Exhibit 10.2

 

SUBSCRIPTION AGREEMENT

 

Proxim Corporation

935 Stewart Drive

Sunnyvale, CA 94085

 

The undersigned (the “Investor”) hereby confirms its agreement with you as
follows:

 

1.                                      THIS SUBSCRIPTION AGREEMENT (THIS
“SUBSCRIPTION AGREEMENT”) IS MADE AS OF THE DATE SET FORTH BELOW BETWEEN PROXIM
CORPORATION, A DELAWARE CORPORATION (THE “COMPANY”), AND THE INVESTOR.

 

2.                                      THE COMPANY HAS AUTHORIZED THE SALE AND
ISSUANCE TO CERTAIN INVESTORS OF UP TO 9,000,000 SHARES (THE “SHARES”) OF ITS
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE (THE “COMMON STOCK”).

 

3.                                      THE COMPANY WILL ALSO ISSUE TO THE
INVESTOR A WARRANT TO PURCHASE COMMON STOCK IN THE FORM ATTACHED HERETO AS
EXHIBIT A (A “WARRANT” AND, COLLECTIVELY WITH THE WARRANTS ISSUED TO THE OTHER
INVESTORS, AS SUCH TERM IS DEFINED IN ANNEX I HERETO, THE “WARRANTS”).  THE
WARRANTS WILL BE EXERCISABLE INTO SHARES OF COMMON STOCK (THE “WARRANT SHARES”)
COMMENCING ON THE DATE THAT IS SIX (6) MONTHS FOLLOWING THE CLOSING DATE (AS
DEFINED IN THE TERMS AND CONDITIONS FOR PURCHASE OF SHARES) AND WILL EXPIRE ON
THE DATE THAT IS THE FIFTH (5TH) ANNIVERSARY OF THE CLOSING DATE.  THE WARRANT
WILL ENTITLE THE INVESTOR TO PURCHASE A NUMBER OF SHARES OF COMMON STOCK EQUAL
TO THE PRODUCT OF (X) THE NUMBER OF SHARES PURCHASED BY THE INVESTOR HEREUNDER
TIMES (Y) 0.50 AND HAVE AN EXERCISE PRICE EQUAL TO $2.35 (SUBJECT TO ADJUSTMENT
AS PROVIDED THEREIN).

 

4.                                      THE PURCHASE PRICE FOR THE SHARES AND
WARRANT BEING PURCHASED BY THE INVESTOR HEREUNDER SHALL BE $1.80 PER SHARE (THE
“PURCHASE PRICE”).

 

5.                                      THE OFFERING AND SALE OF THE SHARES AND
WARRANTS (THE “OFFERING”) ARE BEING MADE PURSUANT TO AN EFFECTIVE “SHELF”
REGISTRATION STATEMENT ON FORM S-3, FILE NO. 333-119975 (INCLUDING THE
PROSPECTUS CONTAINED THEREIN (THE “BASE PROSPECTUS”), THE “REGISTRATION
STATEMENT”) FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE “COMMISSION”).  PRIOR TO THE CONSUMMATION OF THE SALE OF THE SHARES AND
WARRANTS PURSUANT TO THE OFFERING, THE COMPANY WILL FILE A PROSPECTUS SUPPLEMENT
(THE “PROSPECTUS SUPPLEMENT”) WITH THE COMMISSION CONTAINING CERTAIN
SUPPLEMENTAL INFORMATION REGARDING THE SHARES, THE WARRANTS AND THE TERMS OF THE
OFFERING AND WILL PROVIDE A COPY OF SUCH FILING TO THE INVESTOR PROMPTLY
FOLLOWING SUCH FILING.  THE BASE PROSPECTUS, AS AMENDED AND SUPPLEMENTED BY THE
PROSPECTUS SUPPLEMENT, IS REFERRED TO HEREIN AS THE “PROSPECTUS”.

 

6.                                      THE COMPANY AND THE INVESTOR AGREE THAT
THE INVESTOR WILL PURCHASE FROM THE COMPANY, AND THE COMPANY WILL ISSUE AND SELL
TO THE INVESTOR, THE NUMBER OF SHARES SET FORTH BELOW AND A WARRANT FOR THE
AGGREGATE PURCHASE PRICE SET FORTH BELOW.  THE SHARES AND THE WARRANTS SHALL BE
PURCHASED PURSUANT TO THE TERMS AND CONDITIONS FOR PURCHASE OF SHARES AND
WARRANTS ATTACHED HERETO AS ANNEX I AND INCORPORATED HEREIN BY REFERENCE AS
THOUGH FULLY SET FORTH HEREIN (THE “TERMS AND CONDITIONS”).  UNLESS OTHERWISE
REQUESTED BY THE INVESTOR AND AGREED TO BY THE

 

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Company, the Shares purchased by the Investor will be delivered by electronic
book-entry, registered in the Investor’s name as set forth below, and will be
released by Equiserve, Inc., the Company’s transfer agent (the “Transfer
Agent”), to the Investor at the Closing in accordance with the Terms and
Conditions.

 

7.                                      THE INVESTOR REPRESENTS THAT, EXCEPT AS
SET FORTH BELOW, (A) IT HAS HAD NO POSITION, OFFICE OR OTHER MATERIAL
RELATIONSHIP WITHIN THE PAST THREE YEARS WITH THE COMPANY OR ITS AFFILIATES AND
(B) IT HAS NO DIRECT OR INDIRECT AFFILIATION OR ASSOCIATION WITH ANY NASD
MEMBER.  EXCEPTIONS:

 

 

(If no exceptions, write “none.” If left blank, response will be deemed to be
“none.”)

 

[SIGNATURE PAGE FOLLOWS]

 

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Number of Shares:                               

 

Aggregate Purchase Price: $       

 

Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.

 

 

 

Dated as of: February 7, 2005

 

 

 

[INVESTOR]

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

ADDRESS:

 

 

 

 

 

 

 

 

 

 

 

With a copy to:

 

 

 

 

Agreed and Accepted

 

this 7th day of February, 2005:

 

 

 

PROXIM CORPORATION

 

 

 

 

 

By:

 

 

 

Name:

Michael Angel

 

 

Title:

Chief Financial Officer

 

 

 

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ANNEX I

 

TERMS AND CONDITIONS FOR PURCHASE OF SHARES AND WARRANTS

 

1.                                      AUTHORIZATION AND SALE OF THE
SECURITIES.  ON THE TERMS AND SUBJECT TO THE CONDITIONS CONTAINED IN THESE TERMS
AND CONDITIONS AND IN THE SUBSCRIPTION AGREEMENT TO WHICH THESE TERMS AND
CONDITIONS ARE ATTACHED (THE “SUBSCRIPTION AGREEMENT” AND, TOGETHER WITH THESE
TERMS AND CONDITIONS, THIS “AGREEMENT”), THE COMPANY HAS AUTHORIZED THE SALE OF
THE SHARES AND THE WARRANTS AND THE ISSUANCE OF THE WARRANT SHARES.  THE SHARES,
THE WARRANTS AND THE WARRANT SHARES ARE COLLECTIVELY REFERRED TO HEREIN AS THE
“SECURITIES”.

 

2.                                      AGREEMENT TO SELL AND PURCHASE THE
SHARES AND WARRANTS; PLACEMENT AGENT.

 

2.1.                            PURCHASE AND SALE.  AT THE CLOSING (AS DEFINED
IN SECTION 3.1), THE COMPANY WILL SELL TO THE INVESTOR, AND THE INVESTOR WILL
PURCHASE FROM THE COMPANY, UPON THE TERMS AND CONDITIONS CONTAINED IN THIS
AGREEMENT, THE NUMBER OF SHARES SET FORTH ON THE SIGNATURE PAGE TO THE
SUBSCRIPTION AGREEMENT (THE “SIGNATURE PAGE”) FOR THE AGGREGATE PURCHASE PRICE
THEREFOR SET FORTH ON THE SIGNATURE PAGE, AND THE COMPANY WILL ISSUE THE SHARES
AND A WARRANT TO THE INVESTOR.

 

2.2.                            OTHER INVESTORS.  THE COMPANY PROPOSES TO ENTER
INTO THIS SAME FORM OF SUBSCRIPTION AGREEMENT WITH CERTAIN OTHER INVESTORS (THE
“OTHER INVESTORS”) AND EXPECTS TO COMPLETE SALES OF SHARES AND WARRANTS TO
THEM.  THE INVESTOR AND THE OTHER INVESTORS ARE HEREINAFTER SOMETIMES
COLLECTIVELY REFERRED TO AS THE “INVESTORS”.

 

2.3.                            PLACEMENT AGENT.  THE INVESTOR ACKNOWLEDGES THAT
THE COMPANY INTENDS TO PAY EAST PEAK ADVISORS L.L.C. (THE “PLACEMENT AGENT”)
FEES IN RESPECT OF THE SALE OF SHARES AND WARRANTS TO THE INVESTORS.

 

2.4.                            PLACEMENT AGENT AGREEMENT.  THE COMPANY HAS
ENTERED INTO A FINANCIAL ADVISOR AGREEMENT (THE “PLACEMENT AGENT AGREEMENT”)
WITH THE PLACEMENT AGENT. THE COMPANY HEREBY AGREES THAT THE INVESTOR MAY RELY
ON THE REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE COMPANY AS
IF THE SAME WERE SET FORTH IN FULL HEREIN. A COPY OF THE PLACEMENT AGENT
AGREEMENT AS EXECUTED BY THE COMPANY AND THE PLACEMENT AGENT HAS HERETOFORE BEEN
DELIVERED TO THE INVESTOR.

 

3.                                      CLOSING AND DELIVERY OF THE SHARES AND
WARRANTS AND FUNDS.

 

3.1.                            CLOSING.  THE COMPLETION OF THE PURCHASE AND
SALE OF THE SHARES AND WARRANTS (THE “CLOSING”) WILL OCCUR AT A PLACE AND TIME
(THE “CLOSING DATE”) TO BE SPECIFIED BY THE COMPANY AND THE PLACEMENT AGENT, AND
OF WHICH THE INVESTORS WILL BE NOTIFIED IN ADVANCE BY THE PLACEMENT AGENT.  THE
CLOSING DATE SHALL OCCUR ON FEBRUARY 7, 2005, AND NOT LATER THAN FEBRUARY 8,
2005.  AT THE CLOSING, (A) THE COMPANY WILL CAUSE THE TRANSFER AGENT TO DELIVER
TO THE INVESTOR THE NUMBER OF SHARES SET FORTH ON THE SIGNATURE PAGE REGISTERED
IN THE NAME OF THE INVESTOR OR, IF SO INDICATED ON THE INVESTOR QUESTIONNAIRE
ATTACHED HERETO AS EXHIBIT B, IN THE NAME OF A NOMINEE DESIGNATED BY THE
INVESTOR, (B) THE COMPANY WILL ISSUE AND DELIVER TO THE INVESTOR A WARRANT,
REGISTERED IN THE NAME OF THE INVESTOR OR, IF SO INDICATED ON INVESTOR
QUESTIONNAIRE ATTACHED HERETO AS EXHIBIT B,  IN THE NAME OF A NOMINEE DESIGNATED
BY THE INVESTOR, (C) THE

 

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Company will deliver to the Investor an opinion, dated the Closing Date, of
outside counsel representing the Company addressed to the Investor and in form
and substance reasonably acceptable to the Investor, and (d) the aggregate
Purchase Price for the Shares and Warrant being purchased by the Investor will
be delivered by or on behalf of the Investor to the Company by wire transfer of
immediately available funds.

 

3.2.                            CLOSING CONDITIONS.

 

(A)                                  CONDITIONS TO THE COMPANY’S OBLIGATIONS. 
THE COMPANY’S OBLIGATION TO ISSUE THE SHARES AND WARRANT TO THE INVESTOR WILL BE
SUBJECT TO THE ACCURACY AS OF THE CLOSING DATE OF THE REPRESENTATIONS AND
WARRANTIES MADE BY THE INVESTOR AND THE FULFILLMENT OF THOSE UNDERTAKINGS OF THE
INVESTOR TO BE FULFILLED AT OR PRIOR TO THE CLOSING DATE.

 

(B)                                 CONDITIONS TO THE INVESTOR’S OBLIGATIONS. 
THE INVESTOR’S OBLIGATION TO PURCHASE THE SHARES AND WARRANT WILL BE SUBJECT TO
(I) THE ACCURACY IN ALL MATERIAL RESPECTS ON THE CLOSING DATE OF THE
REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY, (II) THE FULFILLMENT OF
THOSE UNDERTAKINGS OF THE COMPANY TO BE FULFILLED PRIOR TO THE CLOSING DATE,
INCLUDING, WITHOUT LIMITATION, THOSE REPRESENTATIONS, WARRANTIES AND COVENANTS
CONTAINED IN THE PLACEMENT AGREEMENT, AND (III) THE FILING OF THE PROSPECTUS
SUPPLEMENT WITH THE COMMISSION AND THE DELIVERY TO THE INVESTOR OF REASONABLE
EVIDENCE OF SUCH FILING (COLLECTIVELY, THE “COMPANY CLOSING CONDITIONS”).  THE
INVESTOR’S OBLIGATIONS ARE EXPRESSLY NOT CONDITIONED ON THE PURCHASE BY ANY OR
ALL OF THE OTHER INVESTORS OF THE SHARES AND WARRANTS THAT THEY HAVE AGREED TO
PURCHASE FROM THE COMPANY, AND THE INVESTOR ACKNOWLEDGES THAT THE COMPANY MAY
SELL LESS THAN ALL OF THE SHARES IN THE OFFERING.

