Exhibit 10.1

 

SOFTBRANDS, INC.

 

SERIES D CONVERTIBLE PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT

 

Dated as of
August 14, 2006

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TABLE OF CONTENTS

 

Page

 

 

ARTICLE I DEFINITIONS

1

 

 

1.1

Definitions; Interpretation.

1

 

 

 

ARTICLE II ISSUANCE AND SALE OF PREFERRED STOCK AND WARRANTS

11

 

 

2.1

Number of Series D Shares, Warrants and Initial Purchase Price

11

 

 

 

ARTICLE III CLOSING; CLOSING DELIVERIES

12

 

 

3.1

Initial Closing

12

3.2

Purchase Option

12

3.3

Subsequent Closing and Subsequent Purchase Price

13

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY

14

 

 

4.1

Existence; Qualification; Subsidiaries

14

4.2

Authorization and Enforceability; Issuance of Shares.

14

4.3

Capitalization

15

4.4

Private Sale; Voting Agreements

16

4.5

SEC Reports; Financial Statements.

16

4.6

Absence of Certain Changes

17

4.7

Litigation

19

4.8

Licenses, Compliance with Law, Other Agreements, Etc

19

4.9

Consents

19

4.10

Disclosure

20

4.11

Tangible Assets

20

4.12

Owned Real Property

20

4.13

Real Property Leases

20

4.14

Certificates, Authorities and Permits

20

4.15

Agreements

20

4.16

Intellectual Property

22

4.17

Employees

23

4.18

ERISA; Employee Benefits

24

4.19

Environment, Health and Safety

24

4.20

Transactions With Affiliates

24

4.21

Taxes

24

4.22

Other Investors

25

4.23

Seniority

25

4.24

Investment Company

25

4.25

Certain Fees

25

4.26

Sarbanes-Oxley Act

25

4.27

Listing and Maintenance Requirements Compliance

25

4.28

No General Solicitation

26

 

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4.29

No Integrated Offering

26

4.30

Private Placement

26

4.31

Questionable Payments

26

4.32

Internal Controls

26

4.33

Use of Proceeds

27

4.34

Customers and Suppliers.

27

4.35

Non-Material Subsidiaries

27

 

 

 

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

27

 

 

5.1

Authorization and Enforceability

27

5.2

Government Approvals

28

 

 

 

ARTICLE VI COMPLIANCE WITH SECURITIES LAWS

28

 

 

6.1

Investment Intent of the Purchasers

28

6.2

Status of Series D Shares and Warrants

28

6.3

Sophistication and Financial Condition of Purchasers

28

6.4

Transfer of Series D Shares, Warrants and Conversion Shares.

28

 

 

 

ARTICLE VII CONDITIONS PRECEDENT

30

 

 

7.1

Conditions to Obligations of ABRY at the Initial Closing

30

7.2

Conditions to Obligations of the Company

32

 

 

 

ARTICLE VIII COVENANTS OF THE COMPANY

32

 

 

8.1

Restricted Actions

32

8.2

Required Actions

34

8.3

Information Rights

36

8.4

Access Rights

37

8.5

Right of First Refusal.

37

8.6

Board Representation.

39

8.7

Appointment Right.

39

8.8

Default Interest

41

8.9

Rights Plan

42

8.10

Confidentiality

42

 

 

 

ARTICLE IX INDEMNIFICATION

42

 

 

9.1

Survival and Indemnification

42

 

 

 

ARTICLE X GENERAL PROVISIONS

43

 

 

10.1

Public Announcements

43

10.2

Successors and Assigns

43

10.3

Entire Agreement

43

10.4

Notices

43

10.5

Purchasers’ Fees and Expenses

44

10.6

Amendment and Waiver

45

 

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10.7

Counterparts

45

10.8

Headings; Construction

45

10.9

Specific Performance

45

10.10

Remedies Cumulative

45

10.11

GOVERNING LAW

45

10.12

JURISDICTION, WAIVER OF JURY TRIAL, ETC.

45

10.13

No Third Party Beneficiaries

46

10.14

Severability

46

10.15

Time of the Essence; Computation of Time

46

10.16

Consideration for Preferred Stock and Warrants

46

 

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SERIES D CONVERTIBLE PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT

THIS SERIES D CONVERTIBLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (this
“Agreement”) is dated as of August 14, 2006 between SoftBrands, Inc., a Delaware
corporation (the “Company”), ABRY Mezzanine Partners, L.P., a Delaware limited
partnership (“ABRY”) and, to the extent it exercises the Purchase Option (as
defined herein), Capital Resource Partners IV, L.P., a Delaware limited
partnership (“CRP”).  Each of ABRY and, to the extent it exercises the Purchase
Option, CRP, is referred to herein as a “Purchaser” and collectively, as the
“Purchasers”.

The Purchasers purchased Series C Shares from the Company pursuant to that
certain Series C Convertible Preferred Stock and Warrant Purchase Agreement,
dated as of August 17, 2005 (as amended, modified or restated from time to time,
the “Series C Purchase Agreement”).

The Purchasers desire to purchase from the Company, and the Company desires to
sell and issue to the Purchasers, up to 6,000 shares of the Company’s Series D
Convertible Preferred Stock, par value $0.01 per share, and warrants to purchase
shares of the Company’s common stock, par value $0.01 per share (including any
associated Rights as defined in and issued pursuant to the Rights Agreement (as
defined herein), the “Common Stock”).

In consideration of the mutual promises, representations, warranties, covenants
and conditions set forth in this Agreement, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

1.1          DEFINITIONS; INTERPRETATION.

(A)           FOR PURPOSES OF THIS AGREEMENT, THE FOLLOWING TERMS HAVE THE
INDICATED MEANINGS:

“ABRY” has the meaning set forth in the preamble hereof.

“ABRY Exercise Notice” has the meaning set forth in Section 3.2 hereof.

“Accrued Amount” means, for any Series D Share at any time, the Liquidation
Value, plus all Unpaid Dividends thereon.

“Affiliate” of a Person means any other Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with such Person, where “control” means the possession of the
power to direct the management and policies of a Person, whether through the
ownership of voting securities, contract or otherwise.

“Affiliate Transaction” has the meaning set forth in Section 8.1(f) hereof.

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“Agreement” has the meaning set forth in the preamble hereof.

“AMEX” means the American Stock Exchange LLC.

“Appointment Right” has the meaning set forth in Section 8.7(a) hereof.

“Appointment Notice” has the meaning set forth in Section  8.7(a) hereof.

“Board of Directors” means the board of directors of the Company.

“Capital Lease” means any lease of property (real, personal or mixed) which, in
accordance with GAAP, should be capitalized on the lessee’s balance sheet or for
which the amount of the asset and liability thereunder as if so capitalized
should be disclosed in a note to such balance sheet.

“Claim” means any action, claim, lawsuit, demand, suit, charge, complaint,
hearing, investigation, notice of a violation or noncompliance, litigation,
proceeding, arbitration, official action, appeals or other dispute, whether
civil, criminal, administrative or otherwise.

“Closing Fee” has the meaning set forth in Section 10.5 hereof.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” has the meaning set forth in the recitals hereof.

“Common Stock Equivalents” means any capital or securities (other than options)
directly or indirectly convertible into or exchangeable for Common Stock.

“Company” has the meaning set forth in the preamble hereof.

“Company Counsel” has the meaning set forth in Section  8.7(a) hereof.

“Company Group” means, collectively, the Company and the Company Subsidiaries.

“Company Intellectual Property” has the meaning set forth in Section 4.16
hereof.

“Company Products” has the meaning set forth in Section 4.16 hereof.

“Company Reports” has the meaning set forth in Section 4.5(a) hereof.

“Company Sale” means a transaction (whether in one or a series of related
transactions) pursuant to which a Person or Persons (a) acquire (whether by
merger, amalgamation, consolidation, recapitalization, reorganization,
redemption, transfer or issuance of Equity Securities or otherwise) Equity
Securities of the Company (or any surviving or resulting corporation) possessing
the voting power to elect a majority of the Board of Directors (or such
surviving or resulting corporation), (b) acquire assets constituting all or
substantially all of the assets of the Company Group or (c) merge or consolidate
(or agree to merge or consolidate) with

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or into any member of the Company Group (other than in a merger involving only
the Company and one of its Wholly-Owned Subsidiaries or, to the extent the
Company is the surviving company and the rights of the holders of the Securities
under this Agreement and the Related Documents are not adversely affected
thereby, or in connection with an acquisition of another company or business
which has been approved by the Board of Directors).

“Company Subsidiaries” means all direct and indirect Subsidiaries of the
Company.

“Compliance Remedy Event” means:

(a)           the breach by the Company Group or failure to perform or observe
in any material respect any covenant or agreement set forth in Section 5C of the
Series D Preferred Stock Certificate of Designation;

(b)           the breach by the Company Group or failure to perform or observe
in any material respect any covenant or agreement set forth in Section 8.1,
8.2(a), 8.2(f), 8.2(i), 8.2(j), 8.4, 8.5 or 8.6 of this Agreement;

(c)           a Material Adverse Effect that occurs within 18 months of this
Agreement and the cause of such Material Adverse Effect breaches any
representation or warranty made by the Company or any Subsidiary thereof in
Section 4.3, 4.5, 4.9, 4.10, 4.16, 4.20, 4.23, 4.25 or 4.27 of this Agreement as
of the date made; or

(d)           a “Compliance Remedy Event” as defined in the Series C Purchase
Agreement.

“Conversion Shares” has the meaning set forth in Section 4.2(b) hereof.

“CRP” has the meaning set forth in the preamble hereof.

“CRP Exercise Notice” has the meaning set forth in Section 3.2 hereof.

“CRP Fee” has the meaning set forth in Section 10.5.

“Current Balance Sheet” has the meaning set forth in Section 4.6(b) hereof.

“Disclosure Schedules” has the meaning set forth in Article IV hereof.

“Environmental and Safety Requirements” means all federal, state, local and
foreign statutes, regulations, ordinances and other provisions having the force
or effect of law, all judicial and administrative orders and determinations and
all common law concerning public health and safety, worker health and safety,
and pollution or protection of the environment, including all those relating to
the presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control, or cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or by-products, asbestos,
polychlorinated biphenyls, noise or radiation.

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“Equity Security” means (a) any capital stock or other equity security, or
ownership interests (including limited liability company, partnership and joint
venture interests), (b) any security directly or indirectly convertible into or
exchangeable for any capital shares or other equity security or security
containing any profit participation features, (c) any warrants, options or other
rights, directly or indirectly, to subscribe for or to purchase any capital
shares, other equity security or security containing any profit participation
features or directly or indirectly to subscribe for or to purchase any security
directly or indirectly convertible into or exchangeable for any capital shares
or other equity security or security containing profit participation features or
(d) any share appreciation rights, phantom share rights or other similar rights.

“ERISA” has the meaning set forth in Section 4.18 hereof.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“Exempt Issuance” has the meaning set forth in Section 8.5(a) hereof.

“EULAs” has the meaning set forth in Section 4.15(a)(x) hereof.

“Evaluation Date” has the meaning set forth in Section 4.32 hereof.

“Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Company.

“Financial Statements” has the meaning set forth in Section 4.5(b) hereof.

“Fully-Diluted Common Stock” has the meaning set forth in Section 8.5 hereof.

“GAAP” means United States generally accepted accounting principles as in effect
from time to time, consistently applied; provided, that for the purpose of
performing the calculation in Section 8.1(c) hereof, references to GAAP shall be
to such principles as in effect on the Initial Closing Date.  All accounting
terms used herein without definition shall be used as defined under GAAP.

“Governmental Agency” means any federal, state, local, foreign or other
governmental agency, instrumentality, commission, authority, board or body.

“Guarantee” means any guarantee of the payment or performance of any
indebtedness or other obligation and any other arrangement whereby credit is
extended to one or more obligor on the basis of any promise of such Person,
whether that promise is expressed in terms of any obligation owned by such
obligor, or to purchase goods and services from such obligor pursuant to a
take-or-pay contract, or to maintain the capital, working capital, solvency of
general financial condition of such obligor, whether or not any such arrangement
is listed in the balance sheet of such Person or referred to in a footnote
thereto, but shall not include endorsements of items for collection in the
Ordinary Course of Business.

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“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid (including margin debt),
(d) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of property
or services (excluding current accounts payable incurred in the Ordinary Course
of Business), (f) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the Indebtedness secured thereby has been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all capital lease obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty, (j) all
obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances, (k) the principal balance outstanding under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
sheet financing product of the Company or any of its Subsidiaries where such
transaction is considered borrowed money indebtedness for tax purposes but is
classified as an operating lease under GAAP and (l) all obligations of such
Person to pay a specified purchase price for goods or services whether or not
delivered or accepted (e.g., take-or-pay obligations) or similar obligations.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnified Liabilities” has the meaning set forth in Section 9.1 hereof.

“Indemnitees” has the meaning set forth in Section 9.1 hereof.

“Intellectual Property” means and includes (a) all past, present, and future
rights of the following types, which may exist or be created under the laws of
any jurisdiction in the world: (i) rights associated with works of authorship,
including exclusive exploitation rights, copyrights, moral rights, and mask
works; (ii) trademark and trade name rights, domain name rights, similar rights,
and related goodwill; (iii) trade secret rights and rights in confidential
information; (iv) patent and industrial property rights; (v) privacy and
publicity rights; and (vi) all other intellectual property rights and
proprietary rights of every kind and nature including database rights; (b) all
patents, registrations, renewals, extensions, combinations, divisions, reissues
of, applications for, and other filings related to, any of the foregoing;
(c) all claims and rights in and to any of the foregoing; and (d) all copies and
tangible embodiments of any of the foregoing (in whatever form or medium)
including information.

“Initial Closing” has the meaning set forth in Section 3.1 hereof.

“Initial Closing Date” has the meaning set forth in Section 3.1 hereof.

“Initial Purchase Price” has the meaning set forth in Section 2.1 hereof.

“Investment Bank” has the meaning set forth in Section 8.7(a) hereof.

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“Investor Director” means the Series C Director (as defined in the Series C
Purchase Agreement); provided, that if at any time the Series C Director is not
a member of the Board of Directors, the term “Investor Director” shall mean the
member of the Board of Directors elected by the holders of a majority of the
shares of Underlying Common Stock as contemplated by Section 5B of the Series D
Preferred Stock Certificate of Designation.

“IRS” means the Internal Revenue Service.

“Knowledge” when used with respect to the Company means the actual knowledge of
George H. Ellis, Randal Tofteland and Gregg A. Waldon, in each case, after
reasonable investigation.

“Liability” means any liability, loss, expense or obligation of whatever kind or
nature (whether known or unknown, whether assert or unasserted, whether absolute
or contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability or obligation for
Taxes.

“Lien” means any mortgage, charge, pledge, lien (statutory or otherwise),
security interest, hypothecation or other encumbrance upon or with respect to
any property of any kind, real or personal, movable or immovable, now owned or
hereafter acquired.

“Liquidation Value” means, with respect to any Series D Share, $1,000.

“Market Price” of any security means the average of the closing prices of such
security’s sales on all securities exchanges on which such security may at the
time be listed, or, if there has been no sales on any such exchange on any day,
the average of the highest bid and lowest asked prices on all such exchanges at
the end of such day, or, if on any day such security is not so listed, the
average of the representative bid and asked prices quoted in the NASDAQ System
as of 4:00 P.M., New York time, or, if on any day such security is not quoted in
the NASDAQ System, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization, in each
such case (i) averaged over a period of 30 days consisting of the day as of
which “Market Price” is being determined and the 29 consecutive Business Days
prior to such day, and (ii) averaged on a volume-weighted basis based on the
trading volume for each such Business Day.  If at any time such security is not
listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, or if at any time this Agreement requires the
determination of the Market Price of any asset which does not constitute a
security, the “Market Price” shall be the fair value of such security or asset
determined jointly by the Company and the holders of a majority of the
Underlying Common Stock.  If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an independent
appraiser experienced in valuing securities jointly selected by the Company and
the holders of a majority of the Underlying Common Stock.  The determination of
such appraiser shall be final and binding upon the parties, and the Company
shall pay the fees and expenses of such appraiser.

“Material Acquisition” means an acquisition of assets or equity of another
Person or group of related Persons or of any facility, division or product line
and/or business

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operated by any Person involving consideration paid by members of the Company
Group, or Indebtedness assumed by members of the Company Group, in the aggregate
exceeding $5,000,000.

“Material Adverse Effect” means a material adverse effect on the business,
assets, condition (financial or otherwise), results of operations, cash flows or
properties of the Company and its Subsidiaries taken as a whole.

“Material Contracts” has the meaning set forth in Section 4.15.

“Material Subsidiaries” means SoftBrands Manufacturing, Inc., a Minnesota
corporation, Fourth Shift Asia Computer Corp. (China) Ltd., a company organized
under the laws of China, SoftBrands Europe Limited, a company organized under
the laws of the United Kingdom and SoftBrands Research PVT. Ltd., a company
organized under the laws of India.

“Most Recent Balance Sheet Date” has the meaning set forth in Section 4.6
hereof.

“NASDAQ” means the NASDAQ National Market, Inc.

“Non-Material Subsidiaries” means all of the Subsidiaries of the Company other
than the Material Subsidiaries.

“Ordinary Course of Business” means the ordinary course of business consistent
with past practice.

“Payment Remedy Event” means (i) the failure of the Company to pay in full any
dividends, Series D Liquidation Preference or Series D Redemption Price (or any
amount otherwise owing hereunder) to the holders of the Series D Preferred Stock
as and when and in the form required to be paid hereunder or under the Series D
Preferred Stock Certificate of Designation, or (ii) a “Payment Remedy Event” as
defined in the Series C Purchase Agreement.

“Permitted Acquisition” means any acquisition of assets or equity of another
Person or group of related Persons or of any facility, division or product line
and/or business operated by any Person that is not a Material Acquisition or
that is approved by the Board of Directors, including the written consent of the
Investor Director.

“Permitted Affiliate Transaction” means any Affiliate Transaction (a) entered
into by the Company Group with its employees in the Ordinary Course of Business
as part of a customary employment relationship, (b) entered into pursuant to the
Stock Option Plan or (c) entered into with any Purchaser in connection with the
transaction contemplated by this Agreement.

“Permitted Lien” means:

(a)           Liens existing on the Initial Closing Date and securing
indebtedness of the Company and its Subsidiaries to the extent such indebtedness
is disclosed on the Most

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Recent Balance Sheet Date or incurred since such date in the Ordinary Course of
Business;

(b)           Liens imposed by Governmental Agencies for Taxes, assessments or
other charges not yet subject to penalty or which are being contested in good
faith and by appropriate proceedings, if adequate reserves with respect thereto
are maintained on the books of the Company in accordance with GAAP;

(c)           statutory liens of carriers, warehousemen, mechanics, material
men, landlords, repairmen or other like Liens arising by operation of law in the
Ordinary Course of Business; provided, that (A) the underlying obligations are
not overdue for a period of more than 60 days, or (B) such Liens are being
contested in good faith and by appropriate proceedings and adequate reserves
with respect thereto are maintained on the books of the Company in accordance
with GAAP;

(d)           easements, rights-of-way, zoning, similar restrictions and other
similar encumbrances or minor imperfections of title which, in the aggregate, do
not in any case materially detract from the value of the property subject
thereto (as such property is used by the Company Group) or interfere with the
ordinary conduct of the business of the Company and any of its Subsidiaries
taken as a whole; and

(e) pledges or deposits made in the Ordinary Course of Business in connection
with workers’ compensation, unemployment insurance and other types of social
security legislation.

“Person” or “person” means any corporation, individual, limited liability
company, joint stock company, joint venture, partnership, unincorporated
association, governmental regulatory entity, country, state or political
subdivision thereof, trust, municipality or other entity.

“Plan” has the meaning set forth in Section 4.18 hereof.

“Purchase Option” has the meaning set forth in Section 3.2 hereof.

“Purchaser Expenses” has the meaning set forth in Section 10.5 hereof.

“Purchasers” has the meaning set forth in the preamble hereof.

“Ratio” has the meaning set forth in Section 8.1(c) hereof.

“Redemption Notice” has the meaning set forth in the Series D Preferred Stock
Certificate of Designation.

“Redemption Period” has the meaning set forth in Section 8.7(d).

“Rejected Sale” has the meaning set forth in Section 8.7(c) hereof.

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“Related Documents” means all documents, certificates and instruments to be
executed or adopted by the Company in connection herewith, including the Series
D Preferred Stock Certificate of Designation, the certificates evidencing the
Series D Shares, the Warrants and the Second Amended and Restated Investor
Rights Agreement.

“Remedy Event” means a Compliance Remedy Event or a Payment Remedy Event.

“Requisite Purchasers” means the Purchasers holding a majority of the number of
shares of Underlying Common Stock.

“Rights Agreement” means the Rights Agreement by and between the Company and
Wells Fargo Bank Minnesota, National Association, dated November 26, 2002.

“Rights Plan” means that certain Rights Plan in effect pursuant to the Rights
Agreement.

“SEC” means the Securities and Exchange Commission.

“Second Amended and Restated Investor Rights Agreement” means the Second Amended
and Restated Investor Rights Agreement between the Company and the Purchasers,
substantially in the form of Exhibit C hereto.

“Securities” has the meaning set forth in Section 6.1 hereof.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Senior Facility” has the meaning set forth in Section 8.1(c) hereof.

“Series A Shares” means the Company’s Series A Preferred Stock, par value $0.01
per share.

“Series B Shares” means the Company’s Series B Convertible Preferred Stock, par
value $0.01 per share.

“Series C Shares” means the Company’s Series C Convertible Preferred Stock, par
value $0.01 per share.

“Series C Purchase Agreement” has the meaning set forth in the recitals.

“Series D Liquidation Preference” has the meaning set forth in the Series D
Preferred Stock Certificate of Designation.

“Series D Preferred Stock Certificate of Designation” means the Certificate of
Designation designating the rights and preferences of the Series D Shares
adopted by the Board of Directors, filed with the Secretary of State of the
State of Delaware, as substantially in the form set forth in Exhibit A attached
hereto.

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“Series D Redemption Price” has the meaning set forth in the Series D Preferred
Stock Certificate of Designation.

“Series D Shares” means the Series D Convertible Preferred Stock, $0.01 par
value per share, of the Company having the rights, designations and preferences
as set forth in the Series D Preferred Stock Certificate of Designation.

“Shrinkwrap Agreements” has the meaning set forth in Section 4.15(a)(x) hereof.

“Stock Option Plan” means the capital stock plan for the benefit of the
Company’s officers, employees or directors which is in effect on the date hereof
and has been approved by the Board of Directors.

“Subsequent Closing” has the meaning set forth in Section 3.3 hereof.

“Subsequent Closing Date” has the meaning set forth in Section 3.3 hereof.

“Subsequent D Shares” has the meaning set forth in Section 2.1 hereof.

“Subsequent Purchase Price” has the meaning set forth in Section 3.3 hereof.

“Subsequent Purchaser” has the meaning set forth in Section 3.2 hereof.

“Subsequent Warrants” has the meaning set forth in Section 2.1 hereof.

“Subsidiary” means any corporation, limited liability company, partnership,
association or other business entity of which (a) if a corporation, a majority
of the total voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
the Company or (b) if a partnership, limited liability company, association or
other business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
the Company.  For purposes hereof, the Company shall be deemed to have a
majority ownership interest in a partnership, limited liability company,
association or other business entity if the Company, directly or indirectly, is
allocated a majority of partnership, limited liability company, association or
other business entity gains or losses, or is or controls the managing director
or general partner of such partnership, limited liability company, association
or other business entity.

“Survival Period” has the meaning set forth in Section 9.1.

“Tax” means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code §59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.

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“Tax Returns” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

“Underlying Common Stock” means (a) the Common Stock issued or issuable upon
conversion of the Series D Shares, (b) the Common Stock issued or issuable upon
exercise of the Warrants and (c) any Common Stock issued or issuable with
respect to the securities referred to in clauses (a) and (b) above by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.  For purposes
of this Agreement, any Person who holds any Series D Shares or Warrants shall be
deemed to be the holder of the Underlying Common Stock issuable upon the
conversion of such Series D Shares and upon the exercise of such Warrants,
regardless of any restriction or limitation on the exercise of such Series D
Shares or Warrants and such Underlying Common Stock shall be deemed to be in
existence and such Person shall be entitled to exercise the rights of a holder
of such Underlying Common Stock hereunder.

“Unpaid Dividends” means, with respect to any Series D Share, as of any date of
determination, the accumulated dividends and accrued and unpaid but not yet
accumulated dividends that have accumulated or accrued on such Series D Share in
accordance with Section 2 of the Series D Preferred Stock Certificate of
Designation from the date of issuance of such Series D Share through and
including such date of determination.

“Warrants” has the meaning set forth in Section 3.1 hereof.

“Warrant Shares” has the meaning set forth in Section 4.2(a) hereof.

“Wholly-Owned Subsidiary” means, with respect to any Person, a Subsidiary of
which all of the outstanding capital or other ownership interests are owned by
such Person or another Wholly-Owned Subsidiary of such Person.

(B)           THE WORDS “HEREIN”, “HEREOF” AND “HEREUNDER” REFER TO THIS
AGREEMENT AS A WHOLE AND NOT TO ANY PARTICULAR ARTICLE, SECTION OR OTHER
SUBDIVISION OF THIS AGREEMENT.  THE USE OF THE WORD “INCLUDING” OR ANY VARIATION
OR DERIVATIVE THEREOF IN THIS AGREEMENT OR IN ANY RELATED DOCUMENT IS BY WAY OF
EXAMPLE RATHER THAN BY LIMITATION.

