Exhibit 10.1


PURCHASE AGREEMENT


THIS AGREEMENT is made as
of the 29th day of December, 2006, by and between NetBank,
Inc. (the “Company”), a corporation organized under the laws of the
State of Georgia, with its principal offices at 1015 Windward Ridge Parkway,
Alpharetta, Georgia 30005 and the purchaser whose name and address is set forth
on the signature page hereof (the “Purchaser”).


IN CONSIDERATION of the
mutual covenants contained in this Agreement, the Company and the Purchaser
agree as follows:


SECTION 1.           Authorization of
Sale of the Shares.  Subject to the
terms and conditions of this Agreement, the Company has authorized the issuance
and sale of up to 6,800,000 shares (the “Shares”) of common stock, par
value $0.01 per share (the “Common Stock”), of the Company.


SECTION 2.           Agreement to Sell
and Purchase the Shares.  At the
Closing (as defined in Section 3), the Company will, subject to the terms
of this Agreement, issue and sell to the Purchaser and the Purchaser will buy
from the Company, upon the terms and conditions hereinafter set forth, the
number of Shares (at the purchase price) shown below:


	
  Number of Shares to Be 

  Purchased

  	
   

  	
  Price Per

  Share In

   Dollars

  	
   

  	
  Aggregate 

  Price

  	
   

  
	
   

  	
   

  	
  $

  	
  3.90

  	
   

  	
  $

  	
   

  	
   

  
								



 


The Company proposes to
enter into this same form of purchase agreement with certain other investors
(the “Other Purchasers”) and expects to complete sales of the shares of
Common Stock to them.  The Purchaser and
the Other Purchasers are hereinafter sometimes collectively referred to as the “Purchasers,”
and this Agreement and the purchase agreements executed by the Other Purchasers
are hereinafter sometimes collectively referred to as the “Agreements.”  The term “Placement Agent” shall mean JMP
Securities LLC.


SECTION 3.           Delivery of the
Shares at the Closing.  The
completion of the purchase and sale of the Shares (the “Closing”) shall
occur at the offices of Morrison & Foerster LLP, 1290 Avenue of the
Americas, New York, New York  10104 as soon
as practicable and as agreed to by the parties hereto, within three business
days following the execution of the Agreements, or on such later date or at
such different location as the parties shall agree in writing, but not prior to
the date that the conditions for Closing set forth below have been satisfied or
waived by the appropriate party (the “Closing Date”).



  
 






 



At the Closing, the
Purchaser shall deliver, in immediately available funds, the full amount of the
purchase price for the Shares being purchased hereunder by wire transfer to an
account designated by the Company and the Company shall deliver to the
Purchaser one or more stock certificates registered in the name of the
Purchaser, or in such nominee name(s) as designated by the Purchaser in writing,
representing the number of Shares set forth in Section 2 above and bearing
an appropriate legend referring to the fact that the Shares were sold in
reliance upon the exemption from registration under the Securities Act of 1933,
as amended (the “Securities Act”), provided by Section 4(2) thereof
and Rule 506 thereunder.  At such
time as Shares are sold pursuant to the Registration Statement (as defined
below) after it has become effective, the Company will promptly substitute one
or more replacement certificates without a legend with respect to such
Shares.  The name(s) in which the stock
certificates are to be registered are set forth in the Stock Certificate
Questionnaire attached hereto as part of Appendix I.


The Company’s obligation
to complete the purchase and sale of the Shares and deliver such stock
certificate(s) to the Purchaser at the Closing shall be subject to the
following conditions, any one or more of which may be waived by the
Company:  (a) receipt by the Company
of immediately available funds in the full amount of the purchase price for the
Shares being purchased hereunder; (b) completion of the purchases and
sales under the Agreements with the Other Purchasers; and (c) the accuracy
of the representations and warranties made by the Purchasers and the
fulfillment of those undertakings of the Purchasers to be fulfilled prior to
the Closing.  The Purchaser’s obligation
to accept delivery of such stock certificate(s) and to pay for the Shares
evidenced thereby shall be subject to the following conditions:  (a) each of the representations and
warranties of the Company made herein shall be true and correct in all material
respects as of the Closing Date; (b) the delivery to the Purchaser by
counsel to the Company and in-house counsel to the Company of legal opinions in
forms reasonably satisfactory to counsel to the Placement Agent;
(c) receipt by the Purchaser of a certificate executed by the chief
executive officer and the chief financial or accounting officer of the Company,
dated as of the Closing Date, to the effect that the representations and
warranties of the Company set forth herein are true and correct in all material
respects as of the Closing Date and that the Company has complied in all
material respects with all the agreements and satisfied in all material
respects all the conditions herein on its part to be performed or satisfied on
or prior to such Closing Date; (d) the fulfillment in all material
respects of those undertakings of the Company to be fulfilled prior to the
Closing; and (e) the Company shall have sold Shares at the Closing for an
aggregate minimum of $20 million in gross proceeds.  The Purchaser’s obligations hereunder are
expressly not conditioned on the purchase by any or all of the Other Purchasers
of the Shares that they have agreed to purchase from the Company.


SECTION 4.           Representations,
Warranties and Covenants of the Company. 
The Company hereby represents and warrants to, and covenants with, the
Purchaser as follows:


4.1                Organization
and Qualification.  The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and the Company is qualified to do
business as a foreign corporation in each jurisdiction in which qualification
is required, except where failure to so qualify would not  have a Material Adverse Effect (as defined
herein).  The Company’s subsidiaries
(each a “Subsidiary” 



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and collectively the “Subsidiaries”) are listed
on Exhibit A to this Agreement. 
Each “Significant Subsidiary” of the Company, as that term is defined in
Rule 1-02 of Regulation S-X under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), is listed on Exhibit A to this Agreement.  Each Significant Subsidiary is a direct or
indirect wholly owned subsidiary of the Company.  Each Significant Subsidiary is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is qualified to do business as a foreign
corporation in each jurisdiction in which qualification is required, except
where failure to so qualify would not have a Material Adverse Effect.


4.2                Reporting
Company; Form S-1.  The
Company is not an “ineligible issuer” (as defined in Rule 405 promulgated under
the Securities Act) and is eligible to register the Shares for resale by the
Purchaser on a registration statement on Form S-1 under the
Securities Act.  The Company is subject
to the reporting requirements of the Exchange Act, and has filed all reports
required thereby.


4.3                Authorized
Capital Stock.  The authorized,
issued and outstanding capital stock of the Company as of September 30, 2006 is
set forth under the heading “Capitalization” in the confidential Private
Placement Memorandum dated December 19, 2006 prepared by the Company (including
all exhibits, supplements and amendments thereto, the “Private Placement
Memorandum”); the issued and outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities. 
Except as disclosed in documents or reports (the “Exchange Act Reports”)
filed by the Company with the Securities and Exchange Commission (the “Commission”)
pursuant to the Exchange Act and the rules and regulations of the Commission
promulgated thereunder (the “1934 Act Rules and Regulations”), the Company does
not have outstanding any options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible securities or
obligations.  With respect to each of the
Significant Subsidiaries (i) all the issued and outstanding shares of such
Subsidiary’s capital stock have been duly authorized and validly issued, are
fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities, and
(ii) there are no outstanding options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or sell,
shares of such Subsidiary’s capital stock or any such options, rights,
convertible securities or obligations.


