Travelzoo Inc. Form S-3/A Exhibit 4.1




TRAVELZOO INC.
COMMON STOCK PURCHASE
AGREEMENT 



        THIS
COMMON STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered
into as of September 29, 2004 by and among Travelzoo Inc., a Delaware corporation (the
“Company”), and the parties listed on the Schedule of Investors attached
hereto as Exhibit A (the “Schedule of Investors”) (each
hereinafter individually referred to as an “Investor” and collectively
referred to as the “Investors”). 



          1.    
          AGREEMENT TO PURCHASE AND SELL STOCK. 



                  1.1.    
          Authorization. As of the Closing (as defined below) the Company will have
          authorized the issuance, pursuant to the terms and conditions of this Agreement,
          of up to two million (2,000,000) shares of the Company’s Common Stock,
          $0.01 par value (the “Common Stock”). 



                  1.2.    
          Agreement to Purchase and Sell. The Company agrees to
          sell to each Investor at the Closing, and each Investor agrees, severally and
          not jointly, to purchase from the Company at the Closing, the number of shares
          of Common Stock for the aggregate price set forth beside such Investor’s
          name on the Schedule of Investors, at the price per share for such Investor set
          forth on the Schedule of Investors. The shares of Common Stock purchased and
          sold pursuant to this Agreement are collectively referred to herein as the
          “Purchased Shares.” 



                  1.3.    
          Independent Nature of Investors’ Obligations and Rights. Nothing
          contained herein or in any other agreement or document delivered at Closing, and
          no action taken by any Investor pursuant hereto or thereto, shall be deemed to
          constitute the Investors as a partnership, an association, a joint venture or
          any other kind of entity or group, or create a presumption that the Investors
          are in any way acting in concert with respect to such obligations or the
          transactions contemplated by this Agreement. Each Investor acknowledges that no
          other Investor has acted as agent for such Investor in connection with making
          its investment hereunder and that no other Investor will be acting as agent of
          such Investor in connection with monitoring its investment in the Purchased
          Shares, effecting sales of Purchased Shares or enforcing its rights under any
          Transaction Document. 



          2.    
          CLOSING. 



                  2.1.    
          The Closing. The purchase and sale of the Purchased Shares will take
          place at the offices of Milbank, Tweed, Hadley & McCloy in Los Angeles,
          California, at 6:30 a.m., Pacific Time, on the date hereof, or at such other
          time or place as the Company and Investors who have agreed to purchase a
          majority of the Purchased Shares listed on the Schedule of Investors mutually
          agree upon (which time and place is referred to in this Agreement as the
          “Closing”), but not prior to the date that the last of the
          conditions listed in Sections 5 and 6 shall have been satisfied or waived by the
          appropriate parties. At the Closing, (a) the Company will deliver to each
          Investor the following (the “Company Deliverables”): (i) a copy
          of the Company’s written instructions to its transfer agent to issue a
          certificate, registered in the name of each Investor, representing the number of
          Purchased Shares that such Investor has agreed to purchase 


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     hereunder as shown on
          the Schedule of Investors, and (ii) a duly executed Agreement, and (b) each
          Investor will deliver to the Company the following (the “Investor
          Deliverables”): (i) the full purchase price of the Purchased Shares
          being acquired by it at Closing as set forth in the Schedule of Investors, paid
          by wire transfer of funds, and (ii) a duly executed Agreement. 



          3.    
          REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
          The Company hereby represents and warrants to each Investor that, except as set
          forth in the Disclosure Schedule and Schedule of Exceptions (the
          “Disclosure Schedule”) separately delivered by the Company to
          the Investors (which Disclosure Schedule shall be deemed to be representations
          and warranties to the Investors by the Company under this Section and to qualify
          each of the representations and warranties set forth herein), the statements in
          the following paragraphs of this Section 3 are all true and correct: 



                  3.1.    
          Organization, Good Standing and Qualification. The
          Company is a corporation duly organized, validly existing and in good standing
          under the laws of the State of Delaware, and has all requisite corporate power
          and authority to conduct its business as currently conducted. The Company is
          qualified to do business as a foreign corporation in each jurisdiction where
          failure to be so qualified could reasonably be expected to, individually or in
          the aggregate: (a) have a material adverse effect on the business, assets,
          financial condition, or results of operations or assets of the Company and its
          subsidiaries (the “Business”) or (b) impair in any material
          respect the Company’s ability to perform on a timely basis its obligations
          under this Agreement (any such effect described in clauses (a) and (b) shall be
          referred to as a “Material Adverse Effect”). 



                  3.2.    
          Capitalization. Immediately before the Closing the capitalization of the
          Company will consist of the following: 5,000,000 authorized shares of Preferred
          Stock, $0.01 par value per share (the “Preferred Stock”),
          none of which are issued and outstanding; and 40,000,000 authorized shares of
          Common Stock, of which approximately 15,448,204 shares were issued and
          outstanding as of September 15, 2004. Except for the approximately 2,383,349
          shares of Common Stock issuable upon exercise of options outstanding as of June
          30, 2004, there are no outstanding options, warrants, rights or agreements for
          the purchase or acquisition from the Company of any shares of its capital stock
          or any securities convertible into or ultimately exchangeable or exercisable for
          any shares of the Company’s capital stock except as referred to in the
          Filings (as defined below). Except as contemplated by this Agreement and except
          for certain outstanding shares of Common Stock subject to a warrant held by
          Wedbush Morgan Securities, Inc., no person has any outstanding registration
          rights, including piggyback rights, with respect to any securities of the
          Company. 



                  3.3.    
          Subsidiaries. The Company does not currently own or control, directly or
          indirectly, any interest in any other corporation, partnership, limited
          liability company, trust, joint venture, association, or other entity. 



                  3.4.    
          Due Authorization; No Violation. All corporate action on the part of
          the Company and its officers, directors and stockholders necessary for the
          authorization, execution and delivery of, and the performance of all obligations
          of the Company under, this Agreement, and the authorization, issuance,
          reservation for issuance and delivery of all of the Purchased Shares being sold
          under this Agreement has been taken or will be taken prior to the Closing, and



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     this Agreement constitutes the valid and legally binding obligation of the
          Company, enforceable against the Company in accordance with its terms, except as
          enforceability may be limited by (i) applicable bankruptcy, insolvency,
          reorganization or other laws of general application relating to or affecting the
          enforcement of creditors’ rights generally and (ii) the effect of rules of
          law governing the availability of equitable remedies. Neither the execution,
          delivery or performance by the Company of this Agreement nor the consummation by
          the Company of the transactions contemplated thereby will (i) conflict with or
          result in a breach of any provision of the Certificate of Incorporation of the
          Company (the “Certificate”) or the Company’s bylaws, (ii)
          conflict with, result in a violation or breach of, or cause a default (or give
          rise to any right of termination, cancellation or acceleration) under any of the
          terms, conditions or provisions of any agreement, instrument or obligation to
          which the Company or any Subsidiary is a party, which default could reasonably
          be expected to have a Material Adverse Effect, or (iii) violate any law,
          statute, rule or regulation or judgment, order, writ, injunction or decree of
          any governmental authority, in each case applicable to the Company or its
          subsidiaries (the “Subsidiaries”) or any of their respective
          properties or assets and which, individually or in the aggregate, could
          reasonably be expected to have a Material Adverse Effect. 



                  3.5.    
          Valid Issuance of Stock. The Purchased Shares, when
          issued, sold and delivered in accordance with the terms of this Agreement for
          the consideration provided for in this Agreement, will be duly and validly
          issued, fully paid and nonassessable and are not and when issued, sold and
          delivered will not be subject to preemptive or other similar rights of any
          stockholder of the Company. 