 

3.3.                            DEPOSIT/WITHDRAWAL AT CUSTODIAN. AT THE TIME OF
CLOSING, AND UPON RECEIPT OF A FEDERAL WIRE NUMBER FROM THE INVESTOR, THE
COMPANY SHALL INSTRUCT THE TRANSFER AGENT TO EFFECT TRANSFER OF THE SHARES
DIRECTLY TO THE ACCOUNT(S) IDENTIFIED BY THE INVESTOR THROUGH THE FACILITIES OF
THE DEPOSITORY TRUST COMPANY (“DTC”) BY MEANS OF THE DEPOSIT/WITHDRAWAL AT
CUSTODIAN OR “DWAC” PROCESS.

 

4.                                      REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE INVESTOR.

 

4.1.                            THE INVESTOR REPRESENTS AND WARRANTS TO THE
COMPANY THAT (A) THE INVESTOR IS KNOWLEDGEABLE, SOPHISTICATED AND EXPERIENCED IN
MAKING, AND IS QUALIFIED TO MAKE DECISIONS WITH RESPECT TO, INVESTMENTS IN
SHARES PRESENTING AN INVESTMENT DECISION LIKE THAT INVOLVED IN THE PURCHASE OF
THE SHARES AND WARRANT, INCLUDING INVESTMENTS IN SECURITIES ISSUED BY THE
COMPANY AND INVESTMENTS IN COMPARABLE COMPANIES, AND HAS REQUESTED, RECEIVED,
REVIEWED AND CONSIDERED ALL INFORMATION IT DEEMED RELEVANT IN MAKING AN INFORMED
DECISION TO PURCHASE THE SHARES AND WARRANT, AND (B) THE INVESTOR, IN CONNECTION
WITH ITS DECISION TO PURCHASE THE SHARES AND WARRANT, RELIED ONLY UPON THE
REGISTRATION STATEMENT, THE PROSPECTUS, THE COMPANY’S REPORTS ON FORMS 10-K,
10-Q, AND 8-K AS FILED BY THE COMPANY WITH THE COMMISSION, AND THE COMPANY’S
REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN AND IN THE PLACEMENT AGREEMENT.

 

4.2.                            THE INVESTOR ACKNOWLEDGES THAT THE PLACEMENT
AGENT IS NOT AUTHORIZED TO MAKE ANY REPRESENTATION OR USE ANY INFORMATION IN
CONNECTION WITH THE ISSUE, PLACEMENT, PURCHASE AND

 

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sale of the Shares and the Warrants, except as set forth or incorporated by
reference in the Prospectus.

 

4.3.                            THE INVESTOR REPRESENTS AND WARRANTS TO THE
COMPANY THAT (A) THE INVESTOR HAS FULL RIGHT, POWER, AUTHORITY AND CAPACITY TO
ENTER INTO THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY
AND HAS TAKEN ALL NECESSARY ACTION TO AUTHORIZE THE EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT, AND (B) THIS AGREEMENT CONSTITUTES A VALID AND
BINDING OBLIGATION OF THE INVESTOR ENFORCEABLE AGAINST THE INVESTOR IN
ACCORDANCE WITH ITS TERMS, EXCEPT AS ENFORCEABILITY MAY BE LIMITED BY APPLICABLE
BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAWS AFFECTING
CREDITORS’ AND CONTRACTING PARTIES’ RIGHTS GENERALLY AND EXCEPT AS
ENFORCEABILITY MAY BE SUBJECT TO GENERAL PRINCIPLES OF EQUITY (REGARDLESS OF
WHETHER SUCH ENFORCEABILITY IS CONSIDERED IN A PROCEEDING IN EQUITY OR AT LAW).

 

4.4.                            THE INVESTOR UNDERSTANDS THAT NOTHING IN THIS
AGREEMENT OR ANY OTHER MATERIALS PRESENTED TO THE INVESTOR IN CONNECTION WITH
THE PURCHASE AND SALE OF THE SHARES AND THE WARRANTS CONSTITUTES LEGAL, TAX OR
INVESTMENT ADVICE.  THE INVESTOR HAS CONSULTED SUCH LEGAL, TAX AND INVESTMENT
ADVISORS AS IT, IN ITS SOLE DISCRETION, HAS DEEMED NECESSARY OR APPROPRIATE IN
CONNECTION WITH ITS PURCHASE OF THE SHARES AND WARRANT.

 

4.5.                            THE INVESTOR REPRESENTS AND WARRANTS THAT IT HAS
NOT PURCHASED ANY SHARES OF COMMON STOCK, ENGAGED IN ANY SHORT SELLING OF THE
COMPANY’S SECURITIES, OR ESTABLISHED OR INCREASED ANY “PUT EQUIVALENT POSITION”
AS DEFINED IN RULE 16(A)-1(H) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE “EXCHANGE ACT”), WITH RESPECT TO THE COMMON STOCK (COLLECTIVELY, A
“SHORT SALE”), WITHIN THE THREE (3) MONTH PERIOD ENDING ON THE DATE OF THIS
AGREEMENT. THE INVESTOR AGREES THAT IT WILL NOT EFFECT ANY SHORT SALES UNTIL THE
PUBLIC ANNOUNCEMENT OF THE TERMS OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT THE
COMPANY AGREES THAT IT WILL PUBLICLY ANNOUNCE SUCH TERMS ON OR BEFORE 9:00 AM
(EASTERN TIME) ON THE BUSINESS DAY IMMEDIATELY FOLLOWING THE DATE OF THIS
AGREEMENT.

 

5.                                      REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE COMPANY.  THE COMPANY REPRESENTS AND WARRANTS TO, AND COVENANTS
WITH, THE INVESTOR AS FOLLOWS:

 

5.1.                            THE COMPANY HAS BEEN DULY ORGANIZED AND IS
VALIDLY EXISTING AS A CORPORATION IN GOOD STANDING UNDER THE LAWS OF THE STATE
OF DELAWARE, WITH CORPORATE POWER AND AUTHORITY TO OWN OR LEASE ITS PROPERTIES
AND CONDUCT ITS BUSINESS AS DESCRIBED IN THE PROSPECTUS.  THE COMPANY IS DULY
QUALIFIED TO TRANSACT BUSINESS IN ALL JURISDICTIONS IN WHICH THE FAILURE TO BE
SO QUALIFIED WOULD HAVE A MATERIAL ADVERSE EFFECT ON THE EARNINGS, BUSINESS,
MANAGEMENT, PROPERTIES, ASSETS, RIGHTS, OPERATIONS OR FINANCIAL CONDITION OF THE
COMPANY (A “MATERIAL ADVERSE EFFECT”).   EACH SUBSIDIARY OF THE COMPANY HAS BEEN
DULY ORGANIZED AND IS VALIDLY EXISTING IN GOOD STANDING UNDER THE LAWS OF ITS
JURISDICTION OF ORGANIZATION, EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED WOULD
NOT HAVE A MATERIAL ADVERSE EFFECT.

 

5.2.                            THE COMPANY HAS FULL LEGAL POWER AND AUTHORITY
TO ENTER INTO THIS AGREEMENT AND THE WARRANT (TOGETHER, THE “TRANSACTION
DOCUMENTS”) AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
 THE TRANSACTION DOCUMENTS HAVE BEEN DULY AUTHORIZED, EXECUTED AND DELIVERED BY
THE COMPANY AND CONSTITUTE LEGAL, VALID AND BINDING OBLIGATIONS OF THE COMPANY
ENFORCEABLE AGAINST THE COMPANY IN ACCORDANCE WITH THEIR RESPECTIVE TERMS,
EXCEPT AS

 

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enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

 

5.3.                            THE COMPANY HAS AN AUTHORIZED CAPITALIZATION AS
SET FORTH IN THE PROSPECTUS, AND ALL OF THE ISSUED SHARES OF COMMON STOCK OF THE
COMPANY HAVE BEEN DULY AND VALIDLY AUTHORIZED AND ISSUED, ARE FULLY PAID AND
NON-ASSESSABLE AND CONFORM TO THE DESCRIPTION OF THE COMMON STOCK CONTAINED IN
THE PROSPECTUS; AND ALL OF THE ISSUED SHARES OF CAPITAL STOCK OF EACH SUBSIDIARY
OF THE COMPANY HAVE BEEN DULY AND VALIDLY AUTHORIZED AND ISSUED, ARE FULLY PAID
AND NON-ASSESSABLE AND ARE OWNED DIRECTLY OR INDIRECTLY BY THE COMPANY, FREE AND
CLEAR OF ALL LIENS, ENCUMBRANCES, EQUITABLE INTERESTS OR CLAIMS.

 

5.4.                            THE SHARES HAVE BEEN DULY AUTHORIZED AND, WHEN
ISSUED AND DELIVERED AGAINST PAYMENT THEREFOR AS PROVIDED HEREIN, WILL BE
VALIDLY ISSUED AND FULLY PAID AND NON-ASSESSABLE AND WILL CONFORM TO THE
DESCRIPTION OF THE COMMON STOCK CONTAINED IN THE PROSPECTUS. THE WARRANTS HAVE
BEEN DULY AUTHORIZED AND WHEN ISSUED AND PAID FOR AS CONTEMPLATED HEREIN WILL BE
VALIDLY ISSUED.  THE WARRANT SHARES HAVE BEEN DULY AUTHORIZED AND WHEN ISSUED
AND PAID FOR AS CONTEMPLATED IN THE WARRANTS WILL BE VALIDLY ISSUED, FULLY PAID
AND NON-ASSESSABLE.  NO PREEMPTIVE RIGHTS OF SHAREHOLDERS EXIST WITH RESPECT TO
ANY SECURITY OF THE COMPANY OR THE ISSUE AND SALE THEREOF.  THE FORM OF
CERTIFICATES FOR THE COMMON STOCK AND WARRANTS CONFORM TO THE CORPORATE LAW OF
THE STATE OF DELAWARE.  THE COMPANY HAS RESERVED FROM ITS DULY AUTHORIZED
CAPITAL STOCK 9,000,000 SHARES OF COMMON STOCK ISSUABLE PURSUANT TO THIS
AGREEMENT AND THE WARRANTS.

 

5.5.                            EXCEPT AS DISCLOSED IN THE PROSPECTUS, AND
EXCEPT FOR EMPLOYEE STOCK OPTIONS AND RESTRICTED STOCK UNITS ISSUED PURSUANT TO
STOCK OPTION OR STOCK PURCHASE PLANS APPROVED BY THE COMPANY’S BOARD OF
DIRECTORS, AND IF REQUIRED BY APPLICABLE LAW OR REGULATION, THE COMPANY’S
STOCKHOLDERS, THERE ARE NO OUTSTANDING RIGHTS, OPTIONS OR WARRANTS FOR THE
PURCHASE OF ANY SECURITIES OF THE COMPANY, AND THE COMPANY IS NOT A PARTY TO ANY
AGREEMENT PURSUANT TO WHICH ANY PERSON HAS THE RIGHT TO PURCHASE ANY SECURITIES
OF THE COMPANY.

 

5.6.                            THE COMPANY FILED THE REGISTRATION STATEMENT
WITH THE COMMISSION ON OCTOBER 26, 2004 UNDER THE SECURITIES ACT, AND THE RULES
AND REGULATIONS (COLLECTIVELY, THE “RULES AND REGULATIONS”) OF THE COMMISSION
PROMULGATED THEREUNDER. THE REGISTRATION STATEMENT WAS DECLARED EFFECTIVE BY THE
COMMISSION ON NOVEMBER 8, 2004, AND NO STOP ORDER SUSPENDING THE EFFECTIVENESS
OF THE REGISTRATION STATEMENT HAS BEEN ISSUED AND, TO THE COMPANY’S KNOWLEDGE,
NO PROCEEDING FOR THAT PURPOSE HAS BEEN INITIATED OR THREATENED BY THE
COMMISSION. ANY REFERENCE HEREIN TO THE REGISTRATION STATEMENT OR THE PROSPECTUS
SHALL BE DEEMED TO REFER TO AND INCLUDE THE DOCUMENTS INCORPORATED BY REFERENCE
THEREIN PURSUANT TO ITEM 12 OF FORM S-3 WHICH WERE FILED UNDER THE EXCHANGE ACT
ON OR BEFORE THE LAST TO OCCUR OF THE EFFECTIVE DATE OF THE REGISTRATION
STATEMENT, THE DATE OF THE BASED PROSPECTUS OR THE DATE OF THE PROSPECTUS
SUPPLEMENT, AND ANY REFERENCE HEREIN TO THE TERMS “AMEND”, “AMENDMENT” OR
“SUPPLEMENT” WITH RESPECT TO THE REGISTRATION STATEMENT OR THE PROSPECTUS SHALL
BE DEEMED TO REFER TO AND INCLUDE (I) THE FILING OF ANY DOCUMENT UNDER THE
EXCHANGE ACT AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT, THE DATE OF
SUCH BASE PROSPECTUS OR THE DATE OF THE PROSPECTUS SUPPLEMENT, AS THE CASE MAY
BE, WHICH IS INCORPORATED THEREIN BY REFERENCE AND (II) ANY SUCH DOCUMENT SO
FILED.