ARTICLE II
ISSUANCE AND SALE OF PREFERRED STOCK AND WARRANTS

2.1          NUMBER OF SERIES D SHARES, WARRANTS AND INITIAL PURCHASE PRICE.  ON
THE TERMS AND SUBJECT TO THE CONDITIONS OF THIS AGREEMENT (A) AT THE INITIAL
CLOSING, THE COMPANY SHALL ISSUE AND SELL TO ABRY, AND ABRY SHALL PURCHASE FROM
THE COMPANY, 5,000 SERIES D SHARES AND WARRANTS TO PURCHASE 333,333 SHARES OF
COMMON STOCK ON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH HEREIN, FOR AN
AGGREGATE PURCHASE PRICE OF $5,000,000 (THE “INITIAL PURCHASE PRICE”) AND (B) AT
THE SUBSEQUENT CLOSING, THE COMPANY SHALL ISSUE AND SELL TO THE SUBSEQUENT
PURCHASERS, AND THE SUBSEQUENT PURCHASERS SHALL PURCHASE FROM THE COMPANY, UP TO
AN AGGREGATE OF 1,000 SERIES D SHARES (THE “SUBSEQUENT D SHARES”) AND WARRANTS
TO PURCHASE 66,667 SHARES OF COMMON STOCK (THE “SUBSEQUENT WARRANTS”) ON THE
TERMS AND SUBJECT TO THE

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CONDITIONS SET FORTH THEREIN, FOR THE SUBSEQUENT PURCHASE PRICE APPLICABLE TO
EACH SUCH SUBSEQUENT PURCHASER AS SET FORTH IN SECTION 3.3 HEREOF.

ARTICLE III
CLOSING; CLOSING DELIVERIES

3.1          INITIAL CLOSING.

(A)           INITIAL CLOSING.  THE INITIAL CLOSING OF THE TRANSACTIONS
CONTEMPLATED HEREBY (THE “INITIAL CLOSING”) SHALL TAKE PLACE AT 10:00 A.M. ON
AUGUST 14, 2006, AT THE OFFICES OF KIRKLAND & ELLIS LLP, NEW YORK, NEW YORK OR
AT SUCH OTHER TIME, PLACE AND/OR DATE AS SHALL BE AGREED UPON BY THE PARTIES
HERETO.  THE DATE UPON WHICH THE INITIAL CLOSING OCCURS IS REFERRED TO HEREIN AS
THE “INITIAL CLOSING DATE.”

(B)           PAYMENT FOR AND DELIVERY OF SERIES D SHARES AND WARRANTS.  AT THE
INITIAL CLOSING, THE COMPANY SHALL ISSUE AND DELIVER TO ABRY (I) A STOCK
CERTIFICATE DULY EXECUTED AND REGISTERED IN ABRY’S NAME EVIDENCING OWNERSHIP OF
THE SERIES D SHARES, AND (II) THE WARRANTS DESCRIBED IN SECTION 2.1 ABOVE, DULY
EXECUTED IN FAVOR OF ABRY AND SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT B
HERETO (TOGETHER WITH ANY COMMON STOCK PURCHASE WARRANT ISSUED IN SUBSTITUTION
OR EXCHANGE THEREOF, THE “WARRANTS”), IN EACH CASE AGAINST PAYMENT BY ABRY OF
THE INITIAL PURCHASE PRICE BY WIRE TRANSFER OF IMMEDIATELY-AVAILABLE FUNDS TO
THE ACCOUNT DESIGNATED BY THE COMPANY.

3.2          PURCHASE OPTION.  THE COMPANY HEREBY GRANTS TO CRP AN OPTION (THE
“PURCHASE OPTION”) TO PURCHASE ALL OR A PORTION OF THE SUBSEQUENT D SHARES
TOGETHER WITH SUBSEQUENT WARRANTS TO PURCHASE 66 2/3 SHARES OF COMMON STOCK
(ROUNDED TO THE NEAREST WHOLE SHARES) FOR EACH SUBSEQUENT D SHARE PURCHASED, AT
A PRICE OF $1,000 PER SUBSEQUENT D SHARE.  THE PURCHASE OPTION SHALL BE
EXERCISABLE AT ANY TIME THAT IS ON OR PRIOR TO SEPTEMBER 4, 2006 AS FOLLOWS:

(A)           IF CRP DETERMINES THAT IT WOULD LIKE TO EXERCISE THE PURCHASE
OPTION, THEN CRP SHALL SEND A WRITTEN NOTICE TO THE COMPANY AND ABRY INDICATING
ITS INTEREST IN EXERCISING THE PURCHASE OPTION (“CRP EXERCISE NOTICE”) AT ANY
TIME PRIOR TO SEPTEMBER 4, 2006.  THE CRP EXERCISE NOTICE SHALL INDICATE THE
NUMBER OF SUBSEQUENT D SHARES AND THE CORRESPONDING NUMBER OF WARRANTS TO BE
PURCHASED BY CRP.

(I)            IF CRP EXERCISES THE PURCHASE OPTION ON OR PRIOR TO SEPTEMBER 4,
2006 AND DELIVERS A CRP EXERCISE NOTICE THAT INDICATES THAT IT HAS ELECTED TO
PURCHASE 100% OF THE SUBSEQUENT D SHARES AND THE CORRESPONDING NUMBER OF
WARRANTS, THEN CRP SHALL BE OBLIGATED TO PURCHASE ALL OF THE SUBSEQUENT D SHARES
AND THE CORRESPONDING NUMBER OF WARRANTS AS SET FORTH IN THE CRP EXERCISE NOTICE
IN EXCHANGE FOR THE SUBSEQUENT PURCHASE PRICE AT THE SUBSEQUENT CLOSING IN
ACCORDANCE WITH SECTION 3.3 BELOW.  IF CRP PURCHASES THE SUBSEQUENT D SHARES AND
THE CORRESPONDING NUMBER OF WARRANTS PURSUANT THIS SECTION 3.2(A)(I), CRP SHALL
BE DEEMED TO BE THE “SUBSEQUENT PURCHASER” FOR PURPOSES OF SECTION 3.3 BELOW AND
A “PURCHASER” FOR ALL PURPOSES OF THIS AGREEMENT AS IF IT HAD EXECUTED THE SAME.

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(II)           IF CRP EXERCISES THE PURCHASE OPTION ON OR PRIOR TO SEPTEMBER 4,
2006 AND DELIVERS A CRP EXERCISE NOTICE THAT INDICATES THAT IT HAS ELECTED TO
PURCHASE LESS THAN 100% OF THE SUBSEQUENT D SHARES AND THE CORRESPONDING NUMBER
OF WARRANTS, THEN (A) CRP SHALL BE OBLIGATED TO PURCHASE THE NUMBER OF
SUBSEQUENT D SHARES AND THE CORRESPONDING NUMBER OF WARRANTS AS SET FORTH IN THE
CRP EXERCISE NOTICE IN EXCHANGE FOR THE SUBSEQUENT PURCHASE PRICE AT THE
SUBSEQUENT CLOSING IN ACCORDANCE WITH SECTION 3.3 BELOW AND (B) ABRY MAY ELECT
TO PURCHASE ALL OR A PORTION OF THE BALANCE OF THE SUBSEQUENT D SHARES AND THE
CORRESPONDING NUMBER OF WARRANTS BY DELIVERING WRITTEN NOTICE (“ABRY EXERCISE
NOTICE”) OF SUCH ELECTION TO THE COMPANY AS SOON AS PRACTICAL AFTER ABRY’S
RECEIPT OF THE CRP EXERCISE NOTICE.  IF ABRY ELECTS TO PURCHASE ANY SUCH THE
SUBSEQUENT D SHARES AND THE CORRESPONDING NUMBER OF WARRANTS, ABRY SHALL DELIVER
AN ABRY EXERCISE NOTICE, INDICATING THE NUMBER OF SUBSEQUENT D SHARES AND THE
CORRESPONDING NUMBER OF WARRANTS TO BE PURCHASED BY ABRY.  UPON DELIVERY OF THE
ABRY EXERCISE NOTICE, ABRY SHALL BE OBLIGATED TO PURCHASE THE NUMBER OF THE
SUBSEQUENT D SHARES AND THE CORRESPONDING NUMBER OF WARRANTS AS SET FORTH IN THE
ABRY EXERCISE NOTICE IN EXCHANGE FOR THE SUBSEQUENT PURCHASE PRICE AT THE
SUBSEQUENT CLOSING IN ACCORDANCE WITH SECTION 3.3 BELOW.  IF CRP AND/OR ABRY
PURCHASE ANY SUBSEQUENT D SHARES AND THE CORRESPONDING NUMBER OF WARRANTS
PURSUANT THIS SECTION 3.2(A)(II), EACH OF CRP AND/OR ABRY SHALL BE DEEMED TO BE
A “SUBSEQUENT PURCHASER” FOR PURPOSES OF SECTION 3.3 BELOW.

(B)           IF CRP DOES NOT EXERCISE THE PURCHASE OPTION ON OR PRIOR TO
SEPTEMBER 4, 2006 BY FAILING TO DELIVER A CRP EXERCISE NOTICE OR BY DELIVERING A
NOTICE INDICATING THAT CRP IS NOT EXERCISING THE PURCHASE OPTION, THEN (I) THE
PURCHASE OPTION SHALL TERMINATE AND (II) ABRY MAY ELECT TO PURCHASE ALL OR A
PORTION OF THE SUBSEQUENT D SHARES AND THE CORRESPONDING NUMBER OF WARRANTS BY
DELIVERING AN ABRY EXERCISE NOTICE TO THE COMPANY AS SOON AS PRACTICAL AFTER CRP
INDICATES THAT IT IS NOT EXERCISING THE PURCHASE OPTION.  UPON ABRY’S DELIVERY
OF THE ABRY EXERCISE NOTICE, ABRY SHALL BE OBLIGATED TO PURCHASE THE NUMBER OF
THE SUBSEQUENT D SHARES AND THE CORRESPONDING NUMBER OF WARRANTS AS SET FORTH IN
THE ABRY EXERCISE NOTICE IN EXCHANGE FOR THE SUBSEQUENT PURCHASE PRICE AT THE
SUBSEQUENT CLOSING IN ACCORDANCE WITH SECTION 3.3 BELOW.  IF ABRY PURCHASES ANY
SUBSEQUENT D SHARES AND THE CORRESPONDING NUMBER OF WARRANTS PURSUANT THIS
SECTION 3.2(B), ABRY SHALL BE DEEMED TO BE THE “SUBSEQUENT PURCHASER” FOR
PURPOSES OF SECTION 3.3 BELOW.

3.3          SUBSEQUENT CLOSING AND SUBSEQUENT PURCHASE PRICE.

(A)           SUBSEQUENT CLOSING.  THE SUBSEQUENT CLOSING OF THE TRANSACTIONS
CONTEMPLATED HEREBY (THE “SUBSEQUENT CLOSING”) SHALL TAKE PLACE AT 10:00 A.M. ON
SEPTEMBER 8, 2006, AT THE OFFICES OF KIRKLAND & ELLIS LLP, NEW YORK, NEW YORK OR
AT SUCH OTHER TIME, PLACE AND/OR DATE AS SHALL BE AGREED UPON BY THE COMPANY AND
THE SUBSEQUENT PURCHASER.  THE DATE UPON WHICH THE SUBSEQUENT CLOSING OCCURS IS
REFERRED TO HEREIN AS THE “SUBSEQUENT CLOSING DATE.”

(B)           PAYMENT FOR AND DELIVERY OF SERIES D SHARES AND WARRANTS.  AT THE
SUBSEQUENT CLOSING, THE COMPANY SHALL ISSUE AND DELIVER TO EACH SUBSEQUENT
PURCHASER (I) A STOCK CERTIFICATE DULY EXECUTED AND REGISTERED IN THE NAME OF
SUCH SUBSEQUENT PURCHASER EVIDENCING OWNERSHIP OF THE SERIES D SHARES, AND (II)
THE WARRANTS DESCRIBED IN SECTION 2.1

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above, duly executed in favor of such Subsequent Purchaser, in each case,
against payment by each Subsequent Purchaser of an amount equal to (A) the
number of Subsequent D Shares set forth in the CRP Exercise Notice or the ABRY
Exercise Notice, as applicable to such Subsequent Purchaser, multiplied by (B)
$1,000 (the “Subsequent Purchase Price”) payable by wire transfer of
immediately-available funds to the account designated by the Company, and
together, in the case of CRP, with appropriate counterpart signature pages to
this Agreement and acknowledgements that its purchase is subject to the
obligations hereunder.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to each Purchaser that, except as set
forth on the disclosure schedules attached hereto (the “Disclosure Schedules”),
which exceptions shall be deemed to be part of the representations and
warranties made hereunder, the following representations are true and complete
as of the date hereof and as of the Initial Closing.  The Disclosure Schedules
shall be arranged in sections corresponding to the numbered and lettered
sections and subsections contained in this Article IV, and the disclosures in
any section or subsection of the Disclosure Schedules shall qualify other
sections and subsection in this Article IV to the extent the applicability of
such disclosure to the representation and warranty in this Article IV
corresponding to such other section is reasonably apparent from such disclosure;
provided that nothing set forth on any schedule shall be deemed adequate to
disclose an exception to a representation and warranty in this Article IV unless
the applicable Disclosure Schedule identifies the exception with reasonably
particularity and describes the relevant facts in reasonable detail.

4.1          EXISTENCE; QUALIFICATION; SUBSIDIARIES.  EACH OF THE COMPANY AND
EACH MATERIAL SUBSIDIARY WAS DULY ORGANIZED, IS VALIDLY EXISTING AND IN GOOD
STANDING UNDER THE LAWS OF THE JURISDICTION IN WHICH IT WAS INCORPORATED OR
FORMED AND HAS FULL POWER AND AUTHORITY TO CONDUCT ITS BUSINESS AND OWN AND
OPERATE ITS PROPERTIES AS NOW CONDUCTED, OWNED AND OPERATED.  THE COPIES OF THE
CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE COMPANY AND ALL AMENDMENTS
THERETO AND CERTIFICATES OF DESIGNATION FILED IN CONNECTION THEREWITH ARE
ATTACHED HERETO AS EXHIBIT D AND ARE TRUE, CORRECT AND COMPLETE COPIES OF SUCH
DOCUMENTS.  EACH OF THE COMPANY AND EACH MATERIAL SUBSIDIARY IS LICENSED OR
QUALIFIED AS A FOREIGN CORPORATION AND IS IN GOOD STANDING IN ALL JURISDICTIONS
WHERE SUCH PERSON IS REQUIRED TO BE SO LICENSED OR QUALIFIED, EXCEPT WHERE THE
FAILURE TO BE SO LICENSED, QUALIFIED OR IN GOOD STANDING WOULD NOT HAVE A
MATERIAL ADVERSE EFFECT.  SCHEDULE 4.1 LISTS ALL SUBSIDIARIES OF THE COMPANY AND
THEIR RESPECTIVE JURISDICTIONS OF INCORPORATION OR FORMATION.  EXCEPT AS SET
FORTH ON SCHEDULE 4.1, THE COMPANY HAS NO SUBSIDIARIES AND OWNS NO CAPITAL STOCK
OR OTHER SECURITIES OF, AND HAS NOT MADE ANY OTHER INVESTMENT IN, ANY OTHER
ENTITY.  ALL OF THE ISSUED SHARES OF CAPITAL STOCK OF EACH SUBSIDIARY 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,
EXCEPT PERMITTED LIENS.

4.2          AUTHORIZATION AND ENFORCEABILITY; ISSUANCE OF SHARES.

(A)           THE COMPANY HAS FULL POWER AND AUTHORITY AND HAS TAKEN ALL
REQUIRED CORPORATE AND OTHER ACTION NECESSARY TO AUTHORIZE IT TO EXECUTE AND
DELIVER THIS AGREEMENT AND

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THE RELATED DOCUMENTS AND TO PERFORM THE TERMS HEREOF AND THEREOF AND TO ISSUE
AND DELIVER THE SERIES D SHARES, THE CONVERSION SHARES, THE WARRANTS AND THE
SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANTS (THE “WARRANT
SHARES”), AND NONE OF SUCH ACTIONS WILL (I) VIOLATE OR CONFLICT WITH ANY
PROVISION OF THE CERTIFICATE OF INCORPORATION OF THE COMPANY, THE BY-LAWS OF THE
COMPANY OR OF ANY APPLICABLE LAW, REGULATION, ORDER, JUDGMENT OR DECREE OR RULE
OF THE STOCK EXCHANGE WHERE THE COMMON STOCK IS LISTED, (II) RESULT IN THE
BREACH OF OR CONSTITUTE A DEFAULT (OR AN EVENT WHICH, WITH NOTICE OR LAPSE OF
TIME OR BOTH WOULD CONSTITUTE A DEFAULT) UNDER ANY AGREEMENT, INSTRUMENT OR
UNDERSTANDING TO WHICH ANY MEMBER OF THE COMPANY GROUP IS A PARTY OR BY WHICH IT
IS BOUND OR BY WHICH IT WILL BECOME BOUND AS A RESULT OF THE TRANSACTION
CONTEMPLATED BY THIS AGREEMENT OR (III) RESULT IN OR CONSTITUTE A “CHANGE OF
CONTROL” UNDER ANY AGREEMENT, INSTRUMENT OR UNDERSTANDING TO WHICH ANY MEMBER OF
THE COMPANY GROUP IS A PARTY OR BY WHICH IT IS BOUND OR BY WHICH IT WILL BECOME
BOUND AS A RESULT OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR ANY
RELATED DOCUMENT.  THIS AGREEMENT AND EACH OF THE RELATED DOCUMENTS CONSTITUTES
A LEGAL, VALID AND BINDING OBLIGATION OF THE COMPANY, ENFORCEABLE AGAINST THE
COMPANY IN ACCORDANCE WITH THEIR TERMS, EXCEPT TO THE EXTENT LIMITED BY
APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM AND SIMILAR LAWS
OF GENERAL APPLICATION RELATED TO THE ENFORCEMENT OF CREDITOR’S RIGHTS GENERALLY
AND EXCEPT AS RIGHTS TO INDEMNITY THEREUNDER MAY BE LIMITED BY APPLICABLE
FEDERAL SECURITIES LAWS.

(B)           THE SERIES D SHARES HAVE BEEN DULY AUTHORIZED AND, WHEN ISSUED AND
DELIVERED IN ACCORDANCE WITH THIS AGREEMENT, WILL BE VALIDLY ISSUED, FULLY PAID
AND NONASSESSABLE, AND WILL BE FREE OF ANY LIENS (OTHER THAN, WITH RESPECT TO
ANY PURCHASER, ANY RESTRICTIONS ON TRANSFER UNDER STATE AND/OR FEDERAL
SECURITIES LAWS OR LIENS CREATED BY SUCH PURCHASER OR UNDER THIS AGREEMENT OR
ANY RELATED DOCUMENT).  THE WARRANTS HAVE BEEN DULY AUTHORIZED AND, WHEN ISSUED
AND DELIVERED IN ACCORDANCE WITH THIS AGREEMENT, WILL BE VALIDLY ISSUED AND WILL
BE FREE OF ANY LIENS (OTHER THAN, WITH RESPECT TO ANY PURCHASER, ANY
RESTRICTIONS ON TRANSFER UNDER STATE AND/OR FEDERAL SECURITIES LAWS OR LIENS
CREATED BY SUCH PURCHASER OR UNDER THIS AGREEMENT OR ANY RELATED DOCUMENT). 
WHEN ISSUED, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE SERIES D
SHARES IN ACCORDANCE WITH THE TERMS OF THE SERIES D PREFERRED STOCK CERTIFICATE
OF DESIGNATION (THE “CONVERSION SHARES”) AND THE WARRANT SHARES WHEN ISSUED UPON
DUE EXERCISE OF THE WARRANT WILL BE DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID
AND NONASSESSABLE, AND WILL BE FREE OF ANY LIENS (OTHER THAN, WITH RESPECT TO
ANY PURCHASER, ANY RESTRICTIONS ON TRANSFER UNDER STATE AND/OR FEDERAL
SECURITIES LAWS OR LIENS CREATED BY SUCH PURCHASER OR UNDER THIS AGREEMENT OR
ANY RELATED DOCUMENT).  THE CONVERSION SHARES AND THE WARRANT SHARES HAVE BEEN
DULY RESERVED FOR ISSUANCE UPON THE CONVERSION OF THE SERIES D SHARES OR
EXERCISE OF THE WARRANTS, AS THE CASE MAY BE.  NEITHER THE ISSUANCE AND DELIVERY
OF THE SERIES D SHARES OR WARRANTS NOR THE ISSUANCE AND DELIVERY OF ANY
CONVERSION SHARES OR WARRANT SHARES IS SUBJECT TO ANY PREEMPTIVE RIGHT OF ANY
STOCKHOLDER OF THE COMPANY OR TO ANY RIGHT OF FIRST REFUSAL OR OTHER SIMILAR
RIGHT IN FAVOR OF ANY PERSON.

4.3          CAPITALIZATION.

(A)           SCHEDULE 4.3 SETS FORTH AS OF THE DATE HEREOF, AND UPON THE
ACCEPTANCE FOR FILING OF THE SERIES D PREFERRED STOCK CERTIFICATE OF
DESIGNATION, (I) THE AUTHORIZED CAPITAL STOCK OF THE COMPANY; (II) THE NUMBER OF
SHARES OF CAPITAL STOCK ISSUED AND OUTSTANDING; (III) THE NUMBER OF SHARES OF
CAPITAL STOCK ISSUABLE PURSUANT TO OPTIONS OR OTHER RIGHTS OUTSTANDING UNDER THE
STOCK OPTION PLAN AND (IV) THE NUMBER OF SHARES OF CAPITAL STOCK ISSUABLE AND
RESERVED FOR

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issuance pursuant to Equity Securities (other than the Series D Shares, the
Warrants and options or other rights outstanding under the Stock Option Plan)
exercisable for, or convertible into or exchangeable for any shares of capital
stock of the Company.  All of the issued and outstanding shares of the Company’s
and each Subsidiary’s Equity Securities have been duly authorized and validly
issued and are fully paid, nonassessable and free of pre-emptive rights and were
issued in full compliance with applicable state and federal securities law and
any rights of third parties.  Except as described on Schedule 4.3, no Person is
entitled to pre-emptive or similar statutory or contractual rights with respect
to any Equity Securities of the Company or any Company Subsidiary.  Except as
described on Schedule 4.3, there are no outstanding warrants, options,
convertible securities or other rights, agreements or arrangements of any
character under which the Company or any of its Subsidiaries is or may be
obligated to issue any Equity Securities of any kind and except as contemplated
by this Agreement, neither the Company nor any of its Subsidiaries is currently
in negotiations for the issuance of any Equity Securities of any kind.  Except
as described on Schedule 4.3 and except for the Amended and Restated Investor
Rights Agreement, there are no voting agreements, buy-sell agreements, option or
right of first purchase agreements or other agreements of any kind among the
Company or any Company Subsidiary and any of the securityholders of the Company
or any Company Subsidiary relating to the securities of the Company or any
Company Subsidiary held by them.  Except as described on Schedule 4.3, no Person
has the right to require the Company or any Company Subsidiary to register any
securities of the Company under the Securities Act, whether on a demand basis or
in connection with the registration of securities of the Company or any Company
Subsidiary for its own account or for the account of any other Person.

(B)           THE ISSUANCE AND SALE OF THE SERIES D SHARES AND THE WARRANTS
HEREUNDER WILL NOT OBLIGATE THE COMPANY TO ISSUE ANY EQUITY SECURITIES TO ANY
OTHER PERSON (OTHER THAN THE PURCHASERS) AND WILL NOT RESULT IN THE ADJUSTMENT
OF THE EXERCISE, CONVERSION, EXCHANGE OR RESET PRICE OF ANY OUTSTANDING
SECURITY.

(C)           EXCEPT FOR THE RIGHTS PLAN, THE COMPANY DOES NOT HAVE OUTSTANDING
STOCKHOLDER PURCHASE RIGHTS OR A “POISON PILL” OR ANY SIMILAR ARRANGEMENT IN
EFFECT GIVING ANY PERSON THE RIGHT TO PURCHASE ANY EQUITY INTEREST IN THE
COMPANY UPON THE OCCURRENCE OF CERTAIN EVENTS.  THE ISSUANCE AND SALE OF THE
SECURITIES HEREUNDER WILL NOT TRIGGER ANY OF THE PROVISIONS OF THE RIGHTS PLAN.

4.4          PRIVATE SALE; VOTING AGREEMENTS.  ASSUMING THE ACCURACY OF EACH
PURCHASER’S REPRESENTATIONS CONTAINED HEREIN, NEITHER THE OFFER, SALE AND
ISSUANCE OF THE SERIES D SHARES AND WARRANTS HEREUNDER NOR THE ISSUANCE AND
DELIVERY OF ANY CONVERSION SHARES OR WARRANT SHARES (ASSUMING THAT THE
CONVERSION SHARES AND WARRANT SHARES ARE ISSUED TO SUCH PURCHASER) REQUIRES
REGISTRATION UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAWS.

