EXHIBIT
10.1


 


SECURITIES
PURCHASE AGREEMENT


 


This SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated as of June 16, 2004 is made by
and among Perficient, Inc., a Delaware corporation, with headquarters located
at 1120 South Capital of Texas Highway, Suite 220, Building 3, Austin, Texas
78746 (the “Company”), and the investors named on the signature pages
hereto, together with their permitted transferees (the “Investors”).


 


RECITALS:


 


A.                                   The
Company and the Investors are executing and delivering this Agreement in
reliance upon the exemptions from securities registration afforded by
Section 4(2) of the Securities Act  and Rule 506 under Regulation D.


 


B.                                     The
Investors desire, upon the terms and conditions stated in this Agreement, to
purchase an aggregate of 800,000 shares of Common Stock of the Company (the “Common
Shares”) at $3.09 per share, for an aggregate purchase price of
$2,472,000.00, and to receive, in consideration for such purchase, Warrants to
acquire additional shares of Common Stock.


 


C.                                     Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement under which the
Company has agreed to provide certain registration rights under the Securities
Act, the rules and regulations promulgated thereunder and applicable state
securities laws.


 


D.                                    The
capitalized terms used herein and not otherwise defined have the meanings given
them in Article X hereof.


 


In consideration of the
premises and the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and the Investors hereby agree as follows:


 


ARTICLE I

PURCHASE AND SALE OF COMMON STOCK


 


1.1                                 Purchase
and Sale of Common Stock.  At the
Closing, subject to the terms of this Agreement and the satisfaction or waiver
of the conditions set forth in Articles VI and VII hereof, the Company will
issue and sell to each Investor, and each Investor will (on a several and not a
joint basis) purchase from the Company, such number of Common Shares set forth
opposite such Investor’s name on Exhibit A hereto under the heading
“Common Shares.”


 


1.2                                 Payment.  Each Investor will pay the purchase amount
for the Common Shares as is set forth opposite such Investor’s name on Exhibit
A hereto under the heading “Purchase


 

















 


Price,” by wire transfer
of immediately available funds in accordance with the Company’s written wire
instructions, simultaneously with delivery by the Company to each Investor of
(i) one or more stock certificates, free and clear of all restrictive and other
legends (except as expressly provided herein), representing the Common Shares
so purchased by such Investor and (ii) Warrants in an amount determined in
accordance with Section 1.4 hereof, and the Company will deliver such
stock certificates and Warrants against delivery of the purchase price as
described above.


 


1.3                                 Closing
Date.  Subject to the satisfaction
or waiver of the conditions set forth in Articles VI and VII hereof, the Closing
will take place at 1:00 p.m., Central Time, on June 16, 2004, or at
another date or time agreed upon by the parties to this Agreement (the “Closing
Date”).  The Closing will be held at
the offices of Faegre & Benson LLP, or at such other place as the parties
agree.


 


1.4                                 Warrants.  In consideration of the purchase of the
Common Shares by the Investors, at the Closing the Company will issue warrants
to each Investor, substantially in the form of Exhibit B hereto (the “Warrants”),
giving each Investor the right, for a period of two years after the Closing
Date, to acquire 200 shares of Common Stock for each 1,000 shares of Common
Stock purchased by such Investor on the Closing Date at a purchase price of
$4.64 per share.


 


ARTICLE II

REPRESENTATIONS AND WARRANTIES OF INVESTORS


 


Each Investor represents
and warrants to the Company, severally and solely with respect to itself and
its purchase hereunder and not with respect to any other Investor, that:


 


2.1                                 Investment
Purpose.  The Investor is purchasing
the Securities for its own account and not with a present view toward the
public sale or distribution thereof, except pursuant to sales registered or
exempted from registration under the Securities Act; 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 from the registration requirements
of the Securities Act.


 


2.2                                 Accredited
Investor Status.  The Investor is an
“accredited investor” as defined in Rule 501(a) of Regulation D.  The Investor has experience as an investor
in securities representing an investment decision like that involved in the
purchase of the Securities and acknowledges that it has the knowledge,
sophistication and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Securities
and has the ability to bear the economic risks of an investment in the
Securities.


 


2.3                                 Reliance
on Exemptions.  The Investor
understands that the Securities are being offered and sold to it in reliance
upon specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Investor’s compliance with, the representations,
warranties, agreements,


 


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acknowledgments and
understandings of the Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investor to acquire
the Securities.


 


2.4                                 Information.  The Investor and its advisors, if any, have
reviewed the SEC Documents and been furnished with all materials relating to
the business, finances and operations of the Company, and materials relating to
the offer and sale of the Securities, that have been requested by the Investor
or its advisors, if any.  The Investor
and its advisors, if any, have been afforded the opportunity to ask questions
of the Company.  Neither such inquiries
nor any other due diligence investigation conducted by Investor or any of its
advisors or representatives modify, amend or affect the Investor’s right to
rely on the Company’s representations and warranties contained in
Article III below.  The Investor
acknowledges and understands that its investment in the Securities involves a
significant degree of risk, including the risks reflected in the SEC Documents,
and that the market price of the Common Stock has been and continues to be
volatile and that no representation is being made as to the future value of the
Common Stock.


 


2.5                                 Governmental
Review.  The Investor understands
that no United States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or endorsement
of the Securities or an investment therein.


 


2.6                                 Transfer
or Resale.  The Investor understands
that:


 


(a)                                  except
as provided in the Registration Rights Agreement, the Securities have not been
and are not being registered under the Securities Act or any applicable state
securities laws and, consequently, the Investor may have to bear the risk of
owning the Securities for an indefinite period of time because the Securities
may not be transferred unless (i) the resale of the Securities is
registered pursuant to an effective registration statement under the Securities
Act; (ii) the Investor has delivered to the Company an opinion of counsel (in
form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Securities to be sold or transferred may
be sold or transferred pursuant to an exemption from such registration; (iii) the
Securities are sold or transferred pursuant to Rule 144; or (iv) the Securities
are sold or transferred to an affiliate (as defined in Rule 144) of the
Investor;


 


(b)                                 any
sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and, if Rule 144 is not applicable, any
resale of the Securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the Securities Act) may require compliance with another exemption
under the Securities Act or the rules and regulations of the SEC thereunder;


 


(c)                                  except
as set forth in the Registration Rights Agreement, neither the Company nor any
other person is under any obligation to register the Securities under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder; and


 


(d)                                 notwithstanding
anything in this Agreement or the Warrants to the contrary, the Company agrees
to reregister any Common Shares or Warrant issued to an Investor


 


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hereunder in the name of
any partner or member of such Investor, and any such partner or member shall be
deemed to be an Investor for all purposes of this Agreement and the
Registration Rights Agreement, provided that any such partner or member agrees
in writing to be subject to the terms of this Agreement and the Registration
Rights Agreement to the same extent as of such partner or member were an
original Investor hereunder and thereunder.


 


2.7                                 Legends.  The Investor understands that until (a) the
Common Shares and the Warrants may be sold by the Investor under Rule 144(k) or
(b) such time as the resale of the Securities has been registered under the
Securities Act as contemplated by the Registration Rights Agreement, the
certificates representing the Securities will bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such Securities):


 


THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES (COLLECTIVELY, THE “ACTS”).  THE
SECURITIES MAY NOT BE SOLD, DISTRIBUTED, OFFERED, PLEDGED, ENCUMBERED, ASSIGNED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF THE FOLLOWING: (1) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACTS COVERING THE
TRANSACTION, (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACTS, OR (3) THE COMPANY OTHERWISE SATISFIES ITSELF THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACTS.  NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.


 


The legend set forth
above will be removed and the Company will issue a certificate without the
legend to the holder of any certificate upon which it is stamped, in accordance
with the terms of Article V hereof.


 


2.8                                 Authorization;
Enforcement.  This Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of the Investor and are valid and binding agreements of
the Investor, enforceable in accordance with their terms, subject to the effect
of any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and the application of general
principles of equity.


 


2.9                                 Residency.  The Investor is a resident of the
jurisdiction set forth immediately below such Investor’s name on the signature
pages hereto.


 


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2.10                           No Intent
to Effect a Change of Control.  The
Investor has no present intent to change or influence the control of the
Company within the meaning of Rule 13d-1 of the Exchange Act.


 


2.11                           No
Hedging.  The Investor has not
established any hedge or other position in the Common Stock that is outstanding
on the Closing Date which is designed to or could reasonably be expected to
lead to or result in any sale of the Common Shares.  For purposes hereof, a “hedge or other position” would include
effecting any short sale or having in effect any short position or any
purchase, sale or grant of any put option, call option or prepaid forward
contract with respect to the Common Stock of the Company or with respect to any
security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from the Common Stock.


 


ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY


 


The Company, and each of
its Subsidiaries, as applicable, represents and warrants to the Investors that:


 


3.1                                 Organization
and Qualification. The Company and its Subsidiaries are duly incorporated,
validly existing and in good standing under the laws of the jurisdictions in
which they are incorporated, with full power and authority (corporate and other)
to own, lease, use and operate their properties, if any, and to carry on their
businesses as and where now owned, leased, used, operated and conducted.  The Company is duly qualified to do business
and is in good standing in every jurisdiction in which the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified or in good standing would not have a Material
Adverse Effect.


 


3.2                                 Authorization;
Enforcement.  (a) The Company
has all requisite corporate power and authority to enter into and to perform
its obligations under this Agreement, the Registration Rights Agreement and the
Warrants, to consummate the transactions contemplated hereby and thereby and to
issue the Securities in accordance with the terms hereof and thereof;
(b) the execution, delivery and performance of this Agreement, the
Registration Rights Agreement and the Warrants by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including without limitation the issuance of the Common Shares, the Warrants
and the Warrant Shares and reservation for issuance of the Warrant Shares) have
been duly authorized by the Company’s Board of Directors and no further consent
or authorization of the Company, its Board or Directors, or its stockholders is
required; (c) this Agreement, the Registration Rights Agreement and the
Warrants have been duly executed by the Company; and (d) each of this
Agreement, the Registration Rights Agreement and the Warrants constitutes a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its respective terms, except as may be limited by
any applicable bankruptcy, insolvency, reorganization, or moratorium or similar
laws affecting the rights of creditors generally and the application of general
principles of equity.


 


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3.3                                 Capitalization.  As of June 14, 2004, the authorized
capital stock of the Company consisted of (i) 40,000,000 shares of Common
Stock, par value $.001 per share, of which 17,161,673 shares were issued and
outstanding; 7,306,652 shares were reserved for issuance under the Option Plan,
of which 5,655,563 shares are subject to outstanding option grants; 318,239
shares were reserved for issuance upon exercise of outstanding warrants as set
forth in Schedule 3.3; and no shares were reserved for issuance
pursuant to any other securities (except as set forth under this
Section 3.3); and (ii) 8,000,000 shares of preferred stock, par value
$.001 per share, of which (a) 2,200,000 shares are designated as Series A
Convertible Preferred Stock, of which no shares were issued and outstanding;
and (b) 2,777,500 shares are designated as Series B Convertible Preferred
Stock, of which no shares were issued and outstanding.  All of such outstanding shares of capital
stock have been, or upon issuance will be, duly authorized, validly issued,
fully paid and nonassessable.  No shares
of capital stock of the Company, including the Common Shares and the Warrant
Shares, are subject to preemptive rights or any other similar rights of the
other stockholders of the Company or any liens or encumbrances imposed through
the actions or failure to act of the Company. 
Except as set forth above and in Schedule 3.3 and except for
the transactions contemplated hereby, (i) there are no outstanding
options, warrants, scrip, rights to subscribe for, puts, calls, rights of first
refusal, agreements, understandings, claims or other commitments or rights of
any character whatsoever relating to, or securities or rights convertible into,
exercisable for, or exchangeable for any shares of capital stock of the
Company, or arrangements by which the Company is or may become bound to issue
additional shares of capital stock of the Company; (ii) there are no
agreements or arrangements (other than the Registration Rights Agreement) under
which the Company is obligated to register the sale of any of its securities
under the Securities Act; and (iii) 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) that will be triggered by
the issuance of the Securities.  The
Company has furnished to each Investor true and correct copies of the terms of
all securities convertible into or exercisable for Common Stock of the Company
and the material rights of the holders thereof in respect thereto. The
Company’s Certificate of Incorporation and the Company’s By-laws, each as in
effect on the date hereof, filed as exhibits to the Company’s SEC Documents,
are true and correct copies of each such document.


 


3.4                                 Issuance
of Securities.  The Common Shares
and the Warrants have been duly authorized and, upon issuance in accordance
with the terms of this Agreement, will be validly issued, fully paid and
non-assessable, free from all taxes, liens, claims, encumbrances and charges
with respect to the issuance thereof, will not be subject to preemptive rights
or other similar rights of stockholders of the Company, and will not impose
personal liability on the holders thereof. 
The Warrant Shares have been duly authorized and reserved for issuance,
and, upon exercise of the Warrants in accordance with the terms thereof, will
be validly issued, fully paid and non-assessable, and free from all taxes,
liens, claims and encumbrances and charges with respect to the issuance thereof
and will not be subject to preemptive rights or other similar rights of
stockholders of the Company and will not impose personal liability upon the
holder thereof.


 


3.5                                 Outstanding
Debt.  The Company has no
Indebtedness for Borrowed Money (as hereinafter defined) except as otherwise
set forth in Schedule 3.5. 
The Company is not in default in the payment of the principal of or interest
or premium on any such Indebtedness for Borrowed


 


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Money, and no event has
occurred or is continuing under the provisions of any instrument, document or
agreement evidencing or relating to any such Indebtedness for Borrowed Money
which with the lapse of time or the giving of notice, or both, would constitute
an event of default thereunder.


 


3.6                                 No
Conflicts; No Violation.


 


(a)                                  The
execution, delivery and performance of this Agreement, the Registration Rights
Agreement and the Warrants by the Company, and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Common Shares, the Warrants and the Warrant
Shares and reservation for issuance of the Warrant Shares) do not and will not
(i) conflict with or result in a violation of any provision of the
Certificate of Incorporation or By-laws, 
(ii) violate or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which with notice or lapse
of time or both could become a default) under, or give to others any rights of
termination, amendment (including without limitation, the triggering of any
anti-dilution provision), acceleration or cancellation of, any agreement,
indenture, patent, patent license, or instrument to which the Company is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including U.S. federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or
its securities are subject) applicable to the Company or by which any property
or asset of the Company is bound or affected (except for such conflicts,
breaches, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect).


 


(b)                                 The
Company is not in violation of its Certificate of Incorporation, By-laws or
other organizational documents and the Company is not in default (and no event
has occurred which with notice or lapse of time or both could put the Company
in default) under, and the Company has not taken any action or failed to take
any action that (and no event has occurred which, without notice or lapse of
time or both) would give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which the Company is a party or by which any property or assets of the Company
is bound or affected, except for possible defaults as would not, individually
or in the aggregate, have a Material Adverse Effect.


 


(c)                                  The
Company is not conducting, and, so long as any Investor owns any of the
Securities, will not conduct, its business in violation of any law, ordinance
or regulation of any governmental entity, the failure to comply with which
would, individually or in the aggregate, have a Material Adverse Effect.


 


(d)                                 Except
as specifically contemplated by this Agreement and as required under the
Securities Act and any applicable state securities laws or any listing
agreement with any securities exchange or automated quotation system, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self regulatory agency in order for it to execute, deliver or
perform any of its obligations under this Agreement, the Warrants or the
Registration Rights


 


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Agreement, in each case
in accordance with the terms hereof or thereof, or to issue and sell the Common
Shares and the Warrants in accordance with the terms hereof and to issue the
Warrant Shares upon exercise of the Warrants. 
Except as set forth in Schedule 3.6, all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof.  The Company
is not in violation of the continued listing requirements of Nasdaq and does
not reasonably anticipate that the Common Stock will be delisted by Nasdaq in
the foreseeable future.  The Company is
unaware of any facts or circumstances which might give rise to the foregoing.


 


3.7                                 SEC
Documents, Financial Statements; Sarbanes-Oxley.  Since January 1, 2001, the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Exchange Act
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents (other
than exhibits) incorporated by reference therein, being hereinafter referred to
herein as the “SEC Documents”). 
The Company has delivered to each Investor, or each Investor has had
access to, true and complete copies of the SEC Documents, except for such
exhibits and incorporated documents.  As
of their respective dates, the SEC Documents complied in all respects with the
requirements of the Exchange Act or the Securities Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC, 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 light of the circumstances under which they were made,
not misleading.  As of their respective
dates, the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto.  Such financial statements have
been prepared in accordance with U.S. generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).  Except as set forth in
the financial statements included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than liabilities incurred in the
ordinary course of business subsequent to March 31, 2004, and liabilities
of the type not required under generally accepted accounting principles to be
reflected in such financial statements. 
Such liabilities incurred subsequent to March 31, 2004 are not, in
the aggregate, material to the financial condition or operating results of the
Company. The Company is in substantial compliance with the applicable provisions
of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the
rules and regulations promulgated thereunder, that are effective, and intends
to comply substantially with other applicable provisions of the Sarbanes-Oxley
Act, and the rules and regulations promulgated thereunder, upon the
effectiveness of such provisions and has no reason to believe that it will not
be so compliant upon such effectiveness. Without limiting the generality of the
foregoing, the Chief Executive


 


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Officer and the Chief
Financial Officer of the Company have signed, and the Company has furnished to
the SEC, all certifications required by Section 302 and Section 906
of the Sarbanes-Oxley Act; such certifications contain no qualifications or
exceptions to the matters certified therein and have not been modified or
withdrawn; and neither the Company nor any of its officers has received notice
from any governmental entity questioning or challenging the accuracy,
completeness, form or manner of filing or submission of such
certifications.  The Company is in
compliance with all applicable provisions of the listing requirements of the
Nasdaq.


 


3.8                                 Absence
of Certain Changes.  Except as
disclosed in the SEC Documents, since March 31, 2004, there has been no
material adverse change in the assets, liabilities, business, properties,
operations, financial condition, prospects or results of operations of the
Company or, to the knowledge of the Company, any development that could reasonably
be expected to have such a material adverse change.


 


3.9                                 Absence
of Litigation.  There is no action,
suit, claim, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company, threatened against or affecting the
Company or any of its officers or directors acting as such that could,
individually or in the aggregate, have a Material Adverse Effect.  The Company is not aware of any facts or circumstances
which would reasonably be expected to give rise to any such action or
proceeding.


 


3.10                           Intellectual
Property Rights.  The
Company owns or possesses the licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and
copyrights necessary to enable it to conduct its business as now operated (and,
to the best of the Company’s knowledge, as presently contemplated to be operated
in the future) (the “Intellectual Property”).  There is no claim or action or proceeding pending or, to the
Company’s knowledge, threatened that challenges the right of the Company with
respect to any Intellectual Property. 
To the Company’s knowledge after due inquiry, the Company’s current and
intended products, services and processes do not infringe on any Intellectual
Property or other rights held by any person. 
The Company is unaware of any facts or circumstances which might give
rise to any of the foregoing.  The
Company has taken reasonable security measures to protect the secrecy,
confidentiality and value of its Intellectual Property.


 


3.11                           No
Materially Adverse Contracts, Etc. 
The Company is not subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
reasonable judgment of the Company’s officers has or is expected in the future,
individually or in the aggregate, to have a Material Adverse Effect.  The Company is not a party to any contract
or agreement which in the reasonable judgment of the Company’s officers has or
is expected to have a Material Adverse Effect.


 


3.12                           Tax
Status.  Except as set forth on Schedule 3.12,
the Company has made or filed all federal, state and foreign income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company has set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported


 


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taxes) and 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 has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply.  There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the Company knows of no basis for any such claim.  The Company has not executed a waiver with
respect to the statute of limitations relating to the assessment or collection
of any foreign, federal, state or local tax. 
None of the Company’s tax returns is presently being audited by any
taxing authority.


 


3.13                           Certain
Transactions.  Except as disclosed
in the SEC Documents and except for arm’s-length transactions pursuant to which
the Company makes payments in the ordinary course of business upon terms no
less favorable than the Company could obtain from third parties, and other than
the grant of stock options, employment agreements or the ownership of other
securities and rights disclosed in filings under the Exchange Act, none of the
officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or employee
has a substantial interest or is an officer, director, trustee or partner.


 


3.14                           Environmental
Laws.  The Company (i) is in
compliance with all applicable foreign federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) has received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct its business and (iii) is in compliance with all terms and
conditions of any such permit, license or approval where, in each of the three
foregoing clauses, the failure to so comply would have, individually or in the
aggregate, a Material Adverse Effect.


 


3.15                           Disclosure.  No information relating to or concerning the
Company set forth in this Agreement or provided to the Investors pursuant to
Section 2.4 hereof or otherwise provided in connection with the
transactions contemplated hereby, including without limitation any oral or
written statements made or given by the officers of the Company, or any of the
Company’s agents, to any Investor, or any Investor’s agent, taken as a whole,
contained any untrue statement of a material fact nor omitted to state any
material fact necessary in order to make the statements made herein or therein,
in light of the circumstances under which they were made, not misleading.  No event or circumstance has occurred or
information exists with respect to the Company or its business, properties,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed (assuming for this purpose that
the Company’s reports filed under the Exchange Act are being incorporated into
an effective registration statement filed by the Company under the Securities
Act).


 


10

















 


3.16                           Acknowledgment
Regarding Investors’ Purchase of Securities.  The Company acknowledges and agrees that each Investor is acting
solely in the capacity of an arm’s-length purchaser with respect to this
Agreement and the transactions contemplated hereby.  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
statement made by any Investor or any of their respective representatives or
agents in connection with this Agreement and the transactions contemplated
hereby is not advice or a recommendation and is merely incidental to such
Investor’s purchase of the Securities and has not been relied on by the Company
in any way.  The Company further
represents to each Investor that the Company’s decision to enter into this
Agreement has been based solely on an independent evaluation by the Company and
its representatives.


 


3.17                           No
Integrated Offering.  Neither the
Company, nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales in any security or
solicited any offers to buy any security under circumstances that would require
registration under the Securities Act of the issuance of the Securities to the
Investors.  The issuance of the
Securities to the Investors will not be integrated with any other issuance of
the Company’s securities (past, current or future) for purposes of the
Securities Act or any applicable rules of Nasdaq.


 


3.18                           No
Brokers.  The Company has taken no
action which would give rise to any claim by any person for brokerage
commissions, finder’s fees or similar payments relating to this Agreement or
the transactions contemplated hereby.


 


3.19                           Permits;
Compliance.  The Company is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted, except those the failure of which to possess
would not, individually or in the aggregate, have a Material Adverse Effect
(collectively, the “Company Permits”), and there is no action pending
or, to the knowledge of the Company, threatened regarding suspension or
cancellation of any of the Company Permits. 
The Company is not in conflict with, or in default or violation of, any
of the Company Permits, except for any such conflicts, defaults or violations
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.  Since
March 31, 2004, the Company has not received any notification with respect
to possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which
conflicts, defaults or violations would not have a Material Adverse Effect.


 


3.20                           Title
to Property.  The Company has good
and marketable title in fee simple to all real property and good and marketable
title to all personal property owned by it which is material to the business of
the Company.  Any real property and
facilities held under lease by the Company are held by it under valid and
enforceable leases with such exceptions as would not have a Material Adverse
Effect.


 


3.21                           Insurance.  The Company is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as is prudent and customary in


 


11

















 


the businesses in which
the Company is engaged.  The Company has
no reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.


 


3.22                           Internal
Accounting Controls.  The Company
maintains a system of internal accounting controls sufficient, in the judgment
of the Company’s board of directors, to provide reasonable assurance that
(a) transactions are executed in accordance with management’s general or
specific authorizations, (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability,
(c) access to assets is permitted only in accordance with management’s
general or specific authorization, (d) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences, and (e) financial
reporting and the preparation of financial statements for external purposes in
accordance with U.S. generally accepted accounting principles are
reliable.  The Chief Executive Officer
and Chief Financial Officer of the Company have made all certifications
required by the Sarbanes-Oxley Act and the rules and regulations promulgated
thereunder, and the statements contained in any such certification are complete
and correct; the Company maintains “disclosure controls and procedures” (as
currently defined in Rule 13a-15(e) under the Exchange Act) in compliance with
the Exchange Act.


 


3.23                           Employment
Matters.  The Company is in
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours except where failure to be in compliance would
not have a Material Adverse Effect. 
There are no pending investigations involving the Company by the U.S.
Department of Labor or any other governmental agency responsible for the
enforcement of such federal, state, local or foreign laws and regulations.  There is no unfair labor practice charge or
complaint against the Company pending before the National Labor Relations Board
or any strike, picketing, boycott, dispute, slowdown or stoppage pending or,
threatened against or involving the Company. 
No representation question exists respecting the employees of the
Company, and no collective bargaining agreement or modification thereof is
currently being negotiated by the Company. 
No grievance or arbitration proceeding is currently pending under any
expired or existing collective bargaining agreements of the Company.  No material labor dispute with the employees
of the Company exists or, to the knowledge of the Company, is imminent.


 


3.24                           Investment
Company Status.  The Company is not
and upon consummation of the sale of the Securities will not be an “investment
company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment
company” as such terms are defined in the Investment Company Act of 1940, as
amended.


 


3.25                           No
General Solicitation.  Neither the
Company nor any distributor participating on the Company’s behalf in the
transactions contemplated hereby (if any) nor any person acting for the
Company, or any such distributor, has conducted any “general solicitation,” as
such term is defined in Regulation D, with respect to any of the Securities
being offered hereby.


 


12

















 


3.26                           Application
of Takeover Protections.  The
Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination or other similar anti-takeover provision under the laws of the
state of its incorporation which is or could become applicable to the Investors
as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company’s issuance of the Securities and the Investors’
ownership of the Securities.


 


ARTICLE IV

COVENANTS


 


4.1                                 Best
Efforts.  Each party will use its
best efforts to satisfy in a timely fashion each of the conditions to be
satisfied by it under Articles VI and VII of this Agreement.


 


4.2                                 Form
D; Blue Sky Laws.  The Company will
file a Notice of Sale of Securities on Form D with respect to the Securities,
as required under Regulation D, and will provide a copy thereof to each
Investor promptly after such filing. 
The Company will, on or before the Closing Date, take such action as it
reasonably determines to be necessary to qualify the Securities for sale to the
Investors under this Agreement under applicable securities (or “blue sky”) laws
of the states of the United States (or to obtain an exemption from such
qualification), and will provide evidence of any such action so taken to the Investors
on or prior to the date of the Closing. 
The Company will file with the SEC a Current Report on Form 8-K
disclosing this Agreement and the transactions contemplated hereby within five
business days after the Closing Date and will make any required notice filings
with state securities law authorities on a timely basis.


 


4.3                                 Reporting
Status; Eligibility to Use Form S-3. 
The Company’s Common Stock is registered under Section 12 of the
Exchange Act.  Throughout the
Registration Period (as defined in the Registration Rights Agreement), the
Company will timely file all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under the reporting
requirements of the Exchange Act, and the Company will not terminate its status
as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.  The Company currently
meets, and will take all reasonably necessary action to continue to meet, the
“registrant eligibility” requirements set forth in the general instructions to
Form S-3.


 


4.4                                 Use
of Proceeds.  The Company will use
the proceeds from the sale of the Securities for working capital and merger and
acquisition purposes.


 


4.5                                 Expenses.  Upon the consummation of the sale of the
Common Shares and the Warrants anticipated by this Agreement, or upon failure
by the parties to consummate such sales, the Company will pay the reasonable
out-of-pocket expenses incurred by the Investors in connection with the
transactions herein contemplated, including without limitation consulting fees
incurred, research reports purchased, travel and lodging expenses incurred
during the due diligence process, and the fees and out-of-pocket expenses of
Faegre & Benson LLP for their services as special counsel to the
Investors in connection with the transactions herein contemplated, up to an
aggregate amount of $20,000.  The
Company will also pay (a) all reasonable fees and expenses incurred by the
Investors with respect to any amendments or


 


13

















 


waivers requested by the
Company (whether or not the same become effective) under or in respect of this
Agreement or the agreements contemplated hereby; (b) all reasonable fees
and expenses incurred by the Investors with respect to the enforcement of the
rights granted under this Agreement or the agreements contemplated hereby; and
(c) all reasonable fees and expenses incurred by the Investors in connection
with the registration of the Registrable Securities (as defined in the
Registration Rights Agreement) pursuant to Article V of the Registration
Rights Agreement; provided, however, that the Company shall be obligated to pay
for the reasonable fees and out-of-pocket expenses of only one legal counsel
for the Investors for purposes of this clause (c) and the Company’s total
payment obligation under this clause (c) shall not exceed $7,500, it being
understood that the amounts in clauses (a), (b) and (c) are not included within
the $20,000 amount specified in the previous sentence, but are separate and in
addition to such amount.


 


4.6                           Financial
Statements.  The financial
statements of the Company will be prepared in accordance with United States
generally accepted accounting principles, consistently applied, and will fairly
present in all material respects the consolidated financial position of the
Company and results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).


 


4.7                                 Listing.  On or before the 10th business
day after the date of this Agreement, the Company will secure the listing of
the Common Shares and the Warrant Shares upon each national securities exchange
or automated quotation system, including without limitation the Nasdaq, if any,
upon which shares of Common Stock are then listed (subject to official notice
of issuance) and, so long as any Investor owns any of the Securities, will
maintain such listing of all such Common Shares and Warrant Shares.  The Company will use its best efforts to
obtain and, so long as any Investor owns any of the Securities, maintain the
listing and trading of its Common Stock on Nasdaq,  the American Stock Exchange
or the New York Stock Exchange and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of
the National Association of Securities Dealers, Inc. and such exchanges or
automated quotation system, as applicable. 
The Company will promptly provide to each Investor copies of any notices
it receives regarding the continued eligibility of the Common Stock for listing
on Nasdaq or other principal exchange or quotation system on which the Common
Stock is listed or traded.


 


4.8                                 Solvency;
Corporate Existence; Compliance with Law. 
The Company (both before and after giving effect to the transactions
contemplated by this Agreement) is solvent (i.e., its assets have a fair market
value in excess of the amount required to pay its probable liabilities on its
existing debts as they become absolute and matured) and currently the Company
has no information that would lead it to reasonably conclude that the Company
would not have, nor does it intend to take any action that would impair its
ability to pay its debts from time to time incurred in connection therewith as
such debts mature.  The Company will
maintain and cause each Subsidiary to maintain its corporate existence in good
standing.  The Company will conduct its
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, where the failure to comply with such would have a Material
Adverse Effect.


 


14

















 


4.9                                 Insurance.  The Company will maintain liability,
casualty and other insurance (subject to customary deductions and retentions)
with responsible insurance companies against such risk of the types and in the
amounts customarily maintained by companies of comparable size and in lines of
business of the Company.


 


4.10                           No
Integration.  The Company will not
make any offers or sales of any security (other than the Securities) under circumstances
that would cause the offering of Securities to be integrated with any other
offering of securities by the Company (i) for the purpose of any
stockholders approval provision applicable to the Company or its securities or
(ii) for purposes of any registration requirement under the Securities
Act.


 


4.11                           Reservation
of Shares.  The Company will at all
times have authorized, and reserved for the purpose of issuance, a sufficient
number of shares of Common Stock to provide for the full exercise of the
Warrants and the issuance of the Warrant Shares in connection therewith (based
upon the exercise price of the Warrants in effect from time to time).  The Company will not reduce the number of
shares of Common Stock reserved for issuance upon exercise of the Warrants,
without the consent of all the Investors. 
If at any time the number of shares of Common Stock authorized and
reserved for issuance is below the Warrant Shares issued and issuable upon
exercise of the Warrants (based on the exercise price of the Warrants then in
effect), the Company will promptly take all corporate action necessary to
authorize and reserve a sufficient number of shares, including, without
limitation, calling a special meeting of stockholders to authorize additional
shares to meet the Company’s obligations under this Section 4.11, in the
case of an insufficient number of authorized shares, and using its best efforts
to obtain stockholder approval of an increase in such authorized number of
shares.


 


4.12                           Sales
by Investors.  Each Investor will
sell any Securities sold by it in compliance with applicable prospectus
delivery requirements, if any, or otherwise in compliance with the requirements
for an exemption from registration under the Securities Act and the rules and
regulations promulgated thereunder.  No
Investor will make any sale, transfer or other disposition of the Securities in
violation of federal or state securities laws.


 


15

















 


4.13                       Additional
Equity Capital; Right of First Refusal.


 


(a)                                  Subject
to the exceptions described below, during the period beginning on the Closing
Date and ending 12 months following the Closing Date, the Company will not
effect any equity offering, including any debt financing with an equity component
and any offering involving warrants or other securities convertible into or
exchangeable for Common Stock (“Future Offering”) unless it first
delivers to each Investor, at least 20 days prior to the closing of such Future
Offering, written notice describing the proposed Future Offering, including the
terms and conditions thereof and proposed definitive documentation to be
entered into in connection therewith, and providing each Investor an option
during the 10-day period following delivery of such notice to purchase its pro
rata share of the securities being offered in the Future Offering (“Additional
Securities”) on the same terms as contemplated by such Future Offering (the
limitations referred to in this Section 4.13(a) is referred to as the “Capital
Raising Limitation”).  In the event
that the terms and conditions of a proposed Future Offering are amended in any
material respect after delivery of the notice to the Investors concerning the
proposed Future Offering, the Company will deliver a new notice to the
Investors describing the amended terms and conditions of the proposed Future
Offering and each Investor thereafter will have an option, during the 10-day
period following delivery of such new notice, to purchase its pro rata share of
the Additional Securities on such amended terms.  The foregoing sentence applies to successive amendments to the
terms and conditions of any proposed Future Offering.


 


(b)                                 The
Capital Raising Limitation does not apply to any transaction involving
(i) issuances of securities in a firm commitment underwritten public
offering (excluding a continuous offering pursuant to Rule 415 under the
Securities Act), or (ii) issuances of securities as consideration for a merger,
acquisition, consolidation or purchase of assets, or in connection with any
strategic investments, joint venture or similar commercial relationship (the
primary purpose of which is not to raise equity capital).  The Capital Raising Limitation also does not
apply to (x) the issuance of securities upon exercise or conversion of the
Company’s options, warrants or other convertible securities outstanding as of
the date hereof or upon exercise of the Warrants, or (y) the grant of
additional options, or the issuance of additional securities pursuant to such
additional options, under the Option Plan.


 


(c)                                  An
Investor’s “pro rata share” is the number of shares of Additional Securities
(rounded to the nearest whole share or dollar amount) as is equal to the
product of (a)(i) the number of shares of Common Stock issuable upon the
exercise of the Warrants held by such Investor immediately prior to the
issuance of the Additional Securities being offered plus any shares of Common
Stock held by such Investor, divided by (ii) the total number of shares of
Common Stock issuable upon conversion of all outstanding options, warrants and
other convertible securities by the Company immediately prior to the issuance
of the Additional Securities being offered plus all issued and outstanding
shares of Common Stock, multiplied by (b) the entire offering of
Additional Securities.


 


4.14                           Pledge
of Securities.  The Company
acknowledges and agrees that the Securities may be pledged by an Investor in
connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the Securities. 
The pledge of Securities shall not be deemed to be a transfer, sale or
assignment of the Securities hereunder, and no Investor effecting


 


16

















 


a pledge of Securities
shall be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement; provided that an
Investor and its pledgee shall be required to comply with the provisions of
Section 2.6 hereof in order to effect a sale, transfer or assignment of
Securities to such pledgee.  The Company
hereby agrees to execute and deliver such documentation as a pledgee of the
Securities may reasonably request in connection with a pledge of the Securities
to such pledgee by an Investor.


 


4.15                           Disclosure
of Transactions and Other Material Information. The Company shall not, and
shall cause each Subsidiary and each of its respective officers, directors,
employees and agents, not to, provide any Investor with any material nonpublic
information regarding the Company or any Subsidiary from and after the Closing
Date without the express written consent of such Investor.  In the event of a breach of the foregoing
covenant by the Company, any Subsidiary, or its each of respective officers,
directors, employees and agents, in addition to any other remedy provided
herein or in the Transaction Documents, such Investor shall have the right to
demand that the Company make a public disclosure, and if the Company fails to
do so within five business days, the Investor may make a public disclosure, in
the form of a press release, public advertisement or otherwise, of such
material nonpublic information without the prior approval by the Company, each
Subsidiary, or each of its respective officers, directors, employees or
agents.  In such event, such Investor
shall provide a copy of such public disclosure to the Company at or prior to
the dissemination of such disclosure to the public.  No Investor shall have any liability to the Company, any
Subsidiary, or any of its or their respective officers, directors, employees,
stockholders or agents for any such disclosure unless such Investor acts with
negligence or willful misconduct. 
Subject to the foregoing, neither the Company nor any Investor shall
issue any press releases or any other public statements with respect to the
transactions contemplated hereby without the prior approval of the other party;
which approval shall not be unreasonably withheld or delayed; provided,
however, that the Company shall be entitled, without the prior approval of any
Investor, to make any press release or other public disclosure with respect to
such transactions (i) in a Current Report on Form 8-K in compliance with the
requirements of the Exchange Act, and (ii) as may otherwise be required by
applicable law and regulations, including the applicable rules and regulations
of the Nasdaq (provided that in the case of clause (i) each Investor shall be
provided a copy of any proposed press release to be issued by the Company at
least one day prior to its release).


 


4.16                           Company
Business Review.  During the period
beginning on the Closing Date and ending 12 months following the Closing Date,
each Investor shall be entitled to participate in a quarterly teleconference
meeting with the Company’s senior management team, if so requested by any
Investor, the purpose of which shall be to provide an in-depth review to the
Investor of the Company’s growth outlook and acquisition plans.  Each Investor acknowledges that the Company
shall have no obligation to disclose any material non-public information to the
Investor during such quarterly teleconference meeting unless a binding
non-disclosure agreement between the Investor and the Company is in effect at
the time of the disclosures and the Investor provides express written consent
to the Company to disclose material non-public information to the Investor.


 


17

















 


ARTICLE V

TRANSFER AGENT INSTRUCTIONS; REMOVAL OF LEGENDS


 


5.1                               Issuance
of Certificates.  The Company shall
instruct its transfer agent to issue certificates, registered in the name of
each Investor or its nominee, for Common Shares and Warrant Shares in such
amounts as specified from time to time by each Investor to the Company issuable
upon exercise of the Warrants in accordance with their terms.  All such certificates will bear the
restrictive legend described in Section 2.7, except as otherwise specified
in this Article V.  In addition,
the Company will issue irrevocable Transfer Agent Instructions to the transfer
agent relating to the Common Shares and the Warrant Shares in the form of Exhibit
D hereto.  The Company will not give
to its transfer agent any instruction other than as described in this
Article V and stop transfer instructions to give effect to
Section 2.7 hereof (prior to registration of the Common Shares and the
Warrant Shares under the Securities Act). 
Nothing in this Section 5.1 will affect in any way the Investors’
obligations and agreement set forth in Section 2.7 hereof to comply with
all applicable prospectus delivery requirements, if any, upon resale of the
Common Shares and the Warrant Shares.


 


5.2                               Unrestricted
Securities.  If, unless otherwise
required by applicable state securities laws, (a) the resale of the
Securities represented by a certificate has been registered under an effective
registration statement filed under the Securities Act, (b) a holder of
Securities provides the Company and the Transfer Agent with an opinion of
counsel, in form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale or transfer of such
Securities may be made without registration under the Securities Act and such
sale either has occurred or may occur without restriction on the manner of such
sale or transfer, (c) such holder provides the Company and the Transfer
Agent with reasonable assurances that such Securities can be sold under Rule
144, or (d) the Securities represented by a certificate can be sold
without restriction as to the number of securities sold under Rule 144(k), the
Company will permit the transfer of the Common Shares or the Warrant Shares,
and the Transfer Agent will issue one or more certificates, free from any
restrictive legend, in such name and in such denominations as specified by such
holder.  Notwithstanding anything herein
to the contrary, the Securities may be pledged as collateral in connection with
a bona fide margin account or other lending arrangement; provided that such
pledge will not alter the provisions of this Article V with respect to the
removal of restrictive legends.


 


5.3                                 Enforcement
of Provision.  The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to each Investor by vitiating the intent and purpose of the
transaction contemplated hereby. 
Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Article V will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section, that each Investor will be entitled, in addition to
all other available remedies, to an injunction restraining any breach and
requiring immediate transfer, without the necessity of showing economic loss
and without any bond or other security being required.


 


18

















 


ARTICLE VI

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL


 


The obligation of the
Company to issue and sell the Common Shares to each Investor at the Closing is
subject to the satisfaction by such Investor, on or before the Closing Date, of
each of the following conditions.  These
conditions are for the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion:


 


6.1                                 The
Investor will have executed this Agreement and the Registration Rights
Agreement and will have delivered those agreements to the Company.


 


6.2                                 The
Investor will have delivered the purchase price for the Common Shares to the
Company in accordance with this Agreement.


 


6.3                                 The
representations and warranties of the Investor must be true and correct in all
material respects as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date, which
representations and warranties must be correct as of such date), and the
Investor will have performed and complied in all material respects with the
covenants and conditions required by this Agreement to be performed or complied
with by the Investor at or prior to the Closing.


 


6.4                                 No
litigation, statute, rule, regulation, executive order, decree, ruling or
injunction will have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.


 


ARTICLE VII

CONDITIONS TO THE INVESTOR’S OBLIGATION TO PURCHASE


 


The obligation of each
Investor hereunder to purchase the Common Shares from the Company at the
Closing is subject to the satisfaction, on or before the Closing Date, of each
of the following conditions.  These
conditions are for each Investor’s respective benefit and may be waived by any
Investor at any time in its sole discretion:


 


7.1                                 The
Company will have executed this Agreement and the Registration Rights Agreement
and each such Agreement will have been delivered the Investor.


 


7.2                                 The
Company will have delivered to the Investors duly executed certificates
representing the Common Shares and duly executed Warrants in the amounts
specified in Sections 1.1 and 1.4 hereof.


 


7.3                                 The
representations and warranties of the Company must be true and correct in all
material respects as of the Closing as though made at that time (except for
representations and warranties that speak as of a specific date, which
representations and warranties must be true and correct as of such date) and
the Company must have performed and complied in all material respects with the
covenants and conditions required by this Agreement to be performed or


 


19

















 


complied with by the
Company at or prior to the Closing.  The
Investor must have received a certificate or certificates dated as of the
Closing Date and executed by the Chief Executive Officer or the Chief Financial
Officer of the Company certifying as to the matters in contained in this
Section 7.3 and as to such other matters as may be reasonably requested by
such Investor, including, but not limited to, the Company’s Certificate of
Incorporation, By-laws, Board of Directors’ resolutions relating to the
transactions contemplated hereby and the incumbency and signatures of each of
the officers of the Company who may execute on behalf of the Company any
document delivered at the Closing.


 


7.4                                 No
litigation, statute, rule, regulation, executive order, decree, ruling or
injunction will have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.


 


7.5                                 Trading
and listing of the Common Stock on the Nasdaq must not have been suspended by
the SEC or the Nasdaq, nor shall Nasdaq have notified the Company of any
failure of the Company to meet any of the continued listing standards.


 


7.6                                 The
Investors will have received an opinion of the Company’s counsel, dated as of
the Closing Date, in form, scope and substance reasonably satisfactory to the
Investors and in substantially the form attached hereto as Exhibit E.