 

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5.7.                            THE REGISTRATION STATEMENT CONFORMS, AND THE
PROSPECTUS AND ANY FURTHER AMENDMENTS OR SUPPLEMENTS TO THE REGISTRATION
STATEMENT OR THE PROSPECTUS WILL CONFORM, IN ALL MATERIAL RESPECTS TO THE
REQUIREMENTS OF THE ACT AND THE RULES AND REGULATIONS OF THE COMMISSION
THEREUNDER.

 

5.8.                            THE REGISTRATION STATEMENT, THE PROSPECTUS AND
ANY AMENDMENTS OR SUPPLEMENTS THERETO CONTAIN ALL STATEMENTS WHICH ARE REQUIRED
TO BE MADE THEREIN BY, AND WILL CONFORM TO, THE REQUIREMENTS OF THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE RULES AND REGULATIONS
PROMULGATED BY THE COMMISSION THEREUNDER (THE “RULES AND REGULATIONS”).  THE
REGISTRATION STATEMENT, THE PROSPECTUS AND ANY AMENDMENTS OR SUPPLEMENTS THERETO
DO NOT CONTAIN, AND WILL NOT CONTAIN, ANY UNTRUE STATEMENT OF A MATERIAL FACT
AND DO NOT OMIT, AND WILL NOT OMIT, TO STATE ANY MATERIAL FACT REQUIRED TO BE
STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING;
PROVIDED, HOWEVER, THAT THE COMPANY MAKES NO REPRESENTATIONS OR WARRANTIES AS TO
INFORMATION CONTAINED IN OR OMITTED FROM THE REGISTRATION STATEMENT, THE
PROSPECTUS OR ANY SUCH AMENDMENT OR SUPPLEMENT, IN RELIANCE UPON, AND IN
CONFORMITY WITH, WRITTEN INFORMATION FURNISHED TO THE COMPANY BY OR ON BEHALF OF
THE INVESTOR SPECIFICALLY FOR USE IN THE PREPARATION THEREOF.  THE COMPANY HAS
NOT DISTRIBUTED ANY OFFERING MATERIAL IN CONNECTION WITH THE OFFERING AND SALE
OF THE SECURITIES, OTHER THAN THE REGISTRATION STATEMENT AND THE PROSPECTUS.

 

5.9.                            THE OFFER AND SALE OF THE SHARES AND THE
WARRANTS BY THE COMPANY TO THE INVESTOR AT THE CLOSING, AND THE WARRANT SHARES
UPON EXERCISE OF THE WARRANTS WILL BE MADE PURSUANT TO THE REGISTRATION
STATEMENT AND THE PROSPECTUS, AND WILL COMPLY IN ALL MATERIAL RESPECTS WITH THE
REQUIREMENTS OF THE SECURITIES ACT, THE EXCHANGE ACT AND THE RULES AND
REGULATIONS.

 

5.10.                     AT THE CLOSING, THE SHARES AND THE WARRANTS, AND UPON
EXERCISE OF THE WARRANTS (AND ASSUMING THE REGISTRATION STATEMENT IS EFFECTIVE
AND AVAILABLE AT THE TIME OF SUCH EXERCISE), THE WARRANT SHARES, SHALL BE ISSUED
TO THE INVESTOR WITHOUT ANY RESTRICTIVE OR OTHER LEGEND AND, AT ALL TIMES
FOLLOWING THE CLOSING, THERE SHALL EXIST NO RESTRICTION ON, OR ANY REQUIREMENT
IMPOSED BY THE COMPANY OR ITS TRANSFER AGENT WITH RESPECT TO, THE OFFER OR SALE
OF SHARES, THE WARRANTS OR THE WARRANT SHARES BY ANY INVESTOR, REGARDLESS OF
WHETHER SUCH OFFER OR SALE IS MADE TO THE PUBLIC, ON AN EXCHANGE (IN WHICH THE
CASE THE RULES OF SUCH EXCHANGE SHALL APPLY), IN A PRIVATE TRANSACTION, OR
OTHERWISE.

 

5.11.                     THE COMPANY’S COMMON STOCK IS REGISTERED PURSUANT TO
SECTION 12(G) OF THE EXCHANGE ACT AND IS LISTED ON THE NASDAQ NATIONAL MARKET. 
THE COMPANY CURRENTLY MEETS THE CONTINUING ELIGIBILITY REQUIREMENTS FOR LISTING
ON THE NASDAQ NATIONAL MARKET AND HAS NOT RECEIVED ANY NOTICE FROM NASDAQ THAT
IT DOES NOT CURRENTLY SATISFY SUCH REQUIREMENTS OR THAT SUCH CONTINUED LISTING
IS IN ANY WAY THREATENED.  THE COMPANY HAS TAKEN NO ACTION DESIGNED TO, OR
WHICH, TO THE KNOWLEDGE OF THE COMPANY, WOULD REASONABLY BE EXPECTED TO HAVE THE
EFFECT OF, TERMINATING THE REGISTRATION OF THE COMMON STOCK UNDER THE EXCHANGE
ACT OR DELISTING THE COMMON STOCK FROM THE NASDAQ NATIONAL MARKET.  THE ISSUANCE
AND SALE OF THE SHARES HEREUNDER DOES NOT AND WILL NOT CONTRAVENE THE RULES AND
REGULATIONS, OR ANY LISTING CRITERIA, OF THE NASDAQ NATIONAL MARKET. BASED ON
INFORMAL ADVICE OF THE STAFF OF THE NASD AND TO THE COMPANY’S KNOWLEDGE, THE
ISSUANCE AND SALE OF THE WARRANTS AND THE WARRANT SHARES HEREUNDER DOES NOT AND
WILL NOT CONTRAVENE THE RULES AND REGULATIONS, OR ANY LISTING CRITERIA, OF THE
NASDAQ NATIONAL MARKET

 

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5.12.                     THE FINANCIAL STATEMENTS OF THE COMPANY, TOGETHER WITH
RELATED NOTES AND SCHEDULES AS SET FORTH OR INCORPORATED BY REFERENCE IN THE
REGISTRATION STATEMENT, PRESENT FAIRLY THE FINANCIAL POSITION AND THE RESULTS OF
OPERATIONS AND CASH FLOWS OF THE COMPANY AS OF THE INDICATED DATES AND FOR THE
INDICATED PERIODS.  SUCH FINANCIAL STATEMENTS AND RELATED SCHEDULES HAVE BEEN
PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES,
CONSISTENTLY APPLIED THROUGH THE PERIODS INVOLVED, EXCEPT AS DISCLOSED THEREIN,
AND ALL ADJUSTMENTS NECESSARY FOR A FAIR PRESENTATION OF RESULTS FOR SUCH
PERIODS HAVE BEEN MADE. THE SUMMARY FINANCIAL AND STATISTICAL DATA OF THE
COMPANY INCLUDED IN THE REGISTRATION STATEMENT PRESENT FAIRLY THE INFORMATION
SHOWN THEREIN AND SUCH DATA HAVE BEEN COMPILED ON A BASIS CONSISTENT WITH THE
FINANCIAL STATEMENTS PRESENTED THEREIN.

 

5.13.                     PRICEWATERHOUSECOOPERS LLP, WHO HAS CERTIFIED CERTAIN
OF THE FINANCIAL STATEMENTS FILED WITH THE COMMISSION AS PART OF THE
REGISTRATION STATEMENT, ARE INDEPENDENT PUBLIC ACCOUNTANTS AS REQUIRED BY THE
SECURITIES ACT AND THE RULES AND REGULATIONS.

 

5.14.                     ALL MATERIAL CONTRACTS FILED WITH THE COMMISSION AND
TO WHICH THE COMPANY OR A SUBSIDIARY OF THE COMPANY IS A PARTY HAVE BEEN DULY
AUTHORIZED, EXECUTED AND DELIVERED BY THE COMPANY OR SUCH SUBSIDIARY, CONSTITUTE
VALID AND BINDING AGREEMENTS OF THE COMPANY OR SUCH SUBSIDIARY, AND ARE
ENFORCEABLE AGAINST THE COMPANY OR SUCH SUBSIDIARY IN ACCORDANCE WITH THE TERMS
THEREOF, SUBJECT TO THE EFFECT OF APPLICABLE BANKRUPTCY, INSOLVENCY OR SIMILAR
LAWS AFFECTING CREDITORS’ RIGHTS GENERALLY AND EQUITABLE PRINCIPLES OF GENERAL
APPLICABILITY.

 

5.15.                     THERE IS NO ACTION, SUIT, CLAIM OR PROCEEDING PENDING
OR, TO THE KNOWLEDGE OF THE COMPANY, THREATENED AGAINST THE COMPANY OR ANY OF
ITS SUBSIDIARIES BEFORE ANY COURT OR ADMINISTRATIVE AGENCY OR OTHERWISE WHICH IF
DETERMINED ADVERSELY TO THE COMPANY OR ITS SUBSIDIARIES MIGHT RESULT IN ANY
MATERIAL ADVERSE EFFECT OR ADVERSELY AFFECT THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY; AND, TO THE BEST OF THE COMPANY’S KNOWLEDGE, NO SUCH
PROCEEDINGS ARE THREATENED.

 

5.16.                     ANY LEASES OF REAL PROPERTY AND BUILDINGS THAT ARE
MATERIAL TO THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES ARE HELD BY THEM
UNDER VALID, SUBSISTING AND ENFORCEABLE LEASES WITH SUCH EXCEPTIONS AS ARE NOT
MATERIAL AND DO NOT INTERFERE WITH THE USE MADE AND PROPOSED TO BE MADE OF SUCH
PROPERTY AND BUILDINGS BY THE COMPANY AND ITS SUBSIDIARIES.

 

5.17.                     NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES HAS
SUSTAINED SINCE THE DATE OF THE LATEST UNAUDITED FINANCIAL STATEMENTS INCLUDED
IN THE PROSPECTUS ANY LOSS OR INTERFERENCE WITH ITS BUSINESS FROM FIRE,
EXPLOSION, FLOOD OR OTHER CALAMITY, WHETHER OR NOT COVERED BY INSURANCE, OR FROM
ANY LABOR DISPUTE OR COURT OR GOVERNMENTAL ACTION, ORDER OR DECREE, OTHERWISE
THAN AS SET FORTH OR CONTEMPLATED IN THE PROSPECTUS THAT WOULD INDIVIDUALLY OR
IN THE AGGREGATE RESULT IN A MATERIAL ADVERSE EFFECT; AND, SINCE THE DATE OF THE
LATEST UNAUDITED FINANCIAL STATEMENTS INCLUDED IN THE PROSPECTUS, OR AS
OTHERWISE DISCLOSED IN THE PROSPECTUS, THERE HAS NOT BEEN ANY CHANGE IN THE
CAPITAL STOCK OR LONG-TERM DEBT OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, THERE
HAVE BEEN NO TRANSACTIONS ENTERED INTO BY THE COMPANY OR ANY OF ITS
SUBSIDIARIES, OTHER THAN THOSE IN THE ORDINARY COURSE OF BUSINESS, THAT WOULD
INDIVIDUALLY OR IN THE AGGREGATE RESULT IN A MATERIAL ADVERSE EFFECT THE COMPANY
AND ITS SUBSIDIARIES CONSIDERED AS ONE ENTERPRISE AND WHICH ARE REQUIRED TO BE
DISCLOSED IN THE PROSPECTUS, THERE HAS BEEN NO DIVIDEND OR DISTRIBUTION OF ANY
KIND DECLARED, PAID OR MADE BY THE COMPANY ON ANY CLASS OF ITS CAPITAL STOCK OR
ANY CHANGE IN THE

 

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general affairs, management, financial position, stockholders’ equity or results
of operations of the Company and its subsidiaries taken as a whole, that would
constitute a Material Adverse Effect otherwise than as set forth or described in
the Prospectus.