4.4                Issuance, Sale
and Delivery of the Shares.  The
Shares have been duly authorized and, when issued, delivered and paid for in
the manner set forth in this Agreement, will be validly issued, fully paid and
nonassessable.  No preemptive rights or
other rights to subscribe for or purchase any shares of Common Stock of the
Company exist with respect to the issuance and sale of the Shares by the
Company pursuant to this Agreement.  No
stockholder of the Company has any right (which has not been waived or has not
expired by reason of lapse of time following notification of the Company’s
intention to file the Registration Statement (as hereinafter defined)) to
require the Company to register the sale of any capital 



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stock owned by such stockholder under the Registration
Statement.  The issuance and sale of the
Shares will not obligate the Company to issue shares of Common Stock or other
securities to any person (other than the Purchasers) and will not result in a right
of any holder of the Company’s securities to obligate the Company to repurchase
the securities held by such holder or to adjust the exercise, conversion,
exchange or reset price under such securities. 
No further approval or authority of the stockholders or the Board of
Directors of the Company will be required for the issuance and sale of the
Shares to be sold by the Company as contemplated herein.


4.5                Due Execution,
Delivery and Performance of the Agreements. 
The Company has full legal right, corporate power and authority to enter
into this Agreement and perform the transactions contemplated hereby.  This Agreement has been duly authorized,
executed and delivered by the Company. 
This Agreement constitutes a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting the enforcement of creditors’ rights and the application of equitable
principles relating to the availability of remedies, and except as rights to
indemnity or contribution, including but not limited to, indemnification
provisions set forth in Section 7.3 of this Agreement may be limited by
federal or state securities law or the public policy underlying such laws.  The execution and performance of this
Agreement by the Company and the consummation of the transactions herein
contemplated will not violate (i) any provision of the certificate of
incorporation or bylaws of the Company or the organizational documents of any
Subsidiary, or (ii) any statute or any authorization, judgment, decree, order,
rule or regulation of any court or any regulatory body, administrative agency
or other governmental agency or body applicable to the Company or any
Significant Subsidiary or any of their respective properties.  No consent, approval, authorization or other
order of any court, regulatory body, administrative agency or other governmental
agency or body is required for the execution and delivery of this Agreement or
the consummation of the transactions contemplated by this Agreement, except for
compliance with the Blue Sky laws and federal securities laws applicable to the
offering of the Shares.  For the purposes of this Agreement the term “Material
Adverse Effect” shall mean a material adverse effect on the condition
(financial or otherwise), properties, business, prospects or results of
operations of the Company and its Subsidiaries, taken as a whole.


4.6                Accountants.  Ernst & Young LLP, who has expressed its
opinion with respect to the consolidated financial statements contained in the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2005, which Form 10-K is attached as an exhibit to, and made
a part of the Private Placement Memorandum, were, as of the date such Form 10-K
was filed with the Commission, registered independent public accountants as
required by the Securities Act and the rules and regulations promulgated
thereunder (the “1933 Act Rules and Regulations”) and by the rules of
the Public Accounting Oversight Board.


4.7                No Defaults or
Consents. Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale by the Company of
the Shares) will give rise to a right to terminate or accelerate the due date
of any payment due under, or conflict with or result in the breach of any term
or provision of, or constitute a default (or an event which with notice or
lapse of time or both would constitute a default) under, except such 



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defaults that individually or in the aggregate would
not cause a Material Adverse Effect, or require any consent or waiver under, or
result in the execution or imposition of any lien, charge or encumbrance upon
any properties or assets of the Company or its Significant Subsidiaries
pursuant to the terms of, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its Significant
Subsidiaries is a party or by which either the Company or its Significant
Subsidiaries or any of their properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation applicable to the Company or any Significant Subsidiary or violate
any provision of the charter or by-laws of the Company or any Significant
Subsidiary, except for such consents or waivers which have already been
obtained and are in full force and effect.


4.8                Contracts.  The material contracts to which the Company
is a party have been duly and validly authorized, executed and delivered by the
Company and constitute the legal, valid and binding agreements of the Company,
enforceable by and against it in accordance with their respective terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to enforcement of creditors’
rights generally, and general equitable principles relating to the availability
of remedies, and except as rights to indemnity or contribution may be limited
by federal or state securities laws and the public policy underlying such laws.


4.9                No Actions.  Except as otherwise set forth in the Exchange
Act Reports, there are no legal or governmental actions, suits or proceedings
pending or, to the Company’s knowledge, threatened against the Company or any
Subsidiary before or by any court, regulatory body or administrative agency or
any other governmental agency or body, domestic, or foreign, which actions,
suits or proceedings, individually or in the aggregate, might reasonably be
expected to have a Material Adverse Effect; and no labor disturbance by the
employees of the Company exists or, to the Company’s knowledge, is imminent,
that might reasonably be expected to have a Material Adverse Effect.  Neither the Company nor any Subsidiary is a
party to or subject to the provisions of any injunction, judgment, decree or
order of any court, regulatory body, administrative agency or other
governmental agency or body that might have a Material Adverse Effect.


4.10              Properties.  The Company and each Significant Subsidiary
has good and marketable title to all the properties and assets described as
owned by it in the consolidated financial statements included in the Exchange
Act Reports, free and clear of all liens, mortgages, pledges, or encumbrances
of any kind except (i) those, if any, reflected in such consolidated financial
statements, or (ii) those that are not material in amount and do not
adversely affect the use made and proposed to be made of such property by the
Company or its Significant Subsidiaries, considered as one entity.  The Company and each Subsidiary 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 and its
Significant Subsidiaries, considered as one entity.  The Company and any Significant Subsidiary
owns or leases all such properties as are necessary to its operations as now
conducted.


4.11              No Material
Adverse Change.  Subsequent to the
dates as of which information is given in the Private Placement Memorandum, and
except as set forth in the Exchange Act Reports, (i) the Company and its
Significant Subsidiaries have not incurred any 



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material liabilities or obligations, indirect, or
contingent, or entered into any material agreement or other transaction that is
not in the ordinary course of business or that could reasonably be expected to
result in a material reduction in the future earnings of the Company;
(ii) the Company and its Significant Subsidiaries have not sustained any
material loss or interference with their businesses or properties from fire,
flood, windstorm, accident or other calamity not covered by insurance;
(iii) the Company and its Significant Subsidiaries have not paid or
declared any dividends or other distributions with respect to their capital
stock and none of the Company or any Significant Subsidiary is in default in
the payment of principal or interest on any outstanding debt obligations;
(iv) there has not been any change in the capital stock of the Company or
its Significant Subsidiaries other than the sale of the Shares hereunder and
shares or options issued pursuant to employee equity incentive plans or
purchase plans approved by the Company’s Board of Directors, or indebtedness
material to the Company or its Significant Subsidiaries (other than in the
ordinary course of business and any required scheduled payments); and
(v) there has not occurred any event that has caused or could reasonably
be expected to cause a Material Adverse Effect.


4.12              Intellectual
Property.  The Company and its
Significant Subsidiaries own, are licensed or otherwise possess sufficient
rights to use, all patents, patent rights, inventions, know-how (including
trade secrets and other unpatented or unpatentable or confidential information,
systems, or procedures), trademarks, service marks, trade names, copyrights and
other intellectual property rights (collectively, the “Intellectual Property”)
necessary for the conduct of their business as described in the Private
Placement Memorandum.  To the Company’s
knowledge, no claims have been asserted against the Company or any Significant
Subsidiary by any person with respect to the use of any such Intellectual
Property or challenging or questioning the validity or effectiveness of any
such Intellectual Property.