 


7.7                                 The
Irrevocable Transfer Agent Instructions, in form and substance substantially
like the form attached hereto as Exhibit D will have been delivered to
the Company’s transfer agent and acknowledged in writing by such transfer
agent.


 


ARTICLE VIII


 


[This Article has been left
blank intentionally]


 


ARTICLE IX

INDEMNIFICATION


 


9.1                                 Indemnification
by Company.  In consideration of
each Investor’s execution and delivery of this Agreement and its acquisition of
the Securities hereunder, and in addition to all of the Company’s other
obligations under this Agreement, the Registration Rights Agreement, and the
Warrants, the Company will defend, protect, indemnify and hold harmless each
Investor and each other holder of the Securities and all of their stockholders,
officers, directors, employees, advisors and direct or indirect investors and
any of the foregoing person’s agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Indemnitees”) from
and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (regardless of whether any such Indemnitee is a


 


20

















 


party to the action for
which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”), incurred or
suffered by an Indemnitee as a result of, or arising out of, or relating to
(a) any breach of any representation or warranty made by the Company
herein or in any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained herein or in any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or claim
brought or made against such Indemnitee and arising out of or resulting from
the execution, delivery, performance, breach or enforcement of this Agreement,
the Registration Rights Agreement or the Warrants by the Company; provided,
however, that, with respect to this clause (c), the Company shall not be liable
to the extent such Indemnified Liabilities are finally determined by a court of
competent jurisdiction to have resulted primarily and directly from the
Investors’ gross negligence or willful misconduct.  To the extent that the foregoing undertaking by the Company is
unenforceable for any reason, the Company will make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities that is
permissible under applicable law.


 


ARTICLE X

DEFINITIONS


 


10.1                           “Additional
Shares” has the meaning set forth in Section 4.13.


 


10.2                           “Capital
Raising Limitation” has the meaning set forth in Section 4.13.


 


10.3                           “Closing”
means the closing of the purchase and sale of the Common Shares.


 


10.4                           “Closing
Date” has the meaning set forth in Section 1.3.


 


10.5                           “Common
Shares” has the meaning set forth in the recitals.


 


10.6                           “Common
Stock” means the common stock, par value $.001  per share, of the Company.


 


10.7                           “Company”
means Perficient, Inc.


 


10.8                           “Company
Permit” has the meaning set forth in Section 3.19.


 


10.9                           “Environmental
Laws” has the meaning set forth in Section 3.14.


 


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


 


10.11                     “Future
Offering” has the meaning set forth in Section 4.13.


 


10.12                     “Indebtedness
for Borrowed Money” shall include only (i) indebtedness of the Company and its
Subsidiaries incurred as the result of a direct borrowing of money, and (ii)
guarantees by the Company and its Subsidiaries of indebtedness of third
parties, and shall not include any other indebtedness including, but not
limited to, indebtedness incurred with respect to trade accounts, equipment
leases, and intercompany loans.


 


21

















 


10.13                     “Indemnified
Liabilities” has the meaning set forth in Article IX.


 


10.14                     “Indemnitees”
has the meaning set forth in Article IX.


 


10.15                     “Intellectual
Property” has the meaning set forth in Section 3.10.


 


10.16                     “Investors”
means the investors whose names are set forth on the signature pages of this
Agreement, and their permitted transferees.


 


10.17                     “Material
Adverse Effect” means a material adverse effect on (a) the assets,
liabilities, business, properties, operations, financial condition, prospects
or results of operations of the Company and its Subsidiaries, taken as a whole,
or (b) the ability of the Company to perform its obligations pursuant to
the transactions contemplated by this Agreement or under the agreements or
instruments to be entered into or filed in connection herewith.


 


10.18                     “Nasdaq”
means the Nasdaq SmallCap Market.


 


10.19                     “Option Plan”
means the Company’s 1999 Stock Option/Stock Issuance Plan, including all
amendments thereto.


 


10.20                     “Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date
of this Agreement and among the parties to this Agreement, in the form attached
hereto as Exhibit C.


 


10.21                     “Regulation
D” means Regulation D as promulgated by the SEC under the Securities Act.


 


10.22                     “Rule 144”
and “Rule 144(k)” mean Rule 144 and Rule 144(k), respectively, promulgated
under the Securities Act, or any successor rule.


 


10.23                     “Sarbanes-Oxley
Act” has the meaning set forth in Section 3.7.


 


10.24                     “SEC” means
the United States Securities and Exchange Commission.


 


10.25                     “SEC
Documents” has the meaning set forth in Section 3.7.


 


10.26                     “Securities”
means the Common Shares, Warrants and Warrant Shares.


 


10.27                     “Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute.


 


10.28                     “Subsidiaries”
means any entity in which the Company, directly or indirectly, owns capital
stock or holds an equity or similar interest, as set forth on Schedule 10.28.


 


10.29                     “Transaction
Documents” shall have the meaning set forth in Section 11.16.


 


10.30                     “Warrant
Shares” means the shares of Common Stock issuable upon the exercise (or
otherwise) of the Warrants.


 


22

















 


10.31                     “Warrants”
means the stock purchase warrants of the Company, in the form attached hereto
as Exhibit B, to acquire shares of Common Stock.


 


ARTICLE XI

GOVERNING LAW; MISCELLANEOUS


 


11.1                           Governing
Law; Jurisdiction.  This Agreement
will be governed by and interpreted in accordance with the laws of the State of
Delaware without regard to the principles of conflict of laws.  The parties hereto hereby submit to the
jurisdiction of the United States federal and state courts located in the State
of Delaware with respect to any dispute arising under this Agreement, the
agreements entered into in connection herewith or the transactions contemplated
hereby or thereby.


 


11.2                           Counterparts;
Signatures by Facsimile.  This
Agreement may be executed in two or more counterparts, all of which are
considered one and the same agreement and will become effective when
counterparts have been signed by each party and delivered to the other
parties.  This Agreement, once executed
by a party, may be delivered to the other parties hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.


 


11.3                           Headings.  The headings of this Agreement are for
convenience of reference only, are not part of this Agreement and do not affect
its interpretation.


 


11.4                           Severability.  If any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of law, then such
provision will be deemed modified in order to conform with such statute or rule
of law.  Any provision hereof that may
prove invalid or unenforceable under any law will not affect the validity or
enforceability of any other provision hereof.


 


11.5                           Entire
Agreement.  This Agreement, the
Registration Rights Agreement and the Warrants (including all schedules and
exhibits thereto) constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof.  There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein or therein.  This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof.


 


11.6                           Consents;
Waivers and Amendments.  Except as
otherwise specifically provided herein, in each case in which approval of the
Investors is required by the terms of this Agreement, such requirement shall be
satisfied only upon receipt of the written consent of each Investor.


 


11.7                           Changes,
Waivers, etc.  Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by a statement in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.


 


23

















 


11.8                           Notices.  Any notices required or permitted to be
given under the terms of this Agreement must be sent by certified or registered
mail (return receipt requested) or delivered personally or by courier
(including a recognized overnight delivery service) or by facsimile and will be
effective five days after being placed in the mail, if mailed by regular U.S.
mail, or upon receipt, if delivered personally, by courier (including a
recognized overnight delivery service) or by facsimile, in each case addressed
to a party.  The addresses for such
communications are:


 


	
  If to the Company:

  	
  Perficient, Inc.

  
	
   

  	
  1120 South Capital of
  Texas Highway

  
	
   

  	
  Suite 220, Building 3

  
	
   

  	
  Austin, TX 78746

  
	
   

  	
  Attn: John T. McDonald

  
	
   

  	
  Facsimile: (512)
  531-6011

  
	
   

  	
   

  
	
  With a copy to:

  	
  Vinson & Elkins
  L.L.P.

  
	
   

  	
  2801 Via Fortuna, Suite
  100

  
	
   

  	
  Austin, Texas 78746

  
	
   

  	
  Attn: J. Nixon Fox III

  
	
   

  	
  Facsimile: (512)
  236-3216

  



 


If to an Investor:  To the address set forth immediately below
such Investor’s name on the signature pages hereto.


 


	
  With a copy to:

  	
  Faegre & Benson LLP

  
	
   

  	
  2200 Wells Fargo Center

  
	
   

  	
  90 South Seventh Street

  
	
   

  	
  Minneapolis, Minnesota
  55402

  
	
   

  	
  Attn:  Mark A. Sides

  
	
   

  	
  Facsimile:  (612) 766-1600

  



 


Each party will provide
written notice to the other parties of any change in its address.


 


11.9                           Successors
and Assigns.  This Agreement is
binding upon and inures to the benefit of the parties and their successors and
assigns.  The Company will not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Investors, and no Investor may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the
Company.  Notwithstanding the foregoing,
an Investor may assign all or part of its rights and obligations hereunder to
any of its “affiliates,” as that term is defined under the Securities Act,
without the consent of the Company so long as the affiliate is an accredited
investor (within the meaning of Regulation D under the Securities Act) and
agrees in writing to be bound by this Agreement.  This provision does not limit the Investor’s right to transfer
the Securities pursuant to the terms of this Agreement or to assign the
Investor’s rights hereunder to any such transferee pursuant to the terms of
this Agreement.


 


24

















 


11.10                     Third
Party Beneficiaries.  This Agreement
is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.


 


11.11                     Survival.  All representations and warranties contained
herein shall survive the execution and delivery of this Agreement, any
investigation at any time made by the Investors or on their behalf, and the
sale and purchase of the Common Shares and the Warrants and payment
therefor.  All statements contained in
any certificate, instrument or other writing delivered by or on behalf of the
Company pursuant hereto or in connection with or contemplation of the
transactions herein contemplated (other than legal opinions) shall constitute
representations and warranties by the Company hereunder.


 


11.12                     Publicity.  The Company and each Investor have the right
to review, a reasonable period of time before issuance thereof, any press
releases, or relevant portions of any SEC or Nasdaq filings or any other public
statements, with respect to the transactions contemplated hereby.  However, the Company may make any press
release or SEC or Nasdaq filings with respect to such transactions as are
required by applicable law and regulations (including NASD requirements)
without the prior approval of the Investors (although the Company will make
reasonable efforts to consult with the Investors in connection with any such
press release prior to its release and filing).


 


11.13                     Further
Assurances.  Each party will do and
perform, or cause to be done and performed, all such further acts and things,
and will execute and deliver all other agreements, certificates, instruments
and documents, as another party may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.


 


11.14                     No Strict
Construction.  The language used in
this Agreement is 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.


 


11.15                     Equitable
Relief.  The Company recognizes
that, if it fails to perform or discharge any of its obligations under this
Agreement, any remedy at law may prove to be inadequate relief to the
Investors.  The Company therefore agrees
that the Investors are entitled to temporary and permanent injunctive relief in
any such case without the necessity of proving actual damages.


 


11.16                     Independent Nature of Investors’
Obligations and Rights.  The obligations of each
Investor under any of the Warrant, Registration Rights Agreement or this
Agreement (collectively, the “Transaction Documents”) 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. 
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 shall be entitled to independently protect and enforce its
rights,


 


25

















 


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.  Each Investor has been represented by its
own separate legal counsel in their review and negotiation of the Transaction
Documents.  The Company has elected to
provide all Investors with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do
so by the Investors.


 


26

















 


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


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  PERFICIENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John T. McDonald

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer
  and

  	
   

  
	
   

  	
   

  	
   

  	
  Chairman of the Board

  	
   

  



 


 


[Signatures
continued on next page]


 

















 


	
   

  	
  INVESTOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tate Capital Partners
  Fund, LLC

  
	
   

  	
  By Tate Capital
  Partners, LLC

  
	
   

  	
  Its Managing Member

  
	
   

  	
  By Tate Capital
  Management, LLC

  
	
   

  	
  Its Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Kurtis
  J. Winters

  
	
   

  	
   

  	
   

  	
  Managing
  Member

  



 


Aggregate Purchase
Amount:  $339,900 (110,000 Shares)


 


ADDRESS:


 


Tate Capital Partners
Fund, LLC


3600 Minnesota Drive,
Suite 525


Minneapolis, MN  55435


Attn: Kurtis J. Winters


 


(any notice hereunder to
this Investor shall include a copy to):


 


Faegre & Benson LLP


2200 Wells Fargo Center


90 South Seventh Street


Minneapolis,
Minnesota  55402


Attn:  Mark A. Sides


 


[Signatures continued on next page]


 

















 


	
   

  	
  INVESTOR:

  
	
   

  	
   

  
	
   

  	
  Pandora Select
  Partners, LP

  
	
   

  	
  By Pandora Select
  Advisors, LLC

  
	
   

  	
  Its Managing Member

  
	
   

  	
  By AJR Financial, LLC

  
	
   

  	
  Its Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Andrew J. Redleaf

  	
   

  
	
   

  	
   

  	
   

  	
  Its: Managing Member

  	
   

  



 


Aggregate Purchase
Amount:  $1,977,600 (640,000 Shares)


 


ADDRESS:


 


Pandora Select Partners,
LP


3033 Excelsior Blvd., Ste
300


Minneapolis MN  55416


Attn: Andrew J. Redleaf


 


(any notice hereunder to
this Investor shall include a copy to):


 


Faegre & Benson LLP


2200 Wells Fargo Center


90 South Seventh Street


Minneapolis, MN  55402


Attn: Marklan M.
Strefling


 


[Signatures continued on next page]


 

















 


	
   

  	
  INVESTOR:

  
	
   

  	
   

  
	
   

  	
  Sigma Opportunity Fund,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Its:

  



 


Aggregate Purchase
Amount:  $154,500.00 (50,000 Shares)


 


ADDRESS:


 


Sigma Opportunity Fund,
LLC


800 Third Avenue, Suite
1701


New York, New York 10022


Attn: Thom Waye


 


(any notice hereunder to
this Investor shall include a copy to):


 


Moomjian & Waite, LLP


100 Jericho Quadrangle


Jericho, New York 11753


Attn: Gary T. Moomjian


 

















 


Exhibit A


 


Schedule of Investors


 


	
  Investor

  	
   

  	
  Common
  Shares

  	
   

  	
  Purchase
  Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tate
  Capital Partners Fund, LLC

  	
   

  	
  110,000

  	
   

  	
  $

  	
  339,900.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pandora
  Select Partners, LP

  	
   

  	
  640,000

  	
   

  	
  $

  	
  1,977,600.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sigma
  Opportunity Fund, LLC

  	
   

  	
  50,000

  	
   

  	
  $

  	
  154,500.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  800,000

  	
   

  	
  $

  	
  2,472,000.00

  	
   

  



 

















 


Exhibit B


 


Form of Warrant


 

















 


Exhibit C


 


Registration Rights Agreement


 

















 


Exhibit D


 


Transfer Agent Instructions


 

















 


Exhibit E


 


Form of Legal Opinion