Unassociated Document


    EXHIBIT
      10.1

    


    SECURITIES
      PURCHASE AGREEMENT

     

    THIS
      SECURITIES PURCHASE AGREEMENT
      (the
“Agreement”),
      is
      dated as of October 19, 2007, by and among Intelligentias, Inc., a Nevada
      corporation (the “Company”)
      and
      the investors listed on Exhibit
      A
      hereto
      (each an “Investor”
and
      collectively, the “Investors”).
      

     

    BACKGROUND

     

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

    


    B. The
      Investors wish, severally, and not jointly, to purchase, and the Company wishes
      to sell and issue to the Investors, upon the terms and subject to the conditions
      stated in this Agreement, (i) an aggregate of up to 12,500,000 shares of the
      Company’s Series A Preferred Stock, par value $0.0001 per share (“Preferred
      Stock”),
      which
      will be convertible into shares (“Conversion
      Shares”)
      of the
      Company’s Common Stock (as hereinafter defined) at the Rate of Conversion (as
      hereinafter defined), and which will have the rights, preferences and privileges
      set forth in the form of Certificate of Designation attached hereto as
Exhibit
      B
      (the
“Certificate
      of Designation”);
      (ii)
      warrants to purchase an aggregate of up to 6,250,000 shares of Common Stock
      at a
      price per share of $1.25 (the “Market
      Warrants”)
      in the
      form attached hereto as Exhibit
      C;
      and
      (iii) warrants to purchase an aggregate of up to 5,000,000 shares of Common
      Stock at a price per share of $1.80 (the “Premium
      Warrants”)
      in the
      form attached hereto as Exhibit
      D.

     

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

     

    ARTICLE
      I

    DEFINITIONS

     

    1.1 Definitions.
      In
      addition to the terms defined elsewhere in this Agreement, the following terms
      have the meanings indicated:

     

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

     

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Best
      Efforts”
means
      the efforts that a prudent person desirous of achieving a result would use
      in
      similar circumstances to ensure that such result is achieved as expeditiously
      as
      practical.

     

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

     

    “Certificate
      of Designation”
has
      the
      meaning set forth in the Background.

    


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

     

    “Closing
      Date”
means
      the date and time of the Closing and shall be on such date and time as is
      mutually agreed to by the Company and each Investor.

     

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

     

    “Company
      Counsel”
      means
      Greenberg
      Traurig, LLP,
      counsel
      to the Company.

     

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

     

    “Conversion
      Price”
means,
      initially, $0.80 per share, subject to the anti-dilution adjustment set forth
      in
      Section 6.4 of the Certificate of Designation.

     

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

    


    “Covering
      Shares”
has
      the
      meaning set forth in Section
      4.1(b).
      

    


    “Disclosure
      Materials”
has
      the
      meaning set forth in Section 3.1(g).

     

    “Effective
      Date”
means
      the date that the Registration Statement is first declared effective by the
      SEC.

     

    “Effectiveness
      Period”
has
      the
      meaning set forth in Section 6.1(b).

     

    “Environmental
      Laws”
has
      the
      meaning set forth in Section
      3.1(r).
      

     

    “Equity
      Securities”
has
      the
      meaning set forth in Section 7.1.

    


    “Event”
has
      the
      meaning set forth in Section 6.1(d).

     

    “Event
      Payments”
has
      the
      meaning set forth in Section 6.1(d).

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    “Excluded
      Securities”
has
      the
      meaning set forth in Section 7.5.

     

    “Filing
      Date”
means
      thirty (30)
      days
      after the Closing Date.

    


    “GAAP”
has
      the
      meaning set forth in Section
      3.1(g).
      

     

    “Hazardous
      Materials”
has
      the
      meaning set forth in Section
      3.1(r).

     

    “Indemnified
      Party”
has
      the
      meaning set forth in Section 6.4(c).

     

    “Indemnifying
      Party”
has
      the
      meaning set forth in Section 6.4(c).

     

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

    


    “Intellectual
      Property”
means
      any and all patents, patent applications, trademarks, trademark applications,
      trade names, service marks, copyrights, copyright applications, licenses,
      know-how (including trade secrets and other unpatented and/or unpatentable
      proprietary or confidential information, systems, or procedures) and other
      similar rights and proprietary knowledge.

     

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

    


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

     

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

     

    “Lock-Up
      Agreements”
has
      the
      meaning set forth in Section
      5.1(c).

     

    “Losses”
means
      any and all losses, claims, damages, liabilities, settlement costs and expenses,
      including, without limitation, reasonable attorneys’ fees.

    


    “Market
      Warrants”
      has
      the
      meaning set forth in the Background.

     

    “Material
      Adverse Effect”
means
      (i) a material adverse effect on the results of operations, prospects, assets,
      business or financial condition of the Company and the Subsidiaries, taken
      as a
      whole on a consolidated basis, or (ii) materially and adversely impair the
      Company’s ability to perform its obligations under any of the Transaction
      Documents.

     

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

    


    “Person”
means
      any individual, corporation, limited liability company, partnership, joint
      venture, trust, incorporated or unincorporated association, joint stock company,
      unincorporated organization, or a government or any department or agency
      thereof.

     

    “Plan
      of Distribution”
has
      the
      meaning set forth in Section
      6.1(a).

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    “Preferred
      Stock”
has
      the
      meaning set forth in the Background.

    


    “Premium
      Warrants”
has
      the
      meaning set forth in the Background.

    


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

     

    “Prospectus”
means
      the prospectus included in the Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A
      promulgated under the Securities Act), as amended or supplemented by any
      prospectus supplement, with respect to the terms of the offering of any portion
      of the Registrable Securities covered by the Registration Statement, and all
      other amendments and supplements to the Prospectus including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

     

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

    


    “Purchase
      Rights”
has
      the
      meaning set forth in Section
      7.1.

    


    “Purchasing
      Investors”
has
      the
      meaning set forth in Section
      7.2(b).

    


    “Rate
      of Conversion”
means
      the number of shares of Common Stock into which each share of Preferred Stock
      may be converted, as determined by dividing (i) the original purchase price
      of
      $0.80 per share by (ii) the Conversion Price.

    


    “Registrable
      Securities”
means
      the
      Conversion Shares and the Warrant Shares issued or issuable pursuant to the
      Transaction Documents,
      together with any securities issued or issuable upon any stock split, dividend
      or other distribution, recapitalization or similar event with respect to the
      foregoing.

     

    “Registration
      Statement”
means
      each registration statement required to be filed under Article VI,
      including (in each case) the Prospectus, amendments and supplements to such
      registration statement or Prospectus, including pre- and post-effective
      amendments, all exhibits thereto, and all material incorporated by reference
      or
      deemed to be incorporated by reference in such registration
      statement.

     

    “Regulation
      D”
has
      the
      meaning set forth in the Background. 

     

    “Required
      Effectiveness Date”
means
      the
      date
      which is one hundred and eighty (180) days after the Closing Date.

     

    “Resale
      Registration Statement”
has
      the
      meaning set forth in Section
      6.1(e).

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

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

     

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

    


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

     

    “Securities”
means,
      collectively, the Preferred Stock, the Conversion
      Shares,
      the
      Warrants and the Warrant Shares.

     

    “Securities
      Act”
has
      the
      meaning set forth in the Background. 

     

    “Staff”
has
      the
      meaning set forth in Section
      6.1(e).

    


    “Subsidiary”
means
      any direct
      or
      indirect subsidiary of the Company.

     

    “Trading
      Day”
means
      (a) any day on which the Securities are listed or quoted and traded on their
      primary Trading Market, or (b) if trading ceases to occur on any Trading Market,
      any Business Day.

     

    “Trading
      Market”
      means
      the
      over-the-counter market or any national securities exchange,
      market or trading or quotation facility on which the Common Stock or Preferred
      Stock is then listed or quoted.

     

    “Transaction
      Documents”
means
      this Agreement, the schedules and exhibits attached hereto, the Warrants, the
      Certificate of Designation, and the Transfer Agent Instructions.

     

    “Transfer
      Agent”
means
      Holladay Stock Transfer, Inc. or
      any
      successor transfer agent for the Company.

     

    “Transfer
      Agent Instructions”
means,
      with respect to the Company, the Irrevocable Transfer Agent Instructions, in
      the
      form of Exhibit F,
      executed by the Company and delivered to and acknowledged in writing by the
      Transfer Agent.

     

    “Warrants”
means,
      collectively, the Market Warrants and the Premium Warrants.

    


    “Warrant
      Shares”
means
      the issuance of Common Stock to be issued upon exercise of the
      Warrants.

     

    ARTICLE
      II

    PURCHASE
      AND SALE

    


    2.1 Purchase
      and Sale of the Preferred Stock and Warrants.
      Subject
      to the terms and conditions of this Agreement, each of the Investors hereby
      severally, and not jointly, agrees to purchase, and the Company hereby agrees
      to
      sell and issue to each of the Investors, the number of shares of Preferred
      Stock
      and Warrants set forth opposite such Investor’s name on Exhibit
      A
      for the
      aggregate purchase price (the “Purchase
      Price”)
      set
      forth opposite such Investor’s name on Exhibit
      A.


    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    2.2 Closing.
      At
      Closing, the Company shall deliver to the Investors (a) the Preferred Stock
      and
      Warrants, registered in the names of the Investors as indicated on Exhibit
      A;
      (b)
evidence
      of filing of the Certificate of Designation, in the form provided on
Exhibit
      B,
      with
      the State of Nevada; (c) executed Transfer Agent Instructions in the form
      provided on Exhibit
      F;
      (d)
      a legal
      opinion from Company Counsel in the form set forth on Exhibit
      G;
      (e)
      evidence of notification of
      filing
      with each applicable Trading
      Market of
      an
      additional shares listing application covering all of the Registrable
      Securities; (f) Lock-up Agreements in the form set forth on Exhibit
      H
      with all
      executives and directors of the Company;
      and (g)
      a certificate, in the form set forth on Exhibit
      I,
      executed by the secretary of the Company and dated as of the Closing Date,
      as to
      the Articles of Incorporation, by-laws, foreign qualification, and good standing
      of the Company and the resolutions adopted by the Company’s Board of Directors
      authorizing the transactions contemplated by the Transaction Documents. The
      Investors shall deliver the Purchase Price to the Company by wire transfer
      of
      immediately available funds to the account specified by the Company in writing,
      subject to the execution and delivery of such other documents contemplated
      hereby on or prior to the Closing. 

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to the Investors on and as of the date
      hereof as follows (which representations and warranties shall be deemed to
      apply, where appropriate, to each Subsidiary of the Company):

     

    (a) Subsidiaries.
      The
      Company has no Subsidiaries other than those listed in Schedule 3.1(a)
      hereto.
      Except as disclosed in Schedule 3.1(a)
      hereto,
      the Company owns, directly or indirectly, all of the capital stock or comparable
      equity interests of each Subsidiary free and clear of any Lien and all the
      issued and outstanding shares of capital stock or comparable equity interest
      of
      each Subsidiary are validly issued and are fully paid, non-assessable and free
      of preemptive and similar rights. 

     

    (b) Organization
      and Qualification.
      Each of
      the Company and, except as would not have a Material Adverse Effect, its
      Subsidiaries is an entity duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its incorporation or organization (as
      applicable), with the requisite legal authority to own or lease and use its
      properties and assets and to carry on its business as currently conducted.
      Neither the Company nor any Subsidiary is in violation of any of the provisions
      of its respective certificate or articles of incorporation, bylaws or other
      organizational or charter documents. Each of the Company and the Subsidiaries
      is
      duly qualified to do business and is in good standing as a foreign corporation
      or other entity in each jurisdiction in which the nature of the business
      conducted or property owned by it makes such qualification necessary, except
      where the failure to be so qualified or in good standing, as the case may be,
      would not, individually or in the aggregate, reasonably be expected to result
      in
      a Material Adverse Effect.