4.13              Compliance.  None of the Company nor its Subsidiaries has
been advised, nor do any of them have any reason to believe, that it is not
conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business, including,
without limitation, all applicable local, state and federal environmental laws
and regulations, except where failure to be so in compliance would not have a
Material Adverse Effect.


4.14              Taxes.  The Company and its Significant Subsidiaries
have filed on a timely basis (giving effect to extensions) all required
material federal, state and foreign income and franchise tax returns and have
paid or accrued all taxes shown as due thereon, and the Company has no
knowledge of any material tax deficiency that has been or might be asserted or
threatened against it that could have a Material Adverse Effect.  All tax liabilities accrued through the date
hereof have been adequately provided for on the books of the Company.


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


4.16              Investment
Company.  The Company is not an “investment
company” or an “affiliated person” of, or “promoter” or “principal underwriter”
for an 



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investment company, within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of
the Commission promulgated thereunder.


4.17              Offering
Materials.  Each of the Company, its
directors and officers has not distributed and will not distribute prior to the
Closing Date any offering material, including any “free writing prospectus” (as
defined in Rule 405 promulgated under the Securities Act), in connection
with the offering and sale of the Shares other than the Private Placement
Memorandum and associated slide presentation, or any amendment or supplement
with respect to such offering material. 
The Company has not in the past nor will it hereafter take any action
independent of the Placement Agent to sell, offer for sale or solicit offers to
buy any securities of the Company that could result in the initial sale of the
Shares not being exempt from the registration requirements of Section 5 of
the Securities Act.


4.18              Insurance.  The Company maintains insurance underwritten
by insurers of recognized financial responsibility, or self-insurers, of the
types and in the amounts that the Company reasonably believes is adequate for
its business, including, but not limited to, insurance covering all real and
personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
with such deductibles as are customary for companies in the same or similar
business, all of which insurance is in full force and effect.


4.19              Additional
Information.  The information
contained in the following documents, which the Placement Agent has furnished to
the Purchaser, or will furnish prior to the Closing, as of the dates thereof,
did not 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 light of the circumstances in which they were made not misleading:


(a)                                  the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2005;


(b)                                 the
Company’s Definitive Proxy Statement for Annual Meeting of stockholders held on
May 2, 2006;


(c)                                  the
Company’s Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 2006, June 30, 2006 and September 30, 2006;


(d)                                 the
Company’s Current Reports on Form 8-K or Form 8-K/A filed with the
Commission on March 28, 2006, October 5, 2006, October 16, 2006 (two Form 8-Ks
filed), October 26, 2006, November 8, 2006, November 9, 2006, November 20, 2006
and December 18, 2006;


(e)           the Private Placement
Memorandum, including all addenda and exhibits thereto, other than this
Agreement and appendices and exhibits hereto; and


(f)            all other documents,
if any, filed by the Company with the Commission since December 31, 2005
pursuant to the reporting requirements of the Exchange Act.



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The documents
incorporated by reference in the Private Placement Memorandum or attached as
exhibits thereto, at the time they became effective or were filed with the
Commission, as the case may be, complied in all material respects with the
requirements of the Exchange Act, as applicable, and the 1934 Act Rules and
Regulations (together with the 1933 Act Rule and Regulations, the “Rules
and Regulations”).  Since December 1,
2005, the Company has filed all documents required to be filed by it prior to
the date hereof with the Commission pursuant to the reporting requirements of
the Exchange Act.


4.20              Price of Common
Stock.  The Company has not taken,
and will not take, directly or indirectly, any action designed to cause or
result in, or that has constituted or that might reasonably be expected to
constitute, the stabilization or manipulation of the price of the shares of the
Common Stock to facilitate the sale or resale of the Shares.


4.21              Use of Proceeds.  The Company shall use the proceeds from the
sale of the Shares as described under “Use of Proceeds” in the Private
Placement Memorandum.


4.22              Non-Public
Information.  The Company has not
disclosed to the Purchaser, whether in the Private Placement Memorandum or
otherwise, information that would constitute material non-public information as
of the Closing Date other than the existence of the transaction contemplated
hereby.


4.23              Use of Purchaser
Name.  Except as otherwise required
by applicable law or regulation the Company shall not use the Purchaser’s name
or the name of any of its affiliates in any advertisement, announcement, press
release or other similar public communication unless it has received the prior
written consent of the Purchaser for the specific use contemplated which
consent shall not be unreasonably withheld.


4.24              Related Party
Transactions.  No transaction has
occurred between or among the Company, on the one hand, and its affiliates,
officers or directors on the other hand, that is required to have been
described under applicable securities laws in its Exchange Act filings and is
not so described, as required, in such filings.


4.25              Off-Balance Sheet
Arrangements.  There is no
transaction, arrangement or other relationship between the Company and an
unconsolidated or other off-balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed,
as required or that otherwise would be reasonably likely to have a Material
Adverse Effect.  There are no other
material off-balance sheet transactions, arrangements or other relationships involving
the Company that may create contingencies or liabilities that are not otherwise
disclosed by the Company in its Exchange Act filings.


4.26              Governmental
Permits, Etc.  The Company and each
Subsidiary has all franchises, licenses, certificates and other authorizations
from such federal, state or local government or governmental agency, department
or body that are currently necessary for the operation of the business of the
Company as currently conducted, except where the failure to posses currently
such franchises, licenses, certificates and other authorizations is not
reasonably expected to have a Material Adverse Effect.  Except as otherwise set forth in the Exchange
Act Reports, neither the Company nor any Subsidiary has received any notice of
proceedings relating 



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to the revocation or modification of any such
franchises, licenses, certificates and other authorizations that, if the
subject of an unfavorable decision, ruling or finding, could reasonably be
expected to have a Material Adverse Effect.


4.27              Financial
Statements.  The consolidated
financial statements of the Company and the related notes and schedules thereto
included in its Exchange Act filings fairly present the financial position,
results of operations, stockholders’ equity and cash flows of the Company and
its consolidated Subsidiaries at the dates and for the periods specified
therein.  Such financial statements and
the related notes and schedules thereto have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved (except as otherwise noted therein) and all adjustments
necessary for a fair presentation of results for such periods have been made,
and comply as to form in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing; provided, however, that the
unaudited financial statements are subject to normal year-end audit adjustments
(which are not expected to be material) and do not contain all footnotes
required under generally accepted accounting principles.


4.28              Listing
Compliance.  The Company is in
compliance with the requirements of the Nasdaq Global Market for continued
quotation of the Common Stock thereon. 
Except as otherwise set forth in the Exchange Act Reports and the
Private Placement Memorandum, the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or the quotation of the Common Stock on the Nasdaq
Global Market, nor has the Company received any notification that the
Commission or the Nasdaq Global Market is contemplating terminating such
registration or quotation.  The
transactions contemplated by this Agreement will not contravene the rules and
regulations of the Nasdaq Global Market. 
Subject to the Company’s ability to timely file with the Commission the
Company’s upcoming Annual Report on Form 10-K for the year ended December 31,
2006 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2007,
the Company will comply with all requirements of the Nasdaq Global Market with
respect to the issuance of the Shares and shall cause the Shares to be quoted
on the Nasdaq Global Market and listed on any other exchange on which the Company’s
common stock is listed on or before the Closing Date.