 

5.18.                     NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES IS IN
VIOLATION OF ITS CHARTER DOCUMENTS OR BYLAWS.  NEITHER THE COMPANY NOR ANY OF
ITS SUBSIDIARIES IS, NOR, WITH THE GIVING OF NOTICE OR LAPSE OF TIME OR BOTH,
WILL IT BE, IN VIOLATION OF OR IN DEFAULT UNDER ANY AGREEMENT, LEASE, CONTRACT,
INDENTURE OR OTHER INSTRUMENT OR OBLIGATION TO WHICH IT IS A PARTY OR BY WHICH
IT, OR ANY OF ITS PROPERTIES, IS BOUND AND WHICH VIOLATION OR DEFAULT HAS
RESULTED IN, OR COULD REASONABLY BE EXPECTED TO RESULT IN, A MATERIAL ADVERSE
EFFECT.

 

5.19.                     EACH APPROVAL, CONSENT, ORDER, AUTHORIZATION,
DESIGNATION, DECLARATION OR FILING BY OR WITH ANY REGULATORY, ADMINISTRATIVE OR
OTHER GOVERNMENTAL BODY NECESSARY IN CONNECTION WITH THE EXECUTION AND DELIVERY
BY THE COMPANY OF THIS AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS HEREIN
CONTEMPLATED HAS BEEN OBTAINED OR MADE AND IS IN FULL FORCE AND EFFECT.

 

5.20.                     THE ISSUE AND SALE OF THE SHARES AND THE WARRANTS BY
THE COMPANY AND THE COMPLIANCE BY THE COMPANY WITH ALL OF THE PROVISIONS OF THIS
AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS HEREIN CONTEMPLATED
(INCLUDING WITHOUT LIMITATION THE ISSUANCE OF THE WARRANT SHARES UPON EXERCISE
OF THE WARRANTS) WILL NOT CONFLICT WITH OR RESULT IN A BREACH OR VIOLATION OF
ANY OF THE TERMS OR PROVISIONS OF, OR CONSTITUTE A DEFAULT UNDER, ANY INDENTURE,
MORTGAGE, DEED OF TRUST, LOAN AGREEMENT OR OTHER AGREEMENT OR INSTRUMENT TO
WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS A PARTY OR BY WHICH THE COMPANY
OR ANY OF ITS SUBSIDIARIES IS BOUND OR TO WHICH ANY OF THE PROPERTY OR ASSETS OF
THE COMPANY OR ANY OF ITS SUBSIDIARIES IS SUBJECT, NOR WILL SUCH ACTION RESULT
IN ANY VIOLATION OF THE PROVISIONS OF THE CERTIFICATE OF INCORPORATION OR
BY-LAWS OF THE COMPANY OR ANY STATUTE OR ANY ORDER, RULE OR REGULATION OF ANY
COURT OR GOVERNMENTAL AGENCY OR BODY HAVING JURISDICTION OVER THE COMPANY OR ANY
OF ITS SUBSIDIARIES OR ANY OF THEIR PROPERTIES; AND NO FILING, CONSENT,
APPROVAL, AUTHORIZATION, ORDER, REGISTRATION OR QUALIFICATION OF OR WITH ANY
SUCH COURT OR GOVERNMENTAL AGENCY OR BODY IS REQUIRED FOR THE ISSUE AND SALE OF
THE SHARES, THE WARRANTS OR THE WARRANT SHARES OR THE CONSUMMATION BY THE
COMPANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, EXCEPT FOR ANY
FILINGS WHICH MAY BE REQUIRED FOR THE ISSUANCE OF THE WARRANT SHARES IN THE
EVENT THE REGISTRATION STATEMENT IS NO LONGER AVAILABLE FOR THE PURPOSE OF
ISSUING SUCH WARRANT SHARES.

 

5.21.                     THE COMPANY AND ITS SUBSIDIARIES OWN OR POSSESS OR
OTHERWISE HAVE THE RIGHT TO USE ADEQUATE PATENTS, PATENT RIGHTS, LICENSES,
INVENTIONS, COPYRIGHTS, KNOW-HOW (INCLUDING TRADE SECRETS AND OTHER UNPATENTED
AND/OR UNPATENTABLE PROPRIETARY OR CONFIDENTIAL INFORMATION, SYSTEMS OR
PROCEDURES), TRADEMARKS, SERVICE MARKS, TRADE NAMES OR OTHER INTELLECTUAL
PROPERTY (COLLECTIVELY, “INTELLECTUAL PROPERTY”) NECESSARY TO CARRY ON THE
BUSINESS NOW OPERATED BY THEM, AND NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES HAS RECEIVED WRITTEN NOTICE OR OTHERWISE HAS ACTUAL KNOWLEDGE OF
ANY ASSERTED RIGHT WITH RESPECT TO INFRINGEMENT  OF INTELLECTUAL PROPERTY THAT
THE COMPANY REASONABLY BELIEVES AS OF THE DATE OF THIS AGREEMENT WILL HAVE A
MATERIAL ADVERSE EFFECT.

 

5.22.                     EACH MATERIAL EMPLOYEE BENEFIT PLAN, WITHIN THE
MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED (“ERISA”), THAT IS MAINTAINED,

 

10

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administered or contributed to by the Company or any of its affiliates for
employees or former employees of the Company and its subsidiaries has been
maintained in material compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but not limited to
ERISA and the Internal Revenue Code of 1986, as amended (the “Code”); no
prohibited transaction, within the meaning of Section 406 of ERISA or
Section 4975 of the Code, has occurred which would result in a material
liability to the Company with respect to any such plan excluding transactions
effected pursuant to a statutory or administrative exemption; and for each such
plan that is subject to the funding rules of Section 412 of the Code or
Section 302 of ERISA, no “accumulated funding deficiency” as defined in
Section 412 of the Code has been incurred, whether or not waived, and the
present value of all benefits accrued under such plan determined using
reasonable actuarial assumptions does not exceed the fair market value of the
assets of each such plan (excluding for these purposes accrued but unpaid
contributions by an amount that represents a material liability to the Company).

 

5.23.                     NEITHER THE COMPANY NOR, TO THE COMPANY’S BEST
KNOWLEDGE, ANY OF ITS AFFILIATES HAS TAKEN OR INTENDS TO TAKE, DIRECTLY OR
INDIRECTLY, ANY ACTION DESIGNED TO CAUSE OR RESULT IN, OR WHICH HAS CONSTITUTED
OR WHICH MIGHT REASONABLY BE EXPECTED TO CONSTITUTE, THE STABILIZATION OR
MANIPULATION OF THE PRICE OF THE SHARES OF COMMON STOCK TO FACILITATE THE SALE
OR RESALE OF THE SHARES.

 

5.24.                     THE COMPANY IS NOT AND, AFTER GIVING EFFECT TO THE
OFFERING AND SALE OF THE SHARES AND THE WARRANTS WILL NOT BE, AN “INVESTMENT
COMPANY”, AS SUCH TERM IS DEFINED IN THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED.

 

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

 

5.26.                     THE COMPANY AND ITS SUBSIDIARIES CARRY, OR ARE COVERED
BY, INSURANCE IN SUCH AMOUNTS AND COVERING SUCH RISKS AS THE COMPANY BELIEVES IS
REASONABLE FOR THE CONDUCT OF THEIR BUSINESSES AND THE VALUE OF ITS PROPERTIES.

 

5.27.                     THE COMPANY HAS NOT AT ANY TIME DURING THE LAST FIVE
YEARS (I) MADE ANY UNLAWFUL CONTRIBUTION TO ANY CANDIDATE FOR FOREIGN OFFICE, OR
FAILED TO DISCLOSE FULLY ANY CONTRIBUTION IN VIOLATION OF LAW, OR (II) MADE ANY
PAYMENT TO ANY FEDERAL OR STATE GOVERNMENTAL OFFICER OR OFFICIAL, OR OTHER
PERSON CHARGED WITH SIMILAR PUBLIC OR QUASI-PUBLIC DUTIES, OTHER THAN PAYMENTS
REQUIRED OR PERMITTED BY THE LAWS OF THE UNITED STATES OR ANY JURISDICTION
THEREOF.

 

5.28.                     EXCEPT AS DISCLOSED IN THE PROSPECTUS, NO PERSON HAS
THE RIGHT TO REQUIRE THE COMPANY OR ANY OF ITS SUBSIDIARIES TO REGISTER ANY
SECURITIES FOR SALE UNDER THE SECURITIES ACT BY REASON OF THE FILING OF THE
REGISTRATION STATEMENT WITH THE COMMISSION OR BY REASON OF THE ISSUANCE AND SALE
OF THE SHARES, EXCEPT FOR RIGHTS WHICH HAVE BEEN WAIVED.

 

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5.29.                     THE SHARES AND THE WARRANT SHARES HAVE BEEN APPROVED
FOR INCLUSION, SUBJECT TO OFFICIAL NOTICE OF ISSUANCE, IN THE NASDAQ NATIONAL
MARKET.

 

5.30.                     OTHER THAN THE PLACEMENT AGENT AGREEMENT AND THIS
AGREEMENT, NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES IS A PARTY TO ANY
CONTRACT, AGREEMENT OR UNDERSTANDING WITH ANY PERSON THAT WOULD GIVE RISE TO A
VALID CLAIM AGAINST THE COMPANY OR ANY OF ITS SUBSIDIARIES FOR A BROKERAGE
COMMISSION, FINDER’S FEE OR LIKE PAYMENT IN CONNECTION WITH THE OFFERING AND
SALE OF THE SHARES, EXCEPT FOR RIGHTS THAT HAVE BEEN WAIVED.

 

6.                                      RIGHT OF PARTICIPATION.

 

6.1.                            DEFINED TERMS.  WHEN USED HEREIN, THE FOLLOWING
TERMS SHALL HAVE THE RESPECTIVE MEANINGS INDICATED:

 

(A)                                  “EXCLUDED SECURITY” MEANS (I) SECURITIES
PURCHASED UNDER THIS AGREEMENT; (II) SECURITIES ISSUED UPON EXERCISE OF THE
WARRANTS; (III) SHARES OF COMMON STOCK ISSUABLE OR ISSUED TO (X) EMPLOYEES,
CONSULTANTS OR DIRECTORS FROM TIME TO TIME EITHER DIRECTLY OR UPON THE EXERCISE
OF OPTIONS, IN SUCH CASE GRANTED OR TO BE GRANTED BY THE COMPANY’S BOARD OF
DIRECTORS (THE “BOARD OF DIRECTORS”), PURSUANT TO ONE OR MORE STOCK OPTION PLANS
OR RESTRICTED STOCK PLANS OR STOCK PURCHASE PLANS IN EFFECT AS OF THE CLOSING
DATE OR SUBSEQUENTLY APPROVED BY THE BOARD OF DIRECTORS INCLUDING A MAJORITY OF
THE COMPANY’S INDEPENDENT DIRECTORS (AS SUCH TERM IS DEFINED UNDER RULE
4200(A)(15) OF THE NASDAQ MARKET RULES) OF THE BOARD OF DIRECTORS, OR (Y)
VENDORS PURSUANT TO WARRANTS TO PURCHASE COMMON STOCK THAT ARE OUTSTANDING ON
THE DATE HEREOF OR ISSUED HEREAFTER, PROVIDED SUCH ISSUANCES ARE APPROVED BY THE
BOARD OF DIRECTORS; (IV) SHARES OF COMMON STOCK ISSUED IN CONNECTION WITH ANY
STOCK SPLIT, STOCK DIVIDEND OR RECAPITALIZATION OF THE COMPANY; (V) SHARES OF
COMMON STOCK ISSUED IN CONNECTION WITH THE ACQUISITION BY THE COMPANY OF ANY
CORPORATION OR OTHER ENTITY OR SUBSTANTIALLY ALL OF THE ASSETS OF ANY
CORPORATION OR OTHER ENTITY OR DIVISION THEREOF OCCURRING AFTER THE CLOSING
DATE; (VI) SHARES OF COMMON STOCK ISSUED UPON THE EXERCISE OR CONVERSION OF ANY
SECURITIES OF THE COMPANY OUTSTANDING ON THE CLOSING DATE; (VII) SHARES OF
COMMON STOCK ISSUED IN CONNECTION WITH A JOINT VENTURE, STRATEGIC ALLIANCE OR
OTHER COMMERCIAL RELATIONSHIP RELATING TO THE OPERATION OF THE COMPANY’S
BUSINESS THE PRIMARY PURPOSE OF WHICH IS NOT TO RAISE EQUITY CAPITAL; (VIII)
SECURITIES ISSUED PURSUANT TO A BONA FIDE FIRM COMMITMENT UNDERWRITTEN PUBLIC
OFFERING; AND (IX) SECURITIES ISSUED IN A REGISTERED DIRECT OFFERING SOLD
PURSUANT TO A REGISTRATION STATEMENT OTHER THAN THE REGISTRATION STATEMENT.

