority of the then-outstanding Preferred Shares, or, if no
Preferred Shares are then outstanding, those Purchasers who hold at least a
majority of the Conversion Shares still entitled to registration rights under
the Registration Rights Agreement.

 

(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); (iii) one (1) Business Day after deposit
with a nationally

 

 

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recognized overnight delivery service, in each case properly addressed to the
party to receive the same; or (iv) three (3) days after deposit in the U.S.
Mail.  The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

Clarient, Inc.

31 Columbia

Aliso Viejo, California 92656

Facsimile:  (949) 425-5701

Attention:  Chief Executive Officer

 

With a copy to:

 

Stradling, Yocca, Carlson & Rauth

660 Newport Center Drive

Suite 1600

Newport Beach, California 92660

Facsimile: (949) 725-4100

Attention:  Shivbir S. Grewal, Esq.

 

With a further copy to:

 

Safeguard Scientifics, Inc.

435 Devon Park Drive

Building 800

Wayne, Pennsylvania 19087

Attention:  General Counsel

Facsimile:  (610) 293-0601

 

If to the Purchaser:

 

Oak Investment Partners XII, Limited Partnership

One Gorham Island

Westport, Connecticut 06880

Facsimile: (203) 227-0327

Attention:  Annie H. Lamont

 

With a copy to:

 

Finn Dixon & Herling LLP

177 Broad Street

Stamford, Connecticut 06901

Facsimile: (203) 325-5001

Attention:  Michael J. Herling, Esq.

 

If to the Transfer Agent:

 

Mellon Investor Services

400 South Hope Street, 4th Floor

Los Angeles, CA 90071

Facsimile: (501) 760-1538

Attention: Ronald Lug

 

 

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or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) days prior to the effectiveness of such change. 
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or
(C) provided by a nationally recognized overnight delivery service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.

 

(g)           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Preferred Shares.  The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of (i) prior to the Initial Closing, the Purchaser in its sole
discretion and (ii) from and after the Initial Closing, the holders of a
majority of the Conversion Shares issued or issuable upon conversion of the
Preferred Shares still entitled to registration rights under the Registration
Rights Agreement) then outstanding, including by merger or consolidation in
which the Company is not the surviving corporation, except pursuant to a deemed
liquidation, dissolution or winding up (as defined in Section 5(c) of the
Certificate of Designations) with respect to which the Company is in compliance
with the Certificate of Designations and except pursuant to a transaction in
which there is no change in control of the Company.  From and after the date
that no holders of Conversion Shares are entitled to registration rights under
the Registration Rights Agreement, the Company may assign this Agreement without
the consent of any party. The Purchaser shall not assign their rights to
purchase Preferred Shares at any Closing to any third party without the prior
written consent of the Company, and the consent of the other Purchasers.

 

(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(a) without the consummation of the Initial Closing, the
representations and warranties of the Company and the Purchaser contained in
Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5
and 8 shall survive the Closings for a period of one (1) year following the date
this Agreement at which time such representations and warranties shall
terminate.  If this Agreement is terminated under Section 8(a) after the
consummation of the Initial Closing but without consummation of the Second
Closing, the representation and warranties of the Company and the Purchaser
contained in Sections 2 and 3, and the agreements and covenants set forth in
Sections 4, 5 and 8 shall nevertheless survive the Initial Closing.  The
representations and warranties of the Company shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Purchaser and their respective representatives and agents.  The Purchaser and
the Company shall be responsible only for their own respective representations,
warranties, agreements and covenants hereunder.

 

 

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(j)            Publicity.  The Company and the Purchaser shall have the right to
approve before issuance 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 the Purchaser, to make
any press release or other public disclosure with respect to such transactions
as is required by applicable law and regulations (although the Purchaser shall
be consulted by the Company (and be given a reasonable opportunity to comment)
in connection with any such press release or other public disclosure prior to
its release and shall be provided with a copy thereof).

 

(k)           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.

 

(l)            Placement Agent.  The Company acknowledges that it has engaged
RBC Capital Markets (the “Placement Agent”) as its placement agent or broker in
connection with the sale of the Preferred Shares.  The Company shall be
responsible for the payment of any placement agent’s fees or broker’s
commissions payable to RBC Capital Markets or otherwise relating to or arising
out of the transactions contemplated hereby.  The Company shall pay, and
indemnify, defend and hold Purchaser harmless against, any liability, loss or
expense (including, without limitation, reasonable attorneys’ fees and
out-of-pocket expenses) arising in connection with any such claim.

 

(m)          No Strict Construction.  The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

 

(n)           Remedies.  The Purchaser and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and the
Certificate of Designations 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.

 

(o)           Reliance.  The Purchaser acknowledges that it is relying upon the
representations and covenants of the Company contained in this Agreement, and is
not relying upon any person, firm, or corporation, in making its investment or
decision to invest in the Company.