4.5          SEC REPORTS; FINANCIAL STATEMENTS.

(A)           THE COMPANY HAS FILED ALL FORMS, REPORTS AND DOCUMENTS REQUIRED TO
BE FILED BY IT WITH THE SEC SINCE MARCH 15, 2005 (ASSUMING, FOR THE PURPOSES OF
THIS SECTION 4.5, THE COMPANY HAS BEEN SUBJECT TO THE FILING REQUIREMENTS OF THE
EXCHANGE ACT SINCE MARCH 15, 2005), AND HAS MADE AVAILABLE TO THE PURCHASERS IN
THE FORM FILED WITH THE SEC (I) ITS FORM 10-K FILED DECEMBER 20, 2005 AND (II)
ALL OTHER FORMS, REPORTS AND OTHER REGISTRATION STATEMENTS FILED

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by the Company with the SEC after March 15, 2005 and before the Initial Closing
Date, including the Form 10-Q for the quarter ended March 31, 2006 (the forms,
reports and other documents referred to in clauses (i) and (ii) above, together
with any amendments or supplements thereto being referred to herein,
collectively, as the “Company Reports”).  Regardless of whether the Company
Reports were required to be filed under the Securities Act or Exchange Act, the
Company Reports (i) were prepared, in all material respects, in accordance with
the applicable requirements of the Securities Act and the Exchange Act, as the
case may be, and (ii) did not as subsequently amended contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.  No
Subsidiary is required to file reports with the SEC under Section 13 or 15(d) of
the Exchange Act.

(B)           EACH OF THE FINANCIAL STATEMENTS (INCLUDING ANY NOTES THERETO)
CONTAINED IN THE COMPANY REPORTS AND THE UNAUDITED CONSOLIDATED BALANCE SHEET OF
THE COMPANY AS OF JUNE 30, 2006 AND THE RELATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY AND COMPREHENSIVE LOSS FOR THE NINE-MONTH PERIOD THEN ENDED
(COLLECTIVELY, THE “FINANCIAL STATEMENTS”), COMPLIES AS TO FORM IN ALL MATERIAL
RESPECTS WITH APPLICABLE ACCOUNTING REQUIREMENTS AND THE PUBLISHED RULES AND
REGULATIONS OF THE SEC WITH RESPECT THERETO AND WAS PREPARED IN ALL MATERIAL
RESPECTS IN ACCORDANCE WITH GAAP APPLIED ON A CONSISTENT BASIS THROUGHOUT THE
PERIODS INDICATED (EXCEPT AS MAY BE INDICATED IN THE NOTES THERETO) AND EACH
FAIRLY PRESENTED IN ALL MATERIAL RESPECTS (SUBJECT TO, IN THE CASE OF THE
UNAUDITED STATEMENTS, TO NORMAL, RECURRING AUDIT ADJUSTMENTS, NONE OF WHICH ARE
MATERIAL INDIVIDUALLY OR IN THE AGGREGATE) THE CONSOLIDATED FINANCIAL POSITION,
RESULTS OF OPERATIONS, STOCKHOLDERS’ EQUITY AND CASH FLOWS OF THE COMPANY GROUP
AS AT THE RESPECTIVE DATES THEREOF AND FOR THE RESPECTIVE PERIODS INDICATED
THEREIN.  AS OF THE DATES OF THE FINANCIAL STATEMENTS, THE COMPANY HAD NO
INDEBTEDNESS OR OTHER LIABILITY, WHICH WAS NOT REFLECTED OR RESERVED AGAINST IN
THE BALANCE SHEETS THERETO WHICH ARE PART OF THE FINANCIAL STATEMENTS, EXCEPT
FOR (I) LIABILITIES INCURRED IN THE ORDINARY COURSE OF BUSINESS SUBSEQUENT TO
MARCH 31, 2006 AND (II) LIABILITIES INCURRED UNDER CONTRACTS ENTERED INTO IN THE
ORDINARY COURSE OF BUSINESS AND NOT REQUIRED UNDER GAAP TO BE REFLECTED IN THE
FINANCIAL STATEMENTS.

4.6          ABSENCE OF CERTAIN CHANGES.  EXCEPT AS SET FORTH ON SCHEDULE 4.6,
SINCE MARCH 31, 2006 (THE “MOST RECENT BALANCE SHEET DATE”), NO MEMBER OF THE
COMPANY GROUP HAS:

(A)           INCURRED ANY LIABILITIES OTHER THAN CURRENT LIABILITIES INCURRED,
OR LIABILITIES UNDER CONTRACTS ENTERED INTO, IN THE ORDINARY COURSE OF BUSINESS
AND FOR INDIVIDUAL AMOUNTS NOT GREATER THAN $350,000;

(B)           PAID, DISCHARGED OR SATISFIED ANY CLAIM, LIEN OR LIABILITY, OTHER
THAN ANY CLAIM, LIEN OR LIABILITY (A) REFLECTED OR RESERVED AGAINST ON THE
BALANCE SHEET CONTAINED IN THE FINANCIAL STATEMENTS AS OF THE MOST RECENT
BALANCE SHEET DATE (THE “CURRENT BALANCE SHEET”) AND PAID, DISCHARGED OR
SATISFIED IN THE ORDINARY COURSE OF BUSINESS OR (B) INCURRED SINCE THE MOST
RECENT BALANCE SHEET DATE AND PAID, DISCHARGED OR SATISFIED, IN EACH CASE IN THE
ORDINARY COURSE OF BUSINESS;

(C)           EXCEPT AS CONTEMPLATED BY THIS AGREEMENT OR ANY RELATED DOCUMENT,
MADE ANY CHANGE OR AMENDMENTS TO ITS CERTIFICATE OF INCORPORATION OR BY-LAWS OR
MATERIAL CHANGE

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TO ANY MATERIAL CONTRACT OR ARRANGEMENT BY WHICH IT IS BOUND OR WHICH ANY OF ITS
ASSETS OR PROPERTIES ARE SUBJECT;

(D)           EXCLUSIVELY LICENSED ANY MATERIAL COMPANY INTELLECTUAL PROPERTY TO
ANY PERSON;

(E)           PERMITTED ANY OF ITS MATERIAL ASSETS, TANGIBLE OR INTANGIBLE, TO
BECOME SUBJECT TO ANY LIEN (OTHER THAN ANY PERMITTED LIEN);

(F)            WRITTEN OFF AS UNCOLLECTIBLE ANY ACCOUNTS RECEIVABLE OTHER THAN
(I) IN THE ORDINARY COURSE OF BUSINESS OR (II) FOR AMOUNTS NOT GREATER THAN
$350,000;

(G)           TERMINATED OR AMENDED OR SUFFERED THE TERMINATION OR AMENDMENT OF,
OTHER THAN IN THE ORDINARY COURSE OF BUSINESS, OR FAILED TO PERFORM IN ALL
MATERIAL RESPECTS ALL OF ITS OBLIGATIONS OR SUFFERED OR PERMITTED ANY MATERIAL
DEFAULT TO EXIST UNDER, ANY MATERIAL CONTRACT, LICENSE OR PERMIT;

(H)           SUFFERED ANY DAMAGE, DESTRUCTION OR LOSS (WHETHER OR NOT COVERED
BY INSURANCE) TO ANY ASSETS OR PROPERTIES OF THE COMPANY GROUP WHICH IN THE
AGGREGATE EXCEEDS $350,000;

(I)            MADE ANY LOAN (OTHER THAN INTERCOMPANY ADVANCES) TO ANY OTHER
PERSON (OTHER THAN ADVANCES TO EMPLOYEES IN THE ORDINARY COURSE OF BUSINESS)
WHICH EXCEED $100,000 INDIVIDUALLY OR $200,000 IN THE AGGREGATE;

(J)            CANCELED, WAIVED OR RELEASED ANY DEBT, CLAIM OR RIGHT IN AN
AMOUNT OR HAVING A VALUE EXCEEDING $350,000;

(K)           OTHER THAN A PERMITTED AFFILIATE TRANSACTION, PAID ANY AMOUNT TO
OR ENTERED INTO ANY AGREEMENT, ARRANGEMENT OR TRANSACTION WITH ANY AFFILIATE
(INCLUDING ITS OFFICERS, DIRECTORS AND EMPLOYEES) OUTSIDE THE ORDINARY COURSE OF
BUSINESS;

(L)            DECLARED, SET ASIDE, OR PAID ANY DIVIDEND OR DISTRIBUTION WITH
RESPECT TO ANY EQUITY SECURITY OR REDEEMED, PURCHASED OR OTHERWISE ACQUIRED ANY
EQUITY SECURITY;

(M)          OTHER THAN IN THE ORDINARY COURSE OF BUSINESS, GRANTED ANY INCREASE
IN THE COMPENSATION OF ANY OFFICER OR EMPLOYEE OR MADE ANY OTHER CHANGE IN
EMPLOYMENT TERMS OF ANY OFFICER OR EMPLOYEE;

(N)           MADE ANY CHANGE IN ANY METHOD OF ACCOUNTING OR ANY MATERIAL CHANGE
IN ANY ACCOUNTING PRACTICE;

(O)           FAILED TO MAINTAIN, OR PERMITTED THE LOSS, LAPSE OR ABANDONMENT
OF, ANY MATERIAL COMPANY INTELLECTUAL PROPERTY;

(P)           TO THE KNOWLEDGE OF THE COMPANY, SUFFERED OR CAUSED ANY OTHER
OCCURRENCE, EVENT OR TRANSACTION KNOWN TO THE COMPANY WHICH, INDIVIDUALLY OR
TOGETHER WITH

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EACH OTHER OCCURRENCE, EVENT OR TRANSACTION, HAS HAD OR COULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT; OR

(Q)           AGREED, IN WRITING OR OTHERWISE, TO ANY OF THE FOREGOING.

4.7          LITIGATION.  EXCEPT AS SET FORTH ON SCHEDULE 4.7, THERE ARE NO
CLAIMS PENDING OR, TO THE KNOWLEDGE OF THE COMPANY, THREATENED AGAINST OR
AFFECTING THE COMPANY OR ANY OTHER MEMBER OF THE COMPANY GROUP AT LAW OR IN
EQUITY, OR BEFORE OR BY ANY GOVERNMENTAL AGENCY (INCLUDING ANY CLAIM WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE RELATED
DOCUMENTS), WHICH IF DETERMINED ADVERSELY TO THE COMPANY WOULD HAVE A MATERIAL
ADVERSE EFFECT, AND, TO THE KNOWLEDGE OF THE COMPANY, THERE IS NO BASIS FOR ANY
SUCH CLAIM (IN EACH CASE, OTHER THAN ANY CLAIM OR CLAIMS NOT PENDING AND, TO THE
KNOWLEDGE OF THE COMPANY, NOT THREATENED AGAINST OR AFFECTING THE COMPANY OR ANY
OF ITS SUBSIDIARIES AS OF THE INITIAL CLOSING DATE).  NEITHER THE COMPANY NOR
ANY MEMBER OF THE COMPANY GROUP IS SUBJECT TO ANY JUDGMENT, ORDER OR DECREE OF
ANY COURT OR OTHER GOVERNMENTAL AGENCY (OTHER THAN ANY SUCH ITEM THAT IS NOT IN
EFFECT AS OF THE INITIAL CLOSING DATE AND THAT COULD NOT REASONABLY BE EXPECTED
TO HAVE A MATERIAL ADVERSE EFFECT).  NEITHER THE COMPANY NOR ANY OTHER MEMBER OF
THE COMPANY GROUP HAS RECEIVED ANY OPINION OR MEMORANDUM FROM LEGAL COUNSEL TO
THE EFFECT THAT IT IS EXPOSED, FROM A LEGAL STANDPOINT, TO ANY LIABILITY THAT
WOULD HAVE A MATERIAL ADVERSE EFFECT.

4.8          LICENSES, COMPLIANCE WITH LAW, OTHER AGREEMENTS, ETC.  THE COMPANY
HAS, DIRECTLY OR THROUGH MEMBERS OF THE COMPANY GROUP, ALL MATERIAL FRANCHISES,
PERMITS, LICENSES AND OTHER RIGHTS NECESSARY TO CONDUCT ITS BUSINESS AND IS NOT
IN VIOLATION IN ANY MATERIAL RESPECT OF ANY ORDER OR DECREE OF ANY COURT, OR OF
ANY LAW, ORDER OR REGULATION OF ANY GOVERNMENTAL AGENCY, OR OF THE PROVISIONS OF
ANY MATERIAL CONTRACT OR AGREEMENT TO WHICH IT IS A PARTY OR BY WHICH IT IS
BOUND, AND NEITHER THIS AGREEMENT NOR THE RELATED DOCUMENTS NOR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY WILL RESULT IN ANY SUCH VIOLATION, EXCEPT WHERE
THE FAILURE TO HAVE ANY SUCH FRANCHISE, PERMIT OR LICENSE OR ANY SUCH VIOLATION
WOULD NOT IN THE AGGREGATE BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.  EACH
OF THE COMPANY AND EACH OTHER MEMBER OF THE COMPANY GROUP ARE IN COMPLIANCE WITH
ALL APPLICABLE LAWS (INCLUDING RULES, REGULATIONS, CODES, PLANS, INJUNCTIONS,
JUDGMENTS, ORDERS, DECREES, RULINGS AND CHARGES THEREUNDER, INCLUDING THE
FOREIGN CORRUPT FEDERAL PRACTICES ACT, 15 U.S.C. 78DD-1 ET/ SEQ.) OF FEDERAL,
STATE, LOCAL AND FOREIGN GOVERNMENTAL (AND ALL AGENCIES THEREOF), EXCEPT TO THE
EXTENT THE FAILURE TO COMPLY WOULD NOT HAVE A MATERIAL ADVERSE EFFECT, AND NO
CLAIM OR NOTICE HAS BEEN FILED OR COMMENCED AGAINST ANY OF THEM ALLEGING ANY
FAILURE TO SO COMPLY.

4.9          CONSENTS.  THE EXECUTION, DELIVERY AND PERFORMANCE BY THE COMPANY
OF THIS AGREEMENT AND THE RELATED DOCUMENTS AND THE OFFER, ISSUANCE AND SALE OF
THE SERIES D SHARES AND THE WARRANTS REQUIRE NO CONSENT OF, ACTION BY OR IN
RESPECT OF, OR FILING WITH, ANY PERSON, GOVERNMENTAL AGENCY HAVING JURISDICTION
OVER THE COMPANY OR ANY OF ITS AFFILIATES THAT HAS NOT BEEN OBTAINED, EXCEPT
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION REQUIRED AFTER THE EXECUTION
AND DELIVERY OF THIS AGREEMENT.  SUBJECT TO THE ACCURACY OF THE REPRESENTATIONS
AND WARRANTIES OF THE PURCHASERS SET FORTH IN ARTICLE V HEREOF, THE COMPANY HAS
TAKEN ALL ACTION NECESSARY TO EXEMPT (I) THE ISSUANCE AND SALE OF THE SERIES D
SHARES AND THE WARRANTS, (II) THE ISSUANCE OF THE CONVERSION SHARES AND WARRANT
SHARES UPON DUE CONVERSION AND EXERCISE OF THE SERIES D SHARES AND WARRANTS,
RESPECTIVELY AND (III) THE OTHER TRANSACTIONS CONTEMPLATED BY THE RELATED
DOCUMENTS FROM THE PROVISIONS OF THE RIGHTS PLAN AND ANY OTHER “POISON PILL”

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ARRANGEMENT, AND ANY ANTI-TAKEOVER, BUSINESS COMBINATION OR CONTROL SHARE LAW OR
STATUTE BINDING ON THE COMPANY GROUP OR TO WHICH THE COMPANY GROUP OR ANY OF ITS
ASSETS AND PROPERTIES MAY BE SUBJECT.

4.10        DISCLOSURE.  THIS AGREEMENT, TOGETHER WITH ALL EXHIBITS AND
SCHEDULES HERETO, AND THE AGREEMENTS, CERTIFICATES AND OTHER DOCUMENTS
(INCLUDING THE COMPANY REPORTS) FURNISHED OR MADE AVAILABLE TO THE PURCHASERS BY
THE COMPANY AND EACH OTHER MEMBER OF THE COMPANY GROUP IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT AND THE RELATED DOCUMENTS, DO NOT
CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR, AS SUPPLEMENTED BY THE
COMPANY REPORTS, OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE
STATEMENTS CONTAINED HEREIN OR THEREIN, IN THE LIGHT OF THE CIRCUMSTANCES UNDER
WHICH THEY WERE MADE, NOT MISLEADING.

4.11        TANGIBLE ASSETS.  THE COMPANY, DIRECTLY OR THROUGH A MEMBER OF THE
COMPANY GROUP, OWNS OR LEASES ALL TANGIBLE ASSETS USED IN OR REASONABLY
NECESSARY FOR THE OPERATION OF THE BUSINESS OF THE COMPANY GROUP, TAKEN AS A
WHOLE.

4.12        OWNED REAL PROPERTY.  NO MEMBER OF THE COMPANY GROUP OWNS ANY REAL
PROPERTY.

4.13        REAL PROPERTY LEASES.  THERE EXISTS NO EVENT OF DEFAULT (NOR, TO THE
COMPANY’S KNOWLEDGE, ANY EVENT WHICH WITH NOTICE OR LAPSE OF TIME WOULD
CONSTITUTE AN EVENT OF DEFAULT) WITH RESPECT TO THE COMPANY, ANY MATERIAL
SUBSIDIARY AND, TO THE COMPANY’S KNOWLEDGE, WITH RESPECT TO ANY OTHER PARTY
THERETO UNDER ANY AGREEMENT PURSUANT TO WHICH THE COMPANY OR ANY MATERIAL
SUBSIDIARY IS THE LESSEE OR LESSOR OF ANY REAL PROPERTY, AND ALL SUCH AGREEMENTS
ARE IN FULL FORCE AND EFFECT AND ENFORCEABLE AGAINST THE LESSOR OR LESSEE IN
ACCORDANCE WITH THEIR TERMS EXCEPT FOR SUCH DEFAULTS AND DEFECTS IN
ENFORCEABILITY AS WOULD NOT IN THE AGGREGATE BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT.

4.14        CERTIFICATES, AUTHORITIES AND PERMITS.  THE COMPANY GROUP POSSESSES
ADEQUATE CERTIFICATES, AUTHORITIES OR PERMITS ISSUED BY APPROPRIATE GOVERNMENTAL
AGENCIES NECESSARY TO CONDUCT THE BUSINESS NOW OPERATED BY THEM, EXCEPT WHERE
THE FAILURE TO POSSESS THE SAME WOULD NOT HAVE A MATERIAL ADVERSE EFFECT, AND
NEITHER THE COMPANY NOR ANY MATERIAL SUBSIDIARY HAS RECEIVED ANY NOTICE OF
PROCEEDINGS RELATING TO THE REVOCATION OR MODIFICATION OF ANY SUCH CERTIFICATE,
AUTHORITY OR PERMIT THAT, IF DETERMINED ADVERSELY TO THE COMPANY OR SUCH
MATERIAL SUBSIDIARY, COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT, INDIVIDUALLY OR IN THE AGGREGATE.

4.15        AGREEMENTS

(A)           EXCEPT AS EXPRESSLY CONTEMPLATED BY THIS AGREEMENT, AS DISCLOSED
IN THE COMPANY REPORTS, OR AS SET FORTH ON SCHEDULE 4.15 AS OF THE INITIAL
CLOSING DATE, NO MEMBER OF THE COMPANY GROUP IS A PARTY TO OR BOUND BY ANY
WRITTEN OR ORAL:

(I)            CONTRACT FOR THE EMPLOYMENT OR RETAINER OF ANY OFFICER,
INDIVIDUAL EMPLOYEE OR OTHER PERSON ON A FULL-TIME, PART-TIME, CONSULTING OR
OTHER BASIS PROVIDING ANNUAL COMPENSATION IN EXCESS OF $150,000 OR WHICH CANNOT
BE TERMINATED WITHOUT CAUSE

20

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AND WITHOUT POST-TERMINATION LIABILITY BY PROVIDING ONLY REASONABLE NOTICE AT
COMMON LAW;

(II)           CONTRACT UNDER WHICH ANY MEMBER OF THE COMPANY GROUP HAS ADVANCED
OR LOANED ANY OTHER PERSON AMOUNTS IN THE AGGREGATE EXCEEDING $200,000;

(III)          AGREEMENT OR INDENTURE RELATING TO BORROWED MONEY OR OTHER
INDEBTEDNESS (EXCLUDING GUARANTEES) OR THE MORTGAGING, PLEDGING OR OTHERWISE
PLACING A LIEN ON ANY MATERIAL ASSET OR MATERIAL GROUP OF ASSETS OF THE COMPANY
GROUP;

(IV)          GUARANTEE OF ANY OBLIGATION IN EXCESS OF $150,000;

(V)           AGREEMENT UNDER WHICH IT HAS GRANTED ANY PERSON ANY REGISTRATION
RIGHTS (INCLUDING DEMAND OR PIGGYBACK REGISTRATION RIGHTS);

(VI)          AGREEMENT WITH A TERM OF MORE THAN TWELVE MONTHS WHICH CONTAINS
EXECUTORY OBLIGATIONS IN EXCESS OF $150,000 AND WHICH IS NOT TERMINABLE BY THE
MEMBER OF THE COMPANY GROUP PARTY THERETO UPON 60 DAYS OR LESS NOTICE WITHOUT
PENALTY;

(VII)         ANY AGREEMENT OR ARRANGEMENT PURSUANT TO WHICH ANOTHER PERSON IS
ENGAGED AS A FINDER, BROKER, AGENT OR IN ANY OTHER CAPACITY IN RESPECT OF THE
SALE OF EQUITY SECURITIES OR DEBT SECURITIES OF THE COMPANY OR A COMPANY SALE;

(VIII)        CONTRACT OR AGREEMENT PROHIBITING IT FROM FREELY ENGAGING IN ANY
BUSINESS OR COMPETING ANYWHERE IN THE WORLD;

(IX)           ANY OTHER AGREEMENT WHICH IS MATERIAL TO ITS OPERATIONS AND
BUSINESS PROSPECTS, INVOLVES A CONSIDERATION IN EXCESS OF $300,000 ANNUALLY OR
THE TERMINATION OF WHICH COULD RESULT IN A MATERIAL ADVERSE EFFECT; OR

(X)            CONTRACT, LICENSE OR PERMISSION (I) PURSUANT TO WHICH ANY
INTELLECTUAL PROPERTY IS LICENSED, TRANSFERRED OR OTHERWISE MADE AVAILABLE,
INCLUDING ON A CONTINGENT BASIS, TO ANY THIRD PARTY (OTHER THAN NON-EXCLUSIVE,
INTERNAL USE, OBJECT CODE SOFTWARE LICENSES GRANTED BY THE COMPANY TO AN END
USER CUSTOMER OF THE COMPANY IN THE ORDINARY COURSE OF BUSINESS PURSUANT TO THE
COMPANY’S STANDARD FORM OF END USER LICENSE AGREEMENT SET FORTH IN
SCHEDULE 4.15(A)(X) (“EULAS”)), OR (II) PURSUANT TO WHICH ANY THIRD PARTY HAS
LICENSED, TRANSFERRED OR OTHERWISE MADE AVAILABLE ANY INTELLECTUAL PROPERTY,
INCLUDING ON A CONTINGENT BASIS, TO ANY MEMBER OF THE COMPANY GROUP (EXCEPT FOR
NON-EXCLUSIVE, INTERNAL USE WRITTEN SOFTWARE LICENSES SOLELY UNDER WHICH
NON-CUSTOMIZED SOFTWARE IS LICENSED TO THE COMPANY SOLELY IN EXECUTABLE OR
OBJECT CODE FORM, WHERE SUCH SOFTWARE IS NOT INCORPORATED INTO, OR USED DIRECTLY
IN THE DEVELOPMENT, MANUFACTURING, OR DISTRIBUTION OF, ANY OF THE PRODUCTS OR
SERVICES OF ANY COMPANY GROUP MEMBER, AND IS GENERALLY AVAILABLE ON STANDARD
TERMS FOR LESS THAN $15,000 (“SHRINKWRAP AGREEMENTS”)).

(B)           ALL OF THE CONTRACTS, AGREEMENTS AND INSTRUMENTS REQUIRED TO BE
SET FORTH ON SCHEDULE 4.15 (THE “MATERIAL CONTRACTS”) AND ALL EULAS AND
SHRINKWRAP AGREEMENTS ARE VALID, BINDING AND ENFORCEABLE IN ACCORDANCE WITH
THEIR RESPECTIVE TERMS.  EACH MEMBER OF THE

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COMPANY GROUP HAS PERFORMED ALL MATERIAL OBLIGATIONS REQUIRED TO BE PERFORMED BY
IT UNDER THE CONTRACTS TO WHICH IT IS A PARTY AND IS NOT IN MATERIAL DEFAULT
UNDER OR IN MATERIAL BREACH OF NOR HAS KNOWLEDGE OF ANY CLAIM OF MATERIAL
DEFAULT OR MATERIAL BREACH UNDER ANY SUCH CONTRACT; NO EVENT HAS OCCURRED WHICH
WITH THE PASSAGE OF TIME OR THE GIVING OF NOTICE OR BOTH WOULD RESULT IN A
DEFAULT, BREACH OR EVENT OF NONCOMPLIANCE BY ANY MEMBER OF THE COMPANY GROUP
UNDER ANY MATERIAL CONTRACT TO WHICH IT IS A PARTY.  THE COMPANY HAS NO
KNOWLEDGE OF ANY BREACH OR ANTICIPATED BREACH BY THE OTHER PARTY TO ANY MATERIAL
CONTRACT TO WHICH IT IS A PARTY.