                  3.6.    
          Governmental Consents. No consent, approval, order or authorization
          of, or registration, qualification, designation, declaration or filing with, any
          federal, state or local governmental authority on the part of the Company is
          required in connection with the valid execution and delivery of this Agreement,
          the offer, sale and issuance of the Purchased Shares, or the consummation of the
          transactions contemplated by this Agreement, except for (i) qualifications or
          filings under the Securities Act of 1933, as amended (the
          “Act”) and the applicable rules and regulations (the
          “Rules and Regulations”) of the Securities and Exchange
          Commission (the “Commission”) under the Act and all other
          applicable securities laws as may be required in connection with the
          transactions contemplated by this Agreement, (ii) the filings required in
          accordance with Section 9.13, and (iii) filings that have been made or obtained,
          or will have been made or obtained, prior to the Closing. All such
          qualifications will be effective on the Closing, and all such filings be made
          within the time prescribed by law. Assuming that the representations of the
          Investors set forth in Section 4 below are true and correct, the offer, sale and
          issuance of the Purchased Shares under the circumstances contemplated by this
          Agreement and in conformity with the terms of this Agreement are exempt from the
          registration requirements of Section 5 of the Act. 



                  3.7.    
          Absence of Changes. Since the date as of which information is given in
          the Company’s Annual Report on Form 10-K for the year ended December 31,
          2003, as amended, except as set forth in the filings and periodic reports
          (including Current Reports on Form 8-K furnished to the Commission) of the
          Company with the Commission pursuant to the Securities Exchange Act of 1934, as
          amended (the “Exchange Act”) (such documents, together with the
          Disclosure Schedule, referred to collectively as the “Disclosure
          Documents”), there has not been (i) any material adverse change in the
          Business, (ii) any transaction that is material to the 



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     Company or the
          Subsidiaries, (iii) any obligation, direct or contingent, that is material to
          the Company or the Subsidiaries, incurred by the Company or the Subsidiaries,
          (iv) any change in the outstanding indebtedness of the Company and the
          Subsidiaries (taken as a whole) that is material to the Company or the Business,
          (v) any dividend declared, paid or made on the capital stock of the Company, or
          (vi) any loss or damage (whether or not insured) to the property of the Company
          or any Subsidiary which has been sustained which, individually or in the
          aggregate, could reasonably be expected to have a Material Adverse Effect. 



                  3.8.    
          Litigation. There is no action, suit, proceeding, claim, arbitration or
          investigation pending (or, to the Company’s knowledge, currently
          threatened) against the Company or the Subsidiaries, or their activities,
          properties or assets, which (i) might prevent the consummation of the
          transactions contemplated by this Agreement or (ii) if adversely resolved
          against the Company or the Subsidiaries could reasonably be expected to have a
          Material Adverse Effect. 



                  3.9.    
          Nasdaq Listing. The Common Stock is registered pursuant to Section 12(g)
          of the Exchange Act, and is listed on The NASDAQ National Market. The Company
          has not received any notification that the Commission or the National
          Association of Securities Dealers, Inc. is contemplating the termination of such
          registration or listing. The Company has submitted to The NASDAQ Stock Market a
          Notification Form: Listing of Additional Shares relating to the Purchased
          Shares. The Company is, and has no reason to believe that it will not in the
          foreseeable future continue to be, in compliance with the listing and
          maintenance requirements for continued listing of the Common Stock on The NASDAQ
          National Market. The issuance and sale of the Purchased Shares hereunder does
          not contravene the rules and regulations of The Nasdaq Stock Market. 



                  3.10.    
          Exchange Act Filings. The Company has filed or furnished in a timely
          manner all reports and other information required to be filed
          (“Filings”) with the Commission pursuant to the Exchange Act
          during the preceding 12 calendar months. On their respective dates of filing or
          furnishing, the Filings complied in all material respects with the requirements
          of the Exchange Act, and the published rules and regulations of the Commission
          promulgated thereunder. On their respective dates of filing or furnishing, the
          Filings did not include any untrue statement of 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, and all financial
          statements contained in the Filings fairly present the financial position of the
          Company on the dates of such statements and the results of operations for the
          periods covered thereby in accordance with generally accepted accounting
          principles consistently applied throughout the periods involved and prior
          periods, except as otherwise indicated in the notes to such financial
          statements. 



                  3.11.    
          Disclosure. The representations and warranties made by the Company in
          this Agreement (including the Disclosure Schedule) and the Filings when read
          together do not contain any untrue statement of a material fact and do not omit
          to state a material fact necessary to make the statements herein as a whole not
          misleading. 



                  3.12.    
          Governmental Permits, Etc. The Company possesses all licenses,
          franchises, governmental approvals, permits or other governmental authorizations
          (collectively, “Authorizations”) relating to the operation of
          the Business, except for those Authorizations the failure of which to possess
          would not, separately or in the aggregate, have a Material Adverse 


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     Effect. To
          the Company’s knowledge after reasonable investigation, the Company is in
          compliance with the terms of all Authorizations and all laws, ordinances,
          regulations and decrees which to the Company’s knowledge are applicable to
          the Business, except for such non-compliance which does not, separately or in
          the aggregate, have a Material Adverse Effect. 



                  3.13.    
          Insurance. The Company is covered by insurance with companies the Company
          believes to be responsible and in such amounts and covering such risks as it
          believes to be adequate for the conduct of its Business and the value of its
          properties and as is customary for companies engaged in similar businesses in
          similar industries. The Company has no knowledge that any such carrier has
          grounds or intends to cancel or fail to renew such policies. 



                  3.14.    
          Intellectual Property. To the Company’s knowledge after reasonable
          investigation, the Company owns or possesses the patents, patent rights,
          licenses, inventions, copyrights, know-how (including trade secrets and other
          unpatented and/or unpatentable proprietary or confidential information, systems
          or procedures) and other rights or interests in items of intellectual property
          as are necessary for the operation of the Business operated by it (the
          “Patent and Proprietary Rights”), except where the failure to
          own or possess such rights would, individually or in the aggregate, not have a
          Material Adverse Effect. The Company has not received notice of any asserted
          rights with respect to any of the Patent and Proprietary Rights which, if
          determined unfavorably with respect to the interests of the Company would,
          individually or in the aggregate, have a Material Adverse Effect; and the
          Company has not received notice or is otherwise aware of any infringement of or
          conflict with asserted rights of others with respect to any of the Patent or
          Proprietary Rights, which infringement or conflict (if the subject of any
          unfavorable decision, ruling or finding), individually or in the aggregate,
          would have a Material Adverse Effect. 



                  3.15.    
          Investment Company. The Company is not, and is not an affiliate of, an
          “investment company” within the meaning of the Investment Company Act
          of 1940, as amended.



                  3.16.    
No Integration. Neither the Company nor any
          other person acting on the Company’s behalf has, directly or through any
          agent, sold, offered for sale, solicited offers to buy or otherwise negotiated
          in respect of, any security (as defined in the Act) which is or will be
          integrated with the issuance of the Purchased Shares in a manner that would
          require the registration of the issuance by the Company of the Purchased Shares
          under the Act. 



                  3.17.    
          Affiliate Transactions. Except as set forth in the Filings, there are no
          outstanding contracts, loans, advances or guaranties of indebtedness by the
          Company or any of its Subsidiaries to or for the benefit of any of (i) its
          “affiliates,” as such term is defined in the Rules and Regulations,
          (ii) except for immaterial advances in the ordinary course of business, any of
          the officers or directors of any of its Subsidiaries, or (iii) any of the
          members of the families of any of them, in each case, required to be set forth
          in the Disclosure Documents, under the Act or Rules and Regulations. 