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (c) Authorization;
      Enforcement.
      The
      Company has the requisite corporate authority to enter into and to consummate
      the transactions contemplated by each of the Transaction Documents to which
      it
      is a party and otherwise to carry out its obligations hereunder and thereunder.
      The execution and delivery of each of the Transaction Documents by the Company
      and the consummation by it of the transactions contemplated hereby and thereby
      have been duly authorized by all necessary corporate action on the part of
      the
      Company and no further consent or action is required by the Company, its
      officers, its Board of Directors or its stockholders. Each of the Transaction
      Documents to which it is a party has been (or upon delivery will be) duly
      executed by the Company and is, or when delivered in accordance with the terms
      hereof, will constitute, the valid and binding obligation of the Company
      enforceable against the Company in accordance with its terms, except as may
      be
      limited by (i) applicable bankruptcy, insolvency, reorganization or other
      laws of general application relating to or affecting the enforcement of
      creditors rights generally; and (ii) the effect of rules of law governing
      the availability of specific performance and other equitable remedies.


    


    (d) No
      Conflicts.
      The
      execution, delivery and performance by the Company of the Transaction Documents
      to which it is a party and the consummation by the Company of the transactions
      contemplated hereby and thereby do not, and will not, (i) conflict with or
      violate any provision of the Company’s or any Subsidiary’s certificate or
      articles of incorporation, bylaws or other organizational or charter documents;
      (ii) conflict with, or constitute a default (or an event that with notice
      or lapse of time or both would become a default) under, or give to others any
      rights of termination, amendment, acceleration or cancellation (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other
      instrument (evidencing a Company or Subsidiary debt or otherwise) or other
      understanding to which the Company or any Subsidiary is a party or by which
      any
      property or asset of the Company or any Subsidiary is bound or affected; or
      (iii) result in a violation of any law, rule, regulation, order, judgment,
      injunction, decree or other restriction of any court or governmental authority
      to which the Company or a Subsidiary is subject (including federal and state
      securities laws and regulations and the rules and regulations of any
      self-regulatory organization to which the Company or its securities are subject,
      including all applicable Trading Markets), or by which any property or asset
      of
      the Company or a Subsidiary is bound or affected, except, in the case of clause
      (ii) or (iii), to the extent that such conflict or violation would not
      reasonably be expected to have a Material Adverse Effect.

     

    (e) The
      Securities.
      The
      Securities are duly authorized and, when issued and paid for in accordance
      with
      the Transaction Documents, will be duly and validly issued, fully paid and
      nonassessable, free and clear of all Liens and will not be subject to preemptive
      rights, rights of first refusal, or similar rights of stockholders (other than
      those imposed by the Investors). The Company has reserved from its duly
      authorized capital stock the maximum number of shares of Common Stock issuable
      upon exercise of the Warrants and conversion of the Preferred Stock. The offer,
      issuance and sale of the Securities to the Investors pursuant to the Agreement,
      in the case of the Conversion Shares, pursuant to the Certificate of
      Designation, and in the case of the Warrant Shares, pursuant to the Warrants,
      are exempt from the registration requirements of the Securities
      Act.

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (f) Capitalization.
      Just
      prior to Closing, the aggregate number of shares and type of all authorized,
      issued and outstanding classes of capital stock, options and other securities
      of
      the Company (whether or not presently convertible into or exercisable or
      exchangeable for shares of capital stock of the Company) consists of (i)
      300,000,000 authorized shares of Common Stock, par value $0.0001 per share,
      with
      114,555,468 shares of Common Stock outstanding; (ii) 200,000,000 shares of
      blank
      check preferred stock, with no shares outstanding; (iii) 12,781,250 shares
      of
      Common Stock, on a diluted basis, reserved for issuance upon the exercise of
      outstanding warrants; and (iv) 2,000,000 shares of Common Stock, on a diluted
      basis, reserved for issuance upon the exercise of outstanding employee stock
      options. All outstanding shares of capital stock are duly authorized, validly
      issued, fully paid and nonassessable and have been issued in compliance with
      all
      applicable securities laws and regulations. Except as disclosed in this
Section
      3.1(f),
      the
      Company does not have outstanding any other options, warrants, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities, rights or obligations convertible into or exercisable or
      exchangeable for, or entered into any agreement giving any Person any right
      to
      subscribe for or acquire, any shares of Preferred Stock or Common Stock, or
      securities or rights convertible or exchangeable into shares of Preferred Stock
      or Common Stock. Except as set forth on Schedule
      3.1(f)
      hereto
      or in the SEC Reports, there are no anti-dilution or price adjustment provisions
      contained in any security issued by the Company (or in any agreement providing
      rights to security holders) and the issuance and sale of the Securities will
      not
      obligate the Company to issue shares of Common Stock or other securities to
      any
      Person (other than the Investors) and will not result in a right of any holder
      of securities to adjust the exercise, conversion, exchange or reset price under
      such securities. To the knowledge of the Company, except as disclosed in
Schedule
      3.1(f)
      hereto,
      no Person or group of related Persons beneficially owns (as determined pursuant
      to Rule 13d-3 under the Exchange Act) or has the right to acquire, by agreement
      with or by obligation binding upon the Company, beneficial ownership of in
      excess of five percent (5%) of the outstanding Common Stock.

     

    (g) SEC
      Reports; Financial Statements.
      Except
      as set forth on Schedule
      3.1(g),
      the
      Company has filed all reports required to be filed by it under Exchange Act
      Sections 13(a) or 15(d), or has received a valid extension of such time of
      filing and has filed any such SEC Reports prior to the expiration of any such
      extension. Such reports required to be filed by the Company under the Exchange
      Act, including pursuant to Section 13(a) or 15(d) thereof, together with any
      materials filed or furnished by the Company under the Exchange Act, whether
      or
      not any such reports were required being collectively referred to herein as
      the
“SEC
      Reports”
and,
      together with this Agreement and the Schedules to this Agreement, the
“Disclosure
      Materials”.
      Except
      as otherwise disclosed in later dated SEC Reports, as of their respective dates,
      or to the extent corrected by a subsequent restatement filed with the SEC,
      the
      SEC Reports filed by the Company complied as to form in all material respects
      with the requirements of the Exchange Act and the rules and regulations of
      the
      SEC promulgated thereunder, and none of the SEC Reports, when filed by the
      Company, contained any untrue statement of a material fact or omitted to state
      a
      material fact required to be stated therein or necessary in order to make the
      statements therein, in the light of the circumstances under which they were
      made, not misleading. Except as otherwise disclosed in later dated SEC Reports,
      the financial statements of the Company included in the SEC Reports comply
      as to
      form in all material respects with applicable accounting requirements and the
      rules and regulations of the SEC with respect thereto as in effect at the time
      of filing. Except as otherwise disclosed in later dated SEC Reports, such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements, the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP or may be condensed or summary statements, and fairly
      present in all material respects the consolidated financial position of the
      Company and its consolidated Subsidiaries taken as a whole as of and for the
      dates thereof and the results of operations and cash flows for the periods
      then
      ended, subject, in the case of unaudited statements, to normal, year-end audit
      adjustments. All material agreements to which the Company or any Subsidiary
      is a
      party or to which the property or assets of the Company or any Subsidiary are
      subject are included as part of or identified in the SEC Reports, to the extent
      such agreements are required to be included or identified pursuant to the rules
      and regulations of the SEC.

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    (h) No
      Change.
      Since
      the date of the latest unaudited financial statements included within the SEC
      Reports, except as disclosed in Schedule
      3.1(h)
      hereto,
      (i) there has been no event, occurrence or development that, individually
      or in the aggregate, has had or that would reasonably be expected to result
      in a
      Material Adverse Effect; (ii) the Company has not incurred any liabilities
      other than (A) trade payables, accrued expenses and other liabilities
      incurred in the ordinary course of business consistent with past practice,
      (B) liabilities not required to be reflected in the Company’s financial
      statements pursuant to GAAP or required to be disclosed in filings made with
      the
      SEC, and (C) other liabilities that would not, individually or in the aggregate,
      have a Material Adverse Effect; (iii) the Company has not altered its
      method of accounting or the changed its auditors, except as disclosed in its
      SEC
      Reports; (iv) the Company has not declared or made any dividend or
      distribution of cash or other property to its stockholders, in their capacities
      as such, or purchased, redeemed or made any agreements to purchase or redeem
      any
      shares of its capital stock (except for repurchases by the Company of shares
      of
      capital stock held by employees, officers, directors, or consultants pursuant
      to
      an option of the Company to repurchase such shares upon the termination of
      employment or services); and (v) the Company has not issued any equity
      securities to any officer, director or Affiliate, except pursuant to existing
      Company stock-based plans. The Company has not taken any steps to seek
      protection pursuant to any bankruptcy law nor does the Company believe that
      its
      creditors intend to initiate involuntary bankruptcy Proceedings or any actual
      knowledge of any fact which would reasonably lead a creditor to do so. The
      Company is not Insolvent (as hereinafter defined) as of the date hereof, and
      will not be Insolvent after giving effect to the transactions contemplated
      hereby to occur at the applicable Closing. For purposes of this Section 3.1(h),
      “Insolvent”
means
      (i) the present fair saleable value of the Company’s assets is less than the
      amount required to pay the Company’s total indebtedness, (ii) the Company is
      unable to pay its debts and liabilities, subordinated, contingent or otherwise,
      as such debts and liabilities become absolute and matured or (iii) the Company
      has unreasonably small capital with which to conduct the business in which
      it is
      engaged as such business is now conducted and is proposed to be
      conducted.


    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    (i) Obligations
      to Related Parties.
      Except
      as set forth in Schedule
      3.1(i),
      there
      are no arrangements which would be required to be disclosed by Item 404 of
      Regulation S-B under the Securities Act except as disclosed in the SEC Reports.
      

    


    (j)  Title
      to Properties and Assets.
      Each of
      the Company and its Subsidiaries has good and valid title to all of the
      properties and assets reflected as owned in the Company’s financial statements,
      free and clear of all Liens, mortgages (statutory or otherwise), security
      interests, pledges, claims or encumbrances except those, if any, disclosed
      in
      the Company’s financial statements and except as would not have a Material
      Adverse Effect. Each of the Company and its Subsidiaries holds its leased
      properties under valid and binding leases, with such exceptions as are not
      materially significant in relation to the business of the Company or the
      Subsidiary. Each of the Company and its Subsidiaries owns or leases all of
      the
      properties which, to its knowledge, are necessary to its operations as now
      conducted.