 

 

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

 

(q)           Form, Registration, Transfer and Exchange of Preferred Stock; Lost
Preferred Stock.  The Company shall keep at its principal office a register in
which the Company shall provide for the registration of Series A Preferred Stock
and of transfers of Series A Preferred Stock. Upon surrender for registration of
transfer of any share of Series A Preferred Stock at the principal office of the
Company, the Company shall, at its expense, promptly execute and deliver one or
more new certificates for shares of Series A Preferred Stock of the like tenor
and number, registered in the name of such transferee or transferees.  At the
option of the holder of any share of Series A Preferred Stock, such share may be
exchanged for other Series A Preferred Stock of like tenor and of a like number,
upon surrender of the certificate for the shares of Series A Preferred Stock to
be exchanged at the principal office of the Company. Whenever any shares of
Series A Preferred Stock are so surrendered for exchange, the Company shall, at
its expense, execute and deliver the certificate for the shares of Series A
Preferred Stock which the holder making the exchange is entitled to receive. 
Every certificate of Series A Preferred Stock surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed by the holder of such certificate of
Series A Preferred Stock or such holder’s attorney duly authorized in writing.
Any share of Series A Preferred Stock issued in exchange for any share of
Series A Preferred Stock or upon transfer thereof shall carry the rights to
unpaid dividends to accrue which were carried by the share of Series A Preferred
Stock so exchanged or transferred, so that neither gain nor loss of interest
shall result from any such transfer or exchange.  Upon receipt of written notice
from the holder of any certificate of Series A Preferred Stock of the loss,
theft, destruction or mutilation of such certificate share of Series A Preferred
Stock and, in the case of any such loss, theft or destruction, upon receipt of
such holder’s affidavit and indemnity as may be reasonably required by the
Company, or in the case of any such mutilation upon surrender and cancellation
of such certificate of Series A Preferred Stock, the Company will make and
deliver a new certificate of Series A Preferred Stock, of like tenor, in lieu of
the lost, stolen, destroyed or mutilated certificate of Series A Preferred
Stock.

 

(r)            Definitions.  In addition to the words and terms defined
elsewhere in this Agreement, the following words and terms shall have the
following meanings, respectively, unless the context clearly requires otherwise:

 

“2008 Filings” has the meaning assigned to such term in Section 3.

 

 

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“Affiliate” means, with respect to any Person, another Person that, directly or
indirectly, (i) has a 5% or more equity interest in that Person, (ii) has 5% or
more common ownership with that Person, (iii) controls that Person, or
(iv) shares common control with that Person.

 

“Agreement” has the meaning assigned to such term in the preface above.

 

“Benefit Plans” has the meaning assigned to such term in Section 3(l).

 

“Business” has the meaning assigned to such term in Section 3(y).

 

“Business Day” means any day except Saturday, Sunday and any day which shall be
a legal holiday or a day on which banking institutions in Los Angeles,
California generally are authorized or required by law or other governmental
actions to close.

 

“Businesses” has the meaning assigned to such term in Section 3(y).

 

“Bylaws” has the meaning assigned to such term in Section 3(c).

 

“Certificate of Designations” has the meaning assigned to such term in the
Recitals.

 

“Certificate of Incorporation” has the meaning assigned to such term in
Section 3(c).

 

“Closing” has the meaning assigned to such term in Section 1(a).

 

“Closing Date” has the meaning assigned to such term in Section 1(b).

 

“Closings” has the meaning assigned to such term in Section 1(a).

 

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

 

“Comerica Loan” has the meaning assigned to such term in Section 4(c).

 

“Common Stock” has the meaning assigned to such term in the Recitals.

 

“Company” has the meaning assigned to such term in the preface above.

 

 “Control” or “controls” for purposes hereof means that a Person has the power,
direct or indirect, to conduct or govern the policies of another Person.

 

“Conversion Shares” has the meaning assigned to such term in the Recitals.

 

“Designation Notice” has the meaning assigned to such term in Section 4(n).

 

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

 

“Exchange Act” has the meaning assigned to such term in Section 3(f).

 

“GAAP” has the meaning assigned to such term in Section 3(g).

 

 

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“Gemino Loan” has the meaning assigned to such term in Section 4(d).

 

“Government Programs” has the meaning assigned to such term in Section 3(y).

 

“Governmental Entity” has the meaning assigned to such term in Section 2(e).

 

“Indebtedness” has the meaning assigned to such term in Section 3(d).

 

“Indemnification Agreement” has the meaning assigned to such term in
Section 4(a).

 

“Initial 8-K” has the meaning assigned to such term in Section 4(h).

 

“Initial Closing” has the meaning assigned to such term in Section 1(a).

 

“Initial Closing Date” has the meaning assigned to such term in Section 1(b).

 

“Irrevocable Transfer Agent Instructions” has the meaning assigned to such term
in Section 5.

 

“Liens” means liens, charges, claims, licenses, pledges, options, security
interests, mortgages, leases, subleases, easements, covenants, rights-of-way or
other similar encumbrances or other similar restrictions.

 

“Material Adverse Effect” has the meaning assigned to such term Section 3(a).

 

“Material Contracts” has the meaning assigned to such term in Section 3(t).

 

 “Medicare and Medicaid Programs” has the meaning assigned to such term in
Section 3(y).