(C)           THE PURCHASERS’ SPECIAL COUNSEL HAS BEEN GIVEN ACCESS TO A TRUE
AND CORRECT COPY OF EACH MATERIAL CONTRACT, OR SUCH MATERIAL CONTRACT IS
AVAILABLE IN THE COMPANY REPORTS, TOGETHER WITH ALL AMENDMENTS, WAIVERS OR OTHER
CHANGES THERETO.

4.16        INTELLECTUAL PROPERTY.  EACH MEMBER OF THE COMPANY GROUP OWNS AND
POSSESSES, DIRECTLY OR THROUGH ANOTHER MEMBER OF THE COMPANY GROUP, FREE AND
CLEAR OF ALL LIENS (OTHER THAN NONEXCLUSIVE LICENSES GRANTED BY A COMPANY GROUP
MEMBER TO ITS CUSTOMERS, OR DISTRIBUTION RIGHTS GRANTED BY A COMPANY GROUP
MEMBER TO PERSONS IN THE DISTRIBUTION CHAIN, IN EACH CASE, IN THE ORDINARY
COURSE OF BUSINESS), ALL RIGHT, TITLE AND INTEREST IN AND TO, OR HAS THE RIGHT
TO USE PURSUANT TO A VALID AND ENFORCEABLE WRITTEN AGREEMENT SET FORTH IN
SCHEDULE 4.15(A)(X), ALL INTELLECTUAL PROPERTY NECESSARY TO THE CONDUCT OF ITS
BUSINESS AS NOW CONDUCTED AND AS PRESENTLY PROPOSED TO BE CONDUCTED (INCLUDING
ALL RIGHT, TITLE AND INTEREST IN AND TO THE INTELLECTUAL PROPERTY REQUIRED TO BE
DISCLOSED IN SCHEDULE 4.16, THE “COMPANY INTELLECTUAL PROPERTY”).  TO THE
KNOWLEDGE OF THE COMPANY, NO MEMBER OF THE COMPANY GROUP HAS INFRINGED,
MISAPPROPRIATED OR CONFLICTED WITH, AND TO THE KNOWLEDGE OF THE COMPANY, THE
CONDUCT OF EACH COMPANY GROUP MEMBER’S BUSINESS AS NOW CONDUCTED AND AS
PRESENTLY PROPOSED TO BE CONDUCTED WILL NOT VIOLATE ANY LICENSE (OR OTHER
AGREEMENT CONCERNING INTELLECTUAL PROPERTY), OR INFRINGE, MISAPPROPRIATE OR
CONFLICT WITH, ANY INTELLECTUAL PROPERTY OF ANY OTHER PERSON OR ENTITY.  NO
COMPANY GROUP MEMBER HAS RECEIVED ANY COMMUNICATIONS (INCLUDING DEMANDS OR
OFFERS TO LICENSE) ALLEGING THAT A COMPANY GROUP MEMBER HAS INFRINGED,
MISAPPROPRIATED OR CONFLICTED WITH OR, BY CONDUCTING ITS BUSINESS, WOULD
INFRINGE, MISAPPROPRIATE OR CONFLICT WITH ANY INTELLECTUAL PROPERTY OF ANY OTHER
PERSON OR ENTITY.  TO THE KNOWLEDGE OF THE COMPANY, THERE ARE NO FACTS WHICH
INDICATE A LIKELIHOOD OF ANY OF THE FOREGOING TWO (2) SENTENCES. THERE ARE NO
CLAIMS AGAINST ANY COMPANY GROUP MEMBER THAT WERE EITHER MADE WITHIN THE PAST
FOUR (4) YEARS OR ARE PRESENTLY PENDING CONTESTING THE VALIDITY, USE, OWNERSHIP
OR ENFORCEABILITY OF ANY OF THE COMPANY INTELLECTUAL PROPERTY (INCLUDING ANY
INTERFERENCE, REISSUE, REEXAMINATION, INVALIDATION, CANCELLATION OR OPPOSITION
PROCEEDING), AND, TO THE KNOWLEDGE OF THE COMPANY, THERE IS NO BASIS FOR ANY
SUCH CLAIM.  TO THE KNOWLEDGE OF THE COMPANY, NO THIRD PARTY HAS INFRINGED,
MISAPPROPRIATED OR OTHERWISE CONFLICTED WITH ANY OF THE COMPANY INTELLECTUAL
PROPERTY.  EXCEPT AS SET FORTH IN SCHEDULE 4.16, NO LOSS OR EXPIRATION (OTHER
THAN, IN THE CASE OF PATENTS AND COPYRIGHTS, NATURAL EXPIRATION AT THE END OF
THEIR RESPECTIVE STATUTORY TERMS) OF ANY COMPANY INTELLECTUAL PROPERTY IS
PENDING, THREATENED OR REASONABLY FORESEEABLE.  ALL REGISTERED OR ISSUED COMPANY
INTELLECTUAL PROPERTY (OR APPLICATIONS THEREFOR) IS IN COMPLIANCE WITH
APPLICABLE FORMAL LEGAL REQUIREMENTS (INCLUDING, AS APPLICABLE, TIMELY PAYMENT
OF FILING, EXAMINATION AND MAINTENANCE FEES, AND TIMELY FILINGS OF PROOFS OF
WORKING OR USE, AFFIDAVITS OF USE AND INCONTESTABILITY AND RENEWAL
APPLICATIONS), AND IS VALID AND ENFORCEABLE.  EXCEPT AS OTHERWISE PROVIDED IN
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL NOT IMPAIR
THE RIGHT, TITLE OR INTEREST OF ANY COMPANY GROUP MEMBER IN AND TO THE COMPANY
INTELLECTUAL PROPERTY AND ALL OF THE COMPANY INTELLECTUAL PROPERTY SHALL BE
OWNED OR AVAILABLE FOR

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USE BY THE COMPANY GROUP MEMBERS IMMEDIATELY AFTER THE INITIAL CLOSING ON TERMS
AND CONDITIONS IDENTICAL TO THOSE UNDER WHICH THE COMPANY GROUP MEMBER OWNED OR
USED THE COMPANY INTELLECTUAL PROPERTY IMMEDIATELY PRIOR TO THE INITIAL
CLOSING.  NO COMPANY GROUP MEMBER JOINTLY OWNS ANY MATERIAL INTELLECTUAL
PROPERTY WITH ANY THIRD PARTY.  EXCEPT AS SET FORTH ON SCHEDULE 4.16, NO SOURCE
CODE FOR ANY PRODUCT OR SERVICE DEVELOPED, MARKETED OR SOLD BY ANY COMPANY GROUP
MEMBER (A “COMPANY PRODUCT”) HAS BEEN MADE AVAILABLE OR LICENSED TO ANY PERSON,
AND NO MEMBER OF THE COMPANY GROUP IS UNDER ANY OBLIGATION (INCLUDING
CONTINGENT) TO DO SO.  NO COMPANY GROUP MEMBER IS SUBJECT TO ANY SETTLEMENT OR
COEXISTENCE AGREEMENT THAT RESTRICTS ITS USE OF ANY INTELLECTUAL PROPERTY OWNED
BY OR EXCLUSIVELY LICENSED TO SUCH MEMBER.  NO FUNDING, FACILITIES, OR PERSONNEL
OF ANY GOVERNMENTAL AGENCY WERE USED, DIRECTLY OR INDIRECTLY, TO DEVELOP ANY
COMPANY INTELLECTUAL PROPERTY, AND NO COMPANY INTELLECTUAL PROPERTY IS SUBJECT
TO ANY “MARCH IN” OR SIMILAR RIGHTS.  EACH MEMBER OF THE COMPANY GROUP HAS
COMPLIED WITH, AND THE PERFORMANCE OF THIS AGREEMENT WILL COMPLY WITH, ALL
APPLICABLE PRIVACY POLICIES, LAWS AND REGULATIONS.  EACH COMPANY GROUP MEMBER
HAS AND ENFORCES A POLICY REQUIRING ALL EMPLOYEES AND INDEPENDENT CONTRACTORS
LIKELY TO PARTICIPATE IN THE DEVELOPMENT OR CREATION OF INTELLECTUAL PROPERTY TO
EXECUTE APPROPRIATE ASSIGNMENT AGREEMENTS, PURSUANT TO WHICH EACH SUCH EMPLOYEE
OR INDEPENDENT CONTRACTOR HAS ASSIGNED TO THE COMPANY ALL OF ITS RIGHTS,
INCLUDING ALL INTELLECTUAL PROPERTY, IN AND TO ALL IDEAS, INVENTIONS, PROCESSES,
WORKS OF AUTHORSHIP AND OTHER WORK PRODUCTS THAT RELATE TO THE BUSINESS OF A
COMPANY GROUP MEMBER AND THAT, IN THE CASE OF EMPLOYEES, WERE CONCEIVED,
CREATED, AUTHORED OR DEVELOPED DURING THE TERM OF SUCH EMPLOYEE’S EMPLOYMENT BY
THE COMPANY.  EACH COMPANY GROUP MEMBER HAS AND ENFORCES A POLICY REQUIRING ALL
EMPLOYEES  AND INDEPENDENT CONTRACTORS WITH ACCESS TO ANY CONFIDENTIAL
INFORMATION OF A COMPANY GROUP MEMBER (OR OF A THIRD PARTY TO WHICH A COMPANY
GROUP MEMBER OWES A DUTY OF CONFIDENTIALITY) TO EXECUTE APPROPRIATE
NON-DISCLOSURE AGREEMENTS.  NO CURRENT OR FORMER EMPLOYEE OR CONTRACTOR
(INCLUDING REKSOFT) OF ANY COMPANY GROUP MEMBER HAS ANY OWNERSHIP OR OTHER
RIGHTS IN OR TO ANY COMPANY INTELLECTUAL PROPERTY.  SCHEDULE 4.16 LISTS ALL
PATENTS, PATENT APPLICATIONS, REGISTERED TRADEMARKS, TRADEMARK APPLICATIONS,
REGISTERED SERVICE MARKS, SERVICE MARK APPLICATIONS, MATERIAL UNREGISTERED
TRADEMARKS OR SERVICE MARKS, TRADE NAMES, REGISTERED COPYRIGHTS, MATERIAL
UNREGISTERED COPYRIGHTS, AND DOMAIN NAMES OWNED BY OR EXCLUSIVELY LICENSED TO
THE COMPANY.  NO COMPANY PRODUCT IS SUBJECT TO ANY OPEN SOURCE, PUBLIC SOURCE,
FREEWARE, SHAREWARE, COPYLEFT, COMMUNITY SOURCE OR SIMILAR OBLIGATION OR
CONDITION THAT COULD REQUIRE THE DISCLOSURE OF ANY SOURCE CODE TO ANY PERSON OR
ENTITY OR OTHERWISE LIMIT THE RIGHT OF ANY COMPANY GROUP MEMBER TO USE OR
DISTRIBUTE ANY COMPANY PRODUCT.  EACH COMPANY GROUP MEMBER HAS TAKEN ALL
COMMERCIALLY REASONABLE ACTION TO ESTABLISH, MAINTAIN, PROTECT, PRESERVE AND
ENFORCE ITS RIGHTS IN THE COMPANY INTELLECTUAL PROPERTY.

4.17        EMPLOYEES.  SINCE THE MOST RECENT BALANCE SHEET DATE, NO KEY
EMPLOYEES AND NO GROUP OF EMPLOYEES HAS TERMINATED, OR TO THE KNOWLEDGE OF THE
COMPANY, PLANS TO TERMINATE, EMPLOYMENT WITH THE COMPANY GROUP.  THE COMPANY
GROUP IS NOT A PARTY TO OR BOUND BY ANY COLLECTIVE BARGAINING AGREEMENT, NOR HAS
IT EXPERIENCED ANY STRIKE, MATERIAL GRIEVANCE, MATERIAL CLAIM OF UNFAIR LABOR
PRACTICE OR OTHER COLLECTIVE BARGAINING DISPUTE.  TO THE KNOWLEDGE OF THE
COMPANY, THERE IS NO ORGANIZATIONAL EFFORT BEING MADE OR THREATENED BY OR ON
BEHALF OF ANY LABOR UNION WITH RESPECT TO THE COMPANY GROUP’S EMPLOYEES.  TO THE
KNOWLEDGE OF THE COMPANY, THE COMPANY GROUP HAS NOT COMMITTED ANY UNFAIR LABOR
PRACTICE OR MATERIALLY VIOLATED ANY FEDERAL, STATE OR LOCAL LAW OR REGULATION
REGULATING EMPLOYERS OR THE TERMS AND CONDITIONS OF ITS EMPLOYEES’ EMPLOYMENT,
INCLUDING LAWS REGULATING EMPLOYEE WAGES AND HOURS, EMPLOYMENT DISCRIMINATION,
EMPLOYEE CIVIL RIGHTS, EQUAL EMPLOYMENT OPPORTUNITY AND EMPLOYMENT OF FOREIGN

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NATIONALS, EXCEPT FOR SUCH VIOLATIONS AS WOULD NOT IN THE AGGREGATE BE EXPECTED
TO HAVE A MATERIAL ADVERSE EFFECT.

4.18        ERISA; EMPLOYEE BENEFITS.  SECTION 4.18 OF THE DISCLOSURE SCHEDULES
SETS FORTH A COMPLETE AND CORRECT LIST OF EACH EMPLOYEE BENEFIT PLAN (AS SUCH
TERM IS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED (“ERISA”)) AND EACH OTHER BENEFIT PLAN, PROGRAM OR
ARRANGEMENT MAINTAINED, ESTABLISHED, SPONSORED, CONTRIBUTED OR REQUIRED TO BE
CONTRIBUTED TO BY ANY MEMBER OF THE COMPANY GROUP, OR WITH RESPECT TO WHICH THE
COMPANY GROUP HAS ANY MATERIAL LIABILITY (EACH A “PLAN” AND COLLECTIVELY, THE
“PLANS”).  THE COMPANY GROUP DOES NOT MAINTAIN, CONTRIBUTE TO, OR HAVE ANY
LIABILITY UNDER (OR WITH RESPECT TO) ANY “DEFINED BENEFIT PLAN” (AS DEFINED IN
SECTION 3(35) OF ERISA), OR ANY “MULTIEMPLOYER PLAN” (AS DEFINED IN SECTION
3(37) OF ERISA), AND DOES NOT OTHERWISE HAVE ANY CURRENT OR POTENTIAL LIABILITY
UNDER TITLE IV OF ERISA.  NO PLAN HAS ANY UNFUNDED OR UNDERFUNDED LIABILITIES. 
EACH PLAN THAT IS INTENDED TO BE QUALIFIED UNDER SECTION 401(A) OF THE CODE IS
SO QUALIFIED.  EACH OF THE PLANS HAS BEEN MAINTAINED, FUNDED AND ADMINISTERED IN
MATERIAL COMPLIANCE WITH ITS TERMS AND WITH THE APPLICABLE PROVISIONS OF ERISA,
THE CODE, AND ANY OTHER APPLICABLE LAWS.  THE COMPANY GROUP HAS NO CURRENT OR
POTENTIAL LIABILITY UNDER ERISA OR THE CODE BY REASON OF BEING CONSIDERED A
SINGLE EMPLOYER UNDER SECTION 414 OF THE CODE WITH ANY PERSON OTHER THAN A
MEMBER OF THE COMPANY GROUP.

4.19        ENVIRONMENT, HEALTH AND SAFETY.  EXCEPT AS SET FORTH ON SCHEDULE
4.19:

(A)           EACH MEMBER OF THE COMPANY GROUP HAS COMPLIED AND IS IN COMPLIANCE
IN ALL MATERIAL RESPECTS WITH ALL ENVIRONMENTAL AND SAFETY REQUIREMENTS THAT ARE
APPLICABLE TO THE COMPANY GROUP’S BUSINESS, EXCEPT WHERE THE FAILURE TO COMPLY
COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT;

(B)           NO MEMBER OF THE COMPANY GROUP HAS RECEIVED ANY WRITTEN NOTICE,
REPORT OR OTHER INFORMATION REGARDING ANY LIABILITIES OR POTENTIAL LIABILITIES,
INCLUDING ANY INVESTIGATORY, REMEDIAL OR CORRECTIVE OBLIGATIONS, RELATING TO
SUCH MEMBER OF THE COMPANY GROUP OR SUCH MEMBER’S FACILITIES AND ARISING UNDER
ENVIRONMENTAL AND SAFETY REQUIREMENTS; AND

(C)           NO MEMBER OF THE COMPANY GROUP HAS, EITHER EXPRESSLY OR BY
OPERATION OF LAW, ASSUMED OR UNDERTAKEN ANY LIABILITY, INCLUDING ANY OBLIGATION
FOR CORRECTIVE OR REMEDIAL ACTION, OF ANY OTHER PERSON RELATING TO ENVIRONMENTAL
AND SAFETY REQUIREMENTS.

4.20        TRANSACTIONS WITH AFFILIATES.  EXCEPT FOR PERMITTED AFFILIATE
TRANSACTIONS AND EXCEPT AS DESCRIBED IN THE COMPANY REPORTS, NEITHER THE COMPANY
NOR ANY OF THE OTHER MEMBERS OF THE COMPANY GROUP IS PARTY TO ANY AGREEMENT,
ARRANGEMENT OR TRANSACTION WITH ANY AFFILIATE WHICH IS MATERIAL TO THE COMPANY’S
AND THE COMPANY GROUP’S BUSINESS, TAKEN AS A WHOLE.

4.21        TAXES.  EXCEPT AS SET FORTH ON SCHEDULE 4.21, EACH OF MEMBER OF THE
COMPANY GROUP HAS FILED ALL TAX RETURNS WHICH IT IS REQUIRED TO FILE UNDER
APPLICABLE LAWS.  ALL SUCH TAX RETURNS ARE COMPLETE AND CORRECT AND HAVE BEEN
PREPARED IN COMPLIANCE WITH ALL APPLICABLE LAWS IN ALL MATERIAL RESPECTS.  EACH
MEMBER OF THE COMPANY GROUP HAS PAID ALL TAXES DUE AND OWING BY IT (WHETHER OR
NOT SUCH TAXES ARE REQUIRED TO BE SHOWN ON A TAX RETURN) AND HAVE WITHHELD AND
PAID OVER TO THE APPROPRIATE TAXING AUTHORITY ALL TAXES WHICH THEY WERE OR ARE
REQUIRED TO

24

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WITHHOLD FROM AMOUNTS PAID OR OWING TO ANY EMPLOYEE, STOCKHOLDER, CREDITOR OR
OTHER THIRD PARTY.  NO MEMBER OF THE COMPANY GROUP HAS WAIVED ANY STATUTE OF
LIMITATIONS WITH RESPECT TO ANY TAXES OR AGREED TO ANY EXTENSION OF TIME WITH
RESPECT TO ANY TAX ASSESSMENT OR DEFICIENCY.  THERE ARE NO LIENS FOR TAXES
(OTHER THAN PERMITTED LIENS) UPON ANY OF THE ASSETS OF ANY MEMBER OF THE COMPANY
GROUP.  SINCE JANUARY 1, 2002, NO WRITTEN CLAIM HAS EVER BEEN MADE BY A
GOVERNMENTAL AGENCY IN A JURISDICTION WHERE NO MEMBER OF THE COMPANY GROUP FILES
TAX RETURNS THAT ANY MEMBER OF THE COMPANY GROUP IS OR MAY BE SUBJECT TO
TAXATION BY THAT JURISDICTION.

4.22        OTHER INVESTORS.  SET FORTH ON SCHEDULE 4.22 IS A LIST OF ALL
STOCKHOLDERS OF THE COMPANY WHO AS OF THE DATE HEREOF AND TO THE COMPANY’S
KNOWLEDGE, BASED UPON SEC FILINGS OF STOCKHOLDERS, AFTER GIVING EFFECT TO THE
TERMS HEREOF, OWN MORE THAN 5% OF THE FULLY DILUTED COMMON EQUITY OF THE COMPANY
AND SETS FORTH SUCH PERCENTAGE OWNERSHIP.

4.23        SENIORITY.  NO CLASS OF EQUITY SECURITIES OF THE COMPANY IS SENIOR
OR, OTHER THAN THE SERIES B SHARES AND THE SERIES C SHARES, PARI PASSU TO, THE
SERIES D SHARES IN RIGHT OF PAYMENT, WHETHER UPON LIQUIDATION, DISSOLUTION OR
OTHERWISE.

4.24        INVESTMENT COMPANY.  THE COMPANY IS NOT, AND IS NOT CONTROLLED BY OR
UNDER COMMON CONTROL WITH AN AFFILIATE OF, AN “INVESTMENT COMPANY” WITHIN THE
MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.

4.25        CERTAIN FEES.  OTHER THAN (I) THE CLOSING FEE TO BE PAID TO ABRY IN
ACCORDANCE WITH SECTION 10.5, (II) THE CRP FEE TO BE PAID TO CRP IN ACCORDANCE
WITH SECTION 10.5 AND (III) THE CONSENT FEE IN AN AMOUNT NOT TO EXCEED $75,000
PAYABLE TO CRP AS THE HOLDER OF SERIES B SHARES, NO FEES OR COMMISSIONS WILL BE
PAYABLE BY THE COMPANY TO ANY BROKER, FINANCIAL ADVISOR, FINDER, INVESTMENT
BANKER, OR BANK WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.  NO PURCHASER SHALL HAVE ANY LIABILITY RESULTING FROM COMMITMENTS BY
THE COMPANY GROUP OR ITS DIRECTORS, OFFICERS OR EMPLOYEES WITH RESPECT TO ANY
FEES OR WITH RESPECT TO ANY CLAIMS MADE BY OR ON BEHALF OF ANY PERSONS FOR FEES
OF A TYPE CONTEMPLATED IN THIS SECTION THAT MAY BE DUE IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  THE COMPANY GROUP SHALL INDEMNIFY
AND HOLD HARMLESS EACH PURCHASER, ITS EMPLOYEES, OFFICERS, DIRECTORS, AGENTS AND
PARTNERS, AND THEIR RESPECTIVE AFFILIATES (AS SUCH TERM IS DEFINED UNDER RULE
405 PROMULGATED UNDER THE SECURITIES ACT), FROM AND AGAINST ALL CLAIMS, LOSSES,
DAMAGES, COSTS (INCLUDING THE COSTS OF PREPARATION AND ATTORNEY’S FEES) AND
EXPENSES SUFFERED IN RESPECT TO ANY FEES DUE ANY OTHER PERSON WITH WHICH THE
COMPANY OR ITS DIRECTORS, OFFICERS OR EMPLOYEES HAS CONTRACTED IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED HEREBY.

4.26        SARBANES-OXLEY ACT.  THE COMPANY IS IN COMPLIANCE IN ALL MATERIAL
RESPECTS WITH ALL PROVISIONS OF THE SARBANES-OXLEY ACT OF 2002 THAT ARE
APPLICABLE TO IT AS OF THE DATE HEREOF.

4.27        LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE.  THE COMMON STOCK
WAS ADMITTED FOR TRADING PRIVILEGES ON AMEX ON DECEMBER 28, 2005 AND HAS BEEN
TRADED ON AMEX AT ALL TIME SINCE SUCH DATE.  THE AUTHORIZATION AND ISSUANCE OF
THE SERIES D SHARES, THE WARRANTS, THE CONVERSION SHARES AND THE WARRANT SHARES
WILL NOT VIOLATE ANY LISTING OR MAINTENANCE REQUIREMENT OF AMEX.

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4.28        NO GENERAL SOLICITATION.  NEITHER THE COMPANY NOR ANY PERSON ACTING
ON ITS BEHALF HAS CONDUCTED ANY GENERAL SOLICITATION OR GENERAL ADVERTISING (AS
THOSE TERMS ARE USED IN REGULATION D) IN CONNECTION WITH THE OFFER OR SALE OF
ANY OF THE SECURITIES.

4.29        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 COMPANY SECURITY OR SOLICITED ANY
OFFERS TO BUY ANY SECURITY UNDER CIRCUMSTANCES THAT WOULD CAUSE THE OFFER AND/OR
SALE OF THE SECURITIES PURSUANT TO THIS AGREEMENT TO BE INTEGRATED WITH PRIOR
OFFERINGS BY THE COMPANY FOR PURPOSES OF THE SECURITIES ACT OR ANY APPLICABLE
STOCKHOLDER APPROVAL PROVISIONS, OR THAT WOULD OTHERWISE ADVERSELY AFFECT
RELIANCE BY THE COMPANY ON SECTION 4(2) FOR THE EXEMPTION FROM REGISTRATION FOR
THE TRANSACTIONS CONTEMPLATED HEREBY OR WOULD REQUIRE REGISTRATION OF THE
SECURITIES UNDER THE SECURITIES ACT.

4.30        PRIVATE PLACEMENT.  SUBJECT TO THE ACCURACY OF THE REPRESENTATIONS
AND WARRANTIES OF THE PURCHASERS IN ARTICLE V, THE OFFER AND SALE OF THE SERIES
D SHARES AND THE WARRANTS TO THE PURCHASERS AS CONTEMPLATED HEREBY IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IS BEING MADE
PURSUANT TO THE EXEMPTION AFFORDED BY SECTION 4(2) OF THE SECURITIES ACT AND/OR
RULE 506 OF REGULATION D PROMULGATED THEREUNDER.