4.29              Internal
Accounting Controls.  The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance
with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.  The Company has
disclosure controls and procedures (as defined in Rules 13a–14 and 15d–14
under the Exchange Act) that are designed to ensure that material information
relating to the Company is made known to the Company’s principal executive
officer and the Company’s principal financial officer or persons performing
similar functions.  The Company is
otherwise in 



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compliance in all material respects with all
applicable provisions of the Sarbanes-Oxley Act of 2002, as amended and the
rules and regulations promulgated thereunder.


4.30              Foreign Corrupt
Practices.  Neither the Company, nor
any Significant Subsidiary, nor, to the knowledge of the Company, any director,
officer, agent, employee or other Person acting on behalf of the Company or any
Significant Subsidiary has, in the course of its actions for, or on behalf of,
the Company, in any manner that would reasonably be expected to have a Material
Adverse Effect, (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds;
(iii) violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.


4.31              Employee
Relations.  Neither the Company nor
any Significant Subsidiary is a party to any collective bargaining agreement or
employs any member of a union.  The
Company and each Significant Subsidiary believe that their relations with their
employees are good.  Except for the
Company’s Chief Risk Executive, Chief Capital Markets Executive and Chief
Strategic Initiatives Executive (i) no executive officer of the Company (as
defined in Rule 501(f) promulgated under the Securities Act) has notified the
Company that such officer intends to leave the Company or otherwise terminate
such officer’s employment with the Company, and (ii) no executive officer of
the Company is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any Significant Subsidiary to any liability with respect
to any of the foregoing matters.


4.32              ERISA.  The Company is in compliance in all material
respects with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder (herein called “ERISA”); no “reportable
event” (as defined in ERISA) has occurred with respect to any “pension plan”
(as defined in ERISA) for which the Company would have any liability; the
Company has not incurred and does not expect to incur liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal from,
any “pension plan”; or (ii) Sections 412 or 4971 of the Internal Revenue
Code of 1986, as amended, including the regulations and published
interpretations thereunder (the “Code”); and each “Pension Plan” for
which the Company would have liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects
and nothing has occurred, whether by action or by failure to act, which would
reasonably be expected to cause the loss of such qualification.


4.33              Environmental
Matters.  Except as would not result
in a Material Adverse Effect, and to the knowledge of the senior executive
officers of the Company or any Significant Subsidiary, there has been no
storage, disposal, generation, manufacture, transportation, handling or
treatment of toxic wastes, hazardous wastes or hazardous substances
(collectively, “Hazardous Substances,” as defined by the Comprehensive
Environmental Response Compensation Liability Act (“CERCLA”), 42 U.S.C.
9601(14)) by the Company or 



 10
 






 



any Significant Subsidiary (or any of their
predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company or any Significant Subsidiary in
violation of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or that would require remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit; and there
has been no material spill, discharge, leak, emission, injection, escape,
dumping or release of any kind into such property or into the environment
surrounding such property of any Hazardous Substances due to or caused by the
Company or any Significant Subsidiary.


4.34              Integration;
Other Issuances of Shares.  Neither
the Company nor its Subsidiaries or any affiliates, nor any Person acting on
its or their behalf, has issued any shares of Common Stock or shares of any
series of preferred stock or other securities or instruments convertible into,
exchangeable for or otherwise entitling the holder thereof to acquire shares of
Common Stock which would be integrated with the sale of the Shares to such
Purchaser for purposes of the Securities Act or of any applicable stockholder
approval provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated, nor will the Company or its
Subsidiaries or affiliates take any action or steps that would require
registration of any of the Shares under the Securities Act or cause the
offering of the Shares to be integrated with other offerings.  Assuming the accuracy of the representations
and warranties of the Purchasers, the offer and sale of the Shares by the
Company to the Purchasers pursuant to this Agreement will be exempt from the
registration requirements of the Securities Act.


SECTION 5.           Representations,
Warranties and Covenants of the Purchaser. 
The Purchaser represents and warrants to, and covenants with, the
Company that:


5.1                Experience.  (i) The Purchaser is knowledgeable,
sophisticated and experienced in financial and business maters, in making, and
is qualified to make, decisions with respect to investments in shares
representing an investment decision like that involved in the purchase of the
Shares, including investments in securities issued by the Company and
comparable entities, has the ability to bear the economic risks of an
investment in the Shares, including a complete loss of its investment, and has
reviewed carefully the Private Placement Memorandum, including exhibits
thereto, and has requested, received, reviewed and considered all information
it deems relevant in making an informed decision to purchase the Shares;
(ii) the Purchaser is acquiring the number of Shares set forth in
Section 2 above in the ordinary course of its business and for its own
account with no present intention of distributing any of such Shares or any
arrangement or understanding with any other persons regarding the distribution
of such Shares (this representation and warranty not limiting the Purchaser’s
right to sell pursuant to the Registration Statement (hereinafter defined) or
in compliance with the Securities Act and the Rules and Regulations, or, other
than with respect to any claims arising out of a breach of this representation
and warranty, the Purchaser’s right to indemnification under Section 7.3);
(iii) the Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Shares, nor will the
Purchaser engage in any short sale that results in a disposition of any of the
Shares by the Purchaser, except in compliance with the Securities Act, Exchange
Act and the Rules and Regulations and any applicable state securities laws;
(iv) the Purchaser has completed or caused 



 11
 






 



to be completed the Registration Statement
Questionnaire attached hereto as part of Appendix I, for use in
preparation of the Registration Statement, and the answers thereto are true and
correct as of the date hereof and will be true and correct as of the effective
date of the Registration Statement and the Purchaser will notify the Company
immediately of any material change in any such information provided in the
Registration Statement Questionnaire until such time as the Purchaser has sold
all of its Shares or until the Company is no longer required to keep the
Registration Statement effective; (v) the Purchaser has, in connection
with its decision to purchase the number of Shares set forth in Section 2
above, relied solely upon the Private Placement Memorandum and the documents
included or incorporated by reference therein and the representations and
warranties of the Company contained herein; (vi) the Purchaser has had an
opportunity to discuss this investment with representatives of the Company and
ask questions of them and (vii) the Purchaser is an “accredited investor”
within the meaning of Rule 501(a)(1),(2),(3) or (7) of Regulation D
promulgated under the Securities Act.


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


5.3                Confidentiality.  For the benefit of the Company, the Purchaser
previously agreed orally with the Placement Agent for the benefit of the
Company and the Placement Agent to keep confidential all information concerning
this private placement.  The Purchaser
understands that the information contained in the Private Placement Memorandum
is strictly confidential and proprietary to the Company and has been prepared
from the Company’s publicly available documents and other information and is
being submitted to the Purchaser solely for such Purchaser’s confidential
use.  The Purchaser agrees to use the
information contained in the Private Placement Memorandum for the sole purpose
of evaluating a possible investment in the Shares and the Purchaser
acknowledges that it is prohibited from reproducing or distributing the Private
Placement Memorandum, this Agreement, or any other offering materials or other
information provided by the Company in connection with the Purchaser’s
consideration of its investment in the Company, in whole or in part, or
divulging or discussing any of their contents, except to its financial,
investment or legal advisors in connection with its proposed investment in the
Shares, each of whom shall be advised of, and agree to abide by, the
confidentiality restrictions contained in this Agreement.  Further, the Purchaser understands that the
existence and nature of all conversations and presentations, if any, regarding
the Company and this offering must be kept strictly confidential.  The Purchaser understands that the federal
securities laws may impose restrictions on trading based on information
regarding this offering.  In addition,
the Purchaser hereby acknowledges that unauthorized disclosure of information
regarding this offering may result in a violation of Regulation FD.  The obligations under this Section 5.3 will
terminate upon the filing by the Company of a Current Report on Form 8-K or a
press release or press releases describing this offering.  In addition to the above, the Purchaser shall
maintain in confidence the receipt and content of any notice of a Suspension
(as defined in Section 5.8 below); provided, however, that the receipt of
such notice of Suspension shall not in and of itself restrict the Purchaser
from engaging in transactions in the Company’s securities in 



 12
 






 



which the Purchaser would otherwise be entitled to
engage in, including without limitation sales pursuant to Rule 144 under the
Securities Act.  The foregoing agreements
shall not apply to any information that is or becomes publicly available
through no fault of the Purchaser, or that the Purchaser is legally required to
disclose; provided, however, that if the Purchaser is requested or ordered to disclose any such information
pursuant to any court or other government order or any other applicable legal
procedure, it shall provide the Company with prompt notice of any such request
or order in time sufficient to enable the Company to seek an appropriate
protective order.