 

“NASDAQ” means the NASDAQ Capital Market.

 

“NASDAQ Stockholder Approval” means stockholder approval required by NASDAQ in
connection with the transactions contemplated by the Transaction Documents (as
defined herein) and the Certificate of Designation (including, without
limitation, the issuance or potential issuance of a number of shares of Common
Stock which is greater than or equal to 20% of the number of shares outstanding
on the date of this Agreement and/or any potential change of control (as
currently defined under the rules and regulations of NASDAQ)).

 

“Permits” has the meaning assigned to such term in Section 3(y).

 

“Permitted Liens” means (A) Liens set forth in Schedule 3(o), (B) inchoate
mechanics’, carriers’, workmen’s, repairmen’s or other like Liens arising or
incurred in the ordinary course of business for amounts not yet due and payable
(provided that such items are properly reserved for on the books of the
Company), (C) Liens for governmental taxes and other charges that are not due
and payable (provided that such items are properly reserved for on the books of
the Company), (D) as to real property leased or occupied by the Company,
recorded easements, covenants, rights-of-way and other similar recorded
restrictions of record (including zoning, building and other similar
restrictions).

 

 

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“Person” means any individual, partnership, joint venture, limited liability
company, corporation, trust, unincorporated organization, group or government or
other department or agency thereof, or other entity.

 

“Placement Agent” has the meaning assigned to such term in Section 9(l).

 

“Preferred Shares” has the meaning assigned to such term in the Recitals.

 

“Preferred Stock” has the meaning assigned to such term in the Recitals.

 

“Preferred Stock Certificates” has the meaning assigned to such term in
Section (1)(c).

 

“Principal Market” has the meaning assigned to such term in Section (4)(f).

 

“Private Programs” has the meaning assigned to such term in Section 3(y).

 

“Purchase Price” has the meaning assigned to such term in the Recitals.

 

“Purchaser” has the meanings assigned to such terms in the preface above.

 

“Purchaser Designees” has the meaning assigned to such term in Section 4(a).

 

“Registration Rights Agreement” has the meaning assigned to such term in the
Recitals.

 

“Regulated Company” and “Regulated Companies” have the meanings assigned to such
terms in Section 3(y).

 

“Regulation D” has the meaning assigned to such term in the Recitals.

 

“Regulations” has the meaning assigned to such term in Section 3(y).

 

“Related Party” has the meaning assigned to such term in Section 4(i).

 

“Reporting Period” has the meaning assigned to such term in Section 4(c).

 

“Resolutions” has the meaning assigned to such term in Section 7(a).

 

“Restricted Securities” has the meaning assigned to such term in Section 4(j).

 

“Rights Agreement” has the meaning assigned to such term in Section 3(v).

 

“Rule 144” has the meaning assigned to such term in Section 2(f).

 

“Safeguard” means Safeguard Delaware, Inc., Safeguard Scientifics, Inc., and
Safeguard Scientifics (Delaware), Inc.

 

 

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“Safeguard Agreement” means that certain agreement (or agreements, as the case
may be) between the Purchaser and Safeguard, relating to (A) the NASDAQ
Stockholder Approval, (B) waiver of certain anti-dilution protection that may be
triggered as a result of the consummation of the transactions contemplated by
the Transaction Documents and (C) certain “change of control” transactions, in
the form attached hereto as Exhibit E.

 

“Safeguard Loan” has the meaning assigned to such term in Section 4(c).

 

“SEC” has the meaning assigned to such term in the Recitals.

 

“SEC Documents” has the meaning assigned to such term in Section 3(g).

 

“Second Closing” has the meaning assigned to such term in Section 1(a).

 

“Second Closing Date” has the meaning assigned to such term in Section 1(b).

 

“Securities” has the meaning assigned to such term in Section 2(a).

 

“Securities Act” has the meaning assigned to such term in the Recitals.

 

“Series A Preferred Stock” has the meaning assigned to such term in the
Recitals.

 

“Strategic Transaction” has the meaning assigned to such term in Section 4(k).

 

“Subsidiaries” has the meaning assigned to such term in Section 3(a).

 

“Takeover Provisions” has the meaning assigned to such term in Section 3(u).

 

“Trading Affiliates” has the meaning assigned to such term in Section 4(k).

 

“Transaction Documents” has the meaning assigned to such term in Section 3(b).

 

*  *  *  *  *  *

 

 

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[Signature Page to Clarient, Inc. Series A Purchase Agreement]

 

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

 

 

COMPANY:

 

 

 

 

CLARIENT, INC.

 

 

 

 

 

 

 

By:

/s/ Ronald A. Andrews

 

 

Name:

Ronald A. Andrews

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

PURCHASER:

 

 

 

 

OAK INVESTMENT PARTNERS XII, LIMITED PARTNERSHIP

 

 

 

 

 

 

 

 

/s/ Ann H. Lamont

 

 

Ann H. Lamont

 

 

Managing Member of Oak Associates XII, LLC

 

 

The General Partner of Oak Investment Partners XII, Limited Partnership

 

 

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