4.31        QUESTIONABLE PAYMENTS.  TO THE KNOWLEDGE OF THE COMPANY, NO MEMBER
OF THE COMPANY GROUP NOR ANY OF THEIR DIRECTORS OR OFFICERS OR ANY OTHER PERSONS
ACTING ON BEHALF OF THE COMPANY GROUP, HAS ON BEHALF OF ANY MEMBER OF THE
COMPANY GROUP OR IN CONNECTION WITH THEIR RESPECTIVE BUSINESSES: (I) USED ANY
CORPORATE FUNDS FOR UNLAWFUL CONTRIBUTIONS, GIFTS, ENTERTAINMENT OR OTHER
UNLAWFUL EXPENSES RELATING TO POLITICAL ACTIVITY, (II) MADE ANY DIRECT OR
INDIRECT UNLAWFUL PAYMENTS TO ANY GOVERNMENTAL OFFICIALS OR EMPLOYEES FROM
CORPORATE FUNDS, (III) ESTABLISHED OR MAINTAINED ANY UNLAWFUL OR UNRECORDED FUND
OF CORPORATE MONIES OR OTHER ASSETS, (IV) MADE ANY FALSE OR FICTITIOUS ENTRIES
ON THE BOOKS AND RECORDS OF THE COMPANY GROUP OR (V) MADE ANY UNLAWFUL BRIBE,
REBATE, PAYOFF, INFLUENCE PAYMENT, KICKBACK OR OTHER UNLAWFUL PAYMENT OF ANY
NATURE.

4.32        INTERNAL CONTROLS.  THE COMPANY GROUP MAINTAINS A SYSTEM OF INTERNAL
ACCOUNTING CONTROLS SUFFICIENT TO PROVIDE REASONABLE ASSURANCE THAT (A)
TRANSACTIONS ARE EXECUTED IN ACCORDANCE WITH MANAGEMENT’S GENERAL OR SPECIFIC
AUTHORIZATIONS, (B) TRANSACTIONS ARE RECORDED AS NECESSARY TO PERMIT PREPARATION
OF FINANCIAL STATEMENTS IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES AND TO MAINTAIN ASSET ACCOUNTABILITY, (C) ACCESS TO ASSETS IS
PERMITTED ONLY IN ACCORDANCE WITH MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATION
AND (D) THE RECORDED ACCOUNTABILITY FOR ASSETS IS COMPARED WITH THE EXISTING
ASSETS AT REASONABLE INTERVALS AND APPROPRIATE ACTION IS TAKEN WITH RESPECT TO
ANY DIFFERENCES. THE COMPANY GROUP HAS ESTABLISHED DISCLOSURE CONTROLS AND
PROCEDURES (AS DEFINED IN EXCHANGE ACT RULES 13A-14 AND 15D-14) FOR THE COMPANY
AND DESIGNED SUCH DISCLOSURE CONTROLS AND PROCEDURES TO ENSURE THAT MATERIAL
INFORMATION RELATING TO THE COMPANY GROUP IS MADE KNOWN TO THE CERTIFYING
OFFICERS BY OTHERS WITHIN THOSE ENTITIES, PARTICULARLY DURING THE PERIOD IN
WHICH THE COMPANY’S MOST RECENTLY FILED PERIODIC REPORT UNDER THE EXCHANGE ACT,
AS THE CASE MAY BE, IS BEING PREPARED.  THE COMPANY’S CERTIFYING OFFICERS HAVE
EVALUATED THE EFFECTIVENESS OF THE COMPANY’S CONTROLS AND PROCEDURES AS OF A
DATE WITHIN 90 DAYS PRIOR TO THE FILING DATE OF THE MOST RECENTLY FILED PERIODIC
REPORT UNDER THE EXCHANGE ACT (SUCH DATE, THE “EVALUATION DATE”).  THE COMPANY
PRESENTED IN ITS MOST RECENTLY FILED PERIODIC REPORT UNDER THE EXCHANGE ACT THE
CONCLUSIONS OF THE CERTIFYING OFFICERS

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ABOUT THE EFFECTIVENESS OF THE DISCLOSURE CONTROLS AND PROCEDURES BASED ON THEIR
EVALUATIONS AS OF THE EVALUATION DATE.  SINCE THE EVALUATION DATE, THERE HAVE
BEEN NO SIGNIFICANT CHANGES IN THE COMPANY GROUP’S INTERNAL CONTROLS (AS SUCH
TERM IS DEFINED IN ITEM 307(B) OF REGULATION S-K) OR, TO THE KNOWLEDGE OF THE
COMPANY, IN OTHER FACTORS THAT COULD SIGNIFICANTLY AFFECT THE COMPANY GROUP’S
INTERNAL CONTROLS.  THE COMPANY GROUP MAINTAINS AND WILL CONTINUE TO MAINTAIN A
STANDARD SYSTEM OF ACCOUNTING ESTABLISHED AND ADMINISTERED IN ACCORDANCE WITH
GAAP AND THE APPLICABLE REQUIREMENTS OF THE EXCHANGE ACT.

4.33        USE OF PROCEEDS.  THE COMPANY WILL USE THE PROCEEDS FROM THE SALE OF
THE SERIES D SHARES AND THE WARRANTS HEREUNDER SOLELY (I) TO PAY THE CLOSING
FEE, THE CRP FEE AND OTHER FEES AND EXPENSES ASSOCIATED WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT AND THE RELATED DOCUMENTS, (II) FOR PERMITTED
ACQUISITIONS AND (III) FOR WORKING CAPITAL AND GENERAL CORPORATE PURPOSES.

4.34        CUSTOMERS AND SUPPLIERS.

(A)           SCHEDULE 4.34 LISTS THE TEN LARGEST CUSTOMERS OF THE COMPANY GROUP
(ON A CONSOLIDATED BASIS) FOR EACH OF THE TWO MOST RECENT FISCAL YEARS AND SETS
FORTH OPPOSITE THE NAME OF EACH SUCH CUSTOMER THE PERCENTAGE OF CONSOLIDATED NET
SALES ATTRIBUTABLE TO SUCH CUSTOMER.

(B)           SINCE THE MOST RECENT BALANCE SHEET DATE, NO MATERIAL SUPPLIER OF
THE COMPANY GROUP HAS INDICATED THAT IT SHALL STOP, OR MATERIALLY DECREASE THE
RATE OF, SUPPLYING MATERIALS, PRODUCTS OR SERVICES TO THE COMPANY GROUP, AND NO
CUSTOMER LISTED ON SCHEDULE 4.34 HAS INDICATED IN WRITING THAT IT SHALL STOP, OR
MATERIALLY DECREASE THE RATE OF, BUYING MATERIALS, PRODUCTS OR SERVICES FROM THE
COMPANY GROUP.

4.35        NON-MATERIAL SUBSIDIARIES.  TO THE ACTUAL KNOWLEDGE OF THE COMPANY
(WITHOUT INVESTIGATION), THE REPRESENTATIONS AND WARRANTIES OF ANY MATERIAL
SUBSIDIARY MADE IN THIS ARTICLE IV ARE TRUE AND COMPLETE AS APPLIED TO EACH
NON-MATERIAL SUBSIDIARY.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

Each Purchaser, severally and not jointly, hereby represents and warrants to the
Company as follows:

5.1          AUTHORIZATION AND ENFORCEABILITY.  SUCH PURCHASER HAS FULL POWER
AND AUTHORITY AND HAS TAKEN ALL ACTION NECESSARY TO PERMIT IT TO EXECUTE AND
DELIVER THIS AGREEMENT AND THE OTHER DOCUMENTS AND INSTRUMENTS TO BE EXECUTED BY
IT PURSUANT HERETO AND TO CARRY OUT THE TERMS HEREOF AND THEREOF.  THIS
AGREEMENT AND SUCH OTHER DOCUMENTS AND INSTRUMENTS EACH CONSTITUTES A LEGAL,
VALID AND BINDING OBLIGATION OF SUCH PURCHASER, ENFORCEABLE AGAINST SUCH
PURCHASER IN ACCORDANCE WITH ITS TERMS, EXCEPT TO THE EXTENT LIMITED BY
APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM AND SIMILAR LAWS
OF GENERAL APPLICATION RELATED TO THE ENFORCEMENT OF CREDITOR’S RIGHTS GENERALLY
AND EXCEPT AS RIGHTS TO INDEMNITY THEREUNDER MAY BY LIMITED BY APPLICABLE
FEDERAL SECURITIES LAWS.

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5.2          GOVERNMENT APPROVALS.  SUCH PURCHASER IS NOT REQUIRED TO OBTAIN ANY
ORDER, CONSENT, APPROVAL OR AUTHORIZATION OF, OR TO MAKE ANY DECLARATION OR
FILING WITH, ANY GOVERNMENTAL AGENCY IN CONNECTION WITH THE EXECUTION AND
DELIVERY OF THIS AGREEMENT AND THE OTHER DOCUMENTS AND INSTRUMENTS TO BE
EXECUTED BY IT PURSUANT HERETO OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY, EXCEPT FOR SUCH ORDER, CONSENT, APPROVAL,
AUTHORIZATION, DECLARATION OR FILING AS WHICH HAS BEEN OR WILL BE OBTAINED OR
MADE.

ARTICLE VI
COMPLIANCE WITH SECURITIES LAWS

6.1          INVESTMENT INTENT OF THE PURCHASERS.  EACH PURCHASER, SEVERALLY AND
NOT JOINTLY, REPRESENTS AND WARRANTS TO THE COMPANY THAT IT UNDERSTANDS THAT THE
SERIES D SHARES, THE WARRANTS, THE CONVERSION SHARES AND THE WARRANT SHARES
(COLLECTIVELY, THE “SECURITIES”) ARE “RESTRICTED SECURITIES” AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT AND SUCH PURCHASER IS ACQUIRING THE SERIES D
SHARES AND WARRANTS IN THE ORDINARY COURSE OF BUSINESS FOR ITS OWN ACCOUNT, WITH
NO PRESENT INTENTION OF SELLING OR OTHERWISE DISTRIBUTING THE SAME TO THE
PUBLIC.

6.2          STATUS OF SERIES D SHARES AND WARRANTS.  EACH PURCHASER HAS BEEN
INFORMED BY THE COMPANY THAT THE SERIES D SHARES AND WARRANTS HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OR UNDER ANY STATE SECURITIES LAWS AND ARE
BEING OFFERED AND SOLD IN RELIANCE UPON FEDERAL AND STATE EXEMPTIONS FOR
TRANSACTIONS NOT INVOLVING ANY PUBLIC OFFERING.  EACH PURCHASER REPRESENTS AND
WARRANTS, SEVERALLY AND NOT JOINTLY, THAT IT WILL NOT, DIRECTLY OR INDIRECTLY,
OFFER, SELL OR OTHERWISE DISPOSE OF (OR SOLICIT ANY OFFERS TO BUY, PURCHASE OR
OTHERWISE ACQUIRE) ANY OF THE SECURITIES EXCEPT IN COMPLIANCE WITH THE
SECURITIES ACT, APPLICABLE STATE SECURITIES LAWS AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER.

6.3          SOPHISTICATION AND FINANCIAL CONDITION OF PURCHASERS.  EACH
PURCHASER REPRESENTS AND WARRANTS, SEVERALLY AND NOT JOINTLY, TO THE COMPANY
THAT IT IS AN “ACCREDITED INVESTOR” AS DEFINED IN REGULATION D UNDER THE
SECURITIES ACT.  EACH PURCHASER REPRESENTS AND WARRANTS, SEVERALLY AND NOT
JOINTLY, TO THE COMPANY THAT IT CONSIDERS ITSELF TO BE AN EXPERIENCED AND
SOPHISTICATED INVESTOR AND TO HAVE SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL
AND BUSINESS MATTERS AS ARE NECESSARY TO EVALUATE THE MERITS AND RISKS OF AN
INVESTMENT IN THE SERIES D SHARES AND THE WARRANTS.  EACH PURCHASER HAS RECEIVED
INFORMATION CONCERNING THE COMPANY, INCLUDING THE COMPANY REPORTS AND THE RISKS
RELATING TO THE COMPANY DESCRIBED IN THE COMPANY’S FORM 10-K FILED DECEMBER 20,
2005 AND THE COMPANY’S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH
31, 2006.  THE REPRESENTATIONS SET FORTH IN THE PRECEDING SENTENCE SHALL NOT
AFFECT ANY REPRESENTATION OR WARRANTY IN THIS AGREEMENT OF ANY PARTY HERETO OR
ANY CONDITION TO THE OBLIGATIONS OF THE PARTIES HERETO, NOR SHALL IT AFFECT THE
COMPANY’S INDEMNIFICATION OBLIGATIONS ARISING UNDER ARTICLE IX HEREOF.

6.4          TRANSFER OF SERIES D SHARES, WARRANTS AND CONVERSION SHARES.

(A)           EACH PURCHASER HAS BEEN INFORMED BY THE COMPANY AND HEREBY AGREES
THAT THE SECURITIES MAY BE TRANSFERRED ONLY (I) PURSUANT TO PUBLIC OFFERINGS
REGISTERED UNDER THE SECURITIES ACT, (II) PURSUANT TO RULE 144 PROMULGATED UNDER
THE SECURITIES ACT (OR ANY SIMILAR

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RULE THEN IN FORCE), (III) TO AN AFFILIATE OF THE TRANSFEROR, OR (IV) SUBJECT TO
THE CONDITIONS SET FORTH IN SECTION 6.4(B), PURSUANT TO ANY OTHER
LEGALLY-AVAILABLE MEANS OF TRANSFER.

(B)           IN CONNECTION WITH ANY TRANSFER OF ANY SECURITIES (OTHER THAN A
TRANSFER DESCRIBED IN SECTION 6.4(A)(I) OR (III)), THE HOLDER OF SUCH SHARES
SHALL DELIVER WRITTEN NOTICE TO THE COMPANY DESCRIBING IN REASONABLE DETAIL THE
PROPOSED TRANSFER, TOGETHER WITH AN OPINION OF COUNSEL (KIRKLAND & ELLIS LLP OR
SUCH OTHER COUNSEL WHICH, TO THE COMPANY’S REASONABLE SATISFACTION, IS
KNOWLEDGEABLE IN SECURITIES LAW MATTERS) TO THE EFFECT THAT SUCH TRANSFER MAY BE
EFFECTED WITHOUT REGISTRATION OF SUCH SHARES UNDER THE SECURITIES ACT.  THE
HOLDER OF THE SECURITIES BEING TRANSFERRED SHALL NOT CONSUMMATE THE TRANSFER
UNTIL (I) THE PROSPECTIVE TRANSFEREE HAS CONFIRMED TO THE COMPANY IN WRITING ITS
AGREEMENT TO BE BOUND BY THE PROVISIONS OF THIS SECTION 6.4 OR (II) SUCH HOLDER
SHALL HAVE DELIVERED TO THE COMPANY AN OPINION OF SUCH COUNSEL THAT NO
SUBSEQUENT TRANSFER OF SUCH SECURITIES SHALL REQUIRE REGISTRATION UNDER THE
SECURITIES ACT.  PROMPTLY UPON RECEIPT OF ANY OPINION DESCRIBED IN CLAUSE (II)
OF THE PRECEDING SENTENCE, THE COMPANY SHALL PREPARE AND DELIVER IN CONNECTION
WITH THE CONSUMMATION OF THE PROPOSED TRANSFER, NEW CERTIFICATES FOR THE
SECURITIES BEING TRANSFERRED THAT DO NOT BEAR THE LEGEND SET FORTH IN SECTION
6.4(C).

(C)           EXCEPT AS PROVIDED IN SECTION 6.4(B), UNTIL TRANSFERRED PURSUANT
TO CLAUSES (A)(I) OR (A)(II) ABOVE, EACH CERTIFICATE EVIDENCING THE OWNERSHIP OF
SERIES D SHARES, WARRANTS, CONVERSION SHARES OR WARRANT SHARES SHALL BE
IMPRINTED WITH A LEGEND SUBSTANTIALLY IN THE FOLLOWING FORM:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON AUGUST
14, 2006 AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR ANY APPLICABLE STATE SECURITIES LAW.  THESE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAW.  THE TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SET FORTH IN THE
SERIES D CONVERTIBLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT DATED AS OF
AUGUST 14, 2006 BETWEEN THE ISSUER (THE “COMPANY”) AND THE OTHER PARTIES
THERETO. THE COMPANY RESERVES THE RIGHT TO REFUSE ANY TRANSFER OF SUCH
SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH
TRANSFER.  A COPY OF SUCH CONDITIONS SHALL BE FURNISHED WITHOUT CHARGE TO THE
HOLDER HEREOF UPON WRITTEN REQUEST TO THE COMPANY.

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ARTICLE VII
CONDITIONS PRECEDENT

7.1          CONDITIONS TO OBLIGATIONS OF ABRY AT THE INITIAL CLOSING.  THE
OBLIGATION OF THE PURCHASERS TO PURCHASE THE SERIES D SHARES AND THE WARRANTS TO
BE PURCHASED BY SUCH PURCHASER AT THE INITIAL CLOSING AND/OR THE SUBSEQUENT
CLOSING IN ACCORDANCE WITH SECTION 3.1 OR SECTION 3.3, AS THE CASE MAY BE, SHALL
BE SUBJECT TO THE SATISFACTION OR WAIVER BY SUCH PURCHASER OF THE FOLLOWING
CONDITIONS PRECEDENT ON OR PRIOR TO THE DATE SUCH CLOSING IS SCHEDULED TO TAKE
PLACE IN ACCORDANCE WITH SECTION 3.1 OR SECTION 3.3, AS APPLICABLE:

(A)           THE SERIES D PREFERRED STOCK CERTIFICATE OF DESIGNATION SHALL HAVE
BEEN FILED WITH THE SECRETARY OF STATE OF THE STATE OF DELAWARE AND SHALL BE IN
FULL FORCE AND EFFECT AND SHALL NOT HAVE BEEN MODIFIED IN ANY MANNER;

(B)           AS OF SUCH DATE THERE SHALL BE AN ABSENCE OF (I) ANY GENERAL
SUSPENSION OF TRADING IN, OR LIMITATION ON PRICES FOR SECURITIES ON ANY NATIONAL
SECURITIES OR BULLETIN BOARD EXCHANGE OR OVER-THE-COUNTER MARKET, (II) THE
DECLARATION OF ANY BANKING MORATORIUM OR ANY SUSPENSION OF PAYMENTS IN RESPECT
OF BANKS OR ANY MATERIAL LIMITATION (WHETHER OR NOT MANDATORY) ON THE EXTENSION
OF CREDIT BY LENDING INSTITUTIONS IN THE UNITED STATES, OR (III) THE
COMMENCEMENT OR ESCALATION OF A WAR OR MATERIAL ARMED HOSTILITIES OR OTHER
INTERNATIONAL OR NATIONAL CALAMITY INVOLVING THE UNITED STATES AND HAVING AN
ADVERSE EFFECT ON THE FUNCTIONING OF THE FINANCIAL MARKETS IN THE UNITED STATES;

(C)           AS OF THE INITIAL CLOSING DATE, THE REPRESENTATIONS AND WARRANTIES
MADE BY THE COMPANY IN ARTICLE IV HEREOF SHALL BE TRUE AND CORRECT IN ALL
RESPECTS TO THE EXTENT THEY ARE QUALIFIED BY MATERIALITY OR MATERIAL ADVERSE
EFFECT, AND TO THE EXTENT NOT SO QUALIFIED SHALL BE TRUE AND CORRECT IN ALL
MATERIAL RESPECTS;

(D)           AT THE INITIAL CLOSING, THE COMPANY SHALL HAVE PAID THE CLOSING
FEE AND THE PURCHASER EXPENSES TO ABRY, IN EACH CASE AS CONTEMPLATED UNDER
SECTION 10.5 OF THIS AGREEMENT, AND, TO THE EXTENT THAT CRP HAS EXERCISED THE
PURCHASE OPTION WITH RESPECT TO ALL, BUT NOT LESS THAN ALL, OF THE SUBSEQUENT D
SHARES AND SUBSEQUENT D WARRANTS, AT THE SUBSEQUENT CLOSING, THE COMPANY SHALL
HAVE PAID THE CRP FEE;

(E)           THE AUTHORIZATION AND ISSUANCE OF THE SERIES D SHARES, THE
WARRANTS, THE CONVERSION SHARES AND THE WARRANT SHARES WILL NOT VIOLATE ANY
LISTING OR MAINTENANCE REQUIREMENTS OF AMEX;

(F)            THE COMPANY SHALL HAVE RECEIVED ALL CONSENTS AND APPROVALS,
INCLUDING BOARD OF DIRECTOR, STOCKHOLDER, GOVERNMENTAL AGENCY AND THIRD PARTY
CONSENTS OR APPROVALS, THAT ARE REQUIRED TO BE OBTAINED IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT AND THE RELATED DOCUMENTS,
INCLUDING THE ISSUANCE OF THE SECURITIES IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT AND THE RELATED DOCUMENTS;

(G)           [INTENTIONALLY OMITTED];

(H)           WITH RESPECT TO THE SUBSEQUENT CLOSING DATE, SINCE THE INITIAL
CLOSING DATE, NO MATERIAL ADVERSE EFFECT SHALL HAVE OCCURRED;

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(I)            [INTENTIONALLY OMITTED];

(J)            [INTENTIONALLY OMITTED];

(K)           NO STOP ORDER OR SUSPENSION OF TRADING SHALL HAVE BEEN IMPOSED BY
THE SEC OR ANY OTHER GOVERNMENTAL REGULATORY BODY WITH RESPECT TO PUBLIC TRADING
IN THE COMMON STOCK ON AMEX;

(L)            THE FOLLOWING DOCUMENTS AND ITEMS SHALL HAVE BEEN DELIVERED TO
THE PURCHASERS AT OR PRIOR TO THE INITIAL CLOSING OR THE SUBSEQUENT CLOSING, AS
THE CASE MAY BE:

(I)            FULLY EXECUTED AND DELIVERED WARRANTS PROVIDING FOR THE PURCHASE
UPON EXERCISE THEREOF OF THE WARRANT SHARES SATISFACTORY IN FORM AND SUBSTANCE
TO ABRY, WHICH WARRANTS SHALL BE IN FULL FORCE AND EFFECT ON THE INITIAL CLOSING
DATE WITHOUT FURTHER AMENDMENT OR MODIFICATION THERETO;

(II)           THE WRITTEN OPINION OF DORSEY & WHITNEY LLP, COUNSEL TO THE
COMPANY, DATED AS OF THE DATE OF SUCH CLOSING AND SATISFACTORY IN FORM AND
SUBSTANCE TO SUCH PURCHASER;

(III)          AT THE INITIAL CLOSING, A COUNTERPART OF THE FIRST AMENDMENT TO
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT DULY EXECUTED AND DELIVERED BY
THE COMPANY AND EACH PERSON REQUIRED TO AMEND THE FIRST AMENDMENT TO AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT, AND, AT EACH CLOSING, THE AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT, AS AMENDED BY THE FIRST AMENDMENT THERETO,
SHALL BE IN FULL FORCE AND EFFECT;

(IV)          CERTIFICATES EVIDENCING OWNERSHIP OF THE SERIES D SHARES, DULY
EXECUTED AND DELIVERED BY THE COMPANY;

(V)           A CERTIFICATE OF A DULY AUTHORIZED OFFICER OF THE COMPANY DATED AS
OF THE INITIAL CLOSING DATE OR THE SUBSEQUENT CLOSING DATE, AS THE CASE MAY BE,
CERTIFYING THAT (A) THE CLOSING CONDITIONS DESCRIBED IN SECTIONS 7.1(A), (B),
(C), (E), (F), (H) AND (K) HAVE BEEN SATISFIED AND (B) THE RESOLUTIONS OF THE
BOARD OF DIRECTORS ATTACHED THERETO (WHICH RESOLUTIONS SHALL HAVE, AMONG OTHER
THINGS AND (X) AUTHORIZED ALL OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
AND THE RELATED DOCUMENTS, APPROVED THE RELATED DOCUMENTS (INCLUDING THE FILING
OF THE SERIES D PREFERRED STOCK CERTIFICATE OF DESIGNATION AND THE ISSUANCE OF
THE SECURITIES);

(VI)          AT THE INITIAL CLOSING, FULLY EXECUTED CONSENT OF THE HOLDERS OF
THE SERIES C SHARES AND SERIES B SHARES TO THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT AND THE RELATED DOCUMENTS AND THE WAIVER OF ANY
PRE-EMPTIVE OR ANTI-DILUTION RIGHTS SUCH PERSONS MAY HAVE IN RESPECT OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE RELATED DOCUMENTS;

(VII)         AT THE INITIAL CLOSING, A FULLY EXECUTED AMENDMENT TO THE RIGHTS
PLAN SATISFACTORY IN FORM AND SUBSTANCE TO ABRY, WHICH AMENDMENT SHALL BE IN
FULL FORCE AND EFFECT ON THE INITIAL CLOSING DATE WITHOUT FURTHER AMENDMENT OR
MODIFICATION THERETO;

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(VIII)        [INTENTIONALLY OMITTED]; AND

(IX)           WITH RESPECT TO THE INITIAL CLOSING, SUCH OTHER DOCUMENTS
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY AS ABRY  MAY REASONABLY
REQUEST.

7.2          CONDITIONS TO OBLIGATIONS OF THE COMPANY.  THE OBLIGATION OF THE
COMPANY TO SELL AND ISSUE THE SERIES D SHARES AND THE WARRANTS TO ABRY AT THE
INITIAL CLOSING IN ACCORDANCE WITH SECTION 3.1 SHALL BE SUBJECT TO THE DELIVERY
OF THE INITIAL PURCHASE PRICE BY ABRY ACCORDANCE WITH SECTION 3.1.  THE
OBLIGATION OF THE COMPANY TO SELL AND ISSUE THE SERIES D SHARES AND THE WARRANTS
TO THE SUBSEQUENT PURCHASER AT THE SUBSEQUENT CLOSING IN ACCORDANCE WITH SECTION
3.3 SHALL BE SUBJECT TO THE DELIVERY OF THE SUBSEQUENT PURCHASE PRICE BY SUCH
PURCHASER ACCORDANCE WITH SECTION 3.3.