                  3.18.    
          Sarbanes-Oxley. To the Company’s knowledge, there is and has been no
          failure on the part of the Company or any of the Company’s directors or
          officers, in their capacities as such, to comply in all material respects with
          any applicable provision of the Sarbanes-Oxley Act 


     5




     of 2002 and the rules and
          regulations promulgated in connection therewith, including Section 402 related
          to loans and Sections 302 and 906 related to certifications. 



          4.    
          REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF INVESTORS.
          Each Investor for itself and for no other Investor hereby severally represents
          and warrants to, and agrees with, the Company, that: 



                  4.1.    
          Authorization. All corporate action on the part of such Investor and its
          officers, directors and stockholders necessary for the authorization, execution
          and delivery of, and the performance of all obligations of the Investor under,
          this Agreement have been taken, and this Agreement constitutes the valid and
          legally binding obligation of such Investor, enforceable against the Investor in
          accordance with its terms, except as enforceability may be limited by (i)
          applicable bankruptcy, insolvency, reorganization or other laws of general
          application relating to or affecting the enforcement of creditors’ rights
          generally and (ii) the effect of rules of law governing the availability of
          equitable remedies. 



                  4.2.    
          Purchase for Own Account. The Purchased Shares to be purchased by such
          Investor hereunder will be acquired for investment for such Investor’s own
          account, not as a nominee or agent, and not with a view to the public resale or
          distribution thereof within the meaning of the Act, and such Investor has no
          present intention of selling, granting any participation in, or otherwise
          distributing the same, without prejudice, however, to such Investor’s right
          at all times to sell or otherwise dispose of Purchased Shares in compliance with
          applicable federal and state securities laws. If not an individual, such
          Investor also represents that such Investor has not been formed for the specific
          purpose of acquiring Purchased Shares. 



                  4.3.    
          Disclosure of Information. Such Investor has had an opportunity to review
          the Disclosure Documents and has received or has had full access to all the
          information it considers necessary or appropriate to make an informed investment
          decision with respect to the Purchased Shares to be purchased by it under this
          Agreement. Such Investor further has had an opportunity to ask questions of and
          to receive answers from the Company regarding the terms and conditions of the
          offering of the Purchased Shares and to obtain additional information (to the
          extent the Company possessed such information or could acquire it without
          unreasonable effort or expense) necessary to verify any information furnished to
          the Investor or to which the Investor had access. The foregoing, however, does
          not in any way limit or modify the representations and warranties made by the
          Company in Section 3, or such Investor’s right to rely on the same. 



                  4.4.    
          Investment Experience. Such Investor understands that the purchase
          of the Purchased Shares involves substantial risk. Such Investor has experience
          as an investor in securities of companies like the Company and acknowledges that
          the Investor is able to fend for itself, can bear the economic risk of such
          Investor’s investment in the Purchased Shares and has such knowledge and
          experience in financial or business matters that such Investor is capable of
          evaluating the merits and risks of this investment in the Purchased Shares and
          protecting its own interests in connection with this investment. 



                  4.5.    
          Investor Status. Such Investor is an “accredited investor”
          within the meaning of Regulation D promulgated under the Act. Such Investor is
          not a registered broker-dealer under Section 15 of the Exchange Act. 


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                  4.6.    
          Restricted Securities. Such Investor understands that the Purchased
          Shares are “restricted securities” for purposes of the Act inasmuch as
          they are being acquired from the Company in a transaction not involving a public
          offering, and that under the Act and the Rules and Regulations such securities
          may be resold without registration under the Act only in limited circumstances.
          In this connection, such Investor represents that the Investor is familiar with
          Rule 144 promulgated under the Act (“Rule 144”) and understands
          the resale limitations imposed thereby and by the Act. Such Investor understands
          that the Company is under no obligation to register any of the Purchased Shares
          except as provided in Section 7 below. 



                  4.7.    
          Limitations on Disposition. The Investor will not make any
          disposition of any of the Purchased Shares unless and until: (a) there is then
          in effect a registration statement under the Act covering such proposed
          disposition and such disposition is made in accordance with such registration
          statement; or (b) (i) such Investor shall have notified the Company of the
          proposed disposition and shall have furnished the Company with a statement of
          the circumstances surrounding the proposed disposition, and (ii) such Investor
          shall have furnished the Company, at the expense of such Investor or its
          transferee, with an opinion of counsel, reasonably satisfactory to the Company,
          that such disposition will not require registration under the Act.
          Notwithstanding the foregoing, no such registration statement or opinion of
          counsel shall be required: (i) for any routine transfer of any Purchased Shares
          in compliance with Rule 144 or Rule 144A under the Act (except that an opinion
          of counsel may be required for other than routine Rule 144 transactions), or
          (ii) for any transfer of Purchased Shares by an Investor that is a partnership,
          limited liability company or a corporation to (A) a partner of such partnership,
          member of such limited liability company or stockholder of such corporation, or
          (B) the estate of any such partner, member or stockholder, or (iii) for the
          transfer by gift, will or intestate succession by any Investor to his or her
          spouse or lineal descendants or ancestors or any trust for any of the foregoing;
          provided, that in each of the foregoing cases the transferee agrees in writing
          to be subject to the terms of this Section 4 (other than Section 4.5) to the
          same extent as if the transferee were an original Investor hereunder. 



                  4.8.    
          Legends. It is understood that the certificates evidencing the Purchased
          Shares will bear legends substantially as set forth below: 


	 
	(a) 
	
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
              (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.  THESE SECURITIES ARE SUBJECT TO
              RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
              UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
              THEREFROM.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
              INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
              OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
              TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.






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	(a) 
	
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF, AND MAY HAVE CERTAIN
              REGISTRATION RIGHTS PURSUANT TO, THE PROVISIONS OF A PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE
              HOLDER, WHICH MAY RESTRICT THE TRANSFER OF SUCH SHARES IN CERTAIN CIRCUMSTANCES.  A COPY OF SUCH
              AGREEMENT MAY BE OBTAINED, WITHOUT CHARGE, AT THE COMPANY'S PRINCIPAL OFFICE.








The legends set forth in (a) and (b)
above shall, upon the request of an Investor, be promptly removed by the Company from any
certificate evidencing Purchased Shares upon delivery to the Company of an opinion of
counsel satisfactory to the Company that the legended security may be freely transferred
in a public sale without a registration statement being in effect under the Act; provided,
however, that no such opinion shall be required after the Shelf Registration Statement (as
defined below) is declared effective by the Commission. In connection with any such
opinion, the Investor shall provide such certifications as may reasonably be deemed
necessary for the delivery of such opinion. 



                  4.9.    
               Further Limitations on Disposition. Such Investor has not and will not,
               prior to the Closing, if then prohibited by law or regulation, sell, dispose of,
               or grant any right with respect to (collectively, a
               “Disposition”), its Purchased Shares, nor will such Investor
               engage in any hedging or other transaction which is designed or could reasonably
               be expected to lead to or result in a Disposition by the Investor of its
               Purchased Shares prior to such date.  In addition, such Investor represents
               that as of the date of this Agreement the Investor does not have any existing
               short position in the Common Stock nor has the Investor executed any derivative
               instruments with any third party, which in either case is designed to dispose of
               its Purchased Shares prior to the Closing. 