 

(B)                                 “PRO RATA SHARE” MEANS, WITH RESPECT TO AN
INVESTOR AT ANY TIME, THE PERCENTAGE DETERMINED BY DIVIDING THE AGGREGATE NUMBER
OF SUCH INVESTOR’S SHARES AND WARRANT SHARES ISSUABLE UNDER THE WARRANTS AT SUCH
TIME, DETERMINED ON A FULLY DILUTED BASIS AFTER GIVING EFFECT TO THE EXERCISE IN
FULL OF SUCH WARRANTS (WITHOUT REGARD TO ANY RESTRICTIONS ON SUCH EXERCISE THAT
MAY BE SET FORTH IN THE WARRANTS), BY THE NUMBER OF THE SHARES OF THE COMMON
STOCK OUTSTANDING PLUS THE NUMBER OF WARRANT SHARES ISSUABLE UNDER THE WARRANTS
AT SUCH TIME.

 

(C)                                  “SUBSEQUENT PLACEMENT” MEANS THE ISSUANCE,
SALE, EXCHANGE, OR AGREEMENT OR OBLIGATION TO ISSUE, SELL OR EXCHANGE OR
RESERVE, OR AGREEMENT TO OR SET ASIDE FOR ISSUANCE, SALE OR EXCHANGE ANY SHARES
OF COMMON STOCK (OR SECURITIES OR RIGHTS CONVERTIBLE, EXERCISABLE OR
EXCHANGEABLE, DIRECTLY OR INDIRECTLY, FOR COMMON STOCK) THAT ARE OFFERED OR SOLD

 

12

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by the Company for a per share price that is less than the Purchase Price per
Share (proportionately adjusted for stock splits, stock dividends and similar
event); provided, however, that the issuance or sale, or agreement to issue or
sell, an Excluded Security shall not constitute a Subsequent Placement.

 

6.2.                            OFFERED SECURITIES. FROM THE CLOSING DATE
THROUGH THE FIRST DATE ON WHICH NONE OF THE WARRANTS REMAIN OUTSTANDING (AS A
RESULT OF THEIR EXERCISE AND/OR EXPIRATION), THE COMPANY WILL NOT, DIRECTLY OR
INDIRECTLY, EFFECT A SUBSEQUENT PLACEMENT, UNLESS IN EACH SUCH CASE THE COMPANY
SHALL HAVE FIRST OFFERED TO SELL TO EACH INVESTOR ITS PRO RATA SHARE OF THE
SECURITIES BEING OFFERED IN SUCH SUBSEQUENT PLACEMENT (THE SECURITIES BEING
OFFERED TO THE INVESTORS BEING REFERRED TO HEREIN AS THE “OFFERED SECURITIES”). 
NOTWITHSTANDING THE FOREGOING, EACH INVESTOR’S RIGHTS TO PARTICIPATE IN
SUBSEQUENT PLACEMENTS PURSUANT TO THIS SECTION 6 SHALL EXPIRE WHEN SUCH
INVESTOR’S WARRANTS ARE NO LONGER OUTSTANDING AND HAVE EITHER BEEN EXERCISED OR
HAVE EXPIRED.  THE COMPANY SHALL OFFER TO SELL TO EACH INVESTOR (A) SUCH
INVESTOR’S PRO RATA SHARE OF THE OFFERED SECURITIES (THE “BASIC AMOUNT”), AND
(B) SUCH ADDITIONAL PORTION OF THE OFFERED SECURITIES AS SUCH INVESTOR SHALL
INDICATE IT WILL PURCHASE SHOULD THE OTHER INVESTORS SUBSCRIBE FOR LESS THAN
THEIR BASIC AMOUNTS (THE “UNDERSUBSCRIPTION AMOUNT”), AT A PRICE AND ON SUCH
OTHER TERMS AS SHALL HAVE BEEN SPECIFIED BY THE COMPANY IN WRITING DELIVERED TO
SUCH INVESTOR (THE “OFFER”), WHICH OFFER BY ITS TERMS SHALL REMAIN OPEN AND
IRREVOCABLE FOR A PERIOD OF NOT LESS THAN THREE (3) BUSINESS DAYS FROM SUCH
INVESTOR’S RECEIPT OF THE TERMS OF THE OFFER IN WRITING (THE “OFFER PERIOD”). 
EACH INVESTOR AGREES THAT IT WILL KEEP THE TERMS OF ANY SUCH SUBSEQUENT
PLACEMENT CONFIDENTIAL UNTIL SUCH INFORMATION IS PUBLICLY AVAILABLE. 
ADDITIONALLY, EACH INVESTOR AGREES THAT IT WILL NOT PURCHASE OR SELL ANY OF THE
COMPANY’S SECURITIES WHILE IN POSSESSION OF INFORMATION REGARDING ANY SUBSEQUENT
PLACEMENT UNTIL SUCH INFORMATION IS PUBLICLY AVAILABLE.

 

6.3.                            NOTICE OF ACCEPTANCE.  IF THE INVESTOR WISHES TO
ACCEPT THE OFFER, THE INVESTOR SHALL DELIVER WRITTEN NOTICE THEREOF (A “NOTICE
OF ACCEPTANCE”) TO THE COMPANY PRIOR TO THE EXPIRATION OF THE OFFER PERIOD,
SPECIFYING THE AMOUNT OF THE INVESTOR’S BASIC AMOUNT THAT THE INVESTOR ELECTS TO
PURCHASE AND, IF THE INVESTOR ELECTS TO PURCHASE ALL OF ITS BASIC AMOUNT, THE
UNDERSUBSCRIPTION AMOUNT THAT THE INVESTOR ELECTS TO PURCHASE.  IF THE AGGREGATE
OF THE BASIC AMOUNTS SUBSCRIBED FOR BY ALL INVESTORS IS LESS THAN THE TOTAL
OFFERED SECURITIES, EACH INVESTOR WHO HAS INDICATED IN ITS NOTICE OF ACCEPTANCE
THAT IT WISHES TO PURCHASE UNDERSUBSCRIPTION AMOUNTS SHALL BE ENTITLED TO
PURCHASE ALL UNDERSUBSCRIPTION AMOUNTS IT HAS SUBSCRIBED FOR; PROVIDED, HOWEVER,
THAT IF  THE AGGREGATE OF THE UNDERSUBSCRIPTION AMOUNTS SUBSCRIBED FOR EXCEED
THE DIFFERENCE BETWEEN THE OFFERED SECURITIES AND THE BASIC AMOUNTS SUBSCRIBED
FOR (THE “AVAILABLE UNDERSUBSCRIPTION AMOUNT”), EACH INVESTOR WHO HAS SUBSCRIBED
FOR ANY UNDERSUBSCRIPTION AMOUNT SHALL BE ENTITLED TO PURCHASE ONLY THAT PORTION
OF THE AVAILABLE UNDERSUBSCRIPTION AMOUNT AS THE UNDERSUBSCRIPTION AMOUNT
SUBSCRIBED FOR BY SUCH INVESTOR BEARS TO THE TOTAL UNDERSUBSCRIPTION AMOUNTS
SUBSCRIBED FOR BY ALL INVESTORS, SUBJECT TO ROUNDING BY THE BOARD OF DIRECTORS
TO THE EXTENT IT DEEMS REASONABLY NECESSARY.

 

6.4.                            PERMITTED SALES OF REFUSED SECURITIES.  IN THE
EVENT THAT NOTICES OF ACCEPTANCE ARE NOT TIMELY DELIVERED BY THE INVESTORS IN
RESPECT OF ALL THE OFFERED SECURITIES, THE COMPANY SHALL HAVE FORTY-FIVE (45)
DAYS FROM THE EXPIRATION OF THE OFFER PERIOD TO CLOSE THE SALE OF ALL OR ANY
PART OF SUCH OFFERED SECURITIES AS TO WHICH A NOTICE OF ACCEPTANCE HAS NOT BEEN
GIVEN BY AN INVESTOR (THE “REFUSED SECURITIES”) TO THE PERSON OR PERSONS
SPECIFIED IN THE OFFER, BUT ONLY UPON TERMS AND CONDITIONS, INCLUDING, WITHOUT
LIMITATION, UNIT PRICE AND INTEREST RATES (IF APPLICABLE),

 

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which are, in the aggregate, no more favorable to such other person or persons
or less favorable to the Company than those set forth in the Offer.

 

6.5.                            REDUCTION IN AMOUNT OF OFFERED SECURITIES.  IN
THE EVENT THAT THE COMPANY PROPOSES TO SELL LESS THAN ALL THE REFUSED SECURITIES
(ANY SUCH SALE TO BE IN THE MANNER AND ON THE TERMS SPECIFIED IN SECTION 6.4
ABOVE), THEN THE INVESTOR MAY, AT ITS OPTION AND IN ITS SOLE AND ABSOLUTE
DISCRETION, REDUCE THE NUMBER OR OTHER UNITS OF THE OFFERED SECURITIES SPECIFIED
IN ITS NOTICE OF ACCEPTANCE TO AN AMOUNT WHICH SHALL BE NOT LESS THAN THE AMOUNT
OF THE OFFERED SECURITIES WHICH THE INVESTOR ELECTED TO PURCHASE PURSUANT TO
SECTION 6.3 ABOVE MULTIPLIED BY A FRACTION, (A) THE NUMERATOR OF WHICH SHALL BE
THE AMOUNT OF OFFERED SECURITIES WHICH THE COMPANY ACTUALLY PROPOSES TO SELL,
AND (B) THE DENOMINATOR OF WHICH SHALL BE THE AMOUNT OF ALL OFFERED SECURITIES.
IN THE EVENT THAT ANY INVESTOR SO ELECTS TO REDUCE THE NUMBER OR AMOUNT OF
OFFERED SECURITIES SPECIFIED IN ITS NOTICE OF ACCEPTANCE, THE COMPANY MAY NOT
SELL OR OTHERWISE DISPOSE OF MORE THAN THE REDUCED AMOUNT OF THE OFFERED
SECURITIES UNTIL SUCH SECURITIES HAVE BEEN OFFERED TO THE INVESTORS IN
ACCORDANCE HEREWITH.

 

6.6.                            CLOSING. UPON EACH CLOSING OF THE PURCHASE AND
SALE OF OFFERED SECURITIES, THE INVESTOR SHALL PURCHASE FROM THE COMPANY, AND
THE COMPANY SHALL SELL TO THE INVESTOR THE NUMBER OF OFFERED SECURITIES
SPECIFIED IN ITS NOTICE OF ACCEPTANCE, AS REDUCED PURSUANT TO SECTION 6.5 ABOVE
IF THE INVESTORS HAVE SO ELECTED, UPON THE TERMS AND CONDITIONS SPECIFIED IN THE
OFFER.  THE PURCHASE BY THE INVESTORS OF ANY OFFERED SECURITIES IS SUBJECT IN
ALL CASES TO THE PREPARATION, EXECUTION AND DELIVERY BY THE COMPANY AND THE
INVESTORS OF A PURCHASE AGREEMENT RELATING TO SUCH OFFERED SECURITIES ON THE
SAME TERMS AND CONDITIONS APPLICABLE TO OTHER PERSONS PURCHASING THE OFFERED
SECURITIES.

 

6.7.                            FURTHER SALE. IN EACH CASE, ANY OFFERED
SECURITIES NOT PURCHASED BY THE INVESTORS OR OTHER PERSON OR PERSONS IN
ACCORDANCE HEREWITH MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE COMPANY
UNTIL THEY ARE AGAIN OFFERED TO THE INVESTORS UNDER THE PROCEDURES SPECIFIED
HEREIN.

 

7.                                      FURTHER AGREEMENTS.

 

7.1.                            THE COMPANY SHALL NOTIFY THE INVESTOR PROMPTLY,
AND WILL, IF REQUESTED, CONFIRM SUCH NOTIFICATION IN WRITING, OF THE RECEIPT BY
THE COMPANY OF ANY NOTIFICATION WITH RESPECT TO ANY SUSPENSION OF THE
QUALIFICATION OF THE SHARES OR WARRANT SHARES FOR OFFER AND SALE IN ANY
JURISDICTION.  IF AT ANY TIME THE COMMISSION SHALL ISSUE ANY ORDER SUSPENDING
THE EFFECTIVENESS OF THE REGISTRATION STATEMENT IN CONNECTION WITH THE OFFERING
CONTEMPLATED HEREBY, THE COMPANY WILL MAKE EVERY REASONABLE EFFORT TO OBTAIN THE
WITHDRAWAL OF ANY SUCH ORDER AS SOON AS PRACTICABLE.

 

7.2.                            THE COMPANY SHALL COMPLY WITH ALL THE
UNDERTAKINGS CONTAINED IN THE REGISTRATION STATEMENT.

 

7.3.