5.4                Investment
Decision.  The Purchaser understands
that nothing in the Agreement or any other materials presented to the Purchaser
in connection with the purchase and sale of the Shares constitutes legal, tax
or investment advice.  The Purchaser has
consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its purchase
of the Shares.


5.5                Risk of Loss.  The Purchaser
understands that its investment in the Shares involves a significant degree of
risk, including a risk of total loss of the Purchaser’s investment, and the
Purchaser has full cognizance of and understands all of the risk factors
related to the Purchaser’s purchase of the Shares, including, but not limited
to, those set forth, or referred to, under the caption “Risk Factors” in the
Private Placement Memorandum and the Exchange Act Reports.  The Purchaser understands that the market
price of the Common Stock has been volatile and that no representation is being
made as to the future value or trading volume of the Common Stock.  The Purchaser has the ability to bear the
economic risks of an investment in the Shares.


5.6                Legend.  The Purchaser
understands that, until such time as (i) the Registration Statement has been
declared effective and the Shares have been sold pursuant to such Registration
Statement or (ii) the Shares may be sold pursuant to Rule 144 under the
Securities Act without any restriction as to the number of securities as of a
particular date that can then be immediately sold, the Shares will bear a
restrictive legend in substantially the following form:


“THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE

NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF

1933, AS AMENDED (THE “SECURITIES ACT”) OR THE

SECURITIES LAWS OF ANY STATE OR OTHER

JURISDICTION.  THE SHARES MAY NOT BE
OFFERED,

SOLD OR OTHERWISE TRANSFERRED, OR DISPOSED OF

EXCEPT (1) PURSUANT TO AN EXEMPTION FROM

REGISTRATION UNDER THE SECURITIES ACT OR (2)

PURSUANT TO AN EFFECTIVE REGISTRATION

STATEMENT UNDER THE SECURITIES ACT, IN EACH

CASE IN ACCORDANCE WITH ALL APPLICABLE STATE

SECURITIES LAWS AND THE SECURITIES LAWS OF

OTHER JURISDICTIONS, AND IN THE CASE OF A

TRANSACTION EXEMPT FROM REGISTRATION, UNLESS

THE COMPANY HAS RECEIVED AN OPINION OF

COUNSEL REASONABLY SATISFACTORY TO IT THAT





 13
 






 



SUCH TRANSACTION DOES NOT REQUIRE

REGISTRATION UNDER THE SECURITIES ACT AND SUCH

OTHER APPLICABLE LAWS.  NOTWITHSTANDING
THE

FOREGOING, THE SHARES MAY BE PLEDGED IN

CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR

OTHER LOAN OR FINANCING ARRANGEMENT SECURED

BY THE SHARES.”


At such time as Shares are sold pursuant to the
Registration Statement (as defined below) after it has become effective, the
Company will promptly substitute one or more replacement certificates without a
legend with respect to such Shares.


5.7                Residency.  The Purchaser’s
principal executive offices are in the jurisdiction set forth immediately below
the Purchaser’s name on the signature pages hereto. 


5.8                Public Sale or Distribution.  The
Purchaser hereby covenants with the Company not to make any sale of the Shares
under the Registration Statement without complying with the provisions of this
Agreement and without effectively causing the prospectus delivery requirements
under the Securities Act to be satisfied (whether physically or through
compliance with Rule 172 under the Securities Act or any similar rule).  The Purchaser also hereby covenants with the
Company that it shall be deemed to have represented at such time that it
presents a certificate to the Company’s transfer agent representing those
Shares presented to the transfer agent for resale that such resale was made
pursuant to the Registration Statement and in compliance with the prospectus
delivery requirements under the Securities Act. 
The Purchaser acknowledges that there may occasionally be times when the
Company must suspend the use of the prospectus (the “Prospectus”) forming a
part of the Registration Statement (a “Suspension”) until such time as an
amendment to the Registration Statement has been filed by the Company and
declared effective by the Commission, or until such time as the Company has
filed an appropriate report with the Commission pursuant to the Exchange
Act.  Without the Company’s prior written
consent, which consent shall not unreasonably be withheld or delayed, the
Purchaser shall not use any written materials to offer the Shares for resale
other than the Prospectus, including any “free writing prospectus” as defined
in Rule 405 under the Securities Act. 
The Purchaser covenants that it will not sell any Shares pursuant to
said Prospectus during the period commencing at the time when Company gives the
Purchaser written notice of the suspension of the use of said Prospectus (which
notice shall contain solely the fact that there has been a suspension and shall
not contain any facts and circumstances regarding the suspension) and ending at
the time when the Company gives the Purchaser written notice that the Purchaser
may thereafter effect sales pursuant to said Prospectus.  Notwithstanding the foregoing, the Company
agrees that no Suspension shall be for a period of longer than 60 consecutive
days, and no Suspension shall be for a period longer than 90 days in the
aggregate in any 365 day period.  The
Purchaser further covenants to notify the Company promptly of the sale of all
of its Shares.


5.9                Organization; Validity; Enforcements.  The
Purchaser further represents and warrants to, and covenants with, the Company
that (i) the Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated
hereby and has taken all necessary action to authorize the execution, delivery
and performance of this Agreement, (ii) the making and performance of this
Agreement by the 



 14
 






 



Purchaser and the consummation of the transactions
herein contemplated will not violate any provision of the organizational
documents of the Purchaser or conflict with, result in the breach or violation
of, or constitute, either by itself or upon notice or the passage of time or
both, a default under any material agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the
Purchaser is a party or, any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body, administrative
agency or other governmental agency or body applicable to the Purchaser, (iii) no
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental agency or body is required on the
part of the Purchaser for the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement, (iv) upon
the execution and delivery of this Agreement, this Agreement shall constitute a
legal, valid and binding obligation of the Purchaser, enforceable in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or the enforcement of creditor’s rights and the
application of equitable principles relating to the availability of remedies,
and except as rights to indemnity or contribution, including, but not limited
to, the indemnification provisions set forth in Section 7.3 of this
Agreement, may be limited by federal or state securities laws or the public
policy underlying such laws and (v) there is not in effect any order
enjoining or restraining the Purchaser from entering into or engaging in any of
the transactions contemplated by this Agreement.