    


    (k)  Intellectual
      Property.
      Except
      as set forth in Schedule
      3.1(k),
      each of
      the Company and its Subsidiaries owns or possesses adequate and enforceable
      rights to use all Intellectual Property used or necessary for the conduct of
      its
      business as now being conducted, proposed to be conducted, and as described
      in
      the Company’s SEC Reports. To the Company’s knowledge, neither the Company nor
      any Subsidiary of the Company infringes on or is in conflict with any right
      of
      any other person with respect to any Intellectual Property nor is there any
      claim of infringement made by a third party against or involving the Company
      or
      any of its Subsidiaries, which infringement, conflict or claim, individually
      or
      in the aggregate, if the subject of an unfavorable decision, ruling or finding,
      would have a Material Adverse Effect. None of the Intellectual Property used
      in
      the Company’s business is expected to expire or terminate within two (2) years
      from the date of this Agreement, except where such expiration or termination
      would not result, either individually or in the aggregate, in a Material Adverse
      Effect. The Company and its Subsidiaries have taken reasonable security measures
      to protect the secrecy, confidentiality and value of all of their Intellectual
      Property. The Company has never agreed to indemnify any person for or against
      any interference. infringement, misappropriation or other conflict with respect
      to any Intellectual Property, except as would not have a Material Adverse
      Effect. To the Company’s knowledge, none of the key employees of the Company are
      obligated under any contract (including, without limitation, licenses,
      covenants, or commitments of any, nature) or other agreement, or subject to
      any
      judgment, decree, or order of any court or administrative agency, that would
      interfere with the use of his or her reasonable diligence to promote the
      interests of the Company or that would conflict with the Company’s business as
      presently conducted, except as would not have a Material Adverse Effect.



    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    (l) Compliance
      with Other Instruments.
      Except
      as would not have a Material Adverse Effect, the Company is not in violation
      or
      default of any provision of any mortgage, indenture, contract, agreement,
      instrument or contract to which it is party or by which it is bound or of any
      judgment, decree, order or writ. None of the Company’s Subsidiaries is in
      violation or default of any provision of any material mortgage, indenture,
      contract, agreement, instrument or contract to which it is party or by which
      it
      is bound or of any judgment, decree, order or writ. 

    


    (m)  Litigation.
      Except
      as disclosed in Schedule
      3.1(m),
      there
      is no Proceeding pending or, to the Company’s knowledge, currently threatened
      against the Company or any Subsidiary that questions the validity of this
      Agreement, or the Transaction Documents, or the right of the Company to enter
      into any of such agreements or to consummate the transactions contemplated
      hereby or thereby, or which might result, either individually or in the
      aggregate, in any material adverse change in the assets, condition, affairs
      or
      prospects of the Company or any Subsidiary, financially or otherwise, or any
      change in the current equity ownership of the Company or any Subsidiary, nor
      is
      the Company aware that there is any basis for any of the foregoing. The
      foregoing includes, without limitation, actions pending or, to the Company’s
      knowledge, threatened involving the prior employment of any of the employees
      of
      the Company or any Subsidiary, their use in connection with the business of
      the
      Company or any Subsidiary of any information or techniques allegedly proprietary
      to any of their former employers, or their obligations under any agreements
      with
      prior employers. Except as disclosed in Schedule
      3.1(m),
      neither
      the Company nor any Subsidiary is a party or subject to the provisions of any
      material order, writ, injunction, judgment or decree of any court or government
      agency or instrumentality. There is no material Proceeding by the Company or
      any
      Subsidiary currently pending or which the Company or any Subsidiary intends
      to
      initiate.

    


    (n) Labor
      Matters.
      The
      Company and its Subsidiaries are in compliance in all respects with all federal,
      state, local and foreign laws and regulations respecting labor, employment
      and
      employment practices and benefits, terms and conditions of employment and wages
      and hours, except where failure to be in compliance would not, either
      individually or in the aggregate, reasonably be expected to result in a Material
      Adverse Effect.

    


    (o) Key
      Employees.
      Neither
      the Company nor any of its Subsidiaries has collective bargaining agreements
      with any of its employees. There is no labor union organizing activity pending
      or, to the Company’s knowledge, threatened with respect to the Company or any
      Subsidiary. Except as disclosed on Schedule
      3.1(o),
      neither
      the Company nor any of its Subsidiaries is a party to or bound by any currently
      effective employment contract, consulting agreement, deferred compensation
      arrangement, bonus plan, incentive plan, profit sharing plan, retirement
      agreement or other employee compensation plan or agreement. 

    


    (p) Registration
      Rights and Voting Rights.
      Except
      as required pursuant Article
      VI
      of this
      Agreement and as disclosed in Schedule
      3.1(p),
      the
      Company is presently not under any obligation, and has not granted any rights,
      to register any of the Company’s presently outstanding securities or any of its
      securities that may hereafter be issued. To the Company’s knowledge, except as
      disclosed in Schedule
      3.1(p),
      no
      stockholder of the Company has entered into any agreement with respect to the
      voting of equity securities of the Company.


    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    (q) Compliance
      with Laws; Permits.
      Neither
      the Company nor any of its Subsidiaries is in violation of any applicable
      statute, rule, regulation, order or restriction of any domestic or foreign
      government or any instrumentality or agency thereof, in respect of the conduct
      of its business or the ownership of its properties which violation would have
      a
      Material Adverse Effect. Except as disclosed in Schedule
      3.1(q),
      no
      governmental orders, permissions, consents, approvals or authorizations are
      required to be obtained and no registrations or declarations are required to
      be
      filed in connection with the execution and delivery of this Agreement and the
      issuance of the Securities, the issuance of the Conversion Shares pursuant
      to
      the Certificate of Designation, or issuance of the Warrant Shares upon exercise
      of the Warrants, except such as has been duly and validly obtained or filed,
      or
      with respect to any filings that must be made after the Closing, as will be
      filed in a timely manner. Except as disclosed in Schedule
      3.1(q),
      each of
      the Company and is Subsidiaries possess
      all certificates, authorizations and permits issued by the appropriate federal,
      state, local or foreign regulatory authorities necessary to conduct their
      respective businesses as described in the SEC Reports (“Material
      Permits”),
      except where the failure to possess such permits is not, individually or in
      the
      aggregate, reasonably be expected to result in a Material Adverse Effect, and
      neither the Company nor any Subsidiary has received any written notice of
      Proceedings relating to the revocation or modification of any Material
      Permit.

    


    (r) Environmental
      and Safety Laws.
      The
      Company and its Subsidiaries (i) are in compliance in all respects with any
      and
      all Environmental Laws (as hereinafter defined); (ii) have received all
      permits, licenses or other approvals required of them under applicable
      Environmental Laws to conduct their respective businesses; and (iii) are in
      compliance in all respects with all terms and conditions of any such permit,
      license or approval where, in each of the foregoing clauses (i), (ii) and (iii),
      the failure to so comply would be reasonably expected to have, individually
      or
      in the aggregate, a Material Adverse Effect. The term “Environmental
      Laws”
means
      all federal, state, local or foreign laws relating to pollution or protection
      of
      human health or the environment (including, without limitation, ambient air,
      surface water, groundwater, land surface or subsurface strata), including,
      without limitation, laws relating to emissions, discharges, releases or
      threatened releases of chemicals, pollutants, contaminants, or toxic or
      hazardous substances or wastes (collectively, “Hazardous
      Materials”)
      into
      the environment, or otherwise relating to the manufacture, processing,
      distribution, use, treatment, storage, disposal, transport or handling of
      Hazardous Materials, as well as all authorizations, codes, decrees, demands
      or
      demand letters, injunctions, judgments, licenses, notices or notice letters,
      orders, permits, plans or regulations issued, entered, promulgated or approved
      thereunder.

    


    (s) Offering
      Valid.
      Assuming the accuracy of the representations and warranties of the Investors
      contained in Section
      3.2
      hereof,
      the offer, sale and issuance of the Preferred Stock, the Warrants, and the
      Warrant Shares will be exempt from the registration requirements of the
      Securities Act, and will have been registered or qualified (or are exempt from
      registration and qualification) under the registration, permit or qualification
      requirements of all applicable state securities laws. Neither the Company nor
      any agent on its behalf has solicited or will solicit any offers to sell or
      has
      offered to sell or will offer to sell all or any part of the Securities to
      any
      person or persons so as to bring the sale of such Securities by the Company
      within the registration provisions of the Securities Act or any state securities
      laws.


    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    (t) Private
      Placement.
      Neither
      the Company, nor any of its Affiliates, nor any Person acting on its or their
      behalf, has engaged in any form of general solicitation or general advertising
      (within the meaning of Regulation D) in connection with the offer or sale
      of the Securities. Neither the Company nor any of its Affiliates nor, any Person
      acting on the Company’s behalf has, directly or indirectly, at any time within
      the past six months, made any offer or sale of any security or solicitation
      of
      any offer to buy any security under circumstances that would (i) eliminate
      the availability of the exemption from registration under Regulation D in
      connection with the offer and sale by the Company of the Securities as
      contemplated hereby or (ii) cause the offering of the Securities pursuant
      to the Transaction Documents to be integrated with prior offerings by the
      Company for purposes of any applicable law, regulation or stockholder approval
      provisions, including, without limitation, under the rules and regulations
      of
      any Trading Market in a manner which would require any stockholder or other
      approval. 

    


    (u) Insurance.
      The
      Company maintains insurance of the types and in the amounts it deems adequate
      for its business covering all risks customarily insured against, provided
      that the
      Company has a general directors and officers liability insurance policy with
      coverage customary for companies similarly situated to the Company.

    


    (v)  Illegal
      Payments.
      The
      Company and its Subsidiaries have not, and to the best knowledge of the Company,
      no director, officer, agent or employee of the Company or any of its
      Subsidiaries has paid, caused to be paid, or agreed to pay, directly or
      indirectly, in connection with the business of the Company (i) to any government
      or agency thereof, any agent or any supplier or customer, any bribe, kickback
      or
      other similar payment; (ii) any contribution to any political party or candidate
      (other than from personal funds of directors. officers or employees not
      reimbursed by their respective employers or as otherwise permitted by applicable
      law; or (iii) intentionally established or maintained any unrecorded fund or
      asset or made any false entries on any books or records for any
      purpose.

    


    (w)  Transfer
      Taxes.
      On the
      Closing Date, all stock transfer or other taxes (other than income taxes)
      required to be paid in connection with the sale and transfer of the Shares
      to be
      sold to the Purchasers hereunder will be, or will have been, fully paid or
      provided for by the Company, and all laws imposing such taxes will be or will
      have been complied with fully.

    


    (x) Placement
      Agent’s Fees.
      The
      Company is not, directly or indirectly, obligated to pay any placement agent’s
      fees, financial advisory fees, or brokers’ commission (other than for persons
      engaged by any Investor or its investment advisor) relating to or arising out
      of
      the execution, delivery or performance of the Transaction Documents or issuance
      of the Securities. The Company shall pay, and hold each Investor harmless
      against, any liability, loss or expense (including, without limitation,
      reasonable attorney’s fees and out-of-pocket expenses) arising in connection
      with any such claim for fees arising out of the issuance of the Securities
      pursuant to this Agreement. 

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    (y) Application
      of Takeover Protections.
      Except
      as described in Schedule
      3.1(y),
      there
      is no control share acquisition, business combination, poison pill (including
      any distribution under a rights agreement) or other similar anti-takeover
      provision under
      the
      Company’s charter documents or the laws of its state of incorporation or
      otherwise, that is or could become applicable to any of the Investors as a
      result of the Investors and the Company fulfilling their obligations or
      exercising their rights under the Transaction Documents, including, without
      limitation, as a result of the Company’s issuance of the Securities and the
      Investors’ ownership of the Securities.

     

    (z) Disclosure.
      All
      disclosure provided by the Company to the Investors regarding the Company,
      its
      business and the transactions contemplated hereby, including the Schedules
      to
      this Agreement, furnished by or on the behalf of the Company are true and
      correct in all material respects and do not contain any untrue statement of
      a
      material fact or omit to state any material fact necessary in order to make
      the
      statements made therein, in the light of the circumstances under which they
      were
      made, not misleading. To the Company’s knowledge, except for the transactions
      contemplated by this Agreement, no event or circumstance has occurred or
      information exists with respect to the Company or any of its Subsidiaries or
      its
      or their business, properties, operations or financial condition, which, under
      applicable law, rule or regulation, required public disclosure or announcement
      by the Company prior to the date hereof but which has not been so publicly
      announced or disclosed. The Company acknowledges and agrees that no Investor
      makes or has made any representations or warranties with respect to the
      transactions contemplated hereby other than those set forth in the Transaction
      Documents. 

     

    (aa) Acknowledgment
      Regarding Investors’ Purchase of Securities.
      Based
      upon the assumption that the transactions contemplated by this Agreement are
      consummated in all material respects in conformity with the Transaction
      Documents, the Company acknowledges and agrees it has been advised that each
      of
      the Investors is acting solely in the capacity of an arm’s length purchaser with
      respect to the Transaction Documents and the transactions contemplated hereby
      and thereby. The Company further acknowledges that no Investor is acting as
      a
      financial advisor or fiduciary of the Company (or in any similar capacity)
      with
      respect to this Agreement and the transactions contemplated hereby and any
      advice given by any Investor or any of their respective representatives or
      agents in connection with the Transaction Documents and the transactions
      contemplated hereby and thereby is merely incidental to the Investors’ purchase
      of the Securities. The Company further represents to each Investor that the
      Company’s decision to enter into this Agreement has been based solely on the
      independent evaluation of the transactions contemplated hereby by the Company
      and its representatives. 

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    (bb) Internal
      Accounting Controls.
      The
      Company and the Subsidiaries maintain a system of internal accounting controls
      sufficient to provide reasonable assurance that (i) transactions are
      executed in accordance with management’s general or specific authorizations,
      (ii) transactions are recorded as necessary to permit preparation of
      financial statements in conformity with generally accepted accounting principles
      and to maintain asset accountability, (iii) access to assets is permitted
      only in accordance with management’s general or specific authorization, and
      (iv) the recorded accountability for assets is compared with the existing
      assets at reasonable intervals and appropriate action is taken with respect
      to
      any differences.

    


    (cc) Sarbanes-Oxley
      Act.
      Except
      as disclosed in SEC Reports, the Company is in compliance in all material
      respects with applicable requirements of the Sarbanes-Oxley Act of 2002 and
      applicable rules and regulations promulgated by the SEC thereunder, except
      where
      such noncompliance would not have, individually or in the aggregate, a Material
      Adverse Effect.

     

    (dd)  Tax
      Status.
      Except
      as disclosed in Schedule
      3.1(dd),
      the
      Company and each of its Subsidiaries (i) has made or filed all foreign, federal,
      state and local income and all other tax returns, reports and declarations
      required by any jurisdiction to which it is subject, to the extent the final
      deadlines for which were on or before the date hereof; (ii) has paid all taxes
      and other governmental assessments and charges that are material in amount,
      shown or determined to be due on such returns, reports and declarations, except
      those being contested in good faith; and (iii) has set aside on its books
      provision reasonably adequate for the payment of all taxes for periods
      subsequent to the periods to which such returns, reports or declarations apply.
      

    


    (ee) Investment
      Company.
      The
      Company is not now, and after the sale of the Securities under the Transaction
      Documents and the application of net proceeds from the sale of the Securities
      described in Section
      4.6
      herein
      will not be, an “investment company” within the meaning of the Investment
      Company Act of 1940, as amended.

    


    3.2 Representations,
      Warranties and Covenants of the Investors.
      Each
      Investor hereby, as to itself only and for no other Investor, represents,
      warrants and covenants to the Company as follows:

     

    (a) Organization;
      Authority.
      Such
      Investor is an entity duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization with the requisite
      corporate, partnership or other power and authority to enter into and to
      consummate the transactions contemplated by the Transaction Documents and
      otherwise to carry out its obligations hereunder and thereunder. The purchase
      by
      such Investor of the Securities hereunder has been duly authorized by all
      necessary corporate, partnership or other action on the part of such Investor.
      This Agreement has been duly executed and delivered by such Investor and
      constitutes the valid and binding obligation of such Investor, enforceable
      against it in accordance with its terms, except as may be limited by
      (i) applicable bankruptcy, insolvency, reorganization or other laws of
      general application relating to or affecting the enforcement of creditors rights
      generally, and (ii) the effect of rules of law governing the availability
      of specific performance and other equitable remedies.

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    (b) No
      Public Sale or Distribution.
      Such
      Investor is (i) acquiring the Preferred Stock and the Warrants and
      (ii) upon exercise of the Warrants will acquire the Warrant Shares issuable
      upon exercise thereof, not with a view towards, or for resale in connection
      with, the public sale or distribution thereof, except pursuant to sales
      registered under the Securities Act or under an exemption from such registration
      and in compliance with applicable federal and state securities laws, and such
      Investor does not have a present arrangement to effect any distribution of
      the
      Securities to or through any person or entity; provided,
      however,
      that by
      making the representations herein, such Investor does not agree to hold any
      of
      the Securities for any minimum or other specific term and reserves the right
      to
      dispose of the Securities at any time in accordance with or pursuant to a
      registration statement or an exemption under the Securities Act. 

     

    (c) Investor
      Status.
      At the
      time such Investor was offered the Securities, it was, and at the date hereof
      it
      is, an “accredited investor” as defined in Rule 501(a) under the Securities Act
      or a “qualified institutional buyer” as defined in Rule 144A(a) under the
      Securities Act. 

     

    (d) Experience
      of Such Investor.
      Such
      Investor, either alone or together with its representatives, has such knowledge,
      sophistication and experience in business and financial matters so as to be
      capable of evaluating the merits and risks of the prospective investment in
      the
      Securities, and has so evaluated the merits and risks of such investment. Such
      Investor understands that it must bear the economic risk of this investment
      in
      the Securities indefinitely, and is able to bear such risk and is able to afford
      a complete loss of such investment.

     

    (e) Access
      to Information.
      Such
      Investor acknowledges that it has had access to the Disclosure Materials and
      information about the Company and the Subsidiaries and their respective
      financial condition, results of operations, business, properties, management
      and
      prospects sufficient to enable it to evaluate its investment. No information,
      inquiry, or investigation conducted by or on behalf of such Investor or its
      representatives or counsel shall modify, amend or affect such Investor’s right
      to rely on the truth, accuracy and completeness of the Disclosure Materials
      and
      the Company’s representations and warranties contained in the Transaction
      Documents. 

    


    (f) Restricted
      Securities.
      The
      Investors understand that the Securities are characterized as “restricted
      securities” under the U.S. federal securities laws inasmuch as they are being
      acquired from the Company in a transaction not involving a public offering
      and
      that under such laws and applicable regulations such securities may be resold
      without registration under the Securities Act only in certain limited
      circumstances.


    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    (g) Short
      Sales.
      No
      Investor, directly or indirectly, and no Person acting on behalf of any
      Investor, has engaged in any purchases or sales of any securities, including
      any
      derivatives, of the Company (including, without limitation, any Short Sales
      involving any of the Company’s securities) since the time that such Investor was
      first contacted by the Company regarding the sale of Securities as contemplated
      under the Transaction Documents. “Short Sales” include, without limitation, all
“short sales” as defined in Rule 200 promulgated under Regulation SHO under the
      Exchange Act and all types of direct and indirect stock pledges, forward sale
      contracts, options, puts, calls, short sales, swaps, derivatives and similar
      arrangements (including on a total return basis), and sales and other
      transactions through non-U.S. broker-dealers or foreign regulated
      brokers.

    


    (h) Legends.
      It is
      understood that, except as provided in Section
      4.1(b)
      of this
      Agreement, certificates evidencing such Securities may bear the legend set
      forth
      in Section
      4.1(b).

     

    ARTICLE
      IV

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1 Transfer
      Restrictions.

    


    (a) The
      Investors covenant that the Securities will only be disposed of pursuant to
      an
      effective registration statement under, and in compliance with the requirements
      of, the Securities Act or pursuant to an available exemption from the
      registration requirements of the Securities Act, and in compliance with any
      applicable state securities laws. In connection with any transfer of Securities
      other than pursuant to an effective registration statement or to the Company,
      or
      pursuant to Rule 144(k), the Company may require the transferor to provide
      to
      the Company an opinion of counsel selected by the transferor, the form and
      substance of which opinion shall be reasonably satisfactory to the Company,
      to
      the effect that such transfer does not require registration under the Securities
      Act. Notwithstanding the foregoing, the Company hereby consents to and agrees
      to
      register on the books of the Company and with its Transfer Agent, without any
      such legal opinion, except to the extent that the Transfer Agent requests such
      legal opinion, any transfer of Securities by an Investor to an Affiliate of
      such
      Investor, provided
      that the
      transferee certifies to the Company that it is an “accredited investor,” as
      defined in Rule 501(a) under the Securities Act, and provided
      that
      such Affiliate does not request any removal of any existing legends on any
      certificate evidencing the Securities.

     

    (b) The
      Investors agree to the imprinting, so long as is required by this Section 4.1(b),
      of the
      following legend on any certificate evidencing any of the Securities:


    


    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE
      OFFERED OR SOLD 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
      COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. 

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    Certificates
      evidencing Securities shall not be required to contain such legend or any other
      legend (i) while a registration statement (including the Registration Statement)
      covering the resale of the Securities is effective under the Securities Act;
      (ii) following any sale of such Securities pursuant to Rule 144
      if
      the
      holder provides the Company with a legal opinion reasonably acceptable to the
      Company to the effect that the Securities can be sold under Rule 144; (iii)
      if
      the Securities
      are eligible for sale under Rule 144(k); or (iv) if the
      holder provides the Company with a legal opinion reasonably acceptable to the
      Company to the effect that the
      legend
      is not required under applicable requirements of the Securities Act (including
      controlling judicial interpretations and pronouncements issued by the staff
      of
      the SEC). Subject to receipt of the undertaking referred to above, the Company
      shall use its Best Efforts to cause its counsel to issue the legal opinion
      included in the Transfer Agent Instructions to the Transfer Agent on the
      Effective Date. Following the Effective Date or at such earlier time as a legend
      is no longer required for certain Securities, the Company will no later than
      three
      (3)
      Trading Days following the delivery by an Investor to the Company or the
      Transfer Agent of (i) a legended certificate representing such Securities,
      and
      (ii) an opinion of counsel to the extent required by Section
      4.1(a),
      deliver
      or cause to be delivered to such Investor a certificate representing such
      Securities that is free from the legend referred to above. The Company may
      not
      make any notation on its records or give instructions to the Transfer Agent
      that
      enlarge the restrictions on transfer set forth in this Section.

     

    If
      within
three
      (3)
      Trading Days after the Company’s receipt of a legended certificate and the other
      documents as specified in clauses (i) and (ii) of the paragraph immediately
      above, the Company shall fail to issue and deliver to such Investor a
      certificate representing such Securities that is free from the legend referred
      to above, and if on or after such third Trading Day the Investor purchases
      (in
      an open market transaction) shares of Common Stock to deliver in satisfaction
      of
      a sale by the Investor of shares of Common Stock that the Investor anticipated
      receiving from the Company without any restrictive legend (the “Covering
      Shares”),
      then
      the Company shall, within three
      (3)
      Trading Days after the Investor’s
      request,
      pay cash
      to the Investor in an amount equal to the excess
      (if any) of the Investor’s
      total
      purchase price (including reasonable brokerage commissions, if any) for the
      Covering Shares,
      over the
      product of (A) the number of Covering Shares, times (B) the closing sale
      price
      on the
      date of delivery of such certificate.

    


    (c) The
      Company will not object to and shall permit (except as prohibited by law) an
      Investor to pledge or grant a security interest in some or all of the Securities
      in connection with a bona fide margin agreement or other loan or financing
      arrangement secured by the Securities, and if required under the terms of such
      agreement, loan or arrangement, the Company will not object to and shall permit
      (except as prohibited by law) such Investor to transfer pledged or secured
      Securities to the pledges or secured parties. Except as required by law, such
      a
      pledge or transfer would not be subject to approval of the Company, no legal
      opinion of the pledgee, secured party or pledgor shall be required in connection
      therewith, and no notice shall be required of such pledge. Each Investor
      acknowledges that the Company shall not be responsible for any pledges relating
      to, or the grant of any security interest in, any of the Securities or for
      any
      agreement, understanding or arrangement between any Investor and its pledgee
      or
      secured party. At the appropriate Investor’s expense, the Company will execute
      and deliver such reasonable documentation as a pledgee or secured party of
      Securities may reasonably request in connection with a pledge or transfer of
      the
      Securities, including the preparation and filing of any required prospectus
      supplement under Rule 424(b)(3) of the Securities Act or other applicable
      provision of the Securities Act to appropriately amend the list of selling
      stockholders thereunder. Provided that the Company is in compliance with the
      terms of this Section
      4.1(c),
      the
      Company’s indemnification obligations pursuant to Section
      6.4
      shall
      not extend to any Proceeding or Losses arising out of or related to this
Section
      4.1(c).

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    4.2 Furnishing
      of Information.
      During
      the time the Registration Statement is required to be effective, the Company
      covenants to timely file (or obtain extensions in respect thereof and file
      within the applicable grace period) all reports required to be filed by the
      Company after the date hereof pursuant to the Exchange Act. 

     

    4.3 Integration.
      The
      Company shall not, and shall use its commercially reasonably efforts to ensure
      that no Affiliate thereof shall, sell, offer for sale or solicit offers to
      buy
      or otherwise negotiate in respect of any security (as defined in Section 2
      of the Securities Act) that would be integrated with the offer or sale of the
      Securities in a manner that would require the registration under the Securities
      Act of the sale of the Securities to the Investors or that would be integrated
      with the offer or sale of the Securities for purposes of the rules and
      regulations of any Trading Market.

     

    4.4 Reservation
      of Securities.
      The
      Company shall maintain a reserve from its duly authorized shares of Common
      Stock
      for issuance pursuant to the Transaction Documents in such amount as may be
      required to fulfill its obligations to issue Conversion Shares and Warrant
      Shares under the Transaction Documents. In the event that at any time the then
      authorized shares of Common Stock are insufficient for the Company to satisfy
      its obligations to issue such Conversion Shares and Warrant Shares under the
      Transaction Documents, the Company shall promptly take such actions as may
      be
      required to increase the number of authorized shares.

     

    4.5 Use
      of
      Proceeds.
      The
      Company intends to use the net proceeds from the sale of the Securities for
      working capital and general corporate purposes.

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    ARTICLE
      V

    CONDITIONS
      AND COVENANTS

     

    5.1 Conditions
      Precedent to the Obligations of the Investors.
      The
      obligation of each Investor to acquire Securities at the Closing is subject
      to
      the satisfaction or waiver by such Investor, at or before the Closing, of each
      of the following conditions:

     

    (a) Representations
      and Warranties.
      The
      representations and warranties of the Company contained herein shall be true
      and
      correct in all material respects (other than those representations and
      warranties that are qualified by materiality or Material Adverse Effect
      qualifiers, which shall be true and correct in all respects) as of the date
      when
      made and as of the Closing as though made on and as of such date; 

     

    (b) Performance.
      The
      Company and each other Investor shall have performed, satisfied and complied
      in
      all material respects with all covenants, agreements and conditions required
      by
      the Transaction Documents to be performed, satisfied or complied with by it
      at
      or prior to the Closing;
      and

    


    (c) Lock-Up
      Agreements.
      Lock-up
      agreements, in the form attached as Exhibit
      H
      shall
      have been put in place covering all shares of Common Stock held by Company
      executive officers and directors (the “Lock-Up
      Agreements”).
      The
      lock-up restrictions in such Lock-Up Agreements will be released only after
      one
      hundred eighty (180) days following the Effective Date of the Registration
      Statement referred to in Section
      6.1(b)
      below.

    


    (d) Payment
      of Expenses.
      The
      Company shall pay, in accordance with Section
      8.2,
      the
      reasonable fees, expenses and disbursements of Ropes & Gray LLP, as counsel
      to the Investors. 

     

    5.2 Conditions
      Precedent to the Obligations of the Company.
      The
      obligation of the Company to sell the Securities at the Closing is subject
      to
      the satisfaction or waiver by the Company, at or before the Closing, of each
      of
      the following conditions:

    


    (a) Representations
      and Warranties.
      The
      representations and warranties of the Investors contained herein shall be true
      and correct in all material respects as of the date when made and as of the
      Closing Date as though made on and as of such date; and

     

    (b) Performance.
      The
      Investors shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by the Transaction
      Documents to be performed, satisfied or complied with by the Investors at or
      prior to the Closing.

    


    5.3
      Covenants
      of the Company.
      The
      Company hereby covenants as follows:

    


    (a) Observation
      Rights.
      So long
      as Investors own a majority of the shares of Preferred Stock acquired hereunder,
      at any time that the Investors do not choose to designate a director to serve
      on
      the Board of Directors of the Company pursuant to Section 2 of the Certificate
      of Designation, Investors will be entitled to designate one individual as an
      observer to attend all meetings of the Board of Directors and to receive all
      information provided to the directors. The Company will reimburse all costs
      associated with the attendance of the meetings of the Board of Directors, or
      any
      committees thereof, by any director or observer designated by the Investors.
      


    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    (b) NASDAQ
      Listing.
      If
      requested by the Investors, the Company will use its Best Efforts to list its
      shares for trading on the NASDAQ Global Market, NASDAQ Global Select Market,
      or
      NASDAQ Capital Market (or any other exchange specified by the Investors) as
      promptly as practicable, including using its Best Efforts to take all action
      necessary to meet, and maintain compliance, with all qualifications for such
      listing. 

     

    ARTICLE
      VI

    REGISTRATION
      RIGHTS 

     

    6.1 Registration
      Statement.

     

    (a) As
      soon
      as practicable but in no event later than the Filing Date, the Company shall
      prepare and file with the SEC a Registration Statement covering the resale
      of
      all Registrable Securities for an offering to be made on a continuous basis
      pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except
      if
      the Company is not then eligible to register for resale the Registrable
      Securities on Form S-3, in which case such registration shall be on another
      appropriate form in accordance with the Securities Act and the Exchange Act)
      and
      shall contain (except if otherwise directed by the Investors or requested by
      the
      SEC) the “Plan
      of Distribution”
in
      substantially the form attached hereto as Exhibit E.

     

    (b) The
      Company shall use its reasonable Best Efforts to cause the Registration
      Statement to be declared effective by the SEC as promptly as practical after
      the
      filing thereof, but in any event prior to the Required Effectiveness Date,
      and
      shall use its reasonable Best Efforts to keep the Registration Statement
      continuously effective under the Securities Act for all Registrable Securities
      until the date that all Conversion Shares and Warrant Shares covered by such
      Registration Statement have been sold or can be sold publicly under Rule 144
      on
      a single day (the “Effectiveness
      Period”).

    


    (c) The
      Company shall notify the Investors in writing promptly (and in any event within
      two (2) Trading Days) after receiving notification from the SEC that the
      Registration Statement has been declared effective.

     

    (d) Should
      an
      Event (as defined below) occur, then upon the occurrence of such Event, and
      on
      every monthly anniversary thereof for fifteen (15) months or until the
      applicable Event is cured, whichever is longer, as relief for the damages
      suffered therefrom by the Investors (the parties hereto agreeing that the
      liquidated damages provided for in this Section
      6.1(d)
      constitute a reasonable estimate of the damages that may be incurred by the
      Investors by reason of the Event and that such liquidated damages represent
      the
      exclusive monetary remedy for the Investors for damages suffered due to an
      Event), the Company shall pay to each Investor an amount in cash, as liquidated
      damages and not as a penalty, equal to one and a half percent (1.5%) of the
      aggregate Purchase Price paid by such Investor hereunder, subject to a cap
      of
      twenty-two and a half percent (22.5%) (provided
      that, to
      the extent an Event occurs with respect to only a portion of the Registrable
      Securities, the Event Payments with respect to such Event shall be reduced
      proportionately to the portion of Registrable Securities with regard to which
      no
      Event has occurred). The payments to which an Investor shall be entitled
      pursuant to this Section 6.1(d)
      are
      referred to herein as “Event
      Payments.”
Any
      Event Payments payable pursuant to the terms hereof shall apply on a pro rated
      basis for any portion of a month prior to the cure of an Event. In the event
      the
      Company fails to make Event Payments in a timely manner, such Event Payments
      shall bear interest at the rate of one percent (1.0%) per month (prorated for
      partial months) until paid in full. All pro rated calculations made pursuant
      to
      this Section
      6.1
      shall be
      based upon the actual number of days in such pro rated month. 

     

    For
      such
      purposes, each of the following shall constitute an “Event”:

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    (i) the
      Registration Statement is not filed on or prior to the Filing Date or is not
      declared effective on or prior to the Required Effectiveness Date; 

     

    (ii) the
      Registration Statement is not kept continuously effective under the Securities
      Act during the Effectiveness Period;

     

    (iii) the
      exercise rights of the Investors pursuant to the Warrants are
      suspended.

     

    (e) Notwithstanding
      anything to the contrary contained in this Agreement, if the staff of the SEC
      (the “Staff”)
      or the
      SEC seeks to characterize any offering pursuant to a Registration Statement
      filed pursuant to this Agreement as constituting a primary offering of
      securities by or on behalf of the Company, or in any other manner, such that
      the
      Staff or the SEC does not permit such Registration Statement to become effective
      and used for resales in a continuous at the market offering pursuant to Rule
      415
      under the Securities Act by the Investors (or as otherwise may be acceptable
      to
      each Investor) without being named therein as “underwriters” (a “Resale
      Registration Statement”),
      and
      the Company has used its Best Efforts to contest such determination, and as
      a
      result the Company is not able to register all of the Registrable Securities,
      but is able to register at least eighty percent (80%) of the Registrable
      Securities, then no Event shall be deemed to have accrued as a result of such
      failure. If any reduction in the number of Registrable Securities included
      in a
      Registration Statement is made pursuant to this Section
      6.1(e),
      then an
      affected Investor shall have the right, upon delivery of a written request
      to
      the Company signed by the Investor, to require the Company to file a Resale
      Registration Statement under Rule 415 within ninety (90) days after its receipt
      of such request (subject to any restrictions imposed by Rule 415 or required
      by
      the Staff or the SEC) for resale by such Investor in a manner reasonably
      acceptable to such Investor, and the Company shall, following such request,
      use
      its Best Efforts to cause such registration statement to be declared and kept
      effective in the same manner as otherwise contemplated in this Agreement for
      registration statements hereunder, in each case for a period equal to that
      specified in Section
      6.1(b)
      herein
      (it being understood that the special demand right under this sentence may
      be
      exercised by a Investor multiple times and with respect to limited amounts
      of
      Registrable Securities to the extent limitations are required in order to permit
      the resale thereof by such Investor pursuant to a Resale Registration Statement
      as contemplated above); and the Company shall otherwise use its Best Efforts
      to
      satisfy the registration rights set forth in Sections
      6.1
      through
6.8
      herein
      as promptly as practicable. 


    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    (f) The
      Company shall not, from the date hereof until the Effective Date of the
      Registration Statement, prepare and file with the SEC a registration statement
      relating to an offering for cash for its own account, or for the account of
      any
      other person, under the Securities Act of any of its equity securities,
other
      than any registration statement or post-effective amendment to a registration
      statement (or supplement thereto) relating to the Company’s employee benefit
      plans registered on Form S-8. 

    


    (g) The
      Company may require each Investor to provide such information regarding such
      Investor as may be required under the Securities Act to effect the registration
      contemplated hereunder.

     

    6.2 Registration
      Procedures.
      In
      connection with the Company’s registration obligations hereunder, the Company
      shall:

     

    (a) (i) Prepare
      and file with the SEC such amendments, including post-effective amendments,
      to
      each Registration Statement and the Prospectus used in connection therewith
      as
      may be necessary to keep the Registration Statement continuously effective,
      as
      to the applicable Registrable Securities for the Effectiveness Period and
      prepare and file with the SEC such additional Registration Statements in order
      to register for resale under the Securities Act all of the Registrable
      Securities during the Effectiveness Period; (ii) cause the related
      Prospectus to be amended or supplemented by any required Prospectus supplement,
      and as so supplemented or amended to be filed pursuant to Rule 424;
      (iii) respond as promptly as reasonably practical, and in any event within
      ten (10) Trading Days (except to the extent that the Company reasonably requires
      additional time to respond to accounting comments), to any comments received
      from the SEC with respect to the Registration Statement or any amendment
      thereto; and (iv) comply in all material respects with the provisions of
      the Securities Act and the Exchange Act applicable to the Company with respect
      to the disposition of all Registrable Securities covered by the Registration
      Statement during the applicable period in accordance with the intended methods
      of disposition by the Investors thereof set forth in the Registration Statement
      as so amended or in such Prospectus as so supplemented.

     

    (b) Notify
      the Investors as promptly as reasonably practical, and confirm such notice
      in
      writing no later than two (2) Trading Days thereafter, of any of the following
      events: (i) any Registration Statement or any post-effective amendment is
      declared effective; (ii) the SEC issues any stop order suspending the
      effectiveness of any Registration Statement or initiates any Proceedings for
      that purpose; (iii) the Company receives notice of any suspension of the
      qualification or exemption from qualification of any Registrable Securities
      for
      sale in any jurisdiction, or the initiation or threat of any Proceeding for
      such
      purpose; or (iv) the financial statements included in any Registration
      Statement become ineligible for inclusion therein or any Registration Statement
      or Prospectus or other document contains any untrue statement of a material
      fact
      or omits to state any material fact required to be stated therein or necessary
      to make the statements therein, in the light of the circumstances under which
      they were made, not misleading.

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

    (c) Use
      its
      reasonable Best Efforts to avoid the issuance of or, if issued, obtain the
      withdrawal of (i) any order suspending the effectiveness of any
      Registration Statement, or (ii) any suspension of the qualification (or
      exemption from qualification) of any of the Registrable Securities for sale
      in
      any jurisdiction, as soon as possible.

     

    (d) If
      requested by an Investor, promptly provide such Investor, without charge, at
      least one conformed copy of each Registration Statement and each amendment
      thereto, including financial statements and schedules, and all exhibits to
      the
      extent requested by such Person (including those previously furnished or
      incorporated by reference) promptly after the filing of such documents with
      the
      SEC.

    


    (e) Promptly
      deliver to each Investor, without charge, as many copies of the Prospectus
      or
      Prospectuses (including each form of prospectus) and each amendment or
      supplement thereto as such Persons may reasonably request. The Company hereby
      consents to the use of such Prospectus and each amendment or supplement thereto
      by each of the selling Investors in connection with the offering and sale of
      the
      Registrable Securities covered by such Prospectus and any amendment or
      supplement thereto to the extent permitted by federal and state securities
      laws
      and regulations.

     

    (f) Prior
      to
      any public offering of Registrable Securities, use its reasonable Best Efforts
      to register or qualify or cooperate with the selling Investors in connection
      with the registration or qualification (or exemption from such registration
      or
      qualification) of such Registrable Securities for offer and sale under the
      securities or Blue Sky laws of such jurisdictions within the United States
      as
      any Investor requests in writing, to keep each such registration or
      qualification (or exemption therefrom) effective for so long as required, but
      not to exceed the duration of the Effectiveness Period, and to do any and all
      other acts or things reasonably necessary or advisable to enable the disposition
      in such jurisdictions of the Registrable Securities covered by a Registration
      Statement; provided,
      however,
      that
      the Company shall not be obligated to file any general consent to service of
      process or to qualify as a foreign corporation or as a dealer in securities
      in
      any jurisdiction in which it is not so qualified or to subject itself to
      taxation in respect of doing business in any jurisdiction in which it is not
      otherwise so subject.

     

    (g) Cooperate
      with the Investors to facilitate the timely preparation and delivery of
      certificates representing Registrable Securities to be delivered to a transferee
      pursuant to a Registration Statement, which certificates shall be free, to
      the
      extent permitted by this Agreement and under law, of all restrictive legends,
      and to enable such Registrable Securities to be in such denominations and
      registered in such names as any such Investors may reasonably
      request.

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    (h) Promptly
      upon the occurrence of any event described in Section
      6.1(d),
      prepare a supplement or amendment, including a post-effective amendment, to
      the
      Registration Statement or a supplement to the related Prospectus or any document
      incorporated or deemed to be incorporated therein by reference, and file any
      other required document so that, as thereafter delivered, neither the
      Registration Statement nor such Prospectus will contain an untrue statement
      of a
      material fact or omit to state a material fact required to be stated therein
      or
      necessary to make the statements therein, in the light of the circumstances
      under which they were made, not misleading.

     

    (i) Comply
      with all rules and regulations of the SEC applicable to the Company in
      connection with the registration of the Securities.

    


    (j) The
      Company shall comply with all applicable rules and regulations of the SEC under
      the Securities Act and the Exchange Act, including, without limitation, Rule
      172
      under the Securities Act, file any final Prospectus, including any supplement
      or
      amendment thereof, with the SEC pursuant to Rule 424 under the Securities Act,
      promptly inform the Holders in writing if, at any time during the Effectiveness
      Period, the Company does not satisfy the conditions specified in Rule 172 and,
      as a result thereof, the Holders are required to make available a Prospectus
      in
      connection with any disposition of Registrable Securities and take such other
      actions as may be reasonably necessary to facilitate the registration of the
      Registrable Securities hereunder.

     

    6.3 Registration
      Expenses.
      The
      Company shall pay all fees and expenses incident to the performance of or
      compliance with Article VI
      of this
      Agreement, but excluding underwriting discounts and commissions of the
      Investors, including without limitation (a) all registration and filing
      fees and expenses, including without limitation those related to filings with
      the SEC, any Trading Market and in connection with applicable state securities
      or Blue Sky laws, (b) printing expenses (including without limitation
      expenses of printing certificates for Registrable Securities),
      (c) messenger, telephone and delivery expenses incurred by the Company,
      (d) fees and disbursements of counsel for the Company, (e) fees and
      expenses of all other Persons retained by the Company in connection with the
      consummation of the transactions contemplated by this Agreement, (f) reasonable
      fees and expenses of one special counsel for the Investors; and (g) all
      listing fees to be paid by the Company to the Trading Market.

     

    6.4 Indemnification

     

    (a) Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Investor, the officers, directors, partners, members, agents
      and employees of each of them, each Person who controls or is alleged to control
      any such Investor (within the meaning of Section 15 of the Securities Act
      or Section 20 of the Exchange Act) and the officers, directors, partners,
      members, agents and employees of each such controlling Person, to the fullest
      extent permitted by applicable law, from and against any and all Losses, as
      incurred, arising out of or relating to any untrue or alleged untrue statement
      of a material fact contained in the Registration Statement, any Prospectus
      or
      any form of Company prospectus or in any amendment or supplement thereto or
      in
      any Company preliminary prospectus, or arising out of or relating to any
      omission or alleged omission of a material fact required to be stated therein
      or
      necessary to make the statements therein (in the case of any Prospectus or
      form
      of prospectus or supplement thereto, in the light of the circumstances under
      which they were made) not misleading, provided,
      however,
      that
      the Company shall not be liable in any such case to the extent that such Loss
      arises out of, or is based upon, an untrue statement or omission or alleged
      untrue statement or omission made in such Registration Statement in reliance
      upon and in conformity with information that relates to such Investor or such
      Investor’s proposed method of distribution of Registrable Securities and was
      provided by such Investor in writing for use in the Registration Statement,
      such
      Prospectus or such form of Prospectus or in any amendment or supplement thereto.
      


    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

    (b) Indemnification
      by Investors.
      Each
      Investor shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and
      Section 20 of the Exchange Act), and the directors, officers, agents or
      employees of such controlling Persons, to the fullest extent permitted by
      applicable law, from and against all Losses (as determined by a court of
      competent jurisdiction in a final judgment not subject to appeal or review)
      arising out of any untrue statement of a material fact contained in the
      Registration Statement, any Prospectus, or any form of prospectus, or in any
      amendment or supplement thereto, or arising out of or relating to any omission
      of a material fact required to be stated therein or necessary to make the
      statements therein (in the case of any Prospectus or form of prospectus or
      supplement thereto, in the light of the circumstances under which they were
      made) not misleading, in each case, on the effective date thereof, but only
      to
      the extent that such untrue statement or omission is based solely upon
      information regarding such Investor furnished to the Company by such Investor
      in
      writing expressly for use therein, or to the extent that such information
      relates to such Investor or such Investor’s proposed method of distribution of
      Registrable Securities and was provided by such Investor for use in the
      Registration Statement, such Prospectus or such form of Prospectus or in any
      amendment or supplement thereto. In no event shall the liability of any selling
      Investor under this Section
      6
      be
      greater in amount than the excess of the dollar amount of the net proceeds
      received by such Investor upon the sale of the Registrable Securities giving
      rise to such indemnification obligation over the dollar amount of an other
      damages incurred by Investor in connection with such registration.