 

(A)                                  IN THE EVENT THAT, ON ANY DATE, THE
REGISTRATION STATEMENT IS UNAVAILABLE TO THE COMPANY FOR THE PURPOSE OF ISSUING
THE WARRANT SHARES TO THE INVESTOR UPON EXERCISE OF THE INVESTOR’S WARRANT (SUCH
DATE, A “REGISTRATION TRIGGER DATE”), THE COMPANY WILL PREPARE AND FILE WITH THE
COMMISSION, AS SOON AS PRACTICABLE FOLLOWING THE REGISTRATION TRIGGER DATE, BUT
IN NO

 

14

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event later than the thirtieth (30th) day following the Registration Trigger
Date (the “Filing Deadline”), a registration statement on Form S-3 (or, if the
Company is not then eligible to use Form S-3, on such other form as the Company
is then eligible to use) covering the resale of the Warrant Shares by the
Investor (the “Second Registration Statement”). In the event that the Company
files the Second Registration Statement on a form other than Form S-3, it shall
convert the Second Registration Statement to a Form S-3, or file a new
registration statement on Form S-3 covering the number of Warrant Shares covered
by the Second Registration Statement, as soon as practicable (but in no event
more than thirty (30) days) following the date on which it becomes eligible to
use Form S-3 for the resale of the Warrant Shares by the Investor.

 

(B)           THE COMPANY SHALL USE ITS REASONABLE BEST EFFORTS TO CAUSE THE
SECOND REGISTRATION STATEMENT TO BECOME EFFECTIVE AS PROMPTLY AS PRACTICABLE
AFTER FILING, SUCH EFFORTS TO INCLUDE, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, RESPONDING PROMPTLY TO ANY AND ALL COMMENTS MADE BY THE STAFF OF THE
COMMISSION WITH RESPECT TO THE REGISTRATION STATEMENT, AND SUBMITTING TO THE
COMMISSION, WITHIN TWO (2) BUSINESS DAYS AFTER THE COMPANY LEARNS THAT NO REVIEW
OF THE REGISTRATION STATEMENT WILL BE MADE BY THE STAFF OF THE COMMISSION OR
THAT THE STAFF OF THE COMMISSION HAS NO FURTHER COMMENTS ON THE REGISTRATION
STATEMENT, AS THE CASE MAY BE, A REQUEST FOR ACCELERATION OF THE EFFECTIVENESS
OF SUCH REGISTRATION STATEMENT TO A TIME AND DATE NOT LATER THAN TWO (2)
BUSINESS DAYS AFTER THE SUBMISSION OF SUCH REQUEST.  NOTWITHSTANDING THE
FOREGOING, IN THE EVENT THE SECOND REGISTRATION STATEMENT IS NOT EFFECTIVE
WITHIN NINETY (90) DAYS OF THE REGISTRATION TRIGGER DATE (IF THERE IS NO REVIEW
OF THE SECOND REGISTRATION STATEMENT BY THE COMMISSION) OR ONE HUNDRED AND
TWENTY (120) DAYS (IF THERE IS A REVIEW OF THE SECOND REGISTRATION STATEMENT BY
THE COMMISSION), THE COMPANY SHALL PAY A PENALTY TO THE HOLDERS EQUAL TO 1.5% 
OF THE VALUE OF THE WARRANT SHARES (THE “PENALTY”) AT THE TIME OF SUCH FAILURE
OF THE SECOND REGISTRATION STATEMENT TO BE EFFECTIVE (THE “EFFECTIVENESS
FAILURE”).  THE PENALTY SHALL BE PAYABLE TO THE HOLDERS AT THE TIME OF THE
EFFECTIVENESS FAILURE AND EVERY 30 DAYS FOLLOWING SUCH EFFECTIVENESS FAILURE
UNTIL THE SECOND REGISTRATION STATEMENT IS DECLARED EFFECTIVE BY THE
COMMISSION.  THE VALUE OF THE WARRANT SHARES SHALL BE DETERMINED BY TAKING THE
VOLUME WEIGHTED AVERAGE PRICE PER SHARE FOR THE FIVE DAYS PRIOR TO AND INCLUDING
THE DATE OF THE EFFECTIVENESS FAILURE. THE COMPANY WILL MAINTAIN THE
EFFECTIVENESS OF THE SECOND REGISTRATION STATEMENT FILED PURSUANT TO THIS
AGREEMENT UNTIL THE EARLIEST TO OCCUR OF (I) THE DATE ON WHICH ALL OF THE
REGISTRABLE SECURITIES ELIGIBLE FOR RESALE THEREUNDER HAVE BEEN PUBLICLY SOLD
PURSUANT TO EITHER THE SECOND REGISTRATION STATEMENT OR RULE 144 UNDER THE
SECURITIES ACT (“RULE 144”), (II) THE DATE ON WHICH ALL OF THE WARRANT SHARES
REMAINING TO BE SOLD UNDER THE SECOND REGISTRATION STATEMENT (IN THE REASONABLE
OPINION OF COUNSEL TO THE COMPANY) MAY BE IMMEDIATELY SOLD TO THE PUBLIC UNDER
PARAGRAPH (K) OF RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION
AND (III) THE DATE THAT IS THE SECOND (2ND) ANNIVERSARY OF THE CLOSING DATE (THE
PERIOD BEGINNING ON THE CLOSING DATE AND ENDING ON THE EARLIEST TO OCCUR OF (I),
(II) OR (III) ABOVE BEING REFERRED TO HEREIN AS THE “REGISTRATION PERIOD”).

 

(C)     THE COMPANY SHALL USE ITS COMMERCIALLY REASONABLE EFFORTS TO PREPARE AND
FILE WITH THE COMMISSION SUCH AMENDMENTS AND SUPPLEMENTS TO THE SECOND
REGISTRATION STATEMENT AND THE PROSPECTUS USED IN CONNECTION THEREWITH (THE
“SECOND PROSPECTUS”) AS MAY BE NECESSARY TO KEEP THE SECOND REGISTRATION
STATEMENT CONTINUOUSLY EFFECTIVE AND FREE FROM ANY MATERIAL MISSTATEMENT OR
OMISSION TO STATE A MATERIAL FACT FOR A PERIOD NOT EXCEEDING ONE YEAR.

 

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(D)                                 THE COMPANY SHALL FURNISH TO EACH HOLDER
WITH RESPECT TO THE WARRANT SHARES REGISTERED UNDER THE SECOND REGISTRATION
STATEMENT SUCH NUMBER OF COPIES OF THE SECOND REGISTRATION STATEMENT, SECOND
PROSPECTUSES AND PRELIMINARY PROSPECTUSES IN CONFORMITY WITH THE REQUIREMENTS OF
THE SECURITIES ACT AND SUCH OTHER DOCUMENTS AS SUCH HOLDER MAY REASONABLY
REQUEST, IN ORDER TO FACILITATE THE PUBLIC SALE OR OTHER DISPOSITION OF ALL OR
ANY OF THE WARRANT SHARES BY SUCH HOLDER.

 

(E)                                  THE COMPANY SHALL FILE DOCUMENTS REQUIRED
OF THE COMPANY FOR BLUE SKY CLEARANCE IN STATES SPECIFIED IN WRITING BY EACH
INVESTOR AND USE ITS COMMERCIALLY REASONABLE EFFORTS TO MAINTAIN SUCH BLUE SKY
QUALIFICATIONS DURING THE REGISTRATION PERIOD; PROVIDED, HOWEVER, THAT THE
COMPANY SHALL NOT BE REQUIRED TO QUALIFY TO DO BUSINESS OR CONSENT TO SERVICE OF
PROCESS IN ANY JURISDICTION IN WHICH IT IS NOT NOW SO QUALIFIED OR HAS NOT SO
CONSENTED.

 

(F)                                    THE COMPANY SHALL BEAR ALL EXPENSES IN
CONNECTION WITH THE PROCEDURES DESCRIBED IN THIS SECTION 7.3 AND THE
REGISTRATION OF THE SECURITIES PURSUANT TO THE REGISTRATION STATEMENT (PROVIDED,
THAT, IF THE WARRANT SHARES ARE OFFERED PURSUANT TO AN UNDERWRITTEN OFFERING,
THE INVESTOR SHALL BEAR THE COST OF ALL UNDERWRITING DISCOUNTS AND SELLING
COMMISSIONS APPLICABLE TO THE SALE OF WARRANT SHARES).

 

(G)                                 THE COMPANY SHALL NOTIFY THE INVESTOR
IMMEDIATELY AFTER BECOMING AWARE OF THE ISSUANCE OF ANY STOP ORDER BY THE
COMMISSION DELAYING OR SUSPENDING THE EFFECTIVENESS OF THE SECOND REGISTRATION
STATEMENT OR OF THE INITIATION OR THREAT OF ANY PROCEEDING FOR THAT PURPOSE; AND
PROMPTLY USE ITS COMMERCIALLY REASONABLE EFFORTS TO PREVENT THE ISSUANCE OF ANY
STOP ORDER AND TO OBTAIN ITS WITHDRAWAL AT THE EARLIEST POSSIBLE MOMENT IF SUCH
STOP ORDER SHOULD BE ISSUED.

 

(H)                                 THE COMPANY SHALL NOTIFY THE INVESTOR
IMMEDIATELY AFTER BECOMING AWARE OF THE OCCURRENCE OF ANY EVENT (BUT SHALL NOT,
WITHOUT THE PRIOR WRITTEN CONSENT OF SUCH INVESTOR, DISCLOSE TO SUCH INVESTOR
ANY FACTS OR CIRCUMSTANCES CONSTITUTING MATERIAL NON-PUBLIC INFORMATION) AS A
RESULT OF WHICH THE SECOND PROSPECTUS, AS THEN IN EFFECT, CONTAINS AN UNTRUE
STATEMENT OF MATERIAL FACT OR OMITS TO STATE A MATERIAL FACT REQUIRED TO BE
STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING IN
LIGHT OF THE CIRCUMSTANCES THEN EXISTING, AND AS PROMPTLY AS PRACTICABLE PREPARE
AND FILE WITH THE COMMISSION AND FURNISH TO THE INVESTOR A REASONABLE NUMBER OF
COPIES OF A SUPPLEMENT OR AN AMENDMENT TO SUCH SECOND PROSPECTUS AS MAY BE
NECESSARY SO THAT SUCH SECOND PROSPECTUS DOES NOT CONTAIN AN UNTRUE STATEMENT OF
MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR
NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING IN LIGHT OF THE
CIRCUMSTANCES THEN EXISTING.

 

(I)                                     IN THE EVENT THAT, AT ANY TIME, THE
NUMBER OF SHARES AVAILABLE UNDER THE SECOND REGISTRATION STATEMENT IS
INSUFFICIENT TO COVER ALL OF THE WARRANT SHARES ISSUABLE UNDER THE WARRANTS
(WITHOUT REGARD TO ANY RESTRICTION ON THE EXERCISE THEREOF), THE COMPANY SHALL
PROMPTLY AMEND THE SECOND REGISTRATION STATEMENT OR FILE A NEW REGISTRATION
STATEMENT, IN ANY EVENT AS SOON AS PRACTICABLE, BUT NOT LATER THAN THE TENTH
(10TH) DAY FOLLOWING NOTICE FROM THE INVESTOR OF THE OCCURRENCE OF SUCH EVENT,
SO THAT THE REGISTRATION STATEMENT OR SUCH NEW REGISTRATION STATEMENT, OR BOTH,
COVERS NO LESS THAN ONE HUNDRED PERCENT (100%) OF THE WARRANT SHARES ISSUABLE
UNDER THE WARRANTS (WITHOUT REGARD TO ANY RESTRICTION ON THE EXERCISE OF SUCH

 

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Warrants).  The Company shall use its best efforts to cause such amendment
and/or new Registration Statement to become effective as soon as practicable
following the filing thereof.