5.10              Short Sales.  Prior to the date hereof, the Purchaser has
not taken, and prior to the public announcement of the transaction after the
Closing the Purchaser shall not take, any action that has caused or will cause
the Purchaser to have, directly or indirectly, sold or agreed to sell any
shares of Common Stock, effected any short sale, whether or not against the
box, established any “put equivalent position” (as defined in
Rule 16a-1(h) under the Exchange Act with respect to the Common Stock,
granted any other right (including, without limitation, any put or call option)
with respect to the Common Stock or with respect to any security that includes,
relates to or derived any significant part of its value from the Common Stock.


SECTION 6.           Survival of
Agreements; Non-Survival of Company Representations and Warranties.  Notwithstanding any investigation made by any
party to this Agreement or by the Placement Agent, all covenants and agreements
made by the Company and the Purchaser herein and in the certificates for the
Shares delivered pursuant hereto shall survive the execution of this Agreement,
the delivery to the Purchaser of the Shares being purchased and the payment
therefor.  All representations and
warranties, made by the Company and the Purchaser herein and in the
certificates for the Shares delivered pursuant hereto shall survive for a
period of two years following the later of the execution of this Agreement, the
delivery to the Purchaser of the Shares being purchased and the payment
therefor.



 15














 


SECTION 7.           Registration of the Shares;
Compliance with the Securities Act. 


7.1                Registration Procedures and
Expenses.  The Company shall:


(a)           as soon as practicable prepare and,
as soon as practicable after filing with the Commission the Company’s Annual Report
on Form 10-K for the year ending December 31, 2006, file with the Commission a
registration statement (the “Registration Statement”) initially on Form S-1
relating to the resale of the Shares by the Purchaser and the Other Purchasers
from time to time on the Nasdaq Global Market, or the facilities of any
national securities exchange or inter-dealer quotation system, including OTCBB,
on which the Common Stock is then traded or quoted in privately-negotiated
transactions;


(b)           use its best efforts, subject to
receipt of necessary information from the Purchasers, to cause the Commission
to declare the Registration Statement effective within 150 days after the
Closing Date (whether the Registration Statement is selected for review by the
Commission or not);


(c)           promptly prepare and file with the
Commission such amendments and supplements to the Registration Statement and
the prospectus used in connection therewith as may be necessary to keep the
Registration Statement effective until the earliest of (i) two years after
the effective date of the Registration Statement, (ii) such time as all of
the Shares have been sold pursuant to the Registration Statement, or
(iii) such time as the Shares become eligible for resale by non-affiliates
pursuant to Rule 144(k) under the Securities Act or any successor rule
then in effect;


(d)           so long as the Registration Statement
is effective covering the resale of Shares owned by the Purchaser, furnish to
the Purchaser with respect to the Shares registered under the Registration
Statement (and to each underwriter, if any, of such Shares) such number of
copies of prospectuses, each amendment and supplement thereto and such other
documents as the Purchaser may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Shares by the Purchaser;


(e)           file documents required of the
Company for normal Blue Sky clearance in states specified in writing by the
Purchaser; provided, however, that the Company shall not be
required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;


(f)            bear all expenses in connection with
the procedures in paragraphs (a) through (e) of this Section 7.1
and the registration of the Shares pursuant to the Registration Statement,
other than fees and expenses, if any, of counsel or other advisers to the
Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and
commissions incurred by the Purchaser or the Other Purchasers, if any in
connection with the offering of the Shares pursuant to the Registration
Statement;


(g)           notify the Purchaser at any time when
a prospectus relating to the Shares is required to be delivered under the
Securities Act of the happening of any event as a result of which the
prospectus included in the Registration Statement contains an untrue statement
of a material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading and, subject to Section 7.6, prepare a supplement or amendment
to such prospectus, so that, as thereafter delivered to the Purchaser of such
Shares, such prospectus will not contain any untrue statement



 16
 






 



of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;


(h)           advise the Purchaser promptly after
receiving notice or obtaining knowledge of the existence of any stop order by
the Commission delaying or suspending the effectiveness of the Registration
Statement or of the initiation or threat in writing of any proceeding for that
purpose, use its commercially reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of the Registration Statement at the
earliest possible time, and promptly notify the Purchaser of the lifting or
withdrawal of any such order;


(i)            file a Form D with respect to
the Shares as required under Regulation D and to provide a copy thereof to the
Purchaser promptly after filing;


(j)            issue a press release or file a
Current Report on Form 8-K describing the transactions contemplated by this
Agreement on or before 9:00 a.m., New York City time, on or before the second
business day following the date hereof; and


(k)           in order to enable the Purchasers to
sell the Shares under Rule 144 to the Securities Act, for a period of two
years from Closing, use its commercially reasonable efforts to comply with the
requirements of Rule 144, including without limitation, use its
commercially reasonable efforts to comply with the requirements of
Rule 144(c) with respect to public information about the Company and
to timely file all reports required to be filed by the Company under the
Exchange Act, except for the Company’s upcoming Annual Report on Form 10-K for
the year ended December 31, 2006 and Quarterly Report on Form 10-Q for the
quarter ended March 31, 2007, which the Company will file as soon as
practicable after the completion of the audit of the Company’s financial
statements for the year ended December 31, 2006.


After such time as the
Company becomes eligible to file a registration statement on Form S-3, the
Company will file a post-effective amendment to the Registration Statement to
provide for the automatic incorporation by reference of the Company’s reports
subsequently filed pursuant to the Exchange Act.


The Company understands
that the Purchaser disclaims being an underwriter, but the Purchaser being
deemed an underwriter shall not relieve the Company of any obligations it has
hereunder.  A draft of the proposed form
of the questionnaire related to the Registration Statement to be completed by
the Purchaser is attached hereto as Appendix I.


7.2                Transfer of Shares After
Registration.  The Purchaser agrees
that it will not effect any disposition of the Shares or its right to purchase
the Shares that would constitute a sale within the meaning of the Securities
Act or pursuant to any applicable state securities laws, except as contemplated
in the Registration Statement referred to in Section 7.1 or as otherwise
permitted by law, and that it will promptly notify the Company of any changes
in the information set forth in the Registration Statement regarding the
Purchaser or its plan of distribution.



 17
 






 



7.3                Indemnification.  For the purpose of this Section 7.3:


(i)       the
term “Purchaser/Affiliate” shall mean any affiliate of the Purchaser,
including a transferee who is an affiliate of the Purchaser, and any person who
controls the Purchaser or any affiliate of the Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act;
and


(ii)      the
term “Registration Statement” shall include any preliminary prospectus
and final prospectus included in the Registration Statement referred to in
Section 7.1 and any supplement or amendment thereto and any issuer free writing
prospectus as defined in Rule 405 under the Securities Act relating to the
Shares.