          	     5.	  	
               CONDITIONS TO INVESTOR’S OBLIGATIONS AT CLOSING. 



               


             5.1.   
Closing. The obligations of each Investor under Section 1 of this
               Agreement to purchase the Purchased Shares at the Closing are subject to the
               fulfillment or waiver, on or before the Closing, of each of the following
               conditions, and the Company shall use all reasonable efforts to cause such
               conditions to be satisfied on or before the Closing: 


	 
	(a) 
	
Representations and Warranties True. Each of the representations and
               warranties of the Company contained in Section 3 shall be true and correct on
               and as of the Closing with the same effect as though such representations and
               warranties had been made on and as of the Closing. 







	 
	(b) 
	Performance. The Company shall have performed and complied with all
               agreements, obligations and conditions contained in this Agreement that are
               required to be performed or complied with by it on or before the Closing and
               shall have obtained all approvals, consents and qualifications necessary to
               complete the purchase and sale described herein. 







	 
	(c) 
	Compliance Certificate. The Company shall have delivered to the
               Investors at the Closing a certificate signed on its behalf by its President,
               Chief Executive Officer or 







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	Chief Financial Officer certifying that the
               conditions specified in Sections 5.1(a) and 5.1(b) have been fulfilled.








	 
	(d) 
	Registration; Securities Exemptions. The offer and sale of the
               Purchased Shares to the Investors pursuant to this Agreement shall be exempt
               from the registration requirements under the Act and the registration and/or
               qualification requirements of all applicable state securities laws. 







	 
	(e) 
	No Material Change. There shall have been no material adverse
               change in the Business from the date of this Agreement and since the date of
               this Agreement, no event shall have occurred which has caused or could
               reasonably be expected to cause a Material Adverse Effect. 







	 
	(f) 
	Opinion of Counsel. The Investors shall have received an opinion of
               counsel to the Company substantially in the form of Exhibit B attached
               hereto.  








	 
	(g) 
	Company Deliverables. The Company shall have delivered to the Investors
               all of the Company Deliverables. 







	 
	(h) 
	Closing Date. The Closing shall have occurred no later than October 15,
               2004.  







	 
	(i) 
	Listing. The Purchased Shares shall have been approved for listing,
               subject only to notice of issuance, on the Nasdaq National Market, and the
               Common Stock shall not have been suspended from trading at any time since August
               24, 2004. 







	 
	(j) 
	Legal Proceedings. No court or governmental or regulatory authority of
               competent jurisdiction shall have enacted, issued, promulgated, enforced or
               enacted any law of order (whether temporary, preliminary or permanent) or taken
               any other action which prohibits or makes illegal consummation of the
               transactions contemplated by this Agreement, and there shall be no suit, claim,
               action, proceeding or governmental investigation pending against the Company or
               the Investors which seeks to challenge the transactions contemplated by this
               Agreement. 









          	     6.	  	
               CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING. 



               


             6.1.    
      Closing. The obligations of the Company under this Agreement to sell the
               Purchased Shares to each Investor at the Closing are subject to the fulfillment
               by such Investor, or waiver by the Company, on or before the Closing, of each of
               the following conditions, and each Investor shall use all reasonable efforts to
               cause such conditions with respect to such Investor to be satisfied on or before
               the Closing: 


               	 
	(a) 
	Representations and Warranties. The representations and
               warranties of the Investor contained in Section 4 shall be true and correct on
               and as of the Closing with the same effect as though such representations
and warranties had been made on and as of the Closing. 







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	(b) 
	Payment of Purchase Price. The Investor shall have
                    delivered to the purchase price for the Purchased Shares specified for such
                    Investor on the Schedule of Investors attached hereto, in accordance with the
                    provisions of Section 2. 







               	 
	(c) 
	Registration; Securities Exemptions. The offer and sale of the
                    Purchased Shares to the Investor pursuant to this Agreement shall be exempt from
                    the registration requirements under the Act and the registration and/or
                    qualification requirements of all other applicable state securities laws. 







               	 
	(d) 
	Investor Deliverables. The Investor shall have delivered all of the
                    Investor Deliverables with respect to such Investor. 







	 
	(e) 
	Legal Proceedings. No court or governmental or regulatory authority of
                    competent jurisdiction shall have enacted, issued, promulgated, enforced or
                    enacted any law of order (whether temporary, preliminary or permanent) or taken
                    any other action which prohibits or makes illegal consummation of the
                    transactions contemplated by this Agreement, and there shall be no suit, claim,
                    action, proceeding or governmental investigation pending against the Company or
                    the Investors which seeks to challenge the transactions contemplated by this
                    Agreement.  








     7.   
REGISTRATION RIGHTS. 


             7.1.   
                    Definitions. For purposes of this Section 7: 



               	(a) 	  	
                    Form S-3. The term
                    “Form S-3” means such form
                    under the Act as is in effect on the date hereof or any successor registration
                    form under the Act subsequently adopted by the Commission that permits inclusion
                    or incorporation of substantial information by reference to other documents
                    filed by the Company with the Commission. 



                    



               	(b) 	  	
                    Holder. The term “Holders” shall mean holders of Registrable
                    Securities. 



                    



               	(c) 	  	
                    Registration. The terms “register,”
                    “registered,” and “registration” refer to a
                    registration effected by preparing and filing a registration statement in
                    compliance with the Act, and the declaration or ordering of effectiveness of
                    such registration statement. 



                    



               	(d) 	  	
                    Registrable Securities. The term “Registrable
                    Securities” means: (1) all of the Purchased Shares, and
                    (2) any shares of Common Stock of the Company issued as a dividend or other
                    distribution with respect to, or in exchange for or in replacement of, any of
                    the Purchased Shares; provided, however, that the term “Registrable
                    Securities” shall not include (i) any Registrable Securities sold or
                    transferred by a person in a transaction in which the registration rights
                    granted under this Agreement are not assigned in accordance with the provisions
                    of this Agreement, (ii) any Registrable Securities sold in a public offering
                    pursuant to a registration statement filed with the Commission or which have
                    been distributed to the public pursuant to Rule 144 (or any successor provision)
                    under the Act or (iii) as to any Holder, the Registrable Securities held by such
                    Holder if all of such Registrable Securities can be publicly sold within a
                    three-month period pursuant to Rule 144, either because the  



                    


     10




               	 	  	
                    Holder holds 1% or
                    less of the Company’s then outstanding Common Stock or because the Holder
                    has held its Registrable Securities for the time period specified in Rule
                    144(k). 



                    



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



                    



               	(f) 	  	
                    Shelf Registration Statement. See Section 7.2(a). 



                    


             7.2.   
                    Form S-3 Shelf Registration. 




               	(a) 	  	
                    Registration; Liquidated Damages. The Company shall prepare and file with
                    the Commission within 30 days following the Closing (the “Filing
                    Date”) and use all reasonable efforts to have declared effective as
                    soon as practicable thereafter, but in any event by the 120th day
                    following the Closing (the “Effectiveness Date”), a
                    registration statement on Form S-3 (or, if the Company is not then eligible to
                    use Form S-3, then on another appropriate form) providing for the resale by the
                    Holders of all of the Registrable Securities (the “Shelf Registration
                    Statement”). The Shelf Registration Statement may include securities
                    other than those held by Holders. If (i) the Shelf Registration Statement is not
                    filed by the Filing Date, or (ii) is not declared effective by the Effectiveness
                    Date, or (iii) after the date such Shelf Registration Statement is first
                    declared effective by the Commission, such Shelf Registration Statement ceases,
                    other than as set forth in Section 7.2(b), to be effective and available to the
                    Holders as to all Registrable Securities to which it is required to cover at any
                    time prior to the time when the Company is no longer required to keep such Shelf
                    Registration Statement effective in accordance with this Section, then, in
                    addition to the right of each Holder to avail itself of any remedies under this
                    Agreement or applicable law, (x) for and upon each such event the Company shall
                    pay to each Holder (pro rata in accordance with their ownership of Registrable
                    Securities) cash, as liquidated damages and not as a penalty, equal to 1.0% of
                    the aggregate purchase price for each Registrable Security then held by such
                    Holder, and (x) on each monthly anniversary of each such event (if the
                    applicable event shall not have been cured by such date, and pro rata for any
                    period of less than one month) until the applicable event is cured, the Company
                    shall pay to each Holder an amount in cash, as liquidated damages and not as a
                    penalty, equal to 1.0% of the Purchase Price for each Registrable Security then
                    held by such Holder; provided, however, that the Company shall not
                    be obligated to pay to any Holder an amount in excess of 10.0% of the Purchase
                    Price for each Registrable Security then held by such Holder. If the Company
                    fails to pay any liquidated damages pursuant to this Section in full 



                    


     11




               		  	
                    within
                    seven days after the date payable, the Company will pay interest thereon at a
                    rate of 10% per annum (or such lesser maximum amount that is permitted to be
                    paid by applicable law) to the Holder, accruing daily from the date such
                    liquidated damages are due until such amounts, plus all such interest thereon,
                    are paid in full. The Company shall use its best efforts to keep the Shelf
                    Registration Statement continuously effective (subject to Section 7.2(b)),
                    pursuant to the Act and the Rules and Regulations promulgated thereunder, until
                    (i) the date when such Registrable Securities cease to meet the definition
                    of Registrable Securities pursuant to Section 7.1, or (ii) the
                    Company’s obligations hereunder terminate. In the event that the Shelf
                    Registration Statement shall cease to be effective, the Company shall promptly
                    prepare and file a new registration statement covering the Registrable
                    Securities and shall use its best efforts to have such registration statement
                    declared effective as soon as possible. Any such registration statement shall be
                    considered a “Shelf Registration Statement” hereunder. 



                    



               	(b) 	  	
                    Blackout Notice. In the event (i) that the Company concludes in good
                    faith that it is necessary for the Company to supplement the Prospectus or make
                    an appropriate filing under the Exchange Act so as to cause the Prospectus to
                    become current, or (ii) that, in the good faith judgment of the Chief Executive
                    Officer or the Board of Directors of the Company, it is advisable to suspend use
                    of the Prospectus for a discrete period of time due to undisclosed pending
                    corporate developments or pending public filings with the Commission (which need
                    not be described in detail in the Blackout Notice), the Company shall deliver a
                    written notice (the “Blackout Notice”) to the Holders to the
                    effect of the foregoing and, upon delivery of the Blackout Notice, the Holders
                    shall not sell any Purchased Shares pursuant to the Prospectus and shall not
                    disclose to any third party that such a notice has been given or the contents of
                    the notice; provided, however, that the Company shall not give a Blackout Notice
                    more than two times in any 12 month period. Thereafter, each Holder shall once
                    again be entitled to sell Purchased Shares pursuant to the Prospectus (as
                    amended or supplemented) upon the Holder’s receipt of copies of the
                    supplemented or amended Prospectus, or at such time as the Holder is advised in
                    writing by the Company that the Prospectus may be used, and at such time as the
                    Holder has received copies of any additional or supplemental filings that are
                    incorporated or deemed incorporated by reference in such Prospectus and which
                    are required to be delivered as part of the Prospectus. In any event, such
                    restrictions shall terminate no later than 45 days after the date of delivery of
                    the Blackout Notice. If the Company has delivered a Blackout Notice within 90
                    days of the date that it delivers another Blackout Notice pursuant this section,
                    then the 45-day time period set forth in the preceding sentence shall be
                    shortened so that the restrictions imposed by the Blackout Notice shall expire
                    no later than 30 days after delivery of such Blackout Notice. 



                    



             7.3.   
                    Expenses. All fees and expenses incurred in connection with any
                    registration of Registrable Securities under this Agreement, including but not
                    limited to registration, qualification and listing fees, printing expenses, fees
                    and disbursements of counsel for the Company, blue sky fees and expenses,
                    reasonable road show expenses, and expenses of the Company’s auditors,
                    transfer agent and other agents and advisors, and all other expenses 



     12



included by
                    the Company in complying with this Section 7, shall be borne by the Company.
                    Each Holder shall be responsible for any fees and expenses of its counsel or
                    other advisers; and all underwriting discounts and selling commissions relating
                    to Registrable Securities registered on behalf of the Holders shall be borne by
                    the Holders of the Registrable Securities included in the such registration
                    pro rata on the basis of the number of shares so registered. 




             7.4.   
                    Obligations of the Company. In connection with the registration of
                    Registrable Securities under this Agreement, the Company shall, as expeditiously
                    as reasonably possible:  




               	(a) 	  	
                    Furnish to each Holder without charge such number of copies of a Prospectus,
                    including a preliminary Prospectus, in conformity with the requirements of the
                    Act, and such other documents as each Holder may reasonably request in order to
                    facilitate the disposition of the Registrable Securities owned by it that are
                    included in such registration. 



                    



               	(b) 	  	
                    Use all reasonable efforts to register and qualify the securities covered by
                    such registration statement under such other securities or blue sky laws of such
                    jurisdictions as shall be reasonably requested by the Holders, provided that the
                    Company shall not be required in connection therewith or as a condition thereto
                    to qualify to do business or to file a general consent to service of process in
                    any such states or jurisdictions. 



                    



               	(c) 	  	
                    Notify the Holders promptly (i) of any request by the Commission or any other
                    federal or state governmental authority during the period of effectiveness of a
                    registration statement for amendments or supplements to such registration
                    statement or related prospectus or for additional information related thereto,
                    (ii) of the issuance by the Commission or any other federal or state
                    governmental authority of any stop order suspending the effectiveness of a
                    registration statement or the initiation of any proceedings for that purpose and
                    (iii) of the receipt by the Company of any notification with respect to the
                    suspension of the qualification or exemption from qualification of any of the
                    Registrable Securities for sale in any jurisdiction or the initiation or
                    threatening of any proceeding for such purpose. 



                    



               	(d) 	  	
                    Make every reasonable effort to obtain the withdrawal of any order suspending
                    the effectiveness of the Shelf Registration Statement at the earliest possible
                    time. 



                    



               	(e) 	  	
                    (i) Prepare and file with the Commission such amendments, including
                    post-effective amendments, and supplements to such registration statement and
                    the Prospectus used in connection with such registration statements as may be
                    necessary to comply with the provisions of the Act with respect to the
                    disposition of all securities covered by such registration statement and as may
                    be necessary to keep the registration statement continuously effective for the
                    period set forth in this Agreement; (ii) cause the related Prospectus to be
                    amended or supplemented by any required prospectus supplement, and as so
                    supplemented or amended to be filed pursuant to Rule 424 promulgated under the
                    Act; (iii) respond as promptly as reasonably possible to any comments received
                    from the Commission with respect to the registration statement or any amendment
                    thereto and, as promptly as reasonably possible, upon request, provide the
                    



                    


     13




               	 	  	
                    Holders true and complete copies of all correspondence from and to the
                    Commission relating to the registration statement; and (iv) comply in all
                    material respects with the provisions of the Act and the Exchange Act with
                    respect to the disposition of all Registrable Securities covered by the
                    registration statement during the applicable period in accordance with the
                    intended methods of disposition by the Holders thereof set forth in the
                    registration statement as so amended or in such Prospectus as so supplemented. 



                    



               	(f) 	  	
                    Furnish to the Holders copies of the registration statement, any related
                    Prospectus and any amendment or supplement thereto, proposed to be filed and
                    provide such Holders and such legal counsel reasonable opportunity to review and
                    comment on such registration statement, Prospectus, amendment or supplement. The
                    Company shall not file the registration statement or any such Prospectus or any
                    amendments or supplements thereto to which the Holders of 66-2/3% of the
                    Registrable Securities shall reasonably object in good faith, provided that the
                    Company is notified of such objection in writing no later than five business
                    days after the Holders have been so furnished copies of such documents. 



                    



               	(g) 	  	
                    In the event that the Registrable Securities are being offered in an
                    underwritten public offering, enter into and perform its obligations under an
                    underwriting agreement, in usual and customary form, including, without
                    limitation, customary indemnification and contribution obligations, with the
                    underwriters of such offering, and shall participate and cooperate with the
                    underwriters in connection with any road show or marketing activities customary
                    for an underwritten public offering; provided that the executive officers
                    of the Company will not be required to participate in “road shows”
                    relating to more than four registration statements that are deemed to be
                    effected pursuant to Section 7.2. In addition, the Company shall use reasonable
                    best efforts to furnish, on the date that such Registrable Securities are
                    delivered to the underwriters for sale, if such securities are being sold
                    through underwriters, (i) an opinion, dated as of such date, of the legal
                    counsel representing the Company for the purposes of such registration, in form
                    and substance as is customarily given to underwriters in an underwritten public
                    offering, addressed to the underwriters, if any, and (ii) a letter dated as of
                    such date, from the independent certified public accountants of the Company, in
                    form and substance as is customarily given by independent certified public
                    accountants to underwriters in an underwritten public offering, addressed to the
                    underwriters. 



                    


             7.5.   
                    Furnish Information. It shall be a condition precedent to the
                    obligations of the Company to take any action pursuant to Section 7.2(a) in
                    respect of any Holder that the Holder shall furnish to the Company such
                    information regarding it, the Registrable Securities held by it, and the
                    intended method of disposition of such securities as the Company may reasonably
                    request in writing and as shall be required to timely effect the registration of
                    its Registrable Securities.



             7.6.   
                    Indemnification. In the event any Registrable Securities are included in
                    a registration statement under this Agreement:


     14




               	(a) 	  	
                    By the Company. To the extent permitted by law, the Company will
                    indemnify and hold harmless each Holder, the officers, directors, agents,
                    investment advisors, partners, members and employees of such Holder and each
                    person, if any, who controls such Holder or such persons (such persons and
                    entities referred to as “Holder Indemnified Parties”), against
                    any losses, claims, damages, liabilities, costs (including, without limitation,
                    reasonable costs of preparation and reasonable attorneys’ fees) and
                    expenses to which any of them may become subject (a “Loss”),
                    insofar as such Losses (or actions in respect thereof) arise out of any claim,
                    action or proceeding brought by a third party arising out of or based upon any
                    of the following statements, omissions or violations (collectively a
                    “Violation”): 



                    



               	(i) 	  	
                    any untrue statement or alleged untrue statement of a material fact contained in
                    a registration statement filed pursuant to this Section 7; 



                    



               	(ii) 	  	
                    the omission or alleged omission to state in a registration statement filed
                    pursuant to this Section 7 a material fact required to be stated therein, or
                    necessary to make the statements therein not misleading; or 



                    



               	(iii) 	  	
                    any violation or alleged violation by the Company of the Act, the Exchange Act,
                    any federal or state securities law or any rule or regulation promulgated under
                    the Act, the Exchange Act or any federal or state securities law, in each case
                    in connection with the offering covered by such registration statement; 



                    



	  	
and
the Company will reimburse each Holder Indemnified Party for any legal or other expenses
reasonably incurred by it, as incurred, in connection with investigating or defending any
such Violation; provided,  however, that the indemnity agreement contained
in this subsection shall not apply to amounts paid in settlement of any such Loss, if such
settlement is effected without the consent of the Company, nor shall the Company be liable
in any such case for any such Loss to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration statement by such Holder
Indemnified Party; and provided further, that the Company will not be liable for the
reasonable legal fees and expenses of more than one counsel to the Holder Indemnified
Parties for each such Violation. 






          	(b) 	  	
               By the Holder. To the extent permitted by law, each Holder will,
               severally and not jointly, indemnify and hold harmless the Company, each of its
               officers, directors, agents and employees, and each person, if any, who controls
               the Company or such persons (such persons and entities referred to as
               “Company Indemnified Parties”) against any Losses to which such
               Company Indemnified Parties may become subject, insofar as such Losses (or
               actions in respect thereto) arise out of or are based upon any Violation, in
               each case to the extent (and only to the extent) that such Violation occurs in
               reliance upon and in conformity with written information furnished by such
               Holder expressly for use in connection with such registration statement; and the
               Holder will reimburse any legal or other expenses reasonably incurred by such
               Company Indemnified Parties in connection with investigating or defending any
               such 



               


     15




          	 	  	
               Violation; provided, however, that the indemnity agreement contained
               in this subsection shall not apply to amounts paid in settlement of any such
               Loss if such settlement is effected without the consent of the applicable
               Holder; provided further, that the Holders shall not be liable for the
               reasonable legal fees and expenses of more than one counsel to the Company
               Indemnified Parties; and provided further, that the total amounts payable
               in indemnity by any Holder under this subsection in respect of all Violations
               shall not exceed the net proceeds received by such Holder in the registered
               offering out of which such Violations arise. 



               




          	(c) 	  	
               Notice. Promptly after receipt by an indemnified party under this Section
               of notice of the commencement of any action (including any governmental action),
               such indemnified party will, if a claim for indemnification in respect thereof
               is to be made against any indemnifying party under this Section, deliver to the
               indemnifying party a written notice of the commencement of such an action and
               the indemnifying party shall have the right to participate in, and, to the
               extent the indemnifying party so desires, jointly with any other indemnifying
               party similarly noticed, to assume the defense thereof with counsel selected by
               the indemnifying party and reasonably acceptable to a majority in interest of
               the indemnified parties; provided, however, that an indemnified party
               shall have the right to retain its own counsel, with the reasonable fees and
               expenses to be paid by the indemnifying party, if the indemnified party has been
               advised in writing by counsel that representation of such indemnified party by
               the counsel retained by the indemnifying party would be inappropriate due to
               actual conflict of interests between such indemnified party and any other party
               represented by such counsel in such proceeding. The failure to deliver written
               notice to the indemnifying party within a reasonable time of the commencement of
               any such action shall relieve such indemnifying party of liability to the
               indemnified party under this Section to the extent such delay caused material
               prejudice to the indemnified party, but the omission so to deliver written
               notice to the indemnifying party will not relieve it of any liability that it
               may have to any indemnified party otherwise than under this Section. 



               



          	(d) 	  	
               Defect Eliminated in Final Prospectus. The foregoing
               indemnity agreements of the Company and the Holder are subject to the condition
               that, insofar as they relate to any Violation made in a prospectus but
               eliminated or remedied in an amended prospectus or a prospectus supplement on
               file with the Commission (the “Final Prospectus”), such
               indemnity agreements shall not inure to the benefit of any person if a copy of
               the Final Prospectus was furnished in a timely manner to the indemnified party
               and was not furnished to the person asserting the loss, liability, claim or
               damage at or prior to the time such action is required by the Act. 



               



          	(e) 	  	
               Contribution. If the indemnification provided for in this Section is held
               by a court of competent jurisdiction to be unavailable to an indemnified party,
               other than pursuant to its terms, with respect to any Loss referred to therein,
               then, subject to the limitations contained in this subsection, the indemnifying
               party, in lieu of indemnifying such indemnified party hereunder, shall
               contribute to the amount paid or payable by such indemnified party as a result
               of such Loss in such proportion as is appropriate to reflect the relative fault
               of the indemnifying party on the one hand and 



               


     16




          		  	
               the indemnified party on the other
               in connection with the actions that resulted in such Loss, as well as any other
               relevant equitable considerations. The relative fault of the indemnifying party
               and of the indemnified party shall be determined by reference to, among other
               things, whether the Violation related to information supplied by the
               indemnifying party or by the indemnified party and the parties’ relative
               intent, knowledge, access to information and opportunity to correct or prevent
               such statement or omission. The Company and the Holders agree that it would not
               be just and equitable if contribution pursuant to this subsection were based
               solely upon the number of entities from whom contribution was requested or by
               any other method of allocation which does not take account of the equitable
               considerations referred to above in this subsection. In no event shall any
               Holder’s contribution obligation under this subsection exceed the proceeds
               actually received by such Holder from the sale of Registrable Securities
               included in such registration. The amount paid or payable by an indemnified
               party as a result of the Losses referred to above in this subsection shall be
               deemed to include any legal or other expenses reasonably incurred by such
               indemnified party in connection with investigating or defending any such action
               or claim, subject to the provisions of subsection. No person guilty of
               fraudulent misrepresentation (within the meaning of the Act) shall be entitled
               to contribution from any person who was not guilty of such fraudulent
               misrepresentation. 



               



          	(f) 	  	
               Survival. The obligations of the Company and the Holders under this
               Section shall survive the completion of any offering of Registrable Securities
               in a registration statement, and otherwise. 



               


             7.7.   
                    Rule 144 Reporting. With a view to making available the benefits of
               certain rules and regulations of the Commission that may at any time permit the
               sale of the Registrable Securities to the public without registration, for so
               long as any Holder owns any Registrable Securities, the Company agrees to: 




          	(a) 	  	
               Make and keep adequate, current public information available, as those terms are
               understood and defined in Rule 144, at all times; 



               



          	(b) 	  	
               File with the Commission in a timely manner all reports and other documents
               required of the Company under the Exchange Act; and 



               



          	(c) 	  	
               So long as any Holder owns any Registrable Securities, furnish to such Holder
               forthwith upon request a written statement by the Company as to its compliance
               with the reporting requirements of Rule 144, a copy of the most recent annual or
               quarterly report of the Company, and such other reports and documents of the
               Company as the Holder may reasonably request in availing itself of any rule or
               regulation of the Commission allowing such Holder to sell any such securities
               without registration; proviced, that the Company shall not be required to
               provide, under this paragraph, any reports or documents which are publicly
               available on the Commission’s EDGAR system. 



               


     17



             7.8.   
                   Termination of Company’s Obligations. The Company shall have no
               obligation to register, or maintain, a registration statement governing
               Registrable Securities, (i) if all Registrable Securities have been registered
               and sold pursuant to registrations effected pursuant to this Agreement, or (ii)
               with respect to any particular Holder, at such time as all Registrable
               Securities held by such Holder may be sold within a three-month period under
               Rule 144, either because the Holder holds 1% or less of the Company’s then
               outstanding Common Stock or because the Holder has held its Registrable
               Securities for the time period specified in Rule 144(k).


             7.9.   
               Piggyback Registrations.




          	(a) 	  	
               Registration. If at any time or from time to time during the period when
               the Company is required to maintain the effectiveness of a Shelf Registration
               Statement there is not an effective Shelf Registration Statement covering all of
               the Registrable Securities, the Company shall use its best efforts to notify all
               Holders of Registrable Securities in writing at least 20 days before filing any
               registration statement under the Act for purposes of effecting an underwritten
               public offering by the Company of securities of the Company (excluding
               registration statements relating to any employee benefit plan or a corporate
               merger, acquisition or reorganization) and will afford each such Holder an
               opportunity to include in such registration statement all or any part of the
               Registrable Securities then held by such Holder. Each Holder desiring to include
               in any such registration statement all or any part of the Registrable Securities
               held by such Holder shall, within 10 days after receipt of the above-described
               notice from the Company, so notify the Company in writing, and in such notice
               shall inform the Company of the number of Registrable Securities such Holder
               wishes to include in such registration statement. If a Holder decides not to
               include all of its Registrable Securities in any such registration statement
               filed by the Company, such Holder shall nevertheless continue to have the right
               to include any Registrable Securities in any subsequent registration statement
               or registration statements as may be filed by the Company with respect to
               offerings of its securities, all upon the terms and conditions set forth herein.
               The Holders’ rights to include any Registrable Securities in any offering
               under this Section are subject in all events to the ability of the managing
               underwriter for such offering to exclude some or all of the Registrable
               Securities requested to be registered on the basis of a good faith determination
               that inclusion of such securities might adversely affect the success of the
               offering or otherwise adversely affect the Company; provided,
               however, that no Registrable Securities shall be excluded from any such
               offering if any securities of the Company other than Registrable Securities are
               included in such offering for resale by any person other than the Company. Any
               such exclusion shall be pro rata among all Holders who have requested to sell
               Registrable Securities in such registration. 



               



          	(b) 	  	
               Underwriting. If a registration statement under which the Company gives
               notice under this Section is for an underwritten offering, then the Company
               shall so advise the Holders of Registrable Securities. In such event, the right
               of any such Holder’s Registrable Securities to be included in a
               registration pursuant to this Section shall be conditioned upon such
               Holder’s participation in such underwriting and the inclusion of such
               Holder’s Registrable Securities in the underwriting to the extent provided
                



               


     18




          	 	  	
               herein. All Holders proposing to distribute their Registrable Securities through
               such underwriting shall enter into an underwriting agreement in customary form
               with the managing underwriter or underwriters selected for such underwriting and
               shall furnish such information and documents as the Company or the managing
               underwriter or underwriters may reasonably request. Notwithstanding any other
               provision of this Agreement, if the managing underwriter determine(s) in good
               faith that marketing factors require a limitation of the number of shares to be
               underwritten, then the managing underwriter(s) may exclude Registrable
               Securities from the registration and the underwriting, pro rata among all
               Holders who have requested to sell Registrable Securities in such registration;
               provided, however, that no Registrable Securities shall be
               excluded from any such offering if any securities of the Company other than
               Registrable Securities are included in such offering for resale by any person
               other than the Company. If any Holder disapproves of the terms of any such
               underwriting, such Holder may elect to withdraw such Holder’s Registrable
               Securities therefrom by written notice to the Company and the underwriter,
               delivered at least 10 business days after the terms of such underwriting are
               disclosed to the Holder. Any Registrable Securities excluded or withdrawn from
               such underwriting shall be excluded and withdrawn from the registration. 



               


             7.10.   
               Limitations on Subsequent Registration RightsFrom and after the
               date hereof, the Company shall not enter into any agreement granting any holder
               or prospective holder of any securities of the Company registration rights with
               respect to such securities that would prevent or prohibit the Company from
               performing its obligations to the Holders herein, without the consent of Holders
               of at least a majority of the Registrable Securities.