ARTICLE VIII
COVENANTS OF THE COMPANY

8.1          RESTRICTED ACTIONS.  PRIOR TO THE CONVERSION OF, OR REDEMPTION OF,
THE SERIES D SHARES (OTHER THAN WITH RESPECT TO SECTION 8.1(E) WHICH SHALL
SURVIVE THE CONVERSION OF THE SERIES D SHARES AND SHALL TERMINATE ON THE DATE
THAT NO SECURITIES ARE OUTSTANDING), WITHOUT THE PRIOR WRITTEN CONSENT OF THE
HOLDERS OF A MAJORITY OF THE SERIES D SHARES (OTHER THAN WITH RESPECT TO
SECTION 8.1(E) WHICH SHALL REQUIRE THE PRIOR WRITTEN CONSENT OF THE HOLDERS OF A
MAJORITY OF THE UNDERLYING COMMON STOCK), THE COMPANY SHALL NOT, NOR SHALL THE
COMPANY SUFFER OR PERMIT ANY MEMBER OF THE COMPANY GROUP TO, DIRECTLY OR
INDIRECTLY:

(A)           USE THE PROCEEDS FROM THE SALE OF THE SERIES D SHARES AND THE
WARRANTS HEREUNDER OTHER THAN (I) TO PAY THE CLOSING FEE, THE CRP FEE AND OTHER
FEES AND EXPENSES ASSOCIATED WITH THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT AND THE RELATED DOCUMENTS, (II) FOR PERMITTED ACQUISITIONS AND (III)
FOR WORKING CAPITAL AND GENERAL CORPORATE PURPOSES;

(B)           PRIOR TO THE THIRD ANNIVERSARY OF THE INITIAL CLOSING DATE,
CONSUMMATE A COMPANY SALE UNLESS THE AMOUNT OF CASH CONSIDERATION AND THE MARKET
PRICE (AS OF THE DATE OF RECEIPT) OF ANY OTHER CONSIDERATION RECEIVED BY THE
HOLDERS OF THE UNDERLYING COMMON STOCK, IN THE AGGREGATE, IN SUCH COMPANY SALE,
PLUS THE AGGREGATE VALUE OF ANY CASH HEREAFTER DISTRIBUTED OR ISSUED AS A
DIVIDEND OR DISTRIBUTION WITH RESPECT TO ANY OF THE SECURITIES IS EQUAL TO 175%
OF THE AGGREGATE AMOUNT OF CAPITAL INVESTED IN THE SECURITIES;

(C)           INCUR, CREATE, ASSUME OR IN ANY WAY BECOME LIABLE FOR ANY
INDEBTEDNESS FOR BORROWED MONEY, CAPITAL LEASES OR GUARANTEES UNLESS AT THE TIME
OF AND AFTER GIVING PRO FORMA EFFECT TO SUCH INCURRENCE AND THE APPLICATION OF
PROCEEDS THEREFROM, THE RATIO OF THE COMPANY’S INDEBTEDNESS FOR BORROWED MONEY
TO EBITDA WOULD BE LESS THAN OR EQUAL TO 2.0 TO 1.0.  SOLELY FOR PURPOSES OF
THIS SECTION 8.1(C), (X) INDEBTEDNESS FOR BORROWED MONEY SHALL MEAN ALL
OBLIGATIONS OF THE COMPANY GROUP FOR BORROWED MONEY WHICH SHOULD BE CLASSIFIED
UPON THE OBLIGOR’S BALANCE SHEET AS LIABILITIES, THE PRESENT VALUE OF ANY
CAPITAL LEASES AND THE AMOUNT OF ALL GUARANTEES (WHETHER OR NOT REQUIRED TO BE
REFLECTED ON SUCH OBLIGOR’S BALANCE SHEET AS LIABILITIES), IN EACH CASE AS
DETERMINED IN ACCORDANCE WITH GAAP, AND (Y) EBITDA SHALL MEAN THE NET INCOME OF
THE COMPANY GROUP (INCLUDING IN THE “COMPANY GROUP” FOR ALL PURPOSES OF THIS
SECTION 8.1(C)(Y), MAI SYSTEMS CORPORATION AND ITS DIRECT AND INDIRECT
SUBSIDIARIES, FOR THE

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ENTIRE PERIOD BEING MEASURED, REGARDLESS OF WHETHER SUCH PERIOD INCLUDES TIME
PERIODS PRECEDING THE ACQUISITION OF MAI SYSTEMS CORPORATION BY THE COMPANY),
(A) ADJUSTED FOR THE ELIMINATION OF THE FOLLOWING ITEMS IF, AND ONLY IF, SUCH
ITEMS SHALL NEVER REQUIRE THE EXPENDITURE OF CASH BY ANY MEMBER OF THE COMPANY
GROUP: (1) NON-CASH INTEREST; (2) NON-CASH EMPLOYEE COMPENSATION EXPENSE AND (3)
NONRECURRING NON-CASH CHARGES, (B) MINUS ANY EXTRAORDINARY GAINS AND OTHER
NON-RECURRING GAINS AND (C) PLUS TO THE EXTENT DEDUCTED FROM NET INCOME (1)
INCOME TAX EXPENSE; (2) DEPRECIATION AND AMORTIZATION EXPENSE AND (3) THE
AGGREGATE CASH INTEREST EXPENSE OF THE COMPANY GROUP PAID, PAYABLE OR ACCRUED
FOR SUCH PERIOD, ALL OF WHICH CALCULATIONS SHALL BE DETERMINED IN ACCORDANCE
WITH GAAP BASED ON THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY GROUP
FOR THE 12 MONTH PERIOD ENDING ON THE LAST DAY OF THE FISCAL QUARTER FOR WHICH
THE MOST RECENT FINANCIAL STATEMENTS HAVE BEEN DELIVERED TO THE PURCHASERS
PURSUANT TO SECTION 8.3; PROVIDED, THAT NOTWITHSTANDING THE FOREGOING PROVISIONS
OF THIS SECTION 8.1(C), (X) THE COMPANY MAY INCUR INDEBTEDNESS UNDER CAPITAL
LEASES IN AN AMOUNT NOT TO EXCEED $1,000,000 IN THE AGGREGATE OUTSTANDING AT ANY
TIME, AND (Y) THE COMPANY MAY INCUR INDEBTEDNESS UNDER THAT CERTAIN CREDIT
AGREEMENT, DATED AS OF THE DATE OF THIS AGREEMENT, BY AND BETWEEN THE COMPANY,
CERTAIN SUBSIDIARIES OF THE COMPANY, THE LENDERS NAMED THEREIN, AND WELLS FARGO
FOOTHILL, INC., AS ARRANGER AND ADMINISTRATIVE AGENT IN EFFECT ON THE DATE
HEREOF (THE “SENIOR FACILITY”) EVEN THOUGH THE RATIO WILL EXCEED 2.0 TO 1.0, IF
SUCH INDEBTEDNESS IS INCURRED TO FINANCE PERMITTED ACQUISITIONS OR FOR WORKING
CAPITAL AND GENERAL CORPORATE PURPOSES ON OR AFTER THE DATE OF THIS AMENDMENT
AND EITHER

(I)            FOLLOWING SUCH INCURRENCE, THE AGGREGATE AMOUNT OF INDEBTEDNESS
OUTSTANDING UNDER THE SENIOR FACILITY DOES NOT EXCEED $23,000,000; OR

(II)           SUCH INDEBTEDNESS UNDER THE SENIOR FACILITY (A) IS INCURRED AT
ANY TIME DURING THE PERIOD BEGINNING ON MARCH 31, 2007 AND ENDING ON DECEMBER
31, 2007,  (B) DOES NOT EXCEED $30,000,000 AND (C) IS INCURRED WHEN THE
COMPANY’S EBITDA FOR THE TWELVE MONTH PERIOD ENDED ON THE MOST RECENTLY ENDED
FISCAL QUARTER EQUALS OR EXCEEDS THE MINIMUM EBITDA TARGETS SET FORTH OPPOSITE
THE DATE BELOW THAT CORRESPONDS TO THE MOST RECENTLY ENDED FISCAL QUARTER PRIOR
TO THE DATE OF THE BORROWING:

Date

 

Minimum EBITDA Target

 

March 31, 2007

 

$

9,000,000

 

 

 

 

 

June 30, 2007

 

$

9,000,000

 

 

 

 

 

September 30, 2007

 

$

10,701,744

 

 

 

 

 

December 31, 2007

 

$

11,862,744

 

(D)           FROM AND AFTER THE THIRD ANNIVERSARY OF THE INITIAL CLOSING DATE,
CONSUMMATE A COMPANY SALE UNLESS THE AMOUNT OF CASH CONSIDERATION AND THE MARKET
PRICE (AS OF THE DATE OF RECEIPT) OF ANY OTHER CONSIDERATION RECEIVED BY THE
HOLDERS OF THE SERIES D PREFERRED STOCK, IN THE AGGREGATE, IN SUCH COMPANY SALE
IS AT LEAST EQUAL TO THE SERIES D REDEMPTION PRICE FOR ALL SUCH SHARES OF SERIES
D PREFERRED STOCK;

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(E)           ENTER INTO ANY AGREEMENT, INSTRUMENT, ARRANGEMENT OR UNDERSTANDING
(OR AMEND OR MODIFY THE TERMS OF ANY EXISTING AGREEMENT, INSTRUMENT, ARRANGEMENT
OR UNDERSTANDING), WHICH BY ITS TERMS WOULD RESTRICT THE COMPANY’S ABILITY TO
COMPLY WITH THE TERMS OF THIS AGREEMENT OR ANY OF THE RELATED DOCUMENTS IN ANY
MATERIAL RESPECT;

(F)            ENTER INTO OR SUFFER TO EXIST ANY CONTRACT, AGREEMENT,
ARRANGEMENT OR TRANSACTION WITH ANY AFFILIATE (AN “AFFILIATE TRANSACTION”),
OTHER THAN A PERMITTED AFFILIATE TRANSACTION, WITHOUT THE PRIOR CONSENT OF THE
MEMBERS OF THE BOARD OF DIRECTORS WITH NO INTEREST IN SUCH AFFILIATE
TRANSACTION;

(G)           SELL, TRANSFER OR OTHERWISE DISPOSE OF THE CAPITAL STOCK OF ANY
SUBSIDIARY;

(H)           IN THE CASE OF ANY COMPANY SUBSIDIARY, AUTHORIZE, ISSUE OR ENTER
INTO AN AGREEMENT PROVIDING FOR THE ISSUANCE (CONTINGENT OR OTHERWISE) OF ANY
EQUITY SECURITIES, UNLESS AFTER GIVING EFFECT TO SUCH ISSUANCE, SUCH SUBSIDIARY
IS WHOLLY-OWNED SUBSIDIARY OF THE COMPANY;

(I)            MATERIALLY ALTER ITS PRINCIPAL LINE OF BUSINESS AS CONDUCTED ON
THE INITIAL CLOSING DATE OR ENGAGE IN ANY BUSINESS UNLESS SUCH BUSINESS IS
REASONABLY RELATED TO SUCH PRINCIPAL LINE OF BUSINESS OF THE COMPANY GROUP AS
CONDUCTED ON THE INITIAL CLOSING DATE;

(J)            COMPLETE A MATERIAL ACQUISITION THAT IS NOT APPROVED BY THE BOARD
OF DIRECTORS, INCLUDING THE CONSENT OF THE INVESTOR DIRECTOR; OR

(K)           WITH RESPECT TO THE COMPANY OR ANY MATERIAL SUBSIDIARY, MAKE AN
ASSIGNMENT FOR THE BENEFIT OF CREDITORS OR ADMIT IN WRITING ITS INABILITY TO PAY
ITS DEBTS GENERALLY AS THEY BECOME DUE, OR PETITION OR APPLY TO ANY TRIBUNAL FOR
THE APPOINTMENT OF A CUSTODIAN, TRUSTEE, RECEIVER OR LIQUIDATOR OF THE COMPANY
OR ANY MATERIAL SUBSIDIARY OR OF ANY SUBSTANTIAL PART OF THE ASSETS OF THE
COMPANY OR ANY MATERIAL SUBSIDIARY, OR COMMENCE ANY PROCEEDING (OTHER THAN A
PROCEEDING FOR THE VOLUNTARY LIQUIDATION AND DISSOLUTION OF A SUBSIDIARY)
RELATING TO THE COMPANY OR ANY MATERIAL SUBSIDIARY UNDER ANY BANKRUPTCY,
REORGANIZATION, ARRANGEMENT, INSOLVENCY, READJUSTMENT OF DEBT, DISSOLUTION OR
LIQUIDATION LAW OF ANY JURISDICTION; OR APPROVE, CONSENT TO OR ACQUIESCENCE IN
ANY SUCH PETITION OR APPLICATION FILED, OR ANY SUCH PROCEEDING COMMENCED, BY ANY
THIRD PARTY AGAINST THE COMPANY OR ANY SUBSIDIARY.

8.2          REQUIRED ACTIONS.  PRIOR TO THE CONVERSION OR REDEMPTION OF ALL THE
SERIES D SHARES, EACH OF THE COMPANY AND EACH OTHER MEMBER OF THE COMPANY GROUP
SHALL:

(A)           USE ITS REASONABLE EFFORTS TO MAINTAIN AT ALL TIMES, OR TO REAPPLY
FOR, A VALID LISTING FOR THE COMMON STOCK ON A NATIONAL SECURITIES EXCHANGE OR
NASDAQ AND AS PROMPTLY AS POSSIBLE FOLLOWING THE LISTING OF THE COMMON STOCK ON
A NATIONAL SECURITIES EXCHANGE OR NASDAQ, SECURE THE LISTING OF ALL OF THE
CONVERSION SHARES AND WARRANT SHARES UPON SUCH NATIONAL SECURITIES EXCHANGE OR
NASDAQ AND MAINTAIN SUCH LISTING OF ALL CONVERSION SHARES AND WARRANT SHARES
FROM TIME TO TIME ISSUABLE UNDER THE TERMS HEREOF AND THE SERIES D PREFERRED
STOCK CERTIFICATE OF DESIGNATION AND PURSUANT TO THE WARRANT, AND MAINTAIN THE
COMMON STOCK’S AUTHORIZATION FOR TRADING ON A NATIONAL SECURITIES EXCHANGE OR
QUOTATION ON NASDAQ;

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(B)           MAINTAIN AND KEEP ITS PROPERTIES IN GOOD REPAIR, WORKING ORDER AND
CONDITION, AND FROM TIME TO TIME MAKE ALL NECESSARY OR DESIRABLE REPAIRS,
RENEWALS AND REPLACEMENTS, SO THAT ITS BUSINESSES MAY BE PROPERLY AND
ADVANTAGEOUSLY CONDUCTED IN ALL MATERIAL RESPECTS AT ALL TIMES;

(C)           MAINTAIN OR CAUSE TO BE MAINTAINED WITH FINANCIALLY SOUND AND
REPUTABLE INSURERS (I) PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE WITH
RESPECT TO THEIR RESPECTIVE BUSINESSES AND PROPERTIES AGAINST LOSS OR DAMAGE OF
THE KINDS AND IN AMOUNTS CUSTOMARILY CARRIED OR MAINTAINED BY COMPANIES OF
ESTABLISHED REPUTATION ENGAGED IN SIMILAR BUSINESSES, AND (II) WITH RESPECT TO
THE COMPANY ONLY, DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE PROVIDING AT
LEAST THE SAME COVERAGE AND AMOUNTS AND CONTAINING TERMS AND CONDITIONS WHICH
ARE NOT LESS ADVANTAGEOUS IN ANY MATERIAL RESPECT, IN EACH CASE THAN THE
DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE MAINTAINED BY THE COMPANY AS OF THE
INITIAL CLOSING DATE;

(D)           PAY AND DISCHARGE WHEN DUE ALL TAX LIABILITIES, ASSESSMENTS AND
GOVERNMENTAL CHARGES OR LEVIES IMPOSED UPON ITS PROPERTIES OR UPON THE INCOME OR
PROFITS THEREFROM (IN EACH CASE BEFORE THE SAME BECOME DELINQUENT AND BEFORE
PENALTIES ACCRUE THEREON), UNLESS THE SAME ARE BEING CONTESTED IN GOOD FAITH BY
APPROPRIATE PROCEEDINGS AND ADEQUATE RESERVES IN ACCORDANCE WITH GAAP, ARE BEING
MAINTAINED BY THE COMPANY;

(E)           AT ALL TIMES CAUSE TO BE DONE ALL THINGS NECESSARY TO MAINTAIN,
PRESERVE AND RENEW ITS CORPORATE EXISTENCE AND ALL MATERIAL LICENSES,
AUTHORIZATIONS AND PERMITS NECESSARY TO THE CONDUCT OF ITS BUSINESSES;

(F)            MAINTAIN, PROTECT AND ENFORCE, AND NOT PERMIT THE LOSS, LAPSE OR
ABANDONMENT OF, ANY COMPANY INTELLECTUAL PROPERTY (OTHER THAN IN THE ORDINARY
COURSE OF BUSINESS WITH RESPECT TO INTELLECTUAL PROPERTY NOT MATERIAL TO THE
BUSINESS OF ANY COMPANY GROUP MEMBER); PROVIDED, HOWEVER, THAT THE FOREGOING IS
NOT INTENDED TO RESTRICT THE COMPANY FROM ENTERING INTO A PLEDGE OF THE COMPANY
INTELLECTUAL PROPERTY OR SELLING FOR VALUE A PORTION OF THE COMPANY INTELLECTUAL
PROPERTY, IF SUCH ACTIVITIES WOULD OTHERWISE BE PERMITTED HEREUNDER);

(G)           COMPLY WITH ALL APPLICABLE LAWS, RULES AND REGULATIONS OF ALL
GOVERNMENT AGENCIES, THE VIOLATION OF WHICH COULD REASONABLY BE EXPECTED TO HAVE
A MATERIAL ADVERSE EFFECT;

(H)           MAINTAIN PROPER BOOKS OF RECORD AND ACCOUNT WHICH PRESENT FAIRLY
IN ALL MATERIAL RESPECTS THE COMPANY’S FINANCIAL CONDITION ON A CONSOLIDATED
BASIS AND RESULTS OF OPERATIONS AND MAKE PROVISIONS ON ITS FINANCIAL STATEMENTS
FOR ALL SUCH PROPER RESERVES AS IN EACH CASE ARE REQUIRED IN ACCORDANCE WITH
GAAP;

(I)            RESERVE AND KEEP AVAILABLE OUT OF THE COMPANY’S AUTHORIZED BUT
UNISSUED SHARES OF COMMON STOCK, SOLELY FOR THE PURPOSES OF ISSUANCE UPON
CONVERSION OF THE SERIES D SHARES AND EXERCISE OF THE WARRANTS, SUCH NUMBER OF
SHARES OF COMMON STOCK AS ARE ISSUABLE UPON THE CONVERSION OF ALL OUTSTANDING
SHARES OF THE SERIES D SHARES OR EXERCISE OF THE WARRANTS.  ALL SHARES OF COMMON
STOCK WHICH ARE SO ISSUABLE SHALL, WHEN ISSUED, BE DULY AND VALIDLY ISSUED,
FULLY PAID AND NONASSESSABLE AND FREE FROM ALL TAXES AND LIENS, OTHER THAN LIENS
CREATED BY THE HOLDER.  THE COMPANY SHALL USE COMMERCIALLY REASONABLE EFFORTS TO
ASSURE THAT ALL SUCH

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SHARES OF COMMON STOCK MAY BE SO ISSUED WITHOUT VIOLATION OF ANY APPLICABLE LAW
OR GOVERNMENTAL REGULATION OR ANY REQUIREMENTS OF ANY DOMESTIC SECURITIES
EXCHANGE UPON WHICH SHARES OF COMMON STOCK MAY BE LISTED (EXCEPT FOR OFFICIAL
NOTICE OF ISSUANCE WHICH SHALL BE IMMEDIATELY DELIVERED BY THE COMPANY UPON EACH
SUCH ISSUANCE AND EXCLUDING THE FILING OF ANY REGISTRATION STATEMENT WITH THE
SEC UNLESS THE COMPANY IS CONTRACTUALLY OR OTHERWISE REQUIRED TO FILE ANY SUCH
REGISTRATION STATEMENT); AND

(J)            USE ITS BEST EFFORTS TO AT ALL TIMES FILE ALL REPORTS (INCLUDING
ANNUAL REPORTS, QUARTERLY REPORTS AND THE INFORMATION, DOCUMENTATION AND OTHER
REPORTS) REQUIRED TO BE FILED BY THE COMPANY UNDER THE EXCHANGE ACT AND SECTIONS
13 AND 15 OF THE RULES AND REGULATIONS ADOPTED BY THE SEC THEREUNDER, AND THE
COMPANY SHALL USE ITS REASONABLE BEST EFFORTS TO FILE EACH OF SUCH REPORTS ON A
TIMELY BASIS, AND TAKE SUCH FURTHER ACTION AS ANY HOLDER OR HOLDERS OF
SECURITIES MAY REASONABLY REQUEST, ALL TO THE EXTENT REQUIRED TO ENABLE SUCH
HOLDERS TO SELL SECURITIES PURSUANT TO RULE 144 ADOPTED BY THE SEC UNDER THE
SECURITIES ACT (AS SUCH RULE MAY BE AMENDED FROM TIME TO TIME) OR ANY SIMILAR
RULE OR REGULATION HEREAFTER ADOPTED BY THE SEC AND TO ENABLE THE COMPANY TO
REGISTER SECURITIES WITH THE SEC ON FORM S-3 OR ANY SIMILAR SHORT-FORM
REGISTRATION STATEMENT (OR, IF THE COMPANY IS NO LONGER SUBJECT TO THE
REQUIREMENTS OF THE EXCHANGE ACT, PROVIDE REPORTS IN SUBSTANTIALLY THE SAME FORM
AND AT THE SAME TIMES AS WOULD BE REQUIRED IF IT WERE SUBJECT TO THE EXCHANGE
ACT).