(a)           The Company agrees to indemnify and
hold harmless the Purchaser and each Purchaser/Affiliate, against any losses,
claims, damages, liabilities or expenses, joint or several, to which the
Purchaser or Purchaser/Affiliates may become subject, under the Securities Act,
the Exchange Act, or any other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, including the Prospectus, financial statements and
schedules, and all other documents filed as a part thereof, as amended at the
time of effectiveness of the Registration Statement, including any information
deemed to be a part thereof as of the time of effectiveness pursuant to
paragraph (b) of Rule 430A, or pursuant to Rules 430B, 430C or
434, of the Rules and Regulations, or the Prospectus, in the form first filed
with the Commission pursuant to Rule 424(b) of the Regulations, or
filed as part of the Registration Statement at the time of effectiveness if no
Rule 424(b) filing is required or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state in any of them a material fact required to be stated therein or necessary
to make the statements in the Registration Statement or any amendment or supplement
thereto not misleading or in the Prospectus or any amendment or supplement
thereto not misleading in light of the circumstances under which they were
made, or arise out of or are based in whole or in part on any inaccuracy in the
representations or warranties of the Company contained in this Agreement, or
any failure of the Company to perform its obligations hereunder or under law,
and will promptly reimburse the Purchaser and each Purchaser/Affiliate for any
legal and other expenses as such expenses are reasonably incurred by such
Purchaser or such Purchaser/Affiliate in connection with investigating,
defending or preparing to defend, settling, compromising or paying any such
loss, claim, damage, liability, expense or action; provided, however,
that the Company will not be liable for amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company, which consent shall not be unreasonably withheld,
and the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon
(i) an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Purchaser expressly for use
therein, or (ii) the failure of such Purchaser to comply with the covenants
and



 18
 






 



agreements contained in Sections 5.9 or 7.2
hereof respecting the sale of the Shares, or (iii) the inaccuracy of any
representation or warranty made by such Purchaser herein or (iv) any
statement or omission in any Prospectus that is corrected in any subsequent
Prospectus that was filed with the Commission prior to the pertinent sale or
sales by the Purchaser.


(b)           Each Purchaser will severally, but
not jointly, indemnify and hold harmless the Company, each of its directors,
each of its officers who signed the Registration Statement and each person, if
any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses,
claims, damages, liabilities or expenses to which the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common
law or otherwise (including in settlement of any litigation, but only if such
settlement is effected with the written consent of such Purchaser, which
consent shall not be unreasonably withheld) insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon (i) any failure to comply with the
covenants and agreements contained in Sections 5.9 or 7.2 hereof respecting the
sale of the Shares or (ii) the inaccuracy of any representation or
warranty made by such Purchaser herein or (iii) any untrue or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or arising out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements in the
Registration Statement or any amendment or supplement thereto not misleading or
in the Prospectus or any amendment or supplement thereto not misleading in the
light of the circumstances under which they were made, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Purchaser expressly for use therein; and will reimburse the Company, each
of its directors, each of its officers who signed the Registration Statement or
controlling person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed the
Registration Statement or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that each Purchaser’s
aggregate liability under this Section 7 shall not exceed the amount of net
proceeds received by such Purchaser on the sale of the Shares pursuant to the
Registration Statement.


(c)           Promptly after receipt by an
indemnified party under this Section 7.3 of notice of the threat or
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 7.3
promptly notify the indemnifying party in writing thereof, but the omission to
notify the indemnifying party will not relieve it from any liability that it
may have to any indemnified party for contribution or otherwise under the
indemnity agreement contained in this Section 7.3 to the extent it is not
prejudiced as a result of such failure. 
In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided,



 19
 






 



however,
if the defendants in any such action include both the indemnified party, and
the indemnifying party and the indemnified party shall have reasonably
concluded, based on an opinion of counsel reasonably satisfactory to the
indemnifying party, that there may be a conflict of interest between the
positions of the indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses available to it
and/or other indemnified parties that are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties.  Upon
receipt of notice from the indemnifying party to such indemnified party of its
election to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7.3 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
reasonably satisfactory to such indemnifying party, representing all of the
indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of action, in each of which cases the
reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party. The indemnifying party shall not be liable for any
settlement of any action without its written consent.  In no event shall any indemnifying party be
liable in respect of any amounts paid in settlement of any action unless the
indemnifying party shall have approved in writing the terms of such settlement;
provided that such consent shall not be unreasonably withheld.  No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnification could have been sought hereunder by such indemnified
party from all liability on claims that are the subject matter of such
proceeding.


(d)           If the indemnification provided for
in this Section 7.3 is required by its terms but is for any reason held to
be unavailable to or otherwise insufficient to hold harmless an indemnified
party under paragraphs (a), (b) or (c) of this Section 7.3 in
respect to any losses, claims, damages, liabilities or expenses referred to
herein, then each applicable indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of any losses, claims,
damages, liabilities or expenses referred to herein (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Purchaser from the private placement of Common Stock hereunder or
(ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but the relative fault
of the Company and the Purchaser in connection with the statements or omissions
or inaccuracies in the representations and warranties in this Agreement and/or
the Registration Statement that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.  The relative benefits received by the Company
on the one hand and each Purchaser on the other shall be deemed to be in the
same proportion as the amount paid by such Purchaser to the Company pursuant to
this Agreement for the Shares



 20
 






 



purchased by such Purchaser that were sold pursuant to
the Registration Statement bears to the difference (the “Difference”)
between the amount such Purchaser paid for the Shares that were sold pursuant
to the Registration Statement and the amount received by such Purchaser from
such sale.  The relative fault of the
Company on the one hand and each Purchaser on the other shall be determined by
reference to, among other things, whether the untrue or alleged statement of a
material fact or the omission or alleged omission to state a material fact or
the inaccurate or the alleged inaccurate representation and/or warranty relates
to information supplied by the Company or by such Purchaser and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.  The
amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in paragraph (c) of this Section 7.3,
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.  The provisions set forth in paragraph
(c) of this Section 7.3 with respect to the notice of the threat or
commencement of any threat or action shall apply if a claim for contribution is
to be made under this paragraph (d); provided, however, that no
additional notice shall be required with respect to any threat or action for
which notice has been given under paragraph (c) for purposes of
indemnification.  The Company and the
Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 7.3 were determined solely by pro rata allocation
(even if all of the Purchasers were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in this paragraph. 
Notwithstanding the provisions of this Section 7.3, no Purchaser
shall be required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages that such Purchaser 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.  The Purchasers’
obligations to contribute pursuant to this Section 7.3 are several and not
joint.


7.4                Termination of Conditions and
Obligations.  The restrictions
imposed by Section 5.9 or Section 7.2 upon the transferability of the
Shares shall cease and terminate as to any particular number of the Shares upon
the earlier of (i) the passage of two years from the effective date of the
Registration Statement covering such Shares and (ii) at such time as an
opinion of counsel satisfactory in form and substance to the Company shall have
been rendered to the effect that such conditions are not necessary in order to
comply with the Securities Act.


7.5                Information Available.  The Company, upon the reasonable request of
the Purchaser, shall make available for inspection by each Purchaser, any
underwriter participating in any disposition pursuant to the Registration
Statement and any attorney, accountant or other agent retained by the Purchaser
or any such underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company’s officers,
employees and independent accountants to supply all information reasonably
requested by the Purchaser or any such underwriter, attorney, accountant or
agent in connection with the Registration Statement.