     8.   
               ASSIGNMENT. Notwithstanding anything herein to the contrary, the
               registration rights of any Holder under Section 7 hereof may be assigned to any
               person or party (an “Assignee”) who acquires from the Holder
               any of shares of Registrable Securities; provided, that (w) no party may
               be assigned any of the foregoing rights until the Company is given written
               notice by the assigning party at the time of such assignment stating the name
               and address of the Assignee and identifying the securities of the Company as to
               which the rights in question are being assigned; (x) any such Assignee shall
               receive such assigned rights subject to all the terms and conditions of this
               Agreement; and (y) no such assignment or assignments shall increase the
               obligations of the Company hereunder. 


     9.
               MISCELLANEOUS. 


             9.1.   
               Survival of Warranties. The representations, warranties and
               covenants of the Company and the Investors contained in or made pursuant to this
               Agreement shall survive the execution and delivery of this Agreement and the
               Closing and shall in no way be affected by any investigation of the subject
               matter thereof made by or on behalf of the Investors, their counsel or the
               Company, as the case may be. 


             9.2.   
               Successors and Assigns. The terms and conditions of this
               Agreement shall inure to the benefit of and be binding upon the respective
               permitted successors and assigns of the parties. 


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             9.3.   
               Governing Law; Consent to Jurisdiction. This Agreement shall be
               governed by and construed under the internal laws of the State of New York
               applicable to agreements entered into and to be performed entirely within New
               York, without reference to principles of conflict of laws or choice of laws.


             9.4.   
               Counterparts. This Agreement may be executed in two or more counterparts,
               each of which shall be deemed an original, but all of which together shall
               constitute one and the same instrument.


             9.5.   
               Headings. The headings and captions used in this Agreement are used for
               convenience only and are not to be considered in construing or interpreting this
               Agreement. All references in this Agreement to sections, paragraphs, exhibits
               and schedules shall, unless otherwise provided, refer to sections and paragraphs
               hereof and exhibits and schedules attached hereto, all of which exhibits and
               schedules are incorporated herein by this reference. 


             9.6.   
               Notices. Unless otherwise provided, any notice required or permitted
               under this Agreement shall be given in writing and shall be deemed effectively
               given upon personal delivery to the party to be notified, when sent by fax or
               three business days after being mailed, by registered or certified mail, postage
               prepaid, addressed to the party to be notified in the case of the Company, at
               590 Madison Avenue, 21st Floor, New York, New York 10022 (telecopier:
               (212) 521-4230) Attention: Mr. Ralph Bartel, or in the case of Investor, at the
               address for such Investor as reflected on the signature page to this Agreement,
               or at such other address as any party may designate by giving 10 days’
               written notice to the Investors or the Company, as appropriate.  


             9.7.   
               Finder’s Fees. Each Investor shall severally indemnify and hold
               harmless the Company from any liability for any commission or compensation in
               the nature of a finder’s or broker’s fee (and any asserted liability)
               based on any undertaking or agreement by such Investor or any of its officers,
               partners, employees or representatives. The Company shall indemnify and hold
               harmless each Investor from any liability for any commission or compensation in
               the nature of a finder’s or broker’s fee (and any asserted liability)
               based on any undertaking or agreement by the Company or any of its officers,
               employees or representatives. 


             9.8.   
               Costs, Expenses. Each party’s costs in connection with the
               preparation, execution delivery and performance of this Agreement (including
               legal fees) shall be borne by that party.  


             9.9.   
               Amendments and Waivers. Any term of this Agreement may be
               amended and the observance of any term of this Agreement may be waived only with
               the written consent of the Company and Investors holding a majority of the
               Purchased Shares purchased or, prior to the Closing to be purchased, hereunder;
               provided, however, that no amendment or waiver of the Company’s obligations
               under Section 7 of this Agreement that significantly and adversely affects the
               rights of a holder of Purchased Shares shall be binding upon that holder unless
               that holder has consented in writing to such amendment or waiver. Subject to the
               limitations set forth in the preceding sentence, any amendment or waiver
               effected in accordance with this Section shall be binding upon each holder of
               any Purchased Shares at the time outstanding (even if such Investor or other
               holder did not vote with respect to, or voted against, such amendment or
               waiver), each future holder of such securities, and the Company. The Investors
               acknowledge that by virtue of


     20




 this provision, holders of a majority of the
               Purchased Shares may bind other holders to amendments or waivers that such other
               holders may have voted to oppose.  


             9.10.   
               Severability. If one or more provisions of this Agreement are held to be
               invalid, illegal or unenforceable under applicable law, such provision(s) shall
               be excluded from this Agreement and the balance of the Agreement shall be
               interpreted as if such provision(s) were so excluded and shall be enforceable in
               accordance with its terms, as long as the remaining provisions are sufficient to
               carry out the overall intentions of the parties as expressed herein. 


             9.11.   
               Entire Agreement. This Agreement, together with any exhibits or
               schedules hereto, constitutes the entire agreement and understanding of the
               parties with respect to the subject matter hereof and supersedes any and all
               prior negotiations, correspondence, agreements or understandings among the
               parties with respect to the subject matter hereof. 


             9.12.   
               Further Assurances. From and after the date of this Agreement, upon
               the request of an Investor or the Company, the Company and the Investors shall
               execute and deliver such instruments, documents or other writings as may be
               reasonably necessary or desirable to confirm and carry out and to effectuate
               fully the intent and purposes of this Agreement. 


             9.13.   
               Securities Laws Disclosure; Publicity. By 8:30 a.m. (New York City time)
               on the first business day after the Closing Date, the Company shall issue a
               press release disclosing the transactions contemplated hereby and file a Current
               Report on Form 8-K disclosing the material terms of the transactions
               contemplated hereby. In addition, the Company will make such other filings and
               notices in the manner and time required by the Commission and the Nasdaq
               National Market. 


             9.14.   
               Integration. The Company shall use its best efforts to ensure that
               neither it nor any affiliate of the Company shall, sell, offer for sale or
               solicit offers to buy or otherwise negotiate in respect of any security (as
               defined in Section 2 of the Act) that would be integrated with the offer or sale
               of the Purchased Shares in a manner that would require the registration under
               the Act of the sale of the Purchased Shares to the Investors. 


             9.15.   
               Acknowledgement. Each Investor acknowledges and agrees that the Company
               has not made any representations or warranties with respect to the transactions
               contemplated hereby other than those specifically set forth in Article 3. The
               Company acknowledges and agrees that no Investor has made any representations or
               warranties with respect to the transactions contemplated hereby other than those
               specifically set forth in Article 4. 





[Remainder of this
page intentionally left blank] 






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        IN
WITNESS WHEREOF, the parties hereto have executed this Common Stock Purchase Agreement as
of the date first above written. 



	  	THE COMPANY 





	  	TRAVELZOO INC.,

                                                     a Delaware corporation




	  	By:	 
 
	  		Name:      Ralph Bartel

                                                            Title:        Chairman of the Board, Chief Executive

              Officer and Chief Financial Officer























     22



	  	INVESTOR




	  	 
 
	  	Name of Investor





	  	By:	 
 
	  		Name:
Title:





	  	Address of Investor:




	  	

	  	

	  	

	  	

	  	

	  	Telecopier number:
 









[COUNTERPART SIGNATURE
PAGE 
COMMON STOCK PURCHASE
AGREEMENT] 













     23





EXHIBIT A 




SCHEDULE OF INVESTORS 


	Name and Address
 of Investor 	Number of
Purchased Shares 	Price Per Share 	Aggregate
Purchase Price 
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	Total: 	  	  	  




























     24





EXHIBIT B 




FORM OF LEGAL OPINION 



























     25