8.3          INFORMATION RIGHTS.  SO LONG AS THE PURCHASERS OR ONE OR MORE OF
THEIR AFFILIATES HOLD AT LEAST 50% OF THE NUMBER OF SHARES OF COMMON STOCK
ISSUED OR ISSUABLE UPON CONVERSION OF THE SERIES D SHARES PURCHASED AT THE
CLOSING, THE COMPANY SHALL FURNISH TO EACH HOLDER OF UNDERLYING COMMON STOCK:

(A)           WITHIN 90 DAYS AFTER THE END OF EACH FISCAL YEAR, ITS FORM 10-K
(OR, IF THE COMPANY IS NO LONGER SUBJECT TO THE REQUIREMENTS OF THE EXCHANGE
ACT, PROVIDE REPORTS IN SUBSTANTIALLY THE SAME FORM AND AT THE SAME TIMES AS
WOULD BE REQUIRED IF IT WERE SUBJECT TO THE EXCHANGE ACT) CONTAINING ITS AUDITED
CONSOLIDATED BALANCE SHEET AND RELATED STATEMENTS OF INCOME, STOCKHOLDERS’
EQUITY AND CASH FLOWS AS OF THE END OF AND FOR SUCH YEAR, SETTING FORTH IN EACH
CASE IN COMPARATIVE FORM THE FIGURES FOR THE PREVIOUS FISCAL YEAR, ALL REPORTED
ON BY PRICEWATERHOUSECOOPERS LLP OR OTHER INDEPENDENT PUBLIC ACCOUNTANTS OF
RECOGNIZED NATIONAL STANDING (WITHOUT A “GOING CONCERN” OR SIMILAR QUALIFICATION
RELATING TO THE QUESTIONABLE VALUE OF ASSETS BECAUSE OF CONCERNS REGARDING
SURVIVABILITY AND WITHOUT ANY QUALIFICATION OR EXCEPTION AS TO THE SCOPE OF SUCH
AUDIT) TO THE EFFECT THAT SUCH CONSOLIDATED FINANCIAL STATEMENTS PRESENT FAIRLY
IN ALL MATERIAL RESPECTS THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
THE COMPANY GROUP ON A CONSOLIDATED BASIS IN ACCORDANCE WITH GAAP, ALL CERTIFIED
BY ONE OF ITS FINANCIAL OFFICERS AS PRESENTING FAIRLY IN ALL MATERIAL RESPECTS
THE RESULTS OF OPERATIONS OF THE COMPANY ON A CONSOLIDATING BASIS IN ACCORDANCE
WITH GAAP, SUBJECT TO NORMAL YEAR-END AUDIT ADJUSTMENTS AND THE ABSENCE OF
FOOTNOTES;

(B)           WITHIN 45 DAYS AFTER THE END OF EACH OF THE FIRST THREE FISCAL
QUARTERS OF EACH FISCAL YEAR, ITS FORM 10-Q (OR, IF THE COMPANY IS NO LONGER
SUBJECT TO THE REQUIREMENTS OF THE EXCHANGE ACT, PROVIDE REPORTS IN
SUBSTANTIALLY THE SAME FORM AND AT THE SAME TIMES AS WOULD BE REQUIRED IF IT
WERE SUBJECT TO THE EXCHANGE ACT) CONTAINING ITS CONSOLIDATED BALANCE SHEET AND
RELATED STATEMENTS OF INCOME AND CASH FLOWS AS OF THE END OF AND FOR SUCH FISCAL
QUARTER AND THE THEN ELAPSED PORTION OF THE FISCAL YEAR, SETTING FORTH IN EACH
CASE IN COMPARATIVE FORM THE FIGURES

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FOR THE CORRESPONDING PERIOD OR PERIODS OF (OR, IN THE CASE OF THE BALANCE
SHEET, AS OF THE END OF) THE PREVIOUS FISCAL YEAR, ALL CERTIFIED BY ONE OF ITS
FINANCIAL OFFICERS AS PRESENTING FAIRLY IN ALL MATERIAL RESPECTS THE RESULTS OF
OPERATIONS OF THE COMPANY ON A CONSOLIDATING BASIS IN ACCORDANCE WITH GAAP,
SUBJECT TO NORMAL YEAR-END AUDIT ADJUSTMENTS AND THE ABSENCE OF FOOTNOTES;

(C)           WITHIN 30 DAYS AFTER THE END OF EACH MONTH, A CONSOLIDATED BALANCE
SHEET AND RELATED STATEMENTS OF INCOME AND CASH FLOWS AS OF THE END OF AND FOR
SUCH MONTH AND THE THEN ELAPSED PORTION OF THE FISCAL YEAR, SETTING FORTH IN
EACH CASE IN COMPARATIVE FORM THE FIGURES FOR THE CORRESPONDING PERIOD OR
PERIODS OF (OR, IN THE CASE OF THE BALANCE SHEET, AS OF THE END OF) THE PREVIOUS
FISCAL YEAR, ALL CERTIFIED BY ONE OF ITS FINANCIAL OFFICERS AS PRESENTING FAIRLY
IN ALL MATERIAL RESPECTS THE RESULTS OF OPERATIONS OF THE COMPANY ON A
CONSOLIDATING BASIS IN ACCORDANCE WITH GAAP, SUBJECT TO NORMAL YEAR-END AUDIT
ADJUSTMENTS AND THE ABSENCE OF FOOTNOTES;

(D)           CONCURRENTLY WITH ANY DELIVERY OF FINANCIAL STATEMENTS UNDER
CLAUSES (A) OR (B) ABOVE, A CERTIFICATE OF A FINANCIAL OFFICER OF THE COMPANY
(I) CERTIFYING AS TO WHETHER A REMEDY EVENT HAS OCCURRED OR ANY OTHER MATERIAL
BREACH OF A REPRESENTATION, WARRANTY OR COVENANT CONTAINED IN THIS AGREEMENT HAS
OCCURRED AND, IF A REMEDY EVENT OR ANY SUCH BREACH HAS OCCURRED, SPECIFYING THE
DETAILS THEREOF AND ANY ACTION TAKEN OR PROPOSED TO BE TAKEN WITH RESPECT
THERETO AND (II) STATING WHETHER ANY CHANGE IN GAAP OR IN THE APPLICATION
THEREOF HAS OCCURRED SINCE THE MOST RECENT BALANCE SHEET DATE AND, IF ANY SUCH
CHANGE HAS OCCURRED, SPECIFYING THE EFFECT OF SUCH CHANGE ON THE FINANCIAL
STATEMENTS ACCOMPANYING SUCH CERTIFICATE;

(E)           BY NO LATER THAN SEPTEMBER 30 OF EACH FISCAL YEAR, A BUDGET AND
BUSINESS PLAN FOR THE IMMEDIATELY SUCCEEDING FISCAL YEAR IN THE FORM APPROVED BY
THE BOARD OF DIRECTORS;

(F)            PROMPTLY AFTER THE SAME BECOME PUBLICLY AVAILABLE, COPIES OF ALL
PERIODIC AND OTHER REPORTS, PROXY STATEMENTS AND OTHER MATERIALS FILED BY ANY
MEMBER OF THE COMPANY GROUP WITH THE SEC, OR ANY GOVERNMENTAL AGENCY SUCCEEDING
TO ANY OR ALL OF THE FUNCTIONS OF THE SEC, OR WITH ANY NATIONAL SECURITIES
EXCHANGE (INCLUDING AMEX), OR DISTRIBUTED BY THE COMPANY TO ITS STOCKHOLDERS
GENERALLY, AS THE CASE MAY BE;

(G)           PROMPTLY FOLLOWING ANY REQUEST THEREFOR, SUCH OTHER INFORMATION
REGARDING THE OPERATIONS, BUSINESS AFFAIRS AND FINANCIAL CONDITION OF ANY MEMBER
OF THE COMPANY GROUP, OR COMPLIANCE WITH THE TERMS OF THIS AGREEMENT OR ANY
RELATED DOCUMENT, AS ANY PURCHASER MAY REASONABLY REQUEST; AND

(H)           BY NO LATER THAN OCTOBER 31, 2006, A COPY OF A COST SAVINGS PLAN
THAT HAS BEEN PRESENTED TO THE COMPANY’S BOARD OF DIRECTORS AND THAT PRESENTS IN
SUBSTANTIAL DETAIL THE COMPANY’S STRATEGY FOR IMPROVING ITS PROFIT MARGINS.

8.4          ACCESS RIGHTS.  SO LONG AS THE PURCHASERS OR ONE OR MORE OF THEIR
AFFILIATES HOLD AT LEAST 50% OF THE NUMBER OF SHARES OF COMMON STOCK ISSUED OR
ISSUABLE UPON CONVERSION OF THE SERIES D SHARES PURCHASED AT THE INITIAL
CLOSING, THE COMPANY SHALL PERMIT EACH PURCHASER, ITS AGENTS AND REPRESENTATIVES
TO HAVE REASONABLE ACCESS TO THE MANAGEMENT PERSONNEL, PREMISES, BOOKS AND
RECORDS OF THE COMPANY GROUP UPON REASONABLE NOTICE DURING REGULAR BUSINESS
HOURS.

8.5          RIGHT OF FIRST REFUSAL. EXCEPT FOR THE ISSUANCE OF:

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(I)            SERIES A SHARES AND RIGHTS TO ACQUIRE COMMON STOCK ISSUED
PURSUANT TO THE RIGHTS PLAN;

(II)           OPTIONS TO PURCHASE, AND SHARES OF COMMON STOCK, ISSUED PURSUANT
TO ANY EMPLOYEE BENEFIT PLAN UNDER A RESERVATION EXISTING AS OF THE DATE OF THIS
AGREEMENT OR HEREAFTER APPROVED BY THE BOARD OF DIRECTORS, INCLUDING THE
INVESTOR DIRECTOR;

(III)          EQUITY SECURITIES ISSUED UPON EXERCISE OF THE WARRANT OR
CONVERSION OF THE SERIES B SHARES, SERIES C SHARES OR SERIES D SHARES;

(IV)          EQUITY SECURITIES ISSUED PURSUANT TO THE EXERCISE OR CONVERSION OF
ANY OTHER OPTION, WARRANT, CONVERTIBLE SECURITY OR RIGHT TO ACQUIRE EQUITY
SECURITIES OUTSTANDING AS OF THE DATE OF THIS AGREEMENT;

(V)           EQUITY SECURITIES ISSUED AND SOLD IN AN OFFERING REGISTERED UNDER
THE SECURITIES ACT;

(VI)          COMMON STOCK ISSUED OR ISSUABLE BY REASON OF A DIVIDEND, STOCK
SPLIT, SPLIT-UP OR OTHER DISTRIBUTION ON SHARES OF COMMON STOCK, OR A
RECAPITALIZATION;

(VII)         COMMON STOCK OR OPTIONS OR WARRANTS TO ACQUIRE COMMON STOCK,
ISSUED OR ISSUABLE TO BANKS, EQUIPMENT LESSORS OR OTHER FINANCIAL INSTITUTIONS,
OR TO REAL PROPERTY LESSORS, PURSUANT TO A DEBT FINANCING, EQUIPMENT LEASING OR
REAL PROPERTY LEASING TRANSACTIONS APPROVED BY THE BOARD OF DIRECTORS IN AN
AGGREGATE AMOUNT NOT TO EXCEED 1% OF THE COMPANY’S FULLY-DILUTED COMMON STOCK AS
OF AUGUST 17, 2005;

(VIII)        COMMON STOCK OR OPTIONS OR WARRANTS TO ACQUIRE COMMON STOCK,
ISSUED IN LICENSING OR COLLABORATIVE ARRANGEMENTS, OR IN STRATEGIC PARTNERSHIPS,
TO THE OTHER PARTY TO SUCH ARRANGEMENT OR PARTNERSHIP IN CONNECTION WITH THE
LICENSING OF TECHNOLOGY APPROVED BY THE BOARD OF DIRECTORS OF THE COMPANY  IN AN
AGGREGATE AMOUNT NOT TO EXCEED 1% OF THE COMPANY’S FULLY-DILUTED COMMON STOCK AS
OF AUGUST 17, 2005;

(IX)           COMMON STOCK OR OPTIONS OR WARRANTS TO ACQUIRE COMMON STOCK
ISSUED IN CONNECTION WITH ANY ACQUISITION OR MERGER TO THE SELLER IN SUCH
ACQUISITION OR MERGER THAT IS APPROVED BY THE BOARD OF DIRECTORS (INCLUDING THE
INVESTOR DIRECTOR), PROVIDED THAT SUCH SECURITIES ARE NOT ISSUED TO A
STOCKHOLDER OF THE COMPANY OR ANY AFFILIATE THEREOF (SUBCLAUSES (I)-(VIII)
ABOVE, AN “EXEMPT ISSUANCE”),

if the Company, at any time after the Closing authorizes the issuance or sale
of, or proposes to issue or sell, any Equity Securities, the Company shall first
offer to sell to each Purchaser holding Series D Shares (solely in such
Purchaser’s capacity as a holder of Series D Shares) a portion of such Equity
Securities equal to the quotient determined by dividing (1) the number of shares
of Common Stock (counting for such purpose only Common Stock issuable upon
conversion of the Series D Shares and exercise of the Warrants and excluding any
shares of Common Stock issuable to such Purchaser on account of its holding any
other Equity Securities) held by such Purchaser by (2) the total number of
shares of Common Stock then outstanding immediately prior to such issuance
(assuming all Warrants have been exercised for Common Stock and all options and

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Common Stock Equivalents have been exercised or exchanged for or converted into
Common Stock in accordance with their terms) (“Fully-Diluted Common Stock”). 
Each Purchaser shall be entitled to purchase all or any portion of such Equity
Securities at the most favorable price and on the most favorable terms as such
Equity Securities are to be offered to any other Person.

8.6          BOARD REPRESENTATION.

(A)           SO LONG AS THE PURCHASERS OR ONE OR MORE OF THEIR AFFILIATES HOLD
AT LEAST 20% OF THE NUMBER OF SHARES OF COMMON STOCK ISSUED OR ISSUABLE UPON
CONVERSION OF THE SERIES D SHARES, THE COMPANY SHALL TAKE ALL NECESSARY OR
DESIRABLE ACTIONS WITHIN ITS CONTROL (INCLUDING CALLING SPECIAL BOARD AND
STOCKHOLDER MEETINGS AND NOMINATING ANY INDIVIDUAL APPOINTED BY THE HOLDERS OF A
MAJORITY OF THE NUMBER OF SHARES OF COMMON STOCK ISSUED OR ISSUABLE UPON
CONVERSION OF THE SERIES D SHARES TO THE BOARD OF DIRECTORS AND RECOMMENDING THE
ELECTION OF SUCH INDIVIDUAL TO THE BOARD OF DIRECTORS), TO CAUSE THE INVESTOR
DIRECTOR TO BE ELECTED TO SERVE AS A MEMBER OF THE BOARD OF DIRECTORS.  THE
COMPANY SHALL AT ALL TIMES MAINTAIN A COMPENSATION COMMITTEE AND AN AUDIT
COMMITTEE OF ITS BOARD OF DIRECTORS.

(B)           AT SUCH TIME AS THE APPOINTMENT RIGHTS IN SECTION 8.6(A) WOULD
APPLY AND THE INVESTOR DIRECTOR IS NOT A MEMBER OF THE BOARD OF DIRECTORS AS
PROVIDED IN THIS AGREEMENT, THE COMPANY SHALL PERMIT THE REQUISITE PURCHASERS TO
APPOINT ONE OBSERVER ATTEND EACH MEETING OF THE BOARD OF DIRECTORS AND ANY
COMMITTEE THEREOF.  THE COMPANY WILL SEND TO ANY SUCH OBSERVER NOTICE OF THE
TIME AND PLACE OF ANY SUCH MEETING IN THE SAME MANNER AND AT THE SAME TIME AS
NOTICE IS SENT TO THE DIRECTORS OR COMMITTEE MEMBERS, AS THE CASE MAY BE;
PROVIDED, HOWEVER, THAT EACH SUCH OBSERVER SHALL ALWAYS RECEIVE AT LEAST THREE
(3) DAYS’ PRIOR NOTICE OF ANY MEETING.  THE COMPANY SHALL ALSO PROVIDE TO SUCH
OBSERVER COPIES OF ALL NOTICES, REPORTS, MINUTES, CONSENTS AND OTHER DOCUMENTS
AT THE TIME AND IN THE MANNER AS THEY ARE PROVIDED TO THE BOARD OF DIRECTORS OR
COMMITTEES.  THE COMPANY SHALL REIMBURSE EACH SUCH OBSERVER FOR ALL REASONABLE
COSTS INCURRED BY THE OBSERVER.

(C)           NOTWITHSTANDING THE FOREGOING, A MAJORITY OF THE BOARD OF
DIRECTORS SHALL HAVE THE RIGHT TO EXCLUDE THE INVESTOR DIRECTOR, OR THE OBSERVER
PERMITTED TO BE IN ATTENDANCE AT EACH MEETING OF THE BOARD OF DIRECTORS PURSUANT
TO SECTION 8.6(B) HEREOF, FROM PORTIONS OF MEETINGS OF THE BOARD OF DIRECTORS
(OR MEETINGS OF COMMITTEES THEREOF) OR OMIT TO PROVIDE THE OBSERVER WITH CERTAIN
INFORMATION IF SUCH MAJORITY OF THE BOARD OF DIRECTORS BELIEVES IN GOOD FAITH,
BASED ON THE ADVICE OF THE COMPANY’S OUTSIDE COUNSEL, THAT SUCH EXCLUSION OR
OMISSION IS NECESSARY TO AVOID A CONFLICT OF INTEREST OR TO PREVENT A BREACH OF
ATTORNEY-CLIENT PRIVILEGE; PROVIDED, THAT THE INVESTOR DIRECTOR AND THE OBSERVER
SHALL NOT BE SO EXCLUDED OR WITHHELD INFORMATION UNLESS ALL OTHER PERSONS WHOSE
PRESENCE AT A MEETING OR RECEIPT OF SUCH MATERIALS WOULD RESULT IN A CONFLICT OF
INTEREST OR A BREACH OF ATTORNEY-CLIENT PRIVILEGE ARE ALSO EXCLUDED OR WITHHELD
INFORMATION.

8.7          APPOINTMENT RIGHT.

(A)           FROM AND AFTER THE EARLIER OF (X) AUGUST 17, 2012 AND (Y) THE
OCCURRENCE OF A REMEDY EVENT, SO LONG AS ANY SERIES D SHARES REMAIN OUTSTANDING
AND SO LONG AS ANY ACCRUED AND UNPAID DIVIDENDS REMAIN OUTSTANDING IN RESPECT
THEREOF, WITH RESPECT TO SECTION 8.7(A)(Y)

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SUCH REMEDY EVENT HAS NOT BEEN CURED BY THE COMPANY WITHIN (I) 30 DAYS OF THE
OCCURRENCE OF A COMPLIANCE REMEDY EVENT AND (II) 10 DAYS FOLLOWING THE
OCCURRENCE OF A PAYMENT REMEDY EVENT OR A REDEMPTION NOTICE HAS NOT BEEN
DELIVERED BY THE COMPANY IN ACCORDANCE WITH THE TERMS OF THE SERIES D PREFERRED
STOCK CERTIFICATE OF DESIGNATION, THE REQUISITE PURCHASERS SHALL HAVE THE RIGHT
TO CAUSE THE COMPANY TO RETAIN AN INVESTMENT BANKER TO IDENTIFY AND ADVISE THE
COMPANY REGARDING OPPORTUNITIES FOR A COMPANY SALE AND PARTICIPATE ON THE
COMPANY’S BEHALF IN NEGOTIATIONS FOR, AND TO ASSIST THE COMPANY IN CONDUCTING,
SUCH COMPANY SALE (THE “APPOINTMENT RIGHT”), THE CONSUMMATION OF WHICH SHALL BE
SUBJECT TO THE REQUISITE PURCHASERS’ CONSENT.  TO EXERCISE THEIR APPOINTMENT
RIGHT, THE REQUISITE PURCHASERS SHALL GIVE PROMPT WRITTEN NOTICE TO THE COMPANY
(THE “APPOINTMENT NOTICE”) OF THEIR INTENTION TO CAUSE, TO THE EXTENT CONSISTENT
WITH SECTION 8.7(C), A COMPANY SALE, WHICH APPOINTMENT NOTICE SHALL IDENTIFY
THREE INVESTMENT BANKS CHOSEN BY THE REQUISITE PURCHASERS TO CONDUCT SUCH
COMPANY SALE.  WITHIN THIRTY (30) DAYS OF THE COMPANY’S RECEIPT OF THE
APPOINTMENT NOTICE, THE COMPANY SHALL RETAIN ONE OF THE INVESTMENT BANKS (THE
“INVESTMENT BANK”) IDENTIFIED BY THE REQUISITE PURCHASERS IN THE APPOINTMENT
NOTICE TO INVESTIGATE THE ADVISABILITY OF, SOLICIT INTEREST IN AND, TO THE
EXTENT CONSISTENT WITH SECTION 8.7(C), NEGOTIATE FOR AN ORDERLY COMPANY SALE
WITH THE OBJECTIVE OF ACHIEVING THE HIGHEST PRACTICABLE VALUE FOR THE COMPANY’S
STOCKHOLDERS WITHIN A REASONABLE PERIOD OF TIME.  THE COMPANY SHALL CAUSE ITS
BOARD OF DIRECTORS AND OFFICERS TO (I) COOPERATE WITH THE INVESTMENT BANK IN
ACCORDANCE WITH THE PROCEDURES ESTABLISHED BY THE INVESTMENT BANK AND THE BOARD
OF DIRECTORS OF THE COMPANY, TO SOLICIT INTEREST IN AN ORDERLY COMPANY SALE,
(II) USE THEIR REASONABLE EFFORTS, CONSISTENT WITH THEIR FIDUCIARY OBLIGATIONS,
TO REACH AN AGREEMENT ON THE OPTIMUM STRUCTURE AND THE TERMS AND CONDITIONS FOR
A COMPANY SALE (INCLUDING WHETHER SUCH COMPANY SALE WILL BE CONSUMMATED BY
MERGER, SALE OF ASSETS OR SALE OF CAPITAL STOCK) AND (III) RETAIN INDEPENDENT
LEGAL COUNSEL, WHICH SHALL BE CHOSEN BY THE BOARD OF DIRECTORS BUT SHALL BE
ACCEPTABLE TO THE REQUISITE PURCHASERS (“COMPANY COUNSEL”), TO ADVISE THE
COMPANY ON SUCH COMPANY SALE.  THE COMPANY SHALL PAY ALL FEES AND EXPENSES
INCURRED IN CONNECTION WITH THE COMPANY SALE, INCLUDING ALL FEES AND EXPENSES OF
THE INVESTMENT BANK, THE COMPANY COUNSEL AND ONE LAW FIRM RETAINED BY THE
REQUISITE PURCHASERS IN CONNECTION WITH THE INVESTIGATION, DOCUMENTATION,
NEGOTIATION AND CONSUMMATION OF THE COMPANY SALE.   NOTWITHSTANDING THE
FOREGOING, THE COMPANY SHALL NOT BE REQUIRED TO REIMBURSE THE PURCHASERS FOR ANY
LEGAL FEES OR EXPENSES INCURRED IN CONNECTION WITH ANY JUDICIAL PROCEEDING
PRIMARILY ARISING AS A RESULT OF THE CONSUMMATION OF THE COMPANY SALE
CONTEMPLATED BY THIS SECTION 8.7 IN WHICH THE PURCHASERS AND THE COMPANY ARE
ADVERSARIES.

(B)           IN FURTHERANCE OF THE FOREGOING AND TO THE EXTENT CONSISTENT WITH
SECTION 8.7(C), THE COMPANY SHALL (I) TAKE ALL NECESSARY OR DESIRABLE ACTIONS
REASONABLY REQUESTED BY THE REQUISITE PURCHASERS OR THE INVESTMENT BANK IN
CONNECTION WITH THE CONSUMMATION OF THE COMPANY SALE AND (II) MAKE ANY
REPRESENTATIONS, WARRANTIES, INDEMNITIES AND AGREEMENTS REASONABLY REQUESTED BY
THE REQUISITE PURCHASERS AND TAKE SUCH OTHER ACTIONS AS THE REQUISITE PURCHASERS
MAY REASONABLY REQUEST IN CONNECTION WITH SUCH COMPANY SALE.

(C)           THE PURCHASERS ACKNOWLEDGE THE FIDUCIARY OBLIGATIONS OF THE BOARD
OF DIRECTORS IN CONSIDERING, NEGOTIATING, APPROVING AND RECOMMENDING TO
STOCKHOLDERS, ANY TRANSACTION THAT WOULD RESULT IN A COMPANY SALE AND
ACKNOWLEDGE THAT SUCH FIDUCIARY OBLIGATIONS REQUIRE THAT THE BOARD OF DIRECTORS
ACT ON AN INFORMED BASIS TO SECURE THE BEST VALUE REASONABLY AVAILABLE TO THE
COMPANY’S STOCKHOLDERS UNDER THE CIRCUMSTANCES.  THE PURCHASERS ACKNOWLEDGE
THAT, ALTHOUGH THE COMPANY SHALL BE OBLIGATED TO CAUSE ITS BOARD OF DIRECTORS TO
RETAIN AN

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INVESTMENT BANK PURSUANT TO THIS SECTION 8.7 AND USE ITS BEST EFFORTS TO ASSIST
THE INVESTMENT BANK IN (I) INVESTIGATING THE ADVISABILITY OF A COMPANY SALE AND
(II) SOLICITING INTEREST IN AND NEGOTIATING THE TERMS OF A COMPANY SALE, THE
BOARD OF DIRECTORS SHALL BE UNDER NO OBLIGATION OR COMPULSION TO APPROVE OR
RECOMMEND ANY COMPANY SALE AND MAY REJECT ANY OR ALL OFFERS WITH RESPECT TO ANY
SUCH POTENTIAL COMPANY SALE, IF, IN THE EXERCISE OF ITS FIDUCIARY OBLIGATIONS,
THE BOARD OF DIRECTORS REASONABLY DETERMINES THAT THE SAME IS NOT IN THE BEST
INTEREST OF, OR FAIR TO, THE STOCKHOLDERS OF THE COMPANY (A “REJECTED SALE”). 
IN THE EVENT OF A REJECTED SALE, THE BOARD OF DIRECTORS SHALL GIVE THE
PURCHASERS PROMPT (AND IN ANY EVENT WITHIN 5 DAYS) WRITTEN NOTICE THEREOF, WHICH
NOTICE SHALL FURTHER SPECIFY IN REASONABLE DETAIL EACH REASON OR REASONS THAT
FORMED THE BASIS FOR THE BOARD OF DIRECTOR’S DETERMINATION THAT SUCH REJECTED
SALE WAS NOT IN THE BEST INTEREST OF, OR FAIR TO, THE STOCKHOLDERS OF THE
COMPANY.

(D)           IMMEDIATELY UPON THE OCCURRENCE OF ANY ADDITIONAL REMEDY EVENT (OR
THE CONTINUATION OF ANY THEN-EXISTING REMEDY EVENT), AND PROVIDED THAT THE
REQUISITE PURCHASERS HAVE NOT DELIVERED AN APPOINTMENT NOTICE WITHIN 12 MONTHS
PRIOR TO THE DELIVERY OF THE APPOINTMENT NOTICE FOR SUCH NEW OR THEN-EXISTING
REMEDY EVENT, THE REQUISITE PURCHASERS SHALL HAVE THE RIGHT TO DELIVER AN
APPOINTMENT NOTICE TO THE COMPANY.  IN THE EVENT THAT THE REQUISITE PURCHASERS
DELIVER AN APPOINTMENT NOTICE THAT DOES NOT RESULT IN A COMPANY SALE, AND THE
REMEDY EVENT THAT GAVE RISE TO SUCH APPOINTMENT EVENT HAS NOT BEEN CURED WITHIN
TWELVE MONTHS FROM THE DATE OF THE ORIGINAL APPOINTMENT NOTICE, THE REQUISITE
PURCHASERS MAY DELIVER ADDITIONAL APPOINTMENT NOTICE(S) ANY TIME FOLLOWING
TWELVE MONTHS AFTER DELIVERY OF ANY PRIOR APPOINTMENT NOTICE.  AT ANY TIME
WITHIN NINETY (90) DAYS FOLLOWING DELIVERY OF AN APPOINTMENT NOTICE (THE
“REDEMPTION PERIOD”), THE COMPANY MAY ELECT BY DELIVERY OF A REDEMPTION NOTICE
(AS DEFINED IN THE SERIES D PREFERRED STOCK CERTIFICATE OF DESIGNATION) TO THE
PURCHASERS, TO REDEEM (SUBJECT TO EACH PURCHASER’S RIGHT TO CONVERT TO COMMON
STOCK PURSUANT TO SECTION 6 OF THE SERIES D PREFERRED STOCK CERTIFICATE OF
DESIGNATION) ALL, BUT NOT LESS THAN ALL, OF THE SHARES OF SERIES D PREFERRED
STOCK THEN OUTSTANDING IN ACCORDANCE WITH THE TERMS OF SECTION 4A OF THE SERIES
D PREFERRED STOCK CERTIFICATE OF DESIGNATION AND FOLLOWING THE REDEMPTION OF ALL
SUCH SHARES OF SERIES D PREFERRED STOCK IN ACCORDANCE WITH THE SERIES D
PREFERRED STOCK CERTIFICATE OF DESIGNATION THE COMPANY SHALL NO LONGER BE
REQUIRED TO COMPLY WITH THE PROVISIONS OF THIS SECTION 8.7.

(E)           NOTHING IN THIS SECTION 8.7, OR IN THE DEFINITION OF REMEDY EVENT,
SHALL LIMIT OR IMPLY LIMITATION OF ANY OTHER REMEDY, AT LAW OR IN EQUITY,
AVAILABLE TO THE PURCHASERS UNDER THIS AGREEMENT OR THE RELATED DOCUMENTS OR
OTHERWISE, FOR BREACH OF ANY PROVISION OF THIS AGREEMENT, THE SERIES D PREFERRED
STOCK CERTIFICATE OF DESIGNATION, OR ANY RELATED DOCUMENT.

8.8          DEFAULT DIVIDENDS.  (A) IF THE SENIOR FACILITY IS OUTSTANDING, FROM
AND AFTER THE DATE ON WHICH THE COMPANY FAILS TO PAY IN FULL ANY DIVIDENDS,
SERIES D LIQUIDATION PREFERENCE OR SERIES D REDEMPTION PRICE TO THE HOLDERS OF
THE SERIES D PREFERRED STOCK AS AND WHEN DUE AND IN THE FORM REQUIRED TO BE PAID
HEREUNDER OR UNDER THE SERIES D PREFERRED STOCK CERTIFICATE OF DESIGNATION
THROUGH THE END OF THE FISCAL QUARTER IN WHICH SUCH DIVIDEND, SERIES D
LIQUIDATION PREFERENCE OR SERIES D REDEMPTION PRICE PAYMENT IS MADE AND (B) IF
THE SENIOR FACILITY IS NO LONGER OUTSTANDING, FROM AND AFTER THE BEGINNING OF
THE FISCAL QUARTER IN WHICH A REMEDY EVENT OCCURS UNTIL THE END OF THE FISCAL
QUARTER IN WHICH THE REMEDY EVENT IS CURED, IN EACH CASE THE DIVIDEND RATE ON
THE SERIES D PREFERRED STOCK SHALL BE INCREASED IN ACCORDANCE WITH THE SERIES D
PREFERRED STOCK CERTIFICATE OF DESIGNATION.

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8.9          RIGHTS PLAN.  THE COMPANY SHALL CAUSE THE RIGHTS AGENT (AS DEFINED
IN THE RIGHTS PLAN) TO DELIVER RIGHTS CERTIFICATES (AS DEFINED IN THE RIGHTS
PLAN) TO THE HOLDERS OF UNDERLYING COMMON STOCK IF RIGHTS CERTIFICATES ARE OR
HAVE BEEN DELIVERED TO OTHER HOLDERS OF COMMON STOCK.  THE COMPANY SHALL NOT
AMEND THE RIGHTS PLAN IN ANY MANNER WHICH COULD CAUSE ANY PURCHASER TO BECOME AN
“ACQUIRING PERSON” THEREUNDER AS A RESULT OF THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE EXERCISE OF SUCH PURCHASER
OF ITS RIGHTS HEREUNDER, WITHOUT THE PRIOR WRITTEN CONSENT OF THE HOLDERS OF A
MAJORITY OF THE UNDERLYING COMMON STOCK.

8.10        CONFIDENTIALITY.  EACH PURCHASER AGREES THAT SUCH PURCHASER WILL
KEEP CONFIDENTIAL AND WILL NOT DISCLOSE, DIVULGE OR USE FOR ANY PURPOSE, OTHER
THAN TO MONITOR ITS INVESTMENT IN THE COMPANY, ANY CONFIDENTIAL INFORMATION
OBTAINED FROM ANY MEMBER OF THE COMPANY GROUP PURSUANT TO THE TERMS OF THIS
AGREEMENT, UNLESS SUCH CONFIDENTIAL INFORMATION (I) IS KNOWN OR BECOMES KNOWN TO
THE PUBLIC IN GENERAL (OTHER THAN AS A RESULT OF A BREACH OF THIS SECTION 8.10
BY THE PURCHASER), (II) IS OR HAS BEEN INDEPENDENTLY DEVELOPED OR CONCEIVED BY
THE PURCHASER WITHOUT USE OF THE COMPANY’S CONFIDENTIAL INFORMATION OR (III) IS
OR HAS BEEN MADE KNOWN OR DISCLOSED TO THE PURCHASER BY A THIRD PARTY WITHOUT A
BREACH OF ANY OBLIGATION OF CONFIDENTIALITY SUCH THIRD PARTY MAY HAVE TO THE
COMPANY; PROVIDED, HOWEVER, THAT A PURCHASER MAY DISCLOSE CONFIDENTIAL
INFORMATION TO ITS LIMITED PARTNERS AND ADVISORY BOARD, AND ATTORNEYS,
ACCOUNTANTS, CONSULTANTS, AND OTHER PROFESSIONALS TO THE EXTENT NECESSARY TO
OBTAIN THEIR SERVICES IN CONNECTION WITH MONITORING ITS INVESTMENT IN THE
COMPANY, OR AS MAY OTHERWISE BE REQUIRED BY LAW.

ARTICLE IX
INDEMNIFICATION

9.1          SURVIVAL AND INDEMNIFICATION.  THE REPRESENTATIONS AND WARRANTIES
OF THE PURCHASERS AND THE COMPANY CONTAINED HEREIN SHALL SURVIVE FOR A PERIOD OF
EIGHTEEN MONTHS FOLLOWING INITIAL CLOSING (THE “SURVIVAL PERIOD”).  IN
CONSIDERATION OF THE PURCHASERS’ EXECUTION AND DELIVERY OF THIS AGREEMENT AND
ACQUIRING THE SERIES D SHARES AND WARRANTS HEREUNDER AND IN ADDITION TO ALL OF
THE COMPANY’S OTHER OBLIGATIONS UNDER THIS AGREEMENT, THE COMPANY SHALL, AND
SHALL CAUSE THE COMPANY GROUP TO, DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS
THE PURCHASERS AND ALL OF THEIR AFFILIATES, OFFICERS, MANAGERS, ADVISORS,
DIRECTORS, EMPLOYEES AND AGENTS (INCLUDING THOSE RETAINED IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT) (COLLECTIVELY, THE “INDEMNITEES”)
FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, COSTS, PENALTIES, FEES,
LIABILITIES, DAMAGES AND EXPENSES (INCLUDING COSTS OF SUIT AND ALL REASONABLE
ATTORNEYS’ FEES AND EXPENSES) IN CONNECTION THEREWITH (IRRESPECTIVE OF WHETHER
ANY SUCH INDEMNITEE IS A PARTY TO THE ACTION FOR WHICH INDEMNIFICATION HEREUNDER
IS SOUGHT) OR OTHER LIABILITIES, LOSSES, OR DIMINUTION IN VALUE (THE
“INDEMNIFIED LIABILITIES”), INCURRED BY THE INDEMNITEES OR ANY OF THEM AS A
RESULT OF, OR ARISING OUT OF, OR RELATING TO (I) THE BREACH OF ANY
REPRESENTATION OR WARRANTY CONTAINED IN THIS AGREEMENT OR IN ANY RELATED
DOCUMENT, (II) THE BREACH OF ANY PROMISE, AGREEMENT OR COVENANT CONTAINED IN
THIS AGREEMENT OR IN ANY RELATED DOCUMENT, OR (III) THE EXECUTION, DELIVERY,
PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT AND ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED PURSUANT HERETO BY ANY OF THE INDEMNITEES.  THE COMPANY
SHALL, AND SHALL CAUSE THE COMPANY GROUP TO, REIMBURSE THE INDEMNITEES FOR THE
INDEMNIFIED LIABILITIES AS SUCH INDEMNIFIED LIABILITIES ARE INCURRED.  TO THE
EXTENT THAT THE FOREGOING

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UNDERTAKING BY THE COMPANY MAY BE UNENFORCEABLE FOR ANY REASON, THE COMPANY
SHALL, AND SHALL CAUSE THE COMPANY GROUP TO, MAKE THE MAXIMUM CONTRIBUTION TO
THE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED LIABILITIES WHICH IS
PERMISSIBLE UNDER APPLICABLE LAW.  THE INDEMNIFICATION PROVIDED FOR UNDER THIS
AGREEMENT WILL REMAIN IN FULL FORCE AND EFFECT REGARDLESS OF ANY INVESTIGATION
MADE BY OR ON BEHALF OF THE INDEMNITEE OR ANY OFFICER, DIRECTOR OR CONTROLLING
PERSON OF SUCH INDEMNITEE AND WILL SURVIVE THE TRANSFER OF SECURITIES.

ARTICLE X
GENERAL PROVISIONS

10.1        PUBLIC ANNOUNCEMENTS.  NEITHER THE PURCHASERS NOR THE COMPANY SHALL
MAKE, OR PERMIT ANY AGENT OR AFFILIATE TO MAKE, ANY PUBLIC STATEMENTS, INCLUDING
ANY PRESS RELEASES, WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER, EXCEPT AS
MAY BE REQUIRED BY LAW OR THE RULES OF ANY EXCHANGE ON WHICH THE COMPANY’S
SECURITIES MAY BE LISTED OR ANY INTER-DEALER QUOTATION SYSTEM IN WHICH THE
COMPANY’S SECURITIES MAY BE AUTHORIZED TO BE QUOTED.  THE COMPANY AND THE
REQUISITE PURCHASERS SHALL JOINTLY AGREE ON THE CONTENT AND SUBSTANCE OF ALL
PUBLIC ANNOUNCEMENTS CONCERNING THE TRANSACTIONS CONTEMPLATED HEREBY; PROVIDED,
THAT THE PURCHASERS ACKNOWLEDGE THAT THE COMPANY INTENDS TO ISSUE A PRESS
RELEASE ANNOUNCING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AS SOON AS
POSSIBLE AFTER THE INITIAL CLOSING, AND THAT THE COMPANY SHALL FILE A FORM 8-K
DESCRIBING THE TRANSACTION, AND FILING THIS AGREEMENT AND THE RELATED DOCUMENTS
AS EXHIBITS, WITHIN FOUR BUSINESS DAYS OF THE INITIAL CLOSING DATE.

10.2        SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BIND AND INURE TO THE
BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS,
INCLUDING EACH SUBSEQUENT HOLDER OF SECURITIES.  THIS AGREEMENT SHALL NOT BE
ASSIGNABLE BY THE COMPANY WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTIES
HERETO.

10.3        ENTIRE AGREEMENT.  THIS AGREEMENT, THE RELATED DOCUMENTS AND EACH
OTHER WRITING REFERRED TO HEREIN OR DELIVERED PURSUANT HERETO CONSTITUTE THE
ENTIRE AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
SUPERSEDE ALL PRIOR ARRANGEMENTS OR UNDERSTANDINGS.

10.4        NOTICES.  ALL NOTICES, REQUESTS, CONSENTS AND OTHER COMMUNICATIONS
PROVIDED FOR HEREIN SHALL BE IN WRITING AND SHALL BE (I) DELIVERED IN PERSON,
(II) TRANSMITTED BY TELECOPY, (III) SENT BY FIRST-CLASS, REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, OR (IV) SENT BY REPUTABLE OVERNIGHT COURIER SERVICE, FEES
PREPAID, TO THE RECIPIENT AT THE ADDRESS OR TELECOPY NUMBER SET FORTH BELOW, OR
SUCH OTHER ADDRESS OR TELECOPY NUMBER AS MAY HEREAFTER BE DESIGNATED IN WRITING
BY SUCH RECIPIENT.  NOTICES SHALL BE DEEMED GIVEN UPON PERSONAL DELIVERY, SEVEN
DAYS FOLLOWING DEPOSIT IN THE MAIL AS SET FORTH ABOVE, UPON ACKNOWLEDGMENT BY
THE RECEIVING TELECOPIER OR ONE DAY FOLLOWING DEPOSIT WITH AN OVERNIGHT COURIER
SERVICE.

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To the Company, to:

SoftBrands, Inc.

Two Meridian Crossings

Suite 800

Minneapolis, MN 55423

Attention: Gregg A. Waldon

Facsimile:  (612) 851-1901

With a copy, which shall not constitute notice to the Company, to:

Dorsey & Whitney LLP

50 South Sixth Street

Suite 1500

Minneapolis, MN 55402

Attention:  Tom Martin, Esq.

Facsimile No.:  (612) 340-7800

To the Purchasers, to:

The addresses set forth on Schedule I hereto

or, in each case, to such other address or to the attention of such other person
as the recipient party shall have specified by prior written notice to the
sending party.

10.5        PURCHASERS’ FEES AND EXPENSES.  ON THE INITIAL CLOSING DATE, IN
CONSIDERATION FOR THE SERVICES ABRY PERFORMED IN STRUCTURING AND ARRANGING THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE RELATED DOCUMENTS, THE
COMPANY WILL PAY TO ABRY MEZZANINE PARTNERS L.P. (OR ITS AFFILIATE) A
TRANSACTION FEE EQUAL TO $250,000 IN CONNECTION WITH THE PURCHASE AND SALE OF
THE PREFERRED STOCK AND WARRANTS HEREUNDER (THE “CLOSING FEE”), BY WIRE TRANSFER
OF IMMEDIATELY AVAILABLE FUNDS TO AN ACCOUNT INDICATED TO THE COMPANY BY ABRY. 
IN ADDITION, THE COMPANY SHALL REIMBURSE ABRY FOR (I) THE REASONABLE FEES AND
EXPENSES OF KIRKLAND & ELLIS LLP INCURRED BY PURCHASERS IN CONNECTION WITH THE
DOCUMENTATION, NEGOTIATION AND CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT AND THE RELATED DOCUMENTS AND (II) ALL OTHER REASONABLE FEES AND
OUT-OF-POCKET EXPENSES INCURRED BY ABRY IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREUNDER (COLLECTIVELY, “PURCHASER EXPENSES”).  AFTER THE INITIAL
CLOSING DATE, THE COMPANY AGREES TO REIMBURSE THE PURCHASERS FOR ALL FEES AND
EXPENSES (INCLUDING LEGAL FEES OF KIRKLAND & ELLIS LLP) INCURRED IN CONNECTION
WITH ANY FUTURE AMENDMENT TO, WAIVER OF OR THE ENFORCEMENT BY THE PURCHASERS OF
ANY OF THEIR RIGHTS ARISING UNDER THIS AGREEMENT OR ANY OF THE RELATED
DOCUMENTS, OR IN CONNECTION WITH THE REVIEW OF THE COMPANY’S PROXY STATEMENT FOR
ANY MEETING OF THE COMPANY’S STOCKHOLDERS.  IF CRP EXERCISES THE PURCHASE OPTION
WITH RESPECT TO ALL, BUT NOT LESS THAN ALL, OF THE SUBSEQUENT D SHARES AND
SUBSEQUENT D WARRANTS, AT THE SUBSEQUENT CLOSING, THE COMPANY HEREBY AGREES TO
(I) PAY CRP A TRANSACTION FEE EQUAL TO $20,000 (THE “CRP FEE”) BY WIRE TRANSFER
OF IMMEDIATELY AVAILABLE FUNDS TO AN ACCOUNT INDICATED TO THE COMPANY BY CRP AND
(II) TO REIMBURSE CRP FOR THE REASONABLE FEES AND EXPENSES OF CHOATE, HALL &
STEWART INCURRED IN CONNECTION THEREWITH.

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10.6        AMENDMENT AND WAIVER.  NO AMENDMENT OR WAIVER OF ANY PROVISION OF
THIS AGREEMENT SHALL BE EFFECTIVE, UNLESS THE SAME SHALL BE IN WRITING AND
SIGNED BY THE COMPANY AND THE HOLDERS OF A MAJORITY OF THE UNDERLYING COMMON
STOCK OUTSTANDING AT THE TIME SUCH AMENDMENT OR WAIVER IS PROPOSED; PROVIDED,
THAT THE AMENDMENT OR WAIVER OF ANY PROVISION OF THIS AGREEMENT THAT
DISPROPORTIONATELY AFFECTS THE RIGHTS OF ANY PURCHASER IN AN ADVERSE MANNER
RELATIVE TO ANY OTHER PURCHASER SHALL REQUIRE THE CONSENT OF SUCH ADVERSELY
AFFECTED PURCHASER.  NO SUCH WAIVER SHALL OPERATE AS A WAIVER OF, OR ESTOPPEL
WITH RESPECT TO, ANY SUBSEQUENT OR OTHER FAILURE.  NO FAILURE BY ANY PARTY TO
TAKE ANY ACTION AGAINST ANY BREACH OF THIS AGREEMENT OR DEFAULT BY ANY OTHER
PARTY SHALL CONSTITUTE A WAIVER OF SUCH PARTY’S RIGHT TO ENFORCE ANY PROVISION
HEREOF OR TO TAKE ANY SUCH ACTION.

10.7        COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE AN ORIGINAL, BUT ALL OF WHICH
TOGETHER SHALL CONSTITUTE ONE AGREEMENT.  ANY PARTY HERETO MAY EXECUTE THIS
AGREEMENT BY FACSIMILE SIGNATURE AND THE OTHER PARTIES HERETO WILL BE ENTITLED
TO RELY UPON SUCH FACSIMILE SIGNATURE AS CONCLUSIVE EVIDENCE THAT THIS AGREEMENT
HAS BEEN DULY EXECUTED BY SUCH PARTY.

10.8        HEADINGS; CONSTRUCTION.  THE HEADINGS OF THE VARIOUS SECTIONS OF
THIS AGREEMENT HAVE BEEN INSERTED FOR REFERENCE ONLY AND SHALL NOT BE DEEMED TO
BE A PART OF THIS AGREEMENT OR ANY RELATED DOCUMENT.

10.9        SPECIFIC PERFORMANCE.  THE COMPANY, ON THE ONE HAND, AND THE
PURCHASERS, ON THE OTHER HAND, ACKNOWLEDGE THAT MONEY DAMAGES WOULD NOT BE A
SUFFICIENT REMEDY FOR ANY BREACH OF THIS AGREEMENT.  IT IS ACCORDINGLY AGREED
THAT THE PARTIES SHALL BE ENTITLED TO SPECIFIC PERFORMANCE AND INJUNCTIVE RELIEF
AS REMEDIES FOR ANY SUCH BREACH, THESE REMEDIES BEING IN ADDITION TO ANY OF THE
REMEDIES TO WHICH THEY MAY BE ENTITLED AT LAW OR EQUITY.

10.10      REMEDIES CUMULATIVE.  EXCEPT AS OTHERWISE PROVIDED HEREIN, THE
REMEDIES PROVIDED HEREIN SHALL BE CUMULATIVE AND SHALL NOT PRECLUDE THE
ASSERTION BY ANY PARTY HERETO OF ANY OTHER RIGHTS OR THE SEEKING OF ANY OTHER
REMEDIES AGAINST ANY OTHER PARTY HERETO.

10.11      GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED IN
ACCORDANCE WITH, AND ENFORCED UNDER, THE LAW OF THE STATE OF DELAWARE APPLICABLE
TO AGREEMENTS OR INSTRUMENTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN SUCH
STATE.

10.12      JURISDICTION, WAIVER OF JURY TRIAL, ETC.

(A)           EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AGREES THAT THE
ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
SERIES D SHARES, WARRANTS, CONVERSION SHARES OR WARRANT SHARES OR ANY AGREEMENTS
OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE BROUGHT IN THE COURTS OF
THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK AND HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION
AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM
OF

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IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM.  EACH
PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS
SET FORTH IN SECTION 10.4, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH
MAILING.

(B)           EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, THE SERIES D SHARES, WARRANTS, CONVERSION SHARES OR WARRANT SHARES OR
ANY OF THE RELATED DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER
OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE COMPANY (I) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE PURCHASERS HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE PURCHASERS WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (II) ACKNOWLEDGES THAT THE
PURCHASERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS TO WHICH THEY ARE PARTY BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

10.13      NO THIRD PARTY BENEFICIARIES.  EXCEPT AS SPECIFICALLY SET FORTH OR
REFERRED TO HEREIN, NOTHING HEREIN IS INTENDED OR SHALL BE CONSTRUED TO CONFER
UPON ANY PERSON OR ENTITY OTHER THAN THE PARTIES HERETO AND THEIR SUCCESSORS OR
ASSIGNS, ANY RIGHTS OR REMEDIES UNDER OR BY REASON OF THIS AGREEMENT.

10.14      SEVERABILITY.  IF ANY TERM, PROVISION, COVENANT OR RESTRICTION OF
THIS AGREEMENT IS HELD BY A COURT OF COMPETENT JURISDICTION TO BE INVALID, VOID
OR UNENFORCEABLE, THE REMAINDER OF THE TERMS, PROVISIONS, COVENANTS AND
RESTRICTIONS OF THIS AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT AND SHALL
IN NO WAY BE AFFECTED, IMPAIRED OR INVALIDATED.

10.15      TIME OF THE ESSENCE; COMPUTATION OF TIME.  TIME IS OF THE ESSENCE FOR
EACH AND EVERY PROVISION OF THIS AGREEMENT.  WHENEVER THE LAST DAY FOR THE
EXERCISE OF ANY PRIVILEGE OR THE DISCHARGE OR ANY DUTY HEREUNDER SHALL FALL UPON
A BUSINESS DAY, THE PARTY HAVING SUCH PRIVILEGE OR DUTY MAY EXERCISE SUCH
PRIVILEGE OR DISCHARGE SUCH DUTY ON THE NEXT SUCCEEDING BUSINESS DAY.

10.16      CONSIDERATION FOR PREFERRED STOCK AND WARRANTS.  EACH OF THE
PURCHASERS AND THE COMPANY ACKNOWLEDGE AND AGREE THAT (I) (A) THE FAIR MARKET
VALUE OF THE WARRANTS PURCHASED AT THE INITIAL CLOSING SHALL EQUAL $166,000, AND
(B) THE FAIR MARKET VALUE OF ANY SHARES OF PREFERRED STOCK ISSUED AT INITIAL
CLOSING HEREUNDER IS THE AGGREGATE LIQUIDATION VALUE FOR THE SHARES OF PREFERRED
STOCK ISSUED AT THE INITIAL CLOSING MINUS THE AGGREGATE VALUE OF THE WARRANTS
ISSUED AT THE INITIAL CLOSING AND (II) (A) THE FAIR MARKET VALUE OF THE WARRANTS
PURCHASED AT THE SUBSEQUENT CLOSING SHALL EQUAL $34,000, AND (III) THE FAIR
MARKET VALUE OF ANY SHARES OF PREFERRED STOCK ISSUED AT THE SUBSEQUENT CLOSING
HEREUNDER IS THE AGGREGATE LIQUIDATION VALUE FOR THE SHARES OF PREFERRED STOCK
ISSUED AT THE SUBSEQUENT CLOSING MINUS THE AGGREGATE VALUE OF THE WARRANTS
ISSUED AT THE SUBSEQUENT CLOSING.  EACH PURCHASER AND THE COMPANY SHALL FILE
THEIR

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RESPECTIVE FEDERAL, STATE AND LOCAL TAX RETURNS IN A MANNER WHICH IS CONSISTENT
WITH SUCH VALUATION AND ALLOCATION AND SHALL NOT TAKE ANY CONTRARY POSITION WITH
ANY TAXING AUTHORITY.

 

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IN WITNESS WHEREOF, the parties have caused their duly authorized officers to
execute this Series D Convertible Preferred Stock and Warrant Purchase Agreement
as of the date first above written.

SOFTBRANDS, INC.

 

 

 

 

 

 

 

 

 

By:

 

/s/ GREGG A. WALDON

 

 

 

 

Name: Gregg A. Waldon

 

 

 

Title: CFO

 

 

 

 

 

 

 

 

 

ABRY MEZZANINE PARTNERS, L.P.

 

 

 

 

 

By:

 

ABRY MEZZANINE INVESTORS, L.P.,

 

 

 

Its General Partner

 

 

 

 

 

 

 

 

 

By:

 

ABRY MEZZANINE HOLDINGS LLC,

 

 

 

Its General Partner

 

 

 

 

 

 

 

 

 

By:

 

/s/ JOHN HUNT

 

 

 

 

Name: John Hunt

 

 

 

Title: Partner

 

 

 

 

 

 

 

 

 

solely for the purpose of Section 3.2 hereof,

 

 

 

 

 

CAPITAL RESOURCE PARTNERS IV, L.P.,

 

 

 

 

 

By:

 

CRP PARTNERS IV, L.L.C.,

 

 

 

its General Partner

 

 

 

 

 

 

 

 

 

By:

 

/s/ ALEXANDER MCGRATH

 

 

 

 

Name: Alexander McGrath

 

 

 

Title: Managing Member

 

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