 

7.4.                            SUSPENSION.

 

(A)                                  SUBJECT TO PARAGRAPH (B) BELOW, IN THE
EVENT (I) OF ANY REQUEST BY THE COMMISSION OR ANY OTHER FEDERAL OR STATE
GOVERNMENTAL AUTHORITY DURING THE PERIOD OF EFFECTIVENESS OF THE SECOND
REGISTRATION STATEMENT FOR AMENDMENTS OR SUPPLEMENTS TO THE SECOND REGISTRATION
STATEMENT OR RELATED SECOND PROSPECTUS OR FOR ADDITIONAL INFORMATION; (II) OF
THE ISSUANCE BY THE COMMISSION OR ANY OTHER FEDERAL OR STATE GOVERNMENTAL
AUTHORITY OF ANY STOP ORDER SUSPENDING THE EFFECTIVENESS OF THE SECOND
REGISTRATION STATEMENT OR THE INITIATION OF ANY PROCEEDINGS FOR THAT PURPOSE;
(III) OF THE RECEIPT BY THE COMPANY OF ANY NOTIFICATION WITH RESPECT TO THE
SUSPENSION OF THE QUALIFICATION OR EXEMPTION FROM QUALIFICATION OF THE WARRANT
SHARES FOR SALE IN ANY JURISDICTION OR THE INITIATION OR THREATENING OF ANY
PROCEEDING FOR SUCH PURPOSE; (IV) OF ANY EVENT OR CIRCUMSTANCE WHICH, UPON THE
ADVICE OF ITS COUNSEL, NECESSITATES THE MAKING OF ANY CHANGES IN THE SECOND
REGISTRATION STATEMENT OR SECOND PROSPECTUS, OR ANY DOCUMENT INCORPORATED OR
DEEMED TO BE INCORPORATED THEREIN BY REFERENCE, SO THAT, IN THE CASE OF THE
SECOND REGISTRATION STATEMENT, IT WILL NOT CONTAIN ANY UNTRUE STATEMENT OF A
MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR
NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING, AND THAT IN THE CASE OF
THE SECOND PROSPECTUS, IT WILL NOT CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL
FACT OR ANY OMISSION TO STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR
NECESSARY TO MAKE THE STATEMENTS THEREIN, IN THE LIGHT OF THE CIRCUMSTANCES
UNDER WHICH THEY WERE MADE, NOT MISLEADING; OR (V) THE COMPANY DETERMINES IN
GOOD FAITH THAT OFFERS AND SALES PURSUANT TO THE SECOND REGISTRATION STATEMENT
SHOULD NOT BE MADE BY REASON OF THE PRESENCE OF MATERIAL UNDISCLOSED
CIRCUMSTANCES OR DEVELOPMENTS WITH RESPECT TO WHICH THE DISCLOSURE THAT WOULD BE
REQUIRED IN SUCH A REGISTRATION STATEMENT OR RELATED PROSPECTUS IS PREMATURE,
WOULD HAVE AN ADVERSE EFFECT ON THE COMPANY OR IS OTHERWISE INADVISABLE, THEN
THE COMPANY SHALL IMMEDIATELY NOTIFY THE INVESTOR IN WRITING (THE “SUSPENSION
NOTICE”) TO THE EFFECT OF THE FOREGOING AND, UPON RECEIPT OF SUCH SUSPENSION
NOTICE, THE INVESTOR WILL REFRAIN FROM SELLING ANY WARRANT SHARES PURSUANT TO
THE SECOND REGISTRATION STATEMENT (A “SUSPENSION”) UNTIL THE INVESTOR’S RECEIPT
OF COPIES OF A SUPPLEMENTED OR AMENDED SECOND PROSPECTUS PREPARED AND FILED BY
THE COMPANY, OR UNTIL IT IS ADVISED IN WRITING BY THE COMPANY THAT THE CURRENT
SECOND PROSPECTUS MAY BE USED, AND HAS RECEIVED COPIES OF ANY ADDITIONAL OR
SUPPLEMENTAL FILINGS THAT ARE INCORPORATED OR DEEMED INCORPORATED BY REFERENCE
IN ANY SUCH SECOND PROSPECTUS.  IN THE EVENT OF ANY SUSPENSION, THE COMPANY WILL
USE ITS COMMERCIALLY REASONABLE EFFORTS TO CAUSE THE USE OF THE SECOND
PROSPECTUS SO SUSPENDED TO BE RESUMED AS SOON AS REASONABLY PRACTICABLE AFTER
THE DELIVERY OF A SUSPENSION NOTICE TO EACH HOLDER, AND IN NO EVENT SHALL THE
COMPANY BE PERMITTED TO SUSPEND THE USE OF THE SECOND REGISTRATION STATEMENT OR
THE SECOND PROSPECTUS PURSUANT TO (V) ABOVE FOR A PERIOD EXCEEDING NINETY (90)
DAYS IN ANY 365-DAY PERIOD.  IN ADDITION TO AND WITHOUT LIMITING ANY OTHER
REMEDIES (INCLUDING, WITHOUT LIMITATION, AT LAW OR AT EQUITY) AVAILABLE TO THE
INVESTOR, SUCH HOLDER SHALL BE ENTITLED TO SPECIFIC PERFORMANCE IN THE EVENT
THAT THE COMPANY FAILS TO COMPLY WITH THE PROVISIONS OF THIS SECTION 7.4(A).

 

(B)                                 AS LONG AS A SUSPENSION IS NOT THEN IN
EFFECT, EACH HOLDER MAY SELL WARRANT SHARES UNDER THE SECOND REGISTRATION
STATEMENT.  UPON RECEIPT OF A REQUEST THEREFOR, THE COMPANY WILL PROVIDE AN
ADEQUATE NUMBER OF CURRENT SECOND PROSPECTUSES TO SUCH HOLDER AND TO SUPPLY
COPIES TO ANY OTHER PARTIES REQUIRING SUCH SECOND PROSPECTUSES.

 

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(C)                                  THE INVESTOR AGREES THAT IT WILL NOTIFY THE
COMPANY IN THE EVENT THAT IT HAS SOLD WARRANT SHARES PURSUANT TO THE SECOND
REGISTRATION STATEMENT, IN WHICH CASE THE COMPANY WILL PROVIDE INSTRUCTIONS TO
THE COMPANY’S TRANSFER AGENT SO THAT THE WARRANT SHARES MAY BE PROPERLY
TRANSFERRED.

 

7.5.                            TRANSFER RESTRICTIONS.  FROM AND AFTER A
REGISTRATION TRIGGER DATE, THE INVESTOR SHALL NOT SELL, ASSIGN, PLEDGE, TRANSFER
OR OTHERWISE DISPOSE OF OR ENCUMBER ANY WARRANT SHARES THAT, AT THE TIME OF SUCH
SALE, CONSTITUTE “RESTRICTED SECURITIES” (AS SUCH TERM IS USED IN RULE 144),
UNLESS THE TRANSFEREE (THE “TRANSFEREE”) AGREES IN WRITING TO BE BOUND BY THE
TERMS OF THIS AGREEMENT, IN WHICH CASE SUCH TRANSFEREE WILL BE DEEMED TO BE AN
“INVESTOR” FOR PURPOSES HEREOF, AND EXCEPT (I) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN WHICH CASE THE INVESTOR
SHALL NOTIFY THE COMPANY THAT IT HAS SOLD WARRANT SHARES PURSUANT TO SUCH
REGISTRATION STATEMENT (A “NOTICE OF SUBSEQUENT SALE”), OR (II) PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY BY SUCH
INVESTOR OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT THE PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. THE COMPANY MAY, AND MAY
INSTRUCT ANY TRANSFER AGENT FOR THE COMPANY TO, PLACE SUCH STOP TRANSFER ORDERS
AS MAY BE REQUIRED ON THE TRANSFER BOOKS OF THE COMPANY IN ORDER TO ENSURE
COMPLIANCE WITH THE PROVISIONS OF THIS SECTION 7.5. THE TRANSFEREE WILL PROMPTLY
NOTIFY THE COMPANY OF ANY CHANGES TO BE MADE IN THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENT REGARDING THE TRANSFEREE OR ITS PLANS OF DISTRIBUTION,
AND THE COMPANY AGREES, IN SUCH EVENT, TO FILE PROMPTLY (BUT IN NO EVENT MORE
THAN FIVE (5) BUSINESS DAY FOLLOWING SUCH NOTIFICATION) ONE OR MORE
POST-EFFECTIVE AMENDMENTS TO THE SECOND REGISTRATION STATEMENT OR A SUPPLEMENT
TO THE RELATED SECOND PROSPECTUS, NAMING SUCH TRANSFEREE AS A SELLING
SHAREHOLDER IN ACCORDANCE WITH THE PROVISIONS OF THE SECURITIES ACT.

 

7.6.                            LEGENDS.  FROM AND AFTER A REGISTRATION TRIGGER
DATE, EACH CERTIFICATE REPRESENTING WARRANT SHARES SHALL BE ENDORSED WITH A
LEGEND IN THE FOLLOWING FORM:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR SECURITIES LAWS OF ANY
STATE AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT OR SUCH LAWS AND, IF REQUESTED BY THE COMPANY, UPON
DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
THE PROPOSED TRANSFER IS EXEMPT FROM THE ACT OR SUCH LAWS.”

 

NOTWITHSTANDING THE FOREGOING, AS LONG AS (A) THE RESALE OR TRANSFER (INCLUDING
WITHOUT LIMITATION A PLEDGE) OF ANY OF THE WARRANT SHARES ARE REGISTERED
PURSUANT TO THE SECOND REGISTRATION STATEMENT AND THE INVESTOR DELIVERS A NOTICE
OF SUBSEQUENT SALE TO THE COMPANY WITH RESPECT TO SUCH WARRANT SHARES, (B) SUCH
WARRANT SHARES HAVE BEEN SOLD PURSUANT TO RULE 144, SUBJECT TO RECEIPT BY THE
COMPANY OF CUSTOMARY DOCUMENTATION REASONABLY ACCEPTABLE TO THE COMPANY IN
CONNECTION THEREWITH, OR (C) SUCH SECURITIES ARE ELIGIBLE FOR RESALE UNDER
PARAGRAPH (K) OF RULE 144 OR ANY SUCCESSOR PROVISION, SUCH WARRANT SHARES SHALL
BE ISSUED WITHOUT ANY LEGEND OR OTHER

 

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restrictive language and, with respect to Warrant Shares upon which such legend
is stamped, the Company shall issue new certificates without such legend to the
holder upon request.

 

7.7.                            THE COMPANY WILL APPLY THE NET PROCEEDS FROM THE
OFFERING AND SALE OF THE SHARES AND THE WARRANTS IN THE MANNER SET FORTH IN THE
PROSPECTUS UNDER THE CAPTION “USE OF PROCEEDS.”

 

7.8.                            FOR SO LONG AS THE WARRANTS ARE OUTSTANDING, THE
COMPANY WILL FURNISH TO THE INVESTOR, AS SOON AS THEY ARE AVAILABLE, COPIES OF
ALL REPORTS OR OTHER COMMUNICATIONS (FINANCIAL OR OTHER) FURNISHED TO ALL
HOLDERS OF THE COMMON STOCK.

 

7.9.                            CERTIFICATES EVIDENCING THE SHARES AND THE
WARRANTS SHALL NOT CONTAIN ANY LEGEND RESTRICTING THEIR TRANSFERABILITY BY THE
INVESTOR.  THE COMPANY SHALL CAUSE ITS COUNSEL TO ISSUE A LEGAL OPINION TO THE
COMPANY’S TRANSFER AGENT IF REQUIRED BY THE COMPANY’S TRANSFER AGENT TO EFFECT A
TRANSFER OF ANY OF THE SECURITIES.

 

8.                                      INDEMNIFICATION.

 

8.1.                            THE COMPANY SHALL INDEMNIFY AND HOLD HARMLESS
THE INVESTOR, EACH OFFICER, DIRECTOR, EMPLOYEE, AGENT AND REPRESENTATIVE OF THE
INVESTOR, AND EACH PERSON, IF ANY, WHO CONTROLS THE INVESTOR WITHIN THE MEANING
OF THE SECURITIES ACT OR THE EXCHANGE ACT AGAINST ANY LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR REASONABLE OUT-OF-POCKET EXPENSES (WHETHER JOINT OR SEVERAL)
(COLLECTIVELY, INCLUDING LEGAL OR OTHER EXPENSES REASONABLY INCURRED IN
CONNECTION WITH INVESTIGATING OR DEFENDING SAME, “LOSSES”), INSOFAR AS ANY SUCH
LOSSES ARISE OUT OF OR ARE BASED UPON (I) ANY UNTRUE STATEMENT OR ALLEGED UNTRUE
STATEMENT OF A MATERIAL FACT CONTAINED IN THE SECOND REGISTRATION STATEMENT,
INCLUDING ANY PRELIMINARY PROSPECTUS OR FINAL PROSPECTUS CONTAINED THEREIN OR
ANY AMENDMENTS OR SUPPLEMENTS THERETO, OR (II) THE OMISSION OR ALLEGED OMISSION
TO STATE THEREIN A MATERIAL FACT REQUIRED TO BE STATED IN THE SECOND
REGISTRATION STATEMENT, INCLUDING ANY PRELIMINARY PROSPECTUS OR FINAL PROSPECTUS
CONTAINED THEREIN OR ANY AMENDMENTS OR SUPPLEMENTS THERETO, OR NECESSARY TO MAKE
THE STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE
MADE, NOT MISLEADING.  SUBJECT TO THE PROVISIONS OF SECTION 8.2 BELOW, THE
COMPANY WILL REIMBURSE THE INVESTOR, AND EACH SUCH OFFICER, DIRECTOR, EMPLOYEE,
AGENT, REPRESENTATIVE OR CONTROLLING PERSON, FOR ANY LEGAL OR OTHER
OUT-OF-POCKET EXPENSES REASONABLY INCURRED BY ANY SUCH ENTITY OR PERSON IN
CONNECTION WITH INVESTIGATING OR DEFENDING ANY LOSS AS SUCH EXPENSES ARE
INCURRED.  THE FOREGOING INDEMNITY SHALL NOT APPLY TO AMOUNTS PAID IN SETTLEMENT
OF ANY LOSS IF SUCH SETTLEMENT IS EFFECTED WITHOUT THE CONSENT OF THE COMPANY
(WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD), NOR SHALL THE COMPANY BE
OBLIGATED TO INDEMNIFY ANY PERSON FOR ANY LOSS TO THE EXTENT THAT SUCH LOSS IS
(X) BASED UPON AND IS IN CONFORMITY WITH WRITTEN INFORMATION FURNISHED BY SUCH
PERSON EXPRESSLY FOR USE IN THE SECOND REGISTRATION STATEMENT OR (Y) BASED ON A
FAILURE OF SUCH PERSON TO DELIVER OR CAUSE TO BE DELIVERED THE FINAL PROSPECTUS
CONTAINED IN THE SECOND REGISTRATION STATEMENT AND MADE AVAILABLE BY THE
COMPANY, IF SUCH DELIVERY IS REQUIRED BY APPLICABLE LAW.  THE COMPANY SHALL NOT
ENTER INTO ANY SETTLEMENT OF A LOSS THAT DOES NOT PROVIDE FOR THE UNCONDITIONAL
RELEASE OF SUCH INVESTOR FROM ALL LIABILITIES AND OBLIGATIONS RELATING TO SUCH
LOSS.

 

8.2.                            PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED PARTY
UNDER THIS SECTION 8 OF NOTICE OF THE COMMENCEMENT OF ANY ACTION (INCLUDING ANY
GOVERNMENTAL ACTION), SUCH INDEMNIFIED PARTY WILL, IF A CLAIM IN RESPECT THEREOF
IS TO BE MADE AGAINST ANY INDEMNIFYING PARTY UNDER THIS SECTION  8,

 

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deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in and to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the reasonably incurred fees and expenses of one such counsel for
all indemnified parties to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the indemnifying party
would be inappropriate under applicable standards of professional conduct due to
actual or potential conflicting interests between such indemnified party and any
other party represented by such counsel in such proceeding.  The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action, to the extent prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 8 with respect to such action, but the
omission so to deliver written notice to the indemnifying party will not relieve
it of any liability that it may have to any indemnified party otherwise than
under this Section 8 or with respect to any other action unless the indemnifying
party is materially prejudiced as a result of not receiving such notice.

 

8.3.                            IN THE EVENT THAT THE INDEMNITY PROVIDED IN THIS
SECTION 8 IS UNAVAILABLE OR INSUFFICIENT TO HOLD HARMLESS AN INDEMNIFIED PARTY
FOR ANY REASON, THE COMPANY AND THE INVESTOR AGREE, SEVERALLY AND NOT JOINTLY,
TO CONTRIBUTE TO THE AGGREGATE LOSSES TO WHICH THE COMPANY OR THE INVESTOR MAY
BE SUBJECT IN SUCH PROPORTION AS IS APPROPRIATE TO REFLECT THE RELATIVE FAULT OF
THE COMPANY AND THE INVESTOR IN CONNECTION WITH THE STATEMENTS OR OMISSIONS
WHICH RESULTED IN SUCH LOSSES; PROVIDED, HOWEVER, THAT IN NO CASE SHALL SUCH
INVESTOR BE RESPONSIBLE FOR ANY AMOUNT IN EXCESS OF THE NET PROCEEDS RESULTING
FROM THE SALE OF THE WARRANT SHARES SOLD BY IT UNDER THE SECOND REGISTRATION
STATEMENT.  RELATIVE FAULT SHALL BE DETERMINED BY REFERENCE TO WHETHER ANY
ALLEGED UNTRUE STATEMENT OR OMISSION RELATES TO INFORMATION PROVIDED BY THE
COMPANY OR BY THE INVESTOR.  THE COMPANY AND THE INVESTOR AGREE THAT IT WOULD
NOT BE JUST AND EQUITABLE IF CONTRIBUTION WERE DETERMINED BY PRO RATA ALLOCATION
OR ANY OTHER METHOD OF ALLOCATION WHICH DOES NOT TAKE ACCOUNT OF THE EQUITABLE
CONSIDERATIONS REFERRED TO ABOVE.  NOTWITHSTANDING THE PROVISIONS OF THIS
SECTION 8.3, NO PERSON GUILTY OF FRAUDULENT MISREPRESENTATION (WITHIN THE
MEANING OF SECTION 11(F) OF THE SECURITIES ACT) SHALL BE ENTITLED TO
CONTRIBUTION FROM ANY PERSON WHO IS NOT GUILTY OF SUCH FRAUDULENT
MISREPRESENTATION.  FOR PURPOSES OF THIS SECTION 8, EACH PERSON WHO CONTROLS THE
INVESTOR WITHIN THE MEANING OF EITHER THE SECURITIES ACT OR THE EXCHANGE ACT AND
EACH OFFICER, DIRECTOR, EMPLOYEE, AGENT OR REPRESENTATIVE OF THE INVESTOR SHALL
HAVE THE SAME RIGHTS TO CONTRIBUTION AS SUCH INVESTOR, AND EACH PERSON WHO
CONTROLS THE COMPANY WITHIN THE MEANING OF EITHER THE SECURITIES ACT OR THE
EXCHANGE ACT AND EACH OFFICER, DIRECTOR, EMPLOYEE, AGENT OR REPRESENTATIVE OF
THE COMPANY SHALL HAVE THE SAME RIGHTS TO CONTRIBUTION AS THE COMPANY, SUBJECT
IN EACH CASE TO THE APPLICABLE TERMS AND CONDITIONS OF THIS SECTION 8.3.

 

9.                                      SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND AGREEMENTS.  NOTWITHSTANDING ANY INVESTIGATION MADE BY ANY PARTY TO THIS
AGREEMENT OR BY THE PLACEMENT AGENT, ALL COVENANTS, AGREEMENTS, REPRESENTATIONS
AND WARRANTIES MADE BY THE COMPANY AND THE INVESTOR HEREIN WILL SURVIVE THE
EXECUTION OF THIS AGREEMENT, THE DELIVERY TO THE INVESTOR OF THE SHARES AND
WARRANTS BEING PURCHASED AND THE PAYMENT THEREFOR.

 

10.                               EXPENSES.  THE COMPANY AND THE INVESTOR SHALL
PAY ALL COSTS AND EXPENSES THAT IT INCURS IN CONNECTION WITH THE NEGOTIATION,
EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT
THAT THE COMPANY SHALL, AT THE CLOSING, PAY UP TO $35,000 IN IMMEDIATELY

 

20

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available funds for all reasonable out-of-pocket expenses (including without
limitation reasonable legal fees and expenses) incurred or to be incurred by
Satellite Asset Management, L.P. (“Satellite”) in connection its due diligence
investigation of the Company and the negotiation, preparation, execution,
delivery and performance of this Agreement and the other documents executed and
delivered at the Closing.  At the Closing, the amount due for such fees and
expenses (which may include fees and expenses estimated to be incurred for
completion of the transaction and post-closing matters) may be netted out of the
Purchase Price payable by Satellite.  In the event the amount paid by the
Company for such fees and expenses is less than the amount of fees and expenses
actually incurred by Satellite, the Company shall promptly pay such deficiency
(up to $35,000 in the aggregate, including any amounts paid at Closing) within
thirty (30) days following receipt of an invoice therefor.

 

11.                               NOTICES.  ANY NOTICE, DEMAND OR REQUEST
REQUIRED OR PERMITTED TO BE GIVEN BY THE COMPANY OR THE INVESTOR PURSUANT TO THE
TERMS OF THIS AGREEMENT SHALL BE IN WRITING AND SHALL BE DEEMED DELIVERED (I)
WHEN DELIVERED PERSONALLY OR BY VERIFIABLE FACSIMILE TRANSMISSION, UNLESS SUCH
DELIVERY IS MADE ON A DAY THAT IS NOT A BUSINESS DAY, IN WHICH CASE SUCH
DELIVERY WILL BE DEEMED TO BE MADE ON THE NEXT SUCCEEDING BUSINESS DAY, (II) ON
THE NEXT BUSINESS DAY AFTER TIMELY DELIVERY TO AN OVERNIGHT COURIER AND (III) ON
THE BUSINESS DAY ACTUALLY RECEIVED IF DEPOSITED IN THE U.S. MAIL (CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID), ADDRESSED AS
FOLLOWS:

 

(A)                                  IF TO THE COMPANY:

 

Proxim Corporation

935 Stewart Drive

Sunnyvale, CA 94085

Fax No.:  (408) 731-3680

Attention:  Michael Angel

 

(B)                                 WITH A COPY (WHICH SHALL NOT CONSTITUTE
NOTICE) TO:

 

Wilson Sonsini Goodrich & Rosati P.C.

650 Page Mill Road

Palo Alto, California 94304

Fax No.:  (650) 493-6811

Attention:  Robert Day

 

(C)                                  IF TO THE INVESTOR, AT ITS ADDRESS ON THE
SIGNATURE PAGE HERETO, OR AT SUCH OTHER ADDRESS OR ADDRESSES AS MAY HAVE BEEN
FURNISHED TO THE COMPANY IN WRITING. FOR PURPOSES OF THIS AGREEMENT, “BUSINESS
DAY” MEANS ANY DAY OTHER THAN A SATURDAY, A SUNDAY OR A DAY ON WHICH THE NEW
YORK STOCK EXCHANGE IS CLOSED OR ON WHICH BANKS IN THE CITY OF NEW YORK ARE
REQUIRED OR AUTHORIZED BY LAW TO BE CLOSED.

 

12.                               ENTIRE AGREEMENT; AMENDMENTS; WAIVER.  THIS
AGREEMENT, THE WARRANT AND THE OTHER DOCUMENTS AND AGREEMENTS EXECUTED AND
DELIVERED BY THE COMPANY AND THE INVESTOR IN

 

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connection therewith constitute the entire agreement between the parties with
regard to the subject matter hereof and thereof, superseding all prior
agreements or understandings, whether written or oral, between or among the
parties.  Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended except pursuant to a written instrument executed by
the Company and the Investor, and no provision hereof may be waived other than
by a written instrument signed by the party against whom enforcement of any such
waiver is sought.  Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

 

13.                               HEADINGS.  THE HEADINGS OF THE VARIOUS
SECTIONS OF THIS AGREEMENT HAVE BEEN INSERTED FOR CONVENIENCE OF REFERENCE ONLY
AND WILL NOT BE DEEMED TO BE PART OF THIS AGREEMENT.

 

14.                               SEVERABILITY.  IN CASE ANY PROVISION CONTAINED
IN THIS AGREEMENT SHOULD BE INVALID, ILLEGAL OR UNENFORCEABLE IN ANY RESPECT,
THE VALIDITY, LEGALITY AND ENFORCEABILITY OF THE REMAINING PROVISIONS CONTAINED
HEREIN WILL NOT IN ANY WAY BE AFFECTED OR IMPAIRED THEREBY.

 

15.                               GOVERNING LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.  EACH
PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS SITTING IN THE CITY AND COUNTY OF NEW YORK FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
CONTEMPLATED HEREBY AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN
ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO
THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR
PROCEEDING IS IMPROPER.  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE
OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR
NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING CONTAINED
HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY
MANNER PERMITTED BY LAW.

 

16.                               COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED
IN TWO OR MORE COUNTERPARTS, EACH OF WHICH WILL CONSTITUTE AN ORIGINAL, BUT ALL
OF WHICH, WHEN TAKEN TOGETHER, WILL CONSTITUTE BUT ONE INSTRUMENT, AND WILL
BECOME EFFECTIVE WHEN ONE OR MORE COUNTERPARTS HAVE BEEN SIGNED BY EACH PARTY
HERETO AND DELIVERED TO THE OTHER PARTIES.

 

22

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EXHIBIT B

 

PROXIM CORPORATION

 

INVESTOR QUESTIONNAIRE

 

Pursuant to Section 3 of the Agreement, please provide the following
information:

 

1.

 

The exact name that your Shares and Warrants are to be registered in. You may
use a nominee name if appropriate:

 

 

 

 

 

 

 

2.

 

The relationship between the Investor and the registered holder listed in
response to item 1 above:

 

 

 

 

 

 

 

3.

 

The mailing address of the registered holder listed in response to item 1 above:

 

 

 

 

 

 

 

4.

 

The Social Security Number or Tax Identification Number of the registered holder
listed in the response to item 1 above:

 

 

 

 

 

 

 

5.

 

Name of DTC Participant (broker-dealer at which the account or accounts to be
credited with the Shares are maintained):

 

 

 

 

 

 

 

6.

 

DTC Participant Number:

 

 

 

 

 

 

 

7.

 

Name of Account at DTC Participant being credited with the Shares:

 

 

 

 

 

 

 

8.

 

Account Number at DTC Participant being credited with the Shares

 

 

 

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