     

    (c) Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all reasonable fees and expenses incurred in connection with
      defense thereof; provided,
      that
      the failure of any Indemnified Party to give such notice shall not relieve
      the
      Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
      except (and only) to the extent that such failure shall have materially and
      adversely prejudiced the Indemnifying Party. An Indemnified Party shall have
      the
      right to employ separate counsel in any such Proceeding and to participate
      in
      the defense thereof, but the fees and expenses of such counsel shall be at
      the
      expense of such Indemnified Party or Parties unless: (i) the Indemnifying
      Party has agreed in writing to pay such fees and expenses; (ii) the
      Indemnifying Party shall have failed promptly to assume the defense of such
      Proceeding; or (iii) the named parties to any such Proceeding (including
      any impleaded parties) include both such Indemnified Party and the Indemnifying
      Party, and such Indemnified Party shall have been advised by counsel that a
      conflict of interest is likely to exist if the same counsel were to represent
      such Indemnified Party and the Indemnifying Party or that additional or
      different defenses may be available to the Indemnified Party (in which case,
      if
      such Indemnified Party notifies the Indemnifying Party in writing that it elects
      to employ separate counsel at the expense of the Indemnifying Party, the
      Indemnifying Party shall not have the right to assume the defense thereof and
      the reasonable fees and expenses of separate counsel shall be at the expense
      of
      the Indemnifying Party). It being understood, however, that the Indemnifying
      Party shall not, in connection with any one such Proceeding (including separate
      Proceedings that have been or will be consolidated before a single judge) be
      liable for the fees and expenses of more than one separate firm of attorneys
      at
      any time for all Indemnified Parties, which firm shall be appointed by a
      majority of the Indemnified Parties. The Indemnifying Party shall not be liable
      for any settlement of any such Proceeding effected without its written consent,
      unless such consent is unreasonably withheld or delayed. No Indemnifying Party
      shall, without the prior written consent of the Indemnified Party, effect any
      settlement of any pending Proceeding in respect of which any Indemnified Party
      is a party, unless such settlement includes an unconditional release of such
      Indemnified Party from all liability on claims that are the subject matter
      of
      such Proceeding. All reasonable fees and expenses of the Indemnified Party
      (including reasonable fees and expenses to the extent incurred in connection
      with investigating or preparing to defend such Proceeding in a manner not
      inconsistent with this Section) shall be paid to the Indemnified Party, as
      incurred, within twenty (20) Trading Days of written notice thereof to the
      Indemnifying Party (regardless of whether it is ultimately determined that
      an
      Indemnified Party is not entitled to indemnification hereunder; provided,
      that
      the Indemnifying Party shall reimburse all such fees and expenses to the extent
      it is finally judicially determined that such Indemnified Party is not entitled
      to indemnification hereunder). 

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

    (d) Contribution.
      If a
      claim for indemnification under Section
      6.4(a)
      or  (b)
      is
      unavailable to an Indemnified Party (by reason of public policy or otherwise),
      then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
      shall contribute to the amount paid or payable by such Indemnified Party as
      a
      result of such Losses, in such proportion as is appropriate to reflect the
      relative fault of the Indemnifying Party and Indemnified Party in connection
      with the actions, statements or omissions that resulted in such Losses as well
      as any other relevant equitable considerations. The relative fault of such
      Indemnifying Party and Indemnified Party shall be determined by reference to,
      among other things, whether any action in question, including any untrue or
      alleged untrue statement of a material fact or omission or alleged omission
      of a
      material fact, has been taken or made by, or relates to information supplied
      by,
      such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission. The amount paid or payable by a party as a result
      of any Losses shall be deemed to include, subject to the limitations set forth
      in Section
      6.4(c),
      any
      reasonable attorneys’ or other reasonable fees or expenses incurred by such
      party in connection with any Proceeding to the extent such party would have
      been
      indemnified for such fees or expenses if the indemnification provided for in
      this Section was
      available to such party in accordance with its terms.


    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section
      6.4(d)
      were
      determined by pro rata allocation or by any other method of allocation that
      does
      not take into account the equitable considerations referred to in the
      immediately preceding paragraph. Notwithstanding the provisions of this
Section
      6.4(d),
      no
      Investor shall be required to contribute, in the aggregate, any amount in excess
      of the amount by which the net proceeds actually received by such Investor
      from
      the sale of the Registrable Securities subject to the Proceeding exceeds the
      amount of any damages that such Investor has otherwise been required to pay
      by
      reason of such untrue or alleged untrue statement or omission or alleged
      omission. No Person guilty of fraudulent misrepresentation (within the meaning
      of Section
      11(f) of
      the Securities Act) shall be entitled to contribution from any Person who was
      not guilty of such fraudulent misrepresentation.

     

    6.5 Dispositions.
      Each
      Investor agrees that it will comply with the prospectus delivery requirements
      of
      the Securities Act as applicable to it in connection with sales of Registrable
      Securities pursuant to the Registration Statement and shall sell its Registrable
      Securities in accordance with the Plan of Distribution set forth in the
      Prospectus. Each Investor further agrees that, upon receipt of a notice from
      the
      Company of the occurrence of any event of the kind described in Sections
      6.2(b)(ii),
      (iii)
      or
(iv),
      such
      Investor will use commercially reasonable efforts to discontinue disposition
      of
      such Registrable Securities under the Registration Statement until such Investor
      is advised in writing by the Company that the use of the Prospectus, or amended
      Prospectus, as applicable, may be used. The Company may provide appropriate
      stop
      orders to enforce the provisions of this paragraph.

     

    6.6 Assignment
      of Registration Rights.
      The
      registration rights under Article
      VI
      of this
      Agreement shall be automatically assignable by the Investors to any transferee
      of all or any potion of such Investor’s Registrable Securities if (i) the
      Investor agrees in writing with the transferee or assignee to assign such rights
      and a copy of such agreement is furnished to the Company within a reasonable
      time after such assignment; (ii) the Company is furnished with written notice of
      (a) the name and address of such transferee or assignee, and (b) the securities
      with respect to which such registration rights are being transferred or
      assigned; (iii) following such transfer or assignment, the further disposition
      of such securities by the transferee or assignee is restricted under the
      Securities Act and applicable state securities laws; (iv) at or before the
      time
      the Company receives the written notice contemplated by clause (ii) of this
      sentence the transferee or assignee agrees in writing to be bound by all of
      the
      provisions contained herein; and (v) such transfer shall have been made in
      accordance with the applicable requirements of this Agreement. 

    


    6.7 No
      Piggyback on Registrations.
      Neither
      the Company nor any of its security holders (other than the Investors in such
      capacity pursuant hereto)
      may
      include
      securities of the Company in the Registration Statement other than the
      Registrable Securities. The Company will not file a registration statement
      relating to the resale of Company securities for the account of any other holder
      of Company securities prior to the Effective Date.

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

    6.8 Piggy-Back
      Registrations.
      If at
      any time during the Effectiveness Period there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the SEC a registration statement relating
      to
      an offering for its own account or the account of others under the Securities
      Act of any of its equity securities, other than on Form S-4 or Form S-8 (each
      as
      promulgated under the Securities Act) or their then equivalents relating to
      equity securities to be issued solely in connection with any acquisition of
      any
      entity or business or equity securities issuable in connection with stock option
      or other employee benefit plans, then the Company shall send to each Investor
      not then eligible to sell all of its Registrable Securities under Rule 144(k),
      written notice of such determination and if, within ten (10) days after receipt
      of such notice, any such Investor shall so request in writing, the Company
      shall
      include in such registration statement all or any part of such Registrable
      Securities such Investor requests to be registered. Notwithstanding the
      foregoing, in the event that, in connection with any underwritten public
      offering, the managing underwriter(s) thereof shall impose a limitation on
      the
      number of shares which may be included in the Registration Statement because,
      in
      such underwriter(s)’ judgment, marketing or other factors dictate such
      limitation is necessary to facilitate public distribution, then the Company
      shall be obligated to include in such Registration Statement only such limited
      portion of the Registrable Securities with respect to which such Investor has
      requested inclusion hereunder as the underwriter shall permit. If an offering
      in
      connection with which an Investor is entitled to registration under this
Section
      6.8
      is an
      underwritten offering, then each Investor whose Registrable Securities are
      included in such Registration Statement shall, unless otherwise agreed by the
      Company, offer and sell such Registrable Securities in an underwritten offering
      using the same underwriter or underwriters and, subject to the provisions of
      this Agreement, on the same terms and conditions as other shares of Preferred
      Stock and Common Stock included in such underwritten offering and
      shall
      enter into an underwriting agreement in a form and substance reasonably
      satisfactory to the Company and the underwriter or underwriters. 

    


    


    ARTICLE
      VII

    PURCHASE
      RIGHTS

    


    7.1 Subsequent
      Offerings.
      So long
      as a majority of the shares of Preferred Stock remain outstanding, the Investors
      will have the right of first refusal (the “Purchase
      Rights”)
      to
      purchase, on the same terms as other investors, up to twenty-five percent (25%)
      of any equity securities, securities convertible into equity securities, or
      options or warrants therefor (“Equity
      Securities”)
      that
      the Company proposes to offer, other than the securities excluded by
Section
      7.5
      hereof.

    


    7.2  Exercise
      of Rights.

    


    (a) If
      the
      Company proposes to issue any Equity Securities, it shall give each Investor
      written notice of its intention, describing the Equity Securities, the price
      and
      the terms and conditions upon which the Company proposes to issue the same.
      Each
      Investor shall have fifteen (15) days from the giving of such notice to elect
      to
      purchase its pro rata share (based on the number of shares of Preferred Stock
      owned by it in relation to the number of shares of Preferred Stock owned by
      all
      Investors) of Equity Securities for the price and upon the terms and conditions
      specified in the notice by giving written notice to the Company and stating
      therein the quantity of such Equity Securities to be purchased.



    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

    (b) If
      not
      all of the Investors elect to purchase their share of the Equity Securities,
      then the Company shall promptly notify in writing the Investors who have
      elected to purchase their full share of such Equity Securities
      and
      shall offer such Investors (the “Purchasing
      Investors”)
      the
      right to acquire such unsubscribed shares. The Purchasing Investors shall have
      ten (10) days after receipt of such notice to notify the Company of their
      election to purchase all or a portion thereof of the unsubscribed shares. If
      the
      Purchasing Investors have, in the aggregate, elected to purchase more than
      the
      number of unsubscribed shares being offered in such notice, then the
      unsubscribed shares shall be allocated according to each Purchasing Investor’s
      share up to the number of unsubscribed shares set forth in the notice to the
      Purchasing Investors. The Purchasing Investors shall then effect the purchase
      of
      the Equity Securities at the closing of the issuance of Equity Securities
      described in the notice delivered by the Company pursuant to Section
      7.2(a).
      On the
      date of such closing, the Company shall deliver to the Investors the
      certificates representing the Equity Securities to be purchased by the
      Purchasing Investors, each certificate to be properly endorsed for transfer,
      and
      at such time, the Purchasing Investors shall pay the purchase price for the
      Equity Securities.

    


    7.3 Issuance
      of Equity Securities to Other Persons.
      If the
      Investors fail to exercise in full their Purchase Rights, the Company shall
      have
      forty-five (45) days thereafter to sell the Equity Securities in respect of
      which the Investor’s rights were not exercised, at a price and upon general
      terms and conditions no more favorable to the purchasers thereof than specified
      in the Company’s notice to the Investors pursuant to Section
      7.2(a)
      hereof.
      If the Company has not sold such Equity Securities within such forty-five (45)
      days, the Company shall not thereafter issue or sell any Equity Securities,
      without first again complying with this Article
      VII.

    


    7.4 Transfer
      of Purchase Rights.
      The
      Purchase Rights of each Investor under this Article
      VII
      may be
      transferred to any Affiliate of such Investor. 

    


    7.5 Excluded
      Securities.
      The
      Purchase Rights established by this Article
      VII
      shall
      have no application to any of the following issuances of Equity Securities
      (collectively, the “Excluded
      Securities”):

     

    (a) shares
      of
      Common Stock issued or issuable to employees, directors or consultants pursuant
      to equity holder plans maintained by the Company and registered with the SEC
      on
      Form S-8;

    


    (b) shares
      of
      Common Stock issued or issuable upon the exercise or conversion of currently
      outstanding options, warrants, or convertible securities;

    


    (c) shares
      of
      Common Stock issued or issuable on the exercise of the Warrants or conversion
      of
      the Preferred Stock;

    


    (d) shares
      of
      Common Stock issued or issuable solely as consideration for bank financings,
      equipment leases, investor relations/public relations services, business
      acquisitions, mergers or strategic partnerships, and not for financing purposes.
      


    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

    ARTICLE
      VIII

    MISCELLANEOUS

     

    8.1 Termination.
      This
      Agreement may be terminated by the Company or any Investor, by written notice
      to
      the other parties, if the Closing has not been consummated by the third Business
      Day following the date of this Agreement; provided
      that no
      such termination will affect the right of any party to sue for any breach by
      the
      other party (or parties).

     

    8.2 Fees
      and Expenses.
      The
      Company shall pay, reimburse and hold the Investors harmless from liability
      for
      the payment of all reasonable fees and expenses incurred by them in connection
      with the preparation and negotiation of this Agreement and the consummation
      of
      the transactions contemplated hereby. The fees and expenses of the Investors
      may
      include, without limitation, the fees and expenses of counsel (which shall
      not
      exceed, without the Company’s prior written consent, the sum of $[ ]) and
      accountants and out of pocket expenses of the Investors arising in connection
      with the preparation, negotiation and execution of the Transaction Documents
      and
      the consummation of the transactions contemplated thereby (an estimate of the
      fees and expenses of such counsel may be paid by check delivered or wire
      transfer to such counsel at the Closing by the Investors, the amount of such
      check or wire transfer being deducted from the aggregate amount to be paid
      by
      the Investors at the Closing for the Preferred Stock to be purchased by them
      under this Agreement). The Company shall pay all Transfer Agent fees, stamp
      taxes and other taxes and duties levied in connection with the sale and issuance
      of the Securities. 

     

    8.3 Entire
      Agreement.
      The
      Transaction Documents, together with the exhibits and schedules thereto, contain
      the entire understanding of the parties with respect to the subject matter
      hereof and supersede all prior agreements and understandings, oral or written,
      with respect to such matters, which the parties acknowledge have been merged
      into such documents, exhibits and schedules. 

     

    8.4 Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile or email at the facsimile number or
      email address specified in this Section  prior
      to
      6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day
      after the date of transmission, if such notice or communication is delivered
      via
      facsimile or email at the facsimile number or email address specified in this
      Section on a day that is not a Trading Day or later than 6:30 p.m. (New York
      City time) on any Trading Day, (c) the Trading Day following the date of
      deposit with a nationally recognized overnight courier service, or (d) upon
      actual receipt by the party to whom such notice is required to be given. The
      addresses, facsimile numbers and email addresses for such notices and
      communications are as follows: 

    


    Notices
      for the Company:

    


    Intelligentias,
      Inc.  

    303
      Twin
      Dolphin Drive, 6th Floor

    Redwood
      City, California 94101

    Attention:
      Mr. Ian Rice, Chairman and CEO

    Telephone
      No.: 650-632-4526

    Facsimile
      No.: 650-357-6901

     

    with
      a
      copy to:

    


    Greenberg
      Traurig, LLP 

    MetLife
      Building

    200
      Park
      Avenue, 15th Floor

    New
      York,
      New York 10166

    Attention:
      Spencer G. Feldman, Esq.

    Telephone
      No.: 212-801-9200

    Facsimile
      No.: 212-801-6400

    Email
      Address: feldmans@gtlaw.com

    


    Notices
      for the Investors:

    


    Kingdon
      Capital Management, LLC

    152
      West
      57th Street, 50th Floor

    New
      York,
      New York 10019

    Attention:
      Alfred Barbagallo

    Telephone
      No.: 212-333-0123

    Email
      Address: alfred.barbagallo@kingdon.com

    


    with
      a
      copy to:

    


    Ropes
      & Gray LLP

    One
      International Place 

    Boston,
      MA 02110 

    Attention:
      Joel F. Freedman

    Telephone
      No.: 617-951-7309

    Facsimile
      No.: 617-951-7050

     

    8.5 Amendments;
      Waivers.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and the holders
      of at least 80% of the Registrable Securities held on the date of such amendment
      or, in the case of a waiver, by the party against whom enforcement of any such
      waiver is sought. No waiver of any default with respect to any provision,
      condition or requirement of this Agreement shall be deemed to be a continuing
      waiver in the future or a waiver of any subsequent default or a waiver of any
      other provision, condition or requirement hereof, nor shall any delay or
      omission of either party to exercise any right hereunder in any manner impair
      the exercise of any such right. Notwithstanding the foregoing, a waiver or
      consent to depart from the provisions hereof with respect to a matter that
      relates exclusively to the rights of Investors under Article VI
      may be
      given by Investors holding at least a majority of the Registrable Securities
      to
      which such waiver or consent relates, and any such amendment shall be binding
      upon the Company and all holders of Registrable Securities.

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

    8.6 Construction.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party.

     

    8.7 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of the Investors. Any Investor may assign its rights under this
      Agreement to any Person to whom such Investor assigns or transfers any
      Securities, provided (i)
      the
      Investor agrees in writing with the transferee or assignee to assign such rights
      and a copy of such agreement is furnished to the Company within a reasonable
      time after such assignment; (ii) the Company is furnished with written notice
      of
      (a) the name and address of such transferee or assignee, and (b) the Registrable
      Securities with respect to which such rights are being transferred or assigned;
      (iii) following such transfer or assignment, the further disposition of such
      securities by the transferee or assignee is restricted under the Securities
      Act
      and applicable state securities laws; (iv) at or before the time the Company
      receives the written notice contemplated by clause (ii) of this sentence the
      transferee or assignee agrees in writing to be bound by all of the provisions
      contained herein; and (v) such transfer shall have been made in accordance
      with
      the applicable requirements of this Agreement. 

    


    8.8 No
      Third-Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, except that each Indemnified
      Party is an intended third party beneficiary of Section 6.4
      and (in
      each case) may enforce the provisions of such Sections directly against the
      parties with obligations thereunder.

     

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

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

    8.10 Survival.
      The
      representations and warranties contained herein shall survive the
      Closing.

     

    8.11 Execution.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission or email attachment, such signature shall create a valid and
      binding obligation of the party executing (or on whose behalf such signature
      is
      executed) with the same force and effect as if such facsimile or email-attached
      signature page were an original thereof.

     

    8.12 Severability.
      If any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

     

    8.13 Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Securities is mutilated, lost, stolen
      or destroyed, the Company shall promptly issue or cause to be issued in exchange
      and substitution for and upon cancellation thereof, or in lieu of and
      substitution therefor, a new certificate or instrument at no cost to the
      Investor. The Company may require the execution by the holder thereof of a
      customary lost certificate affidavit of that fact and a customary agreement
      to
      indemnify and hold harmless the Company (and Transfer Agent, if applicable)
      for
      any losses in connection therewith. 

    


    8.14 Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of the Investors and the Company will
      be entitled to seek specific performance under the Transaction Documents. The
      parties agree that monetary damages may not be adequate compensation for any
      loss incurred by reason of any breach of obligations described in the foregoing
      sentence and hereby agrees to waive in any action for specific performance
      of
      any such obligation (other than in connection with any action for temporary
      restraining order) the defense that a remedy at law would be adequate.


    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

    8.15 Adjustments
      in Share Numbers and Prices.
      In the
      event of any stock split, subdivision, dividend or distribution payable in
      shares of Common Stock (or other securities or rights convertible into, or
      entitling the holder thereof to receive directly or indirectly shares of Common
      Stock), combination or other similar recapitalization or event occurring after
      the date hereof and prior to the Closing, each reference in any Transaction
      Document to a number of shares or a price per share shall be amended to
      appropriately account for such event.

     

    8.16 Independent
      Nature of Investors’ Obligations and Rights.
      The
      obligations of each Investor under any Transaction Document are several and
      not
      joint with the obligations of any other Investor, and no Investor shall be
      responsible in any way for the performance of the obligations of any other
      Investor under any Transaction Document. The decision of each Investor to
      purchase Securities pursuant to this Agreement has been made by such Investor
      independently of any other Investor and independently of any information,
      materials, statements or opinions as to the business, affairs, operations,
      assets, properties, liabilities, results of operations, condition (financial
      or
      otherwise) or prospects of the Company which may have been made or given by
      any
      other Investor or by any agent or employee of any other Investor, and no
      Investor or any of its agents or employees shall have any liability to any
      other
      Investor (or any other person) relating to or arising from any such information,
      materials, statements or opinions. Nothing contained herein or in any
      Transaction Document, and no action taken by any Investor pursuant thereto,
      shall be deemed to constitute the Investors as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Investors are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Document. Each
      Investor acknowledges that no other Investor has acted as agent for such
      Investor in connection with making its investment hereunder and that no other
      Investor will be acting as agent of such Investor in connection with monitoring
      its investment hereunder. Each Investor shall be entitled to independently
      protect and enforce its rights, including without limitation the rights arising
      out of this Agreement or out of the other Transaction Documents, and it shall
      not be necessary for any other Investor to be joined as an additional party
      in
      any Proceeding for such purpose.

     

    [SIGNATURE
      PAGES TO FOLLOW]

    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

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

    


    
      	 	 	 
	 	INTELLIGENTIAS,
              INC.
	 
 	 
 	 
 
	
            	By:  	/s/ Luigi
              Caramico
	 	
              
Name:
 Luigi
              Caramico
	 	Title:   
              President




     

     

     

    Securities
      Purchase
      Agreement


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	 	 	 
	 	INVESTORS:
	 	 
	 	Kingdon Capital Management, LLC,
              the
Investment Manager to M.
              Kingdon Offshore Ltd. 
	 
 	 
 	 
 
	
            	By:  	/s/ Alan
              P. Winters
	 	
              
Name: 
Alan
              P. Winters
	 	Title: 
              Chief Operating Officer 


    

     

    
      
        	 	 	 
	 	 
	 	By: Kingdon Capital Management, LLC,
                the
Investment Adviser to Kingdon
                Associates 
	 
 	 
 	 
 
	
              	By:  	/s/ Alan
                P. Winters
	 	
                
Name: 
Alan
                P. Winters
	 	Title: 
                Chief Operating Officer 


      

       

    

    
      
        
          	 	 	 
	 	 
	 	By: Kingdon Capital Management,
                  LLC, the
                  
Investment Adviser to Kingdon
                  Family Partnership, L.P. 
	 
 	 
 	 
 
	
                	By:  	/s/ Alan
                  P. Winters
	 	
                  
Name: 
Alan
                  P. Winters
	 	Title: 
                  Chief Operating Officer 


        

         

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit A

    Schedule
      of Investors

    


    
      	
              Investor

            	 	
              Preferred
                Stock

            	 	
              Market
                Warrants

            	 	
              Premium
                Warrants

            	 	
              Purchase
                Price

            
	 	 	 	 	 	 	 	 	 
	
              M.
                Kingdon Offshore Ltd.

            	 	
              8,875,000

            	 	
              4,437,500

            	 	
              3,550,000

            	 	
              7,100,000

            
	 	 	 	 	 	 	 	 	 
	
              Kingdon
                Associates

            	 	
              3,143,750

            	 	
              1,571,875

            	 	
              1,257,500

            	 	
              2,515,000

            
	 	 	 	 	 	 	 	 	 
	
              Kingdon
                Family Partnership, L.P.

            	 	
              481,250

            	 	
              240,625

            	 	
              192,500

            	 	
              385,000

            
	 	 	 	 	 	 	 	 	 
	
              TOTAL

            	 	
              12,500,000

            	 	
              6,250,000

            	 	
              5,000,000

            	 	
              $10,000,000