 21
 






 



7.6                Delay in Filing and Effectiveness
of Registration Statement.  In the
event the Registration Statement is not filed and declared effective within 150
days of the Closing Date (whether the Registration Statement is selected for
review by the Commission or not), after the 150th day
after the Closing Date until such time as the Registration Statement is
declared effective, the Company shall pay to the Purchaser an amount, as
liquidated damages and not as a penalty, equal to 0.75% per month for the first
two months after the 150th day after the Closing Date, and thereafter,
1.00% per month, of the aggregate purchase price paid by such Purchaser
pursuant to this Agreement for any Shares then held by such Purchaser (pro rata
on a 30-day basis for any portion of a calendar month).  If the Purchaser shall be prohibited from
selling Shares under the Registration Statement as a result of a Suspension of
more than 60 consecutive days or Suspensions of more than 90 days in the
aggregate in any 12-month period, then for each day on which a Suspension is in
effect that exceeds the maximum allowed period for a Suspension or Suspensions,
but not including any day on which a Suspension is lifted, the Company shall
pay the Purchaser, as liquidated damages and not as a penalty, an amount equal
to 0.75% for the first two months, and thereafter, 1.00% per month, of the
purchase price paid by such Purchaser for its Shares pursuant to this Agreement
for any Shares then held by such Purchaser (pro rata on a 30-day basis for any
portion of a calendar month).  For
purposes of this Section 7.6, a Suspension shall be deemed lifted on the date
that notice that the Suspension has been lifted is delivered to the Purchaser
pursuant to Section 10 of this Agreement. 
All liquidated damages under this Section 7.6 shall be payable monthly
in cash, in arrears and shall be due within five business days after the end of
each calendar month, and any unpaid liquidated damages under this Section 7.6
shall bear interest at 1.50% per month. 
In no event shall the aggregate amount of such liquidated damages or
interest thereon exceed 12.0% of the aggregate purchase price paid by the
Purchaser pursuant to this Agreement for any Shares then held by such
Purchaser.  Such damages described in this
Section 7.6 shall not be the exclusive remedy for the failure of the
Registration Statement to be filed and declared effective or to maintain the
effectiveness of the Registration Statement. 
Notwithstanding anything to the contrary in this Section 7.6, in no
event shall a Suspension be deemed to have occurred under this Section 7.6
where such suspension is the result of any misstatement or omission of
information regarding the Purchaser in the Registration Statement or any
amendment or supplement thereto.


SECTION 8.           Broker’s Fee.  The Purchaser acknowledges that the Company
intends to pay to the Placement Agent a fee in respect of the sale of the
Shares to the Purchaser.  The Purchaser
and the Company agree that the Purchaser shall not be responsible for such fee
and that the Company will indemnify and hold harmless the Purchaser and each
Purchaser/Affiliate against any losses, claims, damages, liabilities or
expenses, joint or several, to which such Purchaser or Purchaser/Affiliate may
become subject with respect to such fee. 
Each of the parties hereto represents that, on the basis of any actions
and agreements by it, there are no other brokers or finders entitled to
compensation in connection with the sale of the Shares to the Purchaser.


SECTION
9.           Independent Nature
of Purchasers’ Obligations and Rights. 
The obligations of the Purchaser under this Agreement are several and
not joint with the obligations of any Other Purchaser, and no Purchaser shall
be responsible in any way for the performance of the obligations of any Other
Purchaser under the Agreements.  The
decision of each Purchaser to purchase the Shares pursuant to the Agreements
has been made by such Purchaser independently of any other Purchaser.  Nothing contained in the Agreements, and no



 22
 






 



action taken by any Purchaser pursuant thereto, shall
be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or with respect to the acquisition, disposition or voting of the
Shares or the transactions contemplated by the Agreements.  Each Purchaser acknowledges that no other
Purchaser has acted as agent for such Purchaser in connection with making its
investment hereunder and that no Purchaser will be acting as agent of such
Purchaser in connection with monitoring its investment in the Shares or
enforcing its rights under this Agreement. 
Each Purchaser shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined
as an additional party in any proceeding for such purpose.  No
consideration shall be offered or paid to any person to amend or consent to a
waiver or modification of any provision of the Agreements unless the same
consideration is also offered to all of the parties to the Agreements.


SECTION 10.         Notices.  All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, e-mail, confirmed facsimile or nationally
recognized overnight express courier postage prepaid, and shall be deemed given
when so mailed and shall be delivered as addressed as follows:


(a)           if to the Company, to:


 


	
  

  	
  NetBank, Inc.

  1015 Windward Ridge Parkway

  Alpharetta, GA 30005

  Attention: Stephen F. Herbert

  Facsimile: 803-462-7623

  E-mail: sherbert@netbank.com

  
	
   

  
	
   

  	
  with a copy to:

  
	
   

  
	
   

  	
  Holland &
  Knight LLP

  
	
   

  	
  50 North Laura
  Street, Suite 3900

  
	
   

  	
  Jacksonville, FL
  32202

  
	
   

  	
  Attention: Ivan
  A. Colao

  
	
   

  	
  Facsimile:
  904-358-1872

  
	
   

  	
  E-mail:
  ivan.colao@hklaw.com

  



 


or to such other person at such other place as the
Company shall designate to the Purchaser in writing; and


(b)           if to the Purchaser,
at its address as set forth at the end of this Agreement, or at such other
address or addresses as may have been furnished to the Company in writing.


SECTION 11.         Changes.  This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and the
Purchaser.



 23
 






 



Any amendment or waiver effected in accordance with
this Section 11 shall be binding upon each holder of any securities
purchased under this Agreement at the time outstanding, each future holder of
all such securities, and the Company.


SECTION 12.         Headings.  The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.


SECTION 13.         Severability.  In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.


SECTION 14.         Governing Law; Venue.  This Agreement is to be construed in
accordance with and governed by the federal law of the United States of America
and the internal laws of the State of New York without giving effect to any
choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of New York to the
rights and duties of the parties.  Each
of the Company and the Purchaser submits to the nonexclusive jurisdiction of
the United States District Court for the Southern District of New York and of
any New York State court sitting in New York City for purposes of all legal
proceedings arising out of or relating to this Agreement and the transactions
contemplated hereby.  Each of the Company
and the Purchaser irrevocably waives, to the fullest extent permitted by law,
any objection that it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.


SECTION 15.         Counterparts.  This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties. 
Facsimile signatures shall be deemed original signatures.


SECTION 16.         Entire Agreement.  This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters.  Each party expressly represents and warrants
that it is not relying on any oral or written representations, warranties,
covenants or agreements outside of this Agreement.


SECTION 17.         Fees and Expenses.  Except as set forth herein, each of the
Company and the Purchaser shall pay its respective fees and expenses related to
the transactions contemplated by this Agreement.


SECTION 18.         Parties.  This Agreement is made solely for the benefit
of and is binding upon the Purchaser and the Company and to the extent provided
in Section 7.3, any person controlling the Company or the Purchaser, the
officers and directors of the Company, and their respective executors,
administrators, successors and assigns and subject to the



 24
 






 



provisions of Section 7.3, no other person shall
acquire or have any right under or by virtue of this Agreement. The term “successors
and assigns” shall not include any subsequent purchaser, as such purchaser, of
the Shares sold to the Purchaser pursuant to this Agreement.


SECTION 19.         Further Assurances.  Each party agrees to cooperate fully with the
other party and to execute such further instruments, documents and agreements
and to give such further written assurance as may be reasonably requested by
any other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.


[Remainder of Page Left Intentionally Blank]



 25














 


IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed by their duly authorized
representatives as of the day and year first above written.


	
  

  	
  Net Bank, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


Print or Type:


	
  

  	
   

  
	
   

  	
   

  	
  Name of Purchaser

  
	
   

  	
   

  	
  (Individual or Institution)

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Jurisdiction of Purchaser’s Executive Offices

  
	
   

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Name of Individual representing

  
	
   

  	
   

  	
  Purchaser (if an Institution)

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Title of Individual representing

  
	
   

  	
   

  	
  Purchaser (if an Institution)

  
	
   

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Number of Shares to be purchased

  



 


Signature by:


	
  

  	
  Individual Purchaser or Individual

  representing Purchaser:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile:

  	
   

  
	
   

  	
  E-mail: