exh10_1.htm


    EXHIBIT
      10.1

     

    
      


       

      


       
        
          

        

      

       

      PURCHASE
        AGREEMENT

       

      Between

       

      MTM
        TECHNOLOGIES, INC.

       

      and

       

      PEQUOT
        PRIVATE EQUITY FUND III, L.P.

       

      and

       

      PEQUOT
        OFFSHORE PRIVATE EQUITY PARTNERS III, L.P.

       

      
 

       

      


       

      


       

      Dated
        July 25, 2007

       

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      Table
        of Contents

       

      
        
          	 	
                  Page 

                
	
                  1.       Purchase
                    and Sale of the Series A-8 Purchased Shares and
                    Warrants.

                	
                  2

                
	
                  1.1

                	
                  Authorization
                    of Issuance of the Series A-8 Purchased Shares and
                    Warrants

                	
                  2

                
	
                  1.2

                	
                  Purchase
                    and Sale of Series A-8 Purchased Shares and Warrants

                	
                  2

                
	
                  1.3

                	
                  Use
                    of Proceeds

                	
                  2

                
	
                  1.4

                	
                  Closing

                	
                  2

                
	 	 
	
                  2.       Representations
                    and Warranties of the Company

                	
                  3

                
	
                  2.1

                	
                  Organization
                    and Qualification

                	
                  3

                
	
                  2.2

                	
                  Certificate
                    of Incorporation and Bylaws

                	
                  3

                
	
                  2.3

                	
                  Corporate
                    Power and Authority

                	
                  3

                
	
                  2.4

                	
                  Capitalization

                	
                  3

                
	
                  2.5

                	
                  Authorization

                	
                  6

                
	
                  2.6

                	
                  Consents

                	
                  6

                
	
                  2.7

                	
                  Brokers
                    or Finders

                	
                  6

                
	
                  2.8

                	
                  Offering
                    Exemption

                	
                  6

                
	
                  2.9

                	
                  Offering
                    of Purchased Shares and Warrants

                	
                  7

                
	
                  2.10

                	
                  SEC
                    Reports

                	
                  7

                
	
                  2.11

                	
                  Financial
                    Statements

                	
                  7

                
	
                  2.12

                	
                  Absence
                    of Conflicts

                	
                  8

                
	 	 
	
                  3.       Representations
                    and Warranties of the Purchasers

                	
                  8

                
	
                  3.1

                	
                  Organization
                    and Qualification

                	
                  8

                
	
                  3.2

                	
                  Power
                    and Authority

                	
                  8

                
	
                  3.3

                	
                  Authorization

                	
                  8

                
	
                  3.4

                	
                  Purchase
                    Entirely for Own Account

                	
                  9

                
	
                  3.5

                	
                  Disclosure
                    of Information

                	
                  9

                
	
                  3.6

                	
                  Investment
                    Experience

                	
                  9

                
	
                  3.7

                	
                  Accredited
                    Investor

                	
                  9

                
	
                  3.8

                	
                  Restricted
                    Securities; Legends

                	
                  9

                
	
                  3.9

                	
                  No
                    General Solicitation

                	
                  10

                
	
                  3.10

                	
                  Absence
                    of Conflicts

                	
                  10

                
	
                  3.11

                	
                  Brokers
                    or Finders

                	
                  11

                
	 	 
	
                  4.       Conditions
                    of the Parties

                	
                  11

                
	
                  4.1

                	
                  Conditions
                    of Purchasers’ Obligations at the Closing

                	
                  11

                
	
                  4.2

                	
                  Conditions
                    of Company’s Obligations at the Closing

                	
                  12

                
	 	 
	
                  5.       Covenants

                	
                  13

                
	
                  5.1

                	
                  Financial
                    Statements

                	
                  13

                


        

         

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

        

         

        
          	
                  5.2

                	
                  Certain
                    Other Reports and Information

                	
                  14

                
	
                  5.3

                	
                  Further
                    Information; Further Assurances

                	
                  14

                
	
                  5.4

                	
                  Notice
                    of Certain Events

                	
                  14

                
	
                  5.5

                	
                  Visitation;
                    Verification

                	
                  15

                
	
                  5.6

                	
                  Insurance

                	
                  15

                
	
                  5.7

                	
                  Payment
                    of Taxes and Other Potential Charges and Priority
                    Claims

                	
                  16

                
	
                  5.8

                	
                  Preservation
                    of Corporate Status

                	
                  16

                
	
                  5.9

                	
                  Governmental
                    Approvals and Filings

                	
                  16

                
	
                  5.10

                	
                  Financial
                    Accounting Practices

                	
                  17

                
	 	 
	
                  6.       Indemnification

                	
                  17

                
	
                  6.1

                	
                  General
                    Indemnification

                	
                  17

                
	
                  6.2

                	
                  Indemnification
                    Principles

                	
                  17

                
	
                  6.3

                	
                  Claim
                    Notice; Right to Defend

                	
                  18

                
	 	 
	7.      
                  Certain
                  Definitions	19
	 	 
	
                  8.       Miscellaneous

                	
                  22

                
	
                  8.1

                	
                  Survival
                    of Representations and Warranties

                	
                  22

                
	
                  8.2

                	
                  Successors
                    and Assigns

                	
                  23

                
	
                  8.3

                	
                  Governing
                    Law

                	
                  23

                
	
                  8.4

                	
                  Counterparts

                	
                  23

                
	
                  8.5

                	
                  Titles
                    and Subtitles

                	
                  23

                
	
                  8.6

                	
                  Notices

                	
                  23

                
	
                  8.7

                	
                  Expenses

                	
                  24

                
	
                  8.8

                	
                  Consents,
                    Amendments and Waivers

                	
                  24

                
	
                  8.9

                	
                  Severability

                	
                  24

                
	
                  8.10

                	
                  Entire
                    Agreement

                	
                  24

                
	
                  8.11

                	
                  Delays
                    or Omissions

                	
                  24

                
	
                  8.12

                	
                  Facsimile
                    Signatures

                	
                  25

                
	
                  8.13

                	
                  Other
                    Remedies

                	
                  25

                
	
                  8.14

                	
                  Further
                    Assurances

                	
                  25

                
	
                  8.15

                	
                  Exchanges;
                    Lost, Stolen or Mutilated Stock Certificates and
                    Warrants

                	
                  25

                
	
                  8.16

                	
                  Nasdaq
                    Compliance

                	
                  26

                
	
                  8.17

                	
                  Further
                    Assurances

                	
                  26

                


        

      

       

      **

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       

      Exhibit
        & Schedules List

       

      
        
          	
                  Exhibit
                    A

                	
                  -

                	
                  Form
                    of Registration Rights Agreement Amendment

                
	
                  Exhibit
                    B

                	
                  -

                	
                  Form
                    of  Certificate of Amendment

                
	
                  Exhibit
                    C

                	
                  -

                	
                  Form
                    of Warrant

                
	
                  Exhibit
                    D

                	
                  -

                	
                  Pro-Forma
                    Capitalization Table

                
	 	 	 
	
                  Schedule
                    I

                	
                  -

                	
                  Names
                    and Addresses of Purchasers

                
	
                  Schedule
                    II

                	
                  -

                	
                  Schedule
                    of Securities Purchased

                


        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      MTM
        TECHNOLOGIES, INC.

       

      PURCHASE
        AGREEMENT

       

      THIS
        PURCHASE AGREEMENT (this “Agreement”) is made on the 25th day of July,
        2007, by and among MTM Technologies, Inc., a New York corporation (the
“Company”), and the following purchasers: Pequot Private Equity Fund III,
        LLP (“Pequot”), Pequot Offshore Private Equity Partners III, L.P,
        (“Pequot Offshore”, collectively with Pequot, the “Pequot Funds”).
        The Pequot Funds are collectively referred to herein as the “Purchasers”,
        and each referred to herein as a “Purchaser”.

       

      W
        I T N E
        S S E T H:

       

      WHEREAS,
        subject to the terms and conditions set forth herein, the Company desires
        to
        issue and sell to the Purchasers on the Closing Date (i) 743,415 shares of
        Series A-8 Preferred Stock (the “Series A-8 Purchased Shares”) and
        detachable warrants to purchase up to 892,099 shares (as such amount may
        be
        adjusted in accordance with the terms thereof) of Common Stock (each, a
“Warrant” and, collectively, the “Warrants”), and the Purchasers
        shall purchase the Series A-8 Purchased Shares and Warrants from the Company
        on
        the terms and conditions set forth herein;

       

      WHEREAS,
        pursuant to that certain Amended and Restated Shareholders’ Agreement, dated as
        of August 1, 2005, as amended, among the Company, the Purchasers and certain
        other shareholders of the Company (the “Shareholders’ Agreement”), the
        parties thereto agreed to the imposition of certain restrictions and obligations
        on such parties including, among other things, certain transfer restrictions
        of
        the Company’s capital stock owned by such parties, certain co-sale and right of
        first refusal rights and the agreement between such parties to vote their
        shares
        of the Company’s capital stock to elect certain individuals to the board of
        directors of the Company (the “Board of Directors”);

       

      WHEREAS,
        subject to the terms and conditions set forth herein, the Company desires
        to
        grant certain registration rights to the Purchasers with respect to the shares
        of Common Stock issuable from time to time upon conversion of the Series
        A-8
        Purchased Shares purchased by the Purchasers and the exercise of the Warrants
        and, on or prior to the Closing Date, the Company will cause that certain
        Registration Rights Agreement, dated December 10, 2004, as amended, among
        the
        Company, the Purchasers and certain individuals named therein, to be amended
        by
        an amendment in substantially the form attached hereto as Exhibit A (the
“Registration Rights Agreement Amendment”), to grant the Purchasers such
        registration rights;

       

      WHEREAS,
        the Independent Committee of the Board of Directors has approved the execution
        and delivery of this Agreement and the transactions contemplated hereby,
        including without limitation, the issuance of the Certificate of Amendment
        with
        respect to the Series A-8 Preferred Stock attached hereto as Exhibit B
        (the “Certificate of Amendment”), the issuance of Series A-8 Purchased
        Shares and the Warrants and the issuance of any Common Stock issuable upon
        conversion or exercise of the foregoing, all on the terms and conditions
        set
        forth below;

       

      NOW,
        THEREFORE, in consideration of the premises and agreements contained in this
        Agreement, and for good and valuable consideration, the receipt and sufficiency
        of which are hereby acknowledged, THE PARTIES HEREBY AGREE AS
        FOLLOWS:

       

      1.           Purchase
        and Sale of the Series A-8 Purchased Shares and Warrants.

       

      1.1           Authorization
        of Issuance of the Series A-8 Purchased Shares and Warrants.  Subject
        to the terms and conditions of this Agreement, on or prior to the Closing
        Date,
        the Company shall have authorized the issuance and sale to the Purchasers
        of (i)
        the Series A-8 Purchased Shares and (i) the Warrants, substantially in the
        form
        attached hereto as Exhibit C.

       

      1.2           Purchase
        and Sale of Series A-8 Purchased Shares and Warrants.  Subject
        to the terms and conditions of this Agreement, the Pequot Funds agree to
        purchase at the Closing, and the Company agrees to issue and sell to each
        such
        Purchaser at the Closing (i) the number of Series A-8 Purchased Shares set
        forth
        opposite such Purchaser’s name under the heading “Number of Series A-8
        Purchased Shares” on Schedule II and (ii) Warrants for the number of
        shares of Common Stock set forth opposite such Purchaser’s name under the
        heading “Number of Warrant Shares” on Schedule II hereto, in
        exchange for the amount set forth opposite such Purchaser’s name under the
        heading “Series A-8 Shares Purchase Price” and “Warrant Purchase
        Price” on Schedule II hereto.

       

      1.3           Use
        of Proceeds.  The
        Company agrees to use the net proceeds from the sale and issuance of the
        Series
        A-8 Purchased Shares and the Warrants (together, the “Purchased
        Securities”) pursuant to this Agreement for working capital and other
        general corporate purposes.

       

      1.4           Closing.  The
        initial purchase and sale of the Purchased Securities shall take place at
        the
        offices of Thelen Reid Brown Raysman & Steiner LLP, 875 Third Avenue, New
        York, New York 10022, promptly upon the satisfaction or waiver of the closing
        conditions set forth in Section 4.1 and 4.2 hereto, but not later than August
        1,
        2007, or on such other date and at such other time as the Company and the
        Pequot
        Funds mutually agree in writing (which time and place are designated as the
        “Closing”).  The date of the Closing is referred to herein as
        the “Closing Date.”  At the Closing, the Company shall deliver
        to each of the Pequot Funds (i) shares of Series A-8 Purchased Shares in
        the
        amount set forth opposite such Purchaser’s name under the heading “Number of
        Series A-8 Purchased Shares” on Schedule II hereto and (ii) Warrants
        entitling such Purchaser to purchase the number of shares of Common Stock
        set
        forth opposite such Purchaser’s name under the heading “Number of Warrant
        Shares” on Schedule II hereto, all against payment in the amounts set
        forth opposite such Purchaser’s name under the heading “Series A-8 Shares and
        Warrant Purchase Price” on Schedule II hereto, by wire transfer of
        immediately available funds to such account as the Company
        designates.  The Closing shall not occur, and the Company shall have
        no obligation to make such deliveries, unless the Pequot Funds purchase and
        pay
        for the aggregate number of Series A-8 Purchased Shares and the Warrants
        set
        forth on Schedule II hereto.  The Company shall pay any
        documentary stamp or similar issue or transfer taxes due as a result of the
        issuance and sale of the Series A-8 Purchased Shares and the
        Warrants.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.           Representations
        and Warranties of the Company.  The
        Company hereby represents and warrants to each Purchaser the
        following:

       

      2.1           Organization
        and Qualification.  Each
        of the Company and the Subsidiaries is duly organized, validly existing and
        in
        good standing under the laws of its respective jurisdiction of incorporation
        or
        organization and has the requisite power and authority to own, lease and
        operate
        its assets, properties and business and to carry on its business as it is
        now
        being conducted or proposed to be conducted.  Each of the Company and
        the Subsidiaries is duly qualified as a foreign corporation to transact
        business, and is in good standing, in each jurisdiction where it owns or
        leases
        real property or maintains employees or where the nature of its activities
        make
        such qualification necessary, except where such failure to qualify would
        not
        have a Material Adverse Effect.

       

      2.2           Certificate
        of Incorporation and Bylaws.  The
        Company has delivered to the Purchasers true, correct, and complete copies
        of
        the Company’s certificate of incorporation as in effect on the date hereof (the
“Existing Certificate”) and the Company’s bylaws as in effect on the date
        hereof (the “Bylaws”).

       

      2.3           Corporate
        Power and Authority.  The
        Company has all requisite corporate power and authority to execute and deliver
        the Transaction Documents to which it is a party.  The Company has all
        requisite corporate power and authority to issue and sell the Series A-8
        Purchased Shares and the Warrants to the Purchasers hereunder.  The
        Company has all requisite corporate power and authority to carry out and
        perform
        its obligations under the terms of the Transaction Documents.  The
        Company has all requisite corporate power and authority to sell and issue
        the
        Common Stock issuable upon conversion of the Series A-8 Preferred Stock and
        the
        exercise of the Warrants (together, the “Conversion
        Shares”).  The Conversion Shares have been duly reserved for
        issuance and when issued will be duly and validly issued, fully paid and
        nonassessable.

       

      2.4           Capitalization  
        (a)      Immediately
        prior to the first Closing occurring pursuant to this Agreement, the authorized
        capital stock of the Company consists of 120,000,000, of which (i) 80,000,000
        are designated as Common Stock; and (ii) 40,000,000 are designated as Preferred
        Stock, of which (A) 38,500,000 are designated as “Series A Preferred Stock” as
        follows: 4,200,000 are designated Series A-1 Preferred Stock of which 3,453,264
        are issued and outstanding, 2,600,000 of which are designated Series A-2
        Preferred Stock of which 2,121,290 are issued and outstanding, 7,200,000
        of
        which are designated Series A-3 Preferred Stock of which 4,079,403 are issued
        and outstanding, 9,000,000 of which are designated Series A-4 Preferred Stock
        of
        which 8,321,758 are issued and outstanding, 8,000,000 of which are designated
        Series A-5 Preferred Stock of which 3,263,519 are issued and outstanding,
        3,000,000 of which are designated Series A-6 Preferred Stock of which 2,558,481
        are issued and outstanding, and 4,500,000 of which are designated Series
        A-7 of
        which 4,170,142 are issued and outstanding and 800,000 of which are designated
        Series A-8 none of which are issued and outstanding.  Shares of the
        authorized Common Stock have been reserved as follows: (i) 250,000 shares
        of the
        authorized Common Stock have been reserved for issuance pursuant to the exercise
        of stock options granted or to be granted after the date hereof 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      under
        the
        1993 Stock Option Plan of the Company, (ii) 350,000 shares of the authorized
        Common Stock have been reserved for issuance pursuant to the exercise of
        stock
        options granted or to be granted after the date hereof under the 1996 Stock
        Option Plan of the Company, (iii) 250,000 shares of the authorized Common
        Stock
        have been reserved for issuance pursuant to the exercise of stock options
        granted or to be granted after the date hereof under the 1998 Stock Option
        Plan
        of the Company, (iv) 350,000 shares of the authorized Common Stock have been
        reserved for issuance pursuant to the exercise of stock options granted or
        to be
        granted after the date hereof under the 2000 Long-Term Performance Plan of
        the
        Company, (v) 250,000 shares of the authorized Common Stock have been reserved
        for issuance pursuant to the exercise of stock options granted or to be granted
        after the date hereof under the 2002 Long-Term Performance Plan of the Company,
        (vi) 4,000,000 shares of the authorized Common Stock have been reserved for
        issuance pursuant to the exercise of stock options granted or to be granted
        after the date hereof under the 2004 Equity Incentive Plan of the Company
        (the
        stock options described in clauses (i) through (vi), collectively, the
“Options”), (vii) 4,200,000 shares of the authorized Common Stock have been
        reserved for issuance upon conversion of the Series A-1 Preferred Stock,
        (viii)
        2,600,000 shares of the authorized Common Stock have been reserved for issuance
        upon conversion of the Series A-2 Preferred Stock, (ix) 7,200,000 shares
        of the
        authorized Common Stock have been reserved for issuance upon conversion of
        the
        Series A-3 Preferred Stock, (x) 9,000,000 shares of the authorized Common
        Stock
        have been reserved for issuance upon conversion of the Series A-4 Preferred
        Stock, (xi) 8,000,000 shares of the authorized Common Stock have been reserved
        for issuance upon conversion of the Series A-5 Preferred Stock, (xii) 3,000,000
        shares of the Common Stock have been reserved for issuance upon conversion
        of
        the Series A-6 Preferred Stock, (xiii) 4,248,088 shares of the Common Stock
        have been reserved for issuance upon conversion of the Series A-7 Preferred
        Stock, (xiv) 2,973,660 shares of the Common Stock have been reserved for
        issuance upon conversion of the Series A-8 Preferred Stock (xv) 500,000 shares
        of the Common Stock have been reserved for issuance pursuant to the exercise
        of
        the Series A-1 Warrants, , (xvi) 400,000 shares of the authorized Common
        Stock
        have been reserved for issuance pursuant to the exercise of the Series A-2
        Warrants, (xvii) 769,232 shares of the authorized Common Stock have been
        reserved for issuance pursuant to the exercise of the Series A-3 Warrants,
        (xviii) 1,538,461 shares of the authorized Common Stock have been reserved
        for
        issuance pursuant to the exercise of the Series A-4 Warrants, (xix) 450,000
        shares of the authorized Common Stock have been reserved for issuance pursuant
        to the exercise of the Series A-5 Warrants, (xx) 765,258 shares of the
        authorized Common Stock have been reserved for issuance pursuant to the exercise
        of the Series A-6 Warrants, (xxi) 1,251,044 shares of the authorized Common
        Stock have been reserved for issuance pursuant to the exercise of the Series
        A-7
        Warrants, (xxii) 892,098 shares of the authorized Common Stock have been
        reserved for issuance pursuant to the exercise of the Series A-8
        Warrants,  (xxiii) 700,000 shares of the authorized Common Stock have
        been reserved for issuance pursuant to the exercise of warrants issued to
        Columbia Partners, Investment Management, (xxiv) 746,736 shares of Series
        A-1
        Preferred Stock have been reserved for issuance as dividends with respect
        to the
        Series A-1 Preferred Stock, (xxv) 478,710 shares of Series A-2 Preferred
        Stock
        have been reserved for issuance as dividends with respect to the Series A-2
        Preferred Stock, (xxvi) 3,120,597 shares of Series A-3 Preferred Stock have
        been
        reserved for issuance as dividends with respect to the Series A-3 Preferred
        Stock, (xxvii) 678,242 shares of Series A-4 Preferred Stock have been reserved
        for issuance as dividends with respect to the Series A-4 Preferred Stock,
        (xxviii) 4,736,491 shares of Series A-5 Preferred Stock have been reserved
        for
        issuance as dividends with respect to the Series A-5 Preferred Stock, (xxx)
        441,519 shares of Series A-6 Preferred Stock have been reserved for issuance
        as
        dividends with respect to the Series A-6 Preferred Stock, (xxxi)
        329,858

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      shares
        of
        Series A-7 Preferred Stock have been reserved for issuance as dividends with
        respect to the Series A-7 Preferred Stock, (xxxii) 56,585 shares of Series
        A-8 Preferred Stock have been reserved for issuance as dividends with respect
        to
        the Series A-8 Preferred Stock, (xxxiii) 250,000 shares of authorized Common
        Stock have been reserved for issuance in connection with the Company’s
        acquisition of Nexl Inc.   The rights, privileges and preferences
        of the Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-3
        Preferred Stock, Series A-4 Preferred Stock, Series A-5 Preferred Stock and
        Series A-6 Preferred Stock are as stated in the Existing
        Certificate.  As of the date hereof, all issued and outstanding shares
        of the Company’s capital stock are duly authorized and validly issued, are fully
        paid and nonassessable.  Except with respect to (i) 3,145,753 options
        to purchase shares of Common Stock and 412,900 restricted stock units
        representing the right to acquire shares of Common Stock, in each case issued
        pursuant to the Company’s equity incentive plans, (ii) 4,422,951 warrants to
        purchase shares of Common Stock issued to the Purchasers in connection with
        the
        original issuance and sale of the Series A-1 Preferred Stock, Series A-2
        Preferred Stock, Series A-3 Preferred Stock, Series A-4 Preferred Stock,
        Series
        A-5 Preferred Stock, and Series A-6 Preferred Stock, and (iii) 700,000 warrants
        to purchase shares of Common Stock issued to Columbia Partners Investment
        Management, there are no options, warrants, conversion privileges, or preemptive
        or other rights or agreements presently outstanding to purchase or otherwise
        acquire from the Company any shares of the capital stock or other securities
        of
        the Company.  Except for the Voting Agreement and the Shareholders
        Agreement, the Company has not entered into any agreements with any of its
        shareholders with respect to the voting of capital shares of the Company
        and to
        the Knowledge of the Company none of its shareholders are parties to such
        agreements. Except as aforesaid and as contemplated in the Transaction
        Documents, the Company is not a party to any agreement or understanding,
        and to
        its Knowledge, no shareholders are a party to such an agreement or
        understanding, that affects or relates to the voting or giving of written
        consents with respect to any security, or the voting by a director, of the
        Company.  Except as aforesaid, to the Company’s Knowledge, no
        shareholder has granted options or other rights to any entity (other than
        the
        Company) to purchase any shares of Common Stock or other equity securities
        of
        the Company from such shareholder.  The Company is not subject to any
        obligation (contingent or otherwise) to repurchase or otherwise to acquire
        or
        retire any shares of its capital stock.  Except with respect to the
        issuance of 600,732 shares of Series A Preferred Stock on November 11, 2006
        and
        634,423 shares of Series A Preferred Stock on May 21, 2007  in
        satisfaction of the dividend obligations under the terms of the Series A
        Preferred Stock, the Company has not declared or paid any dividend or made
        any
        other distribution of cash, stock or other property to its
        shareholders.

       

      (b)           Upon
        acceptance of the Certificate of Amendment by the Secretary of State of the
        State of New York the Series A-8 Preferred Stock shall be designated and
        shall
        have all such rights, including, without limitation, voting rights as set
        forth
        in the Certificate of Amendment.

       

      2.5           Authorization.  The
        execution, delivery and performance by the Company of the Transaction Documents,
        the sale, issuance and delivery of the Purchased Securities and the performance
        of all of the obligations of the Company under each of the Transaction Documents
        have been authorized by the Board of Directors (or a duly authorized committee
        thereof), and, other than approvals required by the Nasdaq Stock Market
        (“Nasdaq”), no other corporate action on the part of the Company or any
        Subsidiary and no other corporate or other approval or 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      authorization
        is required on the part of the Company, or any Person by Law or otherwise
        in
        order to make the Transaction Documents the valid, binding and enforceable
        obligations (subject to (i) laws of general application relating to bankruptcy,
        insolvency, and the relief of debtors, and (ii) rules of law governing specific
        performance, injunctive relief, or other equitable remedies) of the
        Company.  Each of the Transaction Documents, when executed and
        delivered by the Company, will constitute a valid and legally binding obligation
        of the Company, enforceable against the Company in accordance with its
        respective terms, subject to (i) laws of general application relating to
        bankruptcy, insolvency, and the relief of debtors, and (ii) rules of law
        governing specific performance, injunctive relief, or other equitable
        remedies.

       

      2.6           Consents.  Except
        for the consents of the majority of the holders the Company’s Series A Preferred
        Stock, no consent, approval, waiver or authorization, or designation,
        declaration, notification, or filing with any person or entity (governmental
        or
        private), on the part of the Company is required in connection with the valid
        execution, delivery and performance of the Transaction Documents, the offer,
        sale or issuance of the Purchased Securities or the consummation of any other
        transaction contemplated hereby (other than such notifications or filings
        required under applicable federal or state securities laws, if any), except
        for
        such consents, approvals, waivers, authorizations, designations, declarations,
        notifications, or filings that will be received prior to or as of the Closing
        Date.

       

      2.7           Brokers
        or Finders.  The
        Company has not incurred, directly or indirectly, as a result of any action
        taken by the Company, any liability for brokerage or finders’ fees or agents’
commissions or any similar charges in connection with this Agreement or the
        issuance of the Purchased Securities or any transaction contemplated hereby
        or
        thereby.  The Company agrees to indemnify and hold harmless each
        Purchaser from any liability for any commission or compensation in the nature
        of
        a finder’s fee (and the costs and expenses of defending against such liability
        or asserted liability) for which the Company or any of its officers, employees
        or representatives is responsible.

       

      2.8           Offering
        Exemption.  Assuming
        the truth and accuracy of the representations and warranties contained in
        Section 3, the offer and sale of the Purchased Securities as contemplated
        hereby
        and the issuance and delivery to the Purchasers of the Purchased Securities
        and
        the Conversion Shares, are exempt from registration under the Securities
        Act of
        1933, as amended (the “Securities Act”), and will be registered or
        qualified (or exempt from registration or qualification) under applicable
        state
        securities and “blue sky” laws, as currently in effect.

       

      2.9           Offering
        of Purchased Shares and Warrants.  No
        form of general solicitation or general advertising was used by the Company
        or
        any of its agents or representatives in connection with the offer and sale
        of
        the Purchased Securities.  Neither the Company nor, to the Company’s
        Knowledge, any agent acting on the Company’s behalf has, directly or indirectly,
        offered the Purchased Securities of the Company for sale to or solicited
        any
        offers to buy the Purchased Securities of the Company from, or otherwise
        approached or negotiated with respect thereto with any other potential
        purchaser.

       

      2.10           SEC
        Reports.  (a)  The
        Company has filed all required forms, reports and documents with the Securities
        and Exchange Commission (the “SEC”) since April 1, 2001, each


       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      of
        which
        has complied in all material respects with all applicable requirements of
        the
        Securities and the Securities Exchange Act of 1934, as amended (the “Exchange
        Act”), and the rules and regulations promulgated thereunder, each as in
        effect on the date such forms, reports and documents were filed.

       

      (b)           None
        of the following contains any untrue statement of a material fact or omits
        to
        state a material fact necessary in order to make the statements contained
        herein
        in light of the circumstances under which they were made not misleading:
        (i)
        this Agreement (including, the Schedules and Exhibits attached hereto), (ii)
        the
        Existing Certificate, (iii) the Bylaws, or (iv) the SEC
        Reports.  There is no fact which, to the Knowledge of the Company, has
        not been disclosed to the Purchasers, which could be expected to have a Material
        Adverse Effect on the ability of the Company to perform its obligations under
        the Existing Certificate, the Bylaws or this Agreement.

       

      (c)           The
        Company is not aware of any correspondence (other than routine communications),
        action or proposed or threatened action by the SEC or Nasdaq with regard
        to the
        Company since April 1, 2006.

       

      2.11           Financial
        Statements.  Included
        in the Company’s filings with the SEC are the audited financial statements of
        the Company and its Subsidiaries as at and for the years ended March 31,
        2006,
        2005 and 2004 and the unaudited financial statements of the Company and its
        Subsidiaries for the fiscal quarters ended June 30, September 30 and December
        31, 2006 (the “Financial Statements”).  The Financial
        Statements have been prepared in accordance with GAAP and fairly present
        the
        financial condition and operating results of the Company and its Subsidiaries
        as
        of the date, and for the period, indicated therein, except that the unaudited
        financial statements as at and for the quarters ended June 30, September
        30 and
        December 31, 2006 are subject to normal year-end adjustments and do not contain
        all notes required under GAAP.

       

      2.12           Absence
        of Conflicts.  The Company is not in violation of or default under
        any provision of its Existing Certificate or Bylaws. The execution, delivery,
        and performance of, and compliance with this Agreement and the consummation
        of
        the transactions contemplated hereby, have not and will not:

       

      (a)           violate,
        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, would constitute
        a
        default), under, or result in the termination of, or accelerate the performance
        required by, or result in the creation of any Lien upon any of the assets,
        properties or business of the Company and the Subsidiaries under, any of
        the
        terms, conditions or provisions of the Existing Certificate or the Bylaws,
        or
        any material contract of the Company (for purposes of this Section 2.12(a)
        a
        material contract of the Company shall be only those agreements that are
        included as exhibits to the Company filings with the SEC); or

       

      (b)           violate
        any judgment, ruling, order, writ, injunction, award, decree, or any Law
        or
        regulation of any court or federal, state, county or local government or
        any
        other governmental, regulatory or administrative agency or authority which
        is
        applicable to the 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Company
        or any Subsidiary or any of their assets, properties or business, which
        violation would have a Material Adverse Effect.

       

      3.           Representations
        and Warranties of the Purchasers.  Each
        Purchaser hereby represents and warrants that:

       

      3.1           Organization
        and Qualification.  Each
        Purchaser is duly organized, validly existing and in good standing under
        the
        laws of its jurisdiction of incorporation or organization and its Agreement
        of
        Limited Partnership to carry on its business as it is now being conducted
        or
        proposed to be conducted.

       

      3.2           Power
        and Authority.  Each
        Purchaser has all requisite power and authority as a limited partnership
        to
        execute and deliver the Transaction Documents to which it is a party, to
        purchase the Purchased Securities from the Company hereunder, and to carry
        out
        and perform its obligations under the terms of the Transaction
        Documents.

       

      3.3           Authorization.  The
        execution, delivery and performance by such Purchaser of the Transaction
        Documents to which it is a party, and the performance of all of the obligations
        of such Purchaser under each of such Transaction Documents have been duly
        and
        validly authorized, and no other action, approval or authorization is required
        on the part of such Purchaser or any Person by Law or otherwise in order
        to make
        the Transaction Documents the valid, binding and enforceable obligations
        (subject to (i) laws of general application relating to bankruptcy, insolvency,
        and the relief of debtors, and (ii) rules of law governing specific performance,
        injunctive relief, or other equitable remedies) of such Purchaser that is
        a
        party thereto.  Each of the Transaction Documents, when executed and
        delivered by such Purchaser that is a party thereto, will constitute a valid
        and
        legally binding obligation of such Purchaser that is a party thereto,
        enforceable against such Purchaser that is a party thereto in accordance
        with
        its terms subject to: (i) laws of general application relating to bankruptcy,
        insolvency, and the relief of debtors, and (ii) rules of law governing specific
        performance, injunctive relief, or other equitable remedies.

       

      3.4           Purchase
        Entirely for Own Account.  The
        Purchased Securities and the Conversion Shares (collectively, the “New
        Securities”) will be acquired for investment for such Purchaser’s own
        account, not as a nominee or agent, and not with a view to the resale or
        distribution of any part thereof.  Such Purchaser’s principal office
        is listed on Exhibit I attached hereto.  Such Purchaser is
        aware that the Company is issuing the New Securities pursuant to Section
        4(2) of
        the Securities Act and Regulation D promulgated thereunder without complying
        with the registration provisions of the Securities Act or other applicable
        federal or state securities laws.  Such Purchaser is also aware that
        the Company is relying upon, among other things, the representations and
        warranties of the Purchasers contained in this Agreement for purposes of
        complying with Regulation D.

       

      3.5           Disclosure
        of Information.  Such
        Purchaser has received and carefully reviewed all the information it considers
        necessary or appropriate for deciding whether to purchase the New
        Securities.  Such Purchaser further represents that the Company has
        made available to such Purchaser, at a reasonable time prior to the date
        of this
        Agreement, an opportunity to (a) ask questions and receive answers from the
        Company regarding the terms and 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      conditions
        of the offering of the New Securities and the business, properties and financial
        condition of the Company, all of which questions (if any) have been answered
        to
        the reasonable satisfaction of such Purchaser, and (b) obtain additional
        information, all of which was furnished by the Company to the reasonable
        satisfaction of such Purchaser.  The foregoing, however, does not
        limit or modify the representations and warranties of the Company in Section
        2
        of this Agreement or the right of the Purchasers to rely thereon.

       

      3.6           Investment
        Experience.  Such
        Purchaser acknowledges that it is able to fend for itself, can bear the economic
        risk of its investment, and has such knowledge and experience in investing
        in
        companies similar to the Company and in financial or business matters such
        that
        it is capable of evaluating the merits and risks of the investment in the
        New
        Securities.  Such Purchaser has made the determination to enter into
        this Agreement and the other agreements contemplated hereby and to acquire
        the
        New Securities based upon its own independent evaluation and assessment of
        the
        value of the Company and its present and prospective business
        prospects.

       

      3.7           Accredited
        Investor.  Such
        Purchaser is an “accredited investor” within the meaning of SEC Rule 501
        of Regulation D, as presently in effect.

       

      3.8           Restricted
        Securities; Legends.  Such
        Purchaser recognizes that the New Securities will not be registered under
        the
        Securities Act or other applicable federal or state securities
        laws.  Such Purchaser understands that the New Securities it is
        purchasing are characterized as “restricted securities” under the federal
        securities laws inasmuch as they are being acquired from the Company in a
        transaction not involving a public offering.  Such Purchaser
        acknowledges that it may not to sell or transfer the New Securities unless
        such
        New Securities are registered under the Securities Act and under any other
        applicable securities laws and that certificates evidencing the New Securities
        will bear the following legend or similar legend:

       

      THIS
        SECURITY AND THE SHARES OF STOCK WHICH MAY BE PURCHASED UPON THE [EXERCISE]
        [CONVERSION] OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
        ACT
        OF 1933, AS AMENDED (THE “ACT”), AND SUCH SECURITIES MAY NOT BE OFFERED,
        SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION
        AND REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION
        THEREFROM UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND SUCH
        APPLICABLE STATE SECURITIES LAWS.

       

      THIS
        SECURITY AND THE SHARES OF STOCK WHICH MAY BE PURCHASED UPON THE [EXERCISE]
        [CONVERSION] OF THIS SECURITY ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS ON
        THE
        TRANSFER THEREOF PURSUANT TO A SHAREHOLDERS AGREEMENT WITH THE
        ISSUER.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      3.9           No
        General Solicitation.  Such
        Purchaser acknowledges that the New Securities were not offered to such
        Purchaser means of: (a) any advertisement, article, notice or other
        communication published in any newspaper, magazine or similar medium, or
        broadcast over television or radio, or (b) any other form of general
        solicitation or advertising.

       

      3.10           Absence
        of Conflicts.  Such
        Purchaser’s execution, delivery, and performance of, and compliance with the
        Transaction Documents and the consummation of the transactions contemplated
        hereby and thereby, have not and will not:

       

      (a)           violate,
        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, would constitute
        a
        default) under, or result in the termination of, or accelerate the performance
        required by, or result in the creation of any Lien upon any of the assets,
        properties or business of such Purchaser under, any of the terms, conditions
        or
        provisions of (i) its certificate/articles of formation or organization or
        any
        of its other formation or organizational documents, or (ii) any material
        contract to which it is a party; or

       

      (b)           violate
        any judgment, ruling, order, writ, injunction, award, decree, or any Law
        or
        regulation of any court or federal, state, county or local government or
        any
        other governmental, regulatory or administrative agency or authority which
        is
        applicable to such Purchaser or any of its assets, properties or businesses,
        which violation would have a Material Adverse Effect.

       

      3.11           Brokers
        or Finders.  Such
        Purchaser has not incurred, nor will it incur, directly or indirectly, as
        a
        result of any action taken by such Purchaser, any liability for brokerage
        or
        finders’ fees or agents’ commissions or any similar charges in connection with
        this Agreement or the issuance of the New Securities or any transaction
        contemplated hereby or thereby.  Such Purchaser agrees to indemnify
        and hold the Company harmless from any liability for any commission or
        compensation in the nature of a finders’ fee (and the costs and expenses of
        defending against such liability or asserted liability) for which such
        Purchaser, or any of its respective officers, employees or representatives
        is
        responsible.

       

      4.           Conditions
        of the Parties.

       

      4.1           Conditions
        of Purchasers’ Obligations at the Closing.  The
        obligations of each Purchaser under Section 1 of this Agreement are subject
        to
        the satisfaction by the Company on or before the Closing of each of the
        following conditions:

       

      (a)           Representations
        and Warranties.  The representations and warranties of the Company
        contained in Section 2 shall be true and correct on and as of the Closing
        with
        the same force and effect as though such representations and warranties had
        been
        made on and as of the date of the Closing except as a result of events and
        changes thereto that do not result in a Material Adverse Effect (except where
        such representation is made as of a specific date, it shall be true and correct
        as of such date except as a result of events and changes thereto that do
        not
        result in a Material Adverse Effect).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b)           Performance.  The
        Company shall have performed and complied with all conditions contained in
        this
        Agreement that are required to be performed or complied with by it on or
        before
        the Closing.

       

      (c)           Consents
        and Approvals.  All authorizations, approvals, permits, or
        consents, if any, of any governmental authority or regulatory body of the
        United
        States or of any state or any creditor of the Company or any other Person
        that
        are required in connection with the lawful issuance and sale of the Purchased
        Securities at the Closing pursuant to this Agreement shall be duly obtained
        and
        effective as of each the Closing and the purchase and payment of the Purchased
        Securities to be purchased by the Purchasers at each the Closing on the terms
        and conditions as provided herein shall not violate any applicable
        Law.

       

      (d)           Good
        Standing; Qualification to do Business.  The Company shall have
        delivered to the Purchasers certificates of good standing with respect to
        the
        Company dated as of a date no earlier than 15 days prior to the any the Closing
        from the jurisdiction of incorporation of the Company and from each jurisdiction
        in which it has qualified to do business and evidence of telephone confirmation
        thereof as of the close of business immediately prior to the Closing
        Date.

       

      (e)           Secretary’s
        Certificate.  The Company shall have delivered to the Purchasers a
        certificate executed by its Secretary dated the Closing Date certifying with
        respect to (i) a copy of its Existing Certificate, the Certificate of Amendment
        and its Bylaws as amended to and in effect on the Closing Date and that the
        Company is not in violation of or default under any provision of its Existing
        Certificate, Certificate of Amendment or Bylaws as of and on the Closing
        Date,  (ii) board (or committee) resolutions authorizing the
        transactions contemplated by this Agreement and the Transaction Documents,
        (iii)
        copies of all minutes of all meetings (or excerpts thereof) and all actions
        by
        written consent of the shareholders of the Company authorizing the transactions
        contemplated in the Transaction Documents and (iv) incumbency matters and
        such
        other proceedings relating to the authorization, execution and delivery of
        the
        Transaction Documents as may be reasonably requested by the
        Purchasers.

       

      (f)           Cross-Receipts
        of the Purchasers.  The Company and the Purchasers shall have
        executed and delivered a cross-receipt acknowledging the Company’s delivery to
        the Purchasers of the documents and certificates representing the Purchased
        Securities issued and sold to the Purchasers on the Closing Date to the
        Purchasers and the Purchasers’ payment therefor.

       

      (g)           Conversion
        Shares.  The Conversion Shares with respect to Purchased
        Securities being purchased at the Closing, have been duly reserved for issuance
        and when issued will be duly and validly issued, fully paid and
        nonassessable.

       

      (h)           Listing
        on Stock Exchange.  Appropriate filings shall have been made to
        list the Common Stock on Nasdaq, any other national securities exchange as
        identified under the Exchange Act, or the Nasdaq OTC Bulletin Board (or
        comparable substitute quotation system) as of the Closing and no action shall
        have been taken by Nasdaq or such national securities exchange to terminate
        such
        listing prior to the Closing.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (i)           Registration
        Rights Agreement; etc.  The Company and each other Purchaser shall
        have executed the Registration Rights Agreement Amendment.

       

      (j)           Series
        A-8 Purchased Shares.  The Company shall deliver to each Purchaser
        its respective Series A-8 Purchased Shares.

       

      (k)           Warrants.  The
        Company shall deliver to each Purchaser its respective Warrants.

       

      (l)           Charter
        Amendment . The Company shall have filed at the Closing the Certificate of
        Amendment.

       

      4.2           Conditions
        of Company’s Obligations at the Closing.  The
        obligations of the Company to consummate the transactions contemplated by
        this
        Agreement are subject to the satisfaction by the Purchasers on or before
        any the
        Closing of each of the following conditions:

       

      (a)           Representations
        and Warranties.  The representations and warranties of the
        Purchasers contained in Section 3 shall be true and correct in all material
        respects on and as of the Closing (except where another date or period of
        time
        is specifically stated herein for a representation or warranty and in such
        case
        such representation or warranty shall be true and correct in all material
        respects on and as of such date) with the same force
        and
        effect as though such representations and warranties had been made on and
        as of
        the date of the Closing; provided, however, that representations and warranties
        that contain a materiality qualification shall be true and correct in all
        respects.

       

      (b)           Performance.  The
        Purchasers shall have performed and complied with all conditions contained
        in
        this Agreement that are required to be performed or complied with by it on
        or
        before the Closing.

       

      (c)           Consents
        and Approvals.  All authorizations, approvals, or permits, if any,
        of any governmental authority or regulatory body of the United States or
        of any
        state or any other Person that are required in connection with the lawful
        issuance and sale of the Purchased Securities pursuant to this Agreement
        shall
        be duly obtained and effective as of the Closing and the purchase and payment
        of
        the Purchased Securities to be purchased by the Purchasers at the Closing
        on the
        terms and conditions as provided herein shall not violate any applicable
        Law.

       

      (d)           Cross-Receipts
        of the Purchasers.  The Company and the Purchasers shall have
        executed and delivered a cross-receipt acknowledging the Company’s delivery to
        the Purchasers of the certificates representing the Purchased Securities
        issued
        and sold to the Purchasers on the Closing Date to the Purchasers and the
        Purchasers’ payment therefor.

       

      (e)           Purchase
        Price.  The Purchasers shall have delivered to the Company the
        applicable purchase price for the Purchased Securities being purchased on
        the
        Closing Date as provided in Section 1.4.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (f)           Complete
        Purchase.  If more than one Purchaser is purchasing Purchased
        Securities at any the Closing, then each such Purchaser shall have satisfied
        all
        of the foregoing conditions in this Section 4.3 and shall have purchased
        the
        Purchased Securities that each such Purchaser has agreed to
        purchase.

       

      (g)           Consent
        of Series A Preferred Stockholders.  The Consent of the Series A
        Preferred Stockholders required pursuant to the Company’s Certificate of
        Incorporation shall have been delivered to the Company.

       

      5.           Covenants.  So
        long as any Purchaser together with any entity affiliated with it owns at
        least
        750,000 shares of Series A Preferred Stock (as appropriately adjusted for
        any
        stock splits, stock dividends, combinations, and the like), the Company
        covenants and agrees that it will comply with each of the following
        covenants.

       

      5.1           Financial
        Statements.  The
        Company shall furnish to each Purchaser, within five Business Days after
        filing,
        a true and complete signed copy of its Form 10-Q as filed with the SEC pursuant
        to the Exchange Act, all in such form, and together with such other information
        with respect to the business of the Company, as the Purchasers may request,
        which shall present fairly, in all material respects, the financial position
        of
        the Company as of the end of each such period and the results of its operations
        and cash flows during such period, all in accordance with
        GAAP.  Annually, but not later than five Business Days after filing,
        the Company shall deliver to the Purchasers (i) a true and complete signed
        copy
        of its Form 10-K as filed with the SEC pursuant to the Exchange Act and (ii)
        audited financial statements which shall present fairly, in all material
        respects, the financial position of the Company as of the end of each such
        period and the results of its operations and cash flows during such period,
        all
        in accordance with GAAP and accompanied by the unqualified report and opinion
        thereon of the Company’s independent certified public accountant.

       

      5.2           Certain
        Other Reports and Information.  The
        Company shall deliver to the Purchasers, within 30 days of issuance, all
        accountants’ management letters pertaining to, all other reports submitted by
        accountants in connection with any audit of, and all other reports from outside
        accountants with respect to, the Company and its Subsidiaries (and, in any
        event, any independent auditors’ annual management letters, if issued, will be
        delivered to the Purchasers concurrently with the financial statements referred
        to in Section 5.1).

       

      5.3           Further
        Information; Further Assurances.  The
        Company will, with reasonable promptness, provide to the Purchasers such
        further
        assurances and additional information, reports and statements respecting
        its
        business, operations, properties and financial condition and respecting its
        Affiliates and investments, as the Purchasers may from time to time reasonably
        request.  The Company shall use its reasonable commercial efforts to
        assist each Purchaser with respect to the necessary Securities Act and/or
        Exchange Act filings with respect to the Purchased Securities at the cost
        and
        expense of such Purchaser.

       

      5.4           Notice
        of Certain Events.  Promptly
        upon becoming aware of any of the following, the Company shall give the
        Purchasers notice thereof, together with a written statement of a Responsible
        Officer of the Company setting forth the details thereof and any action with
        respect thereto taken or proposed to be taken by the Company:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (i)           Any
        pending action, suit, proceeding or investigation by or before any Governmental
        Authority against or affecting the Company (or any such action, suit, proceeding
        or investigation threatened in writing) to the extent that it would result
        in a
        Material Adverse Effect.

       

      (ii)           Any
        material violation, breach or default by the Company or any of its Subsidiaries
        of or under any agreement or instrument material to its business, assets,
        properties, operations or condition, financial or otherwise (it being expressly
        understood and agreed that the Company need not provide notice to the Purchasers
        pursuant to this Section 5.4(ii) of the termination of any such agreement
        or
        instrument in accordance with its terms).

       

      (iii)           (A)
        Any Environmental Claim made or threatened in writing against the Company,
        or
        (B) the Company’s becoming aware of any past or present acts, omissions, events
        or circumstances (including any Release, disposition, removal, abandonment
        or
        escape of any Hazardous Materials on, at, in, under, above, to, from or about
        any facility or property now or previously owned, operated or leased by the
        Company or any of its Subsidiaries) which could form the basis of any such
        Environmental Claim, which Environmental Claim, in the case of either clause
        (A)
        or (B), if adversely resolved, would reasonably be expected, either individually
        or in the aggregate, to have a Material Adverse Effect.

       

      (iv)           The
        occurrence of any Material Adverse Effect or any deviation in or change from
        the
        representations, warranties or covenants of the Company in this Agreement
        or in
        the other Transaction Documents.

       

      5.5           Visitation;
        Verification.  The
        Company shall permit such Persons as the Purchasers may designate from time
        to
        time to visit and inspect any of the properties of the Company to examine
        their
        respective assets, properties, offices and other facilities, and books and
        records and take copies and extracts therefrom, and access to the outside
        auditors of the Company and their work papers relating thereto, in each case,
        as
        the Purchasers may from time to time reasonably request, and to discuss their
        affairs with their directors, officers, employees and independent accountants
        at
        such times and as often as the Purchasers may reasonably request;
provided that (i) any such Person shall provide at least two days’ prior
        advance notice to the Company of its intention to visit or inspect any of
        the
        properties of the Company; and (ii) all such visits or inspections shall
        be
        conducted during the normal business hours of the Company and without undue
        interference with the conduct of the Company’s business.  The Company
        shall reimburse the Purchasers for reasonable out-of-pocket costs and expenses
        of for all inspections in any calendar year; for all other times all such
        visits
        or inspections shall be at the sole cost and expense of the
        Purchasers.  The parties hereto agree that no investigation by the
        Purchasers or their representatives shall affect or limit the scope of the
        representations and warranties of the Company contained herein or in any
        Transaction Document delivered pursuant hereto or limit liability for breach
        of
        any such representation or warranty.

       

      The
        Purchasers shall have the right to examine and verify accounts, inventory
        and
        other properties and liabilities of the Company and its Subsidiaries from
        time
        to time, and the Company shall cooperate with the Purchasers in such
        verification.  Without limitation of the foregoing, subject to
        limitations required due to the nature of any classified work, contracts
        or


       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      customer
        relationships, the Company hereby authorizes its officers, employees and
        independent accountants to discuss with the Purchasers the affairs of the
        Company and its Subsidiaries.

       

      5.6           Insurance.

       

      (a)           The
        Company shall, and shall cause each of its Subsidiaries to (i) maintain with
        financially sound and reputable insurers insurance with respect to its
        properties and business and against such liabilities, workers’ compensation,
        casualties and contingencies and of such types and in such amounts as are
        customary in the case of corporations engaged in the same or similar businesses
        or having similar properties similarly situated and naming each Purchaser
        as an
        additional insured and a loss payee, (ii) furnish to the Purchasers from
        time to
        time upon request copies of the policies under which such insurance is issued,
        original certificates of insurance and such other information relating to
        such
        insurance as the Purchasers may reasonably request, and (iii) provide such
        other
        insurance and endorsements as are required by this Agreement and the other
        Transaction Documents.

       

      (b)           The
        Company shall maintain in effect an errors and omissions insurance policy
        for
        the Company and its Subsidiaries with (i) coverage extending to all officers
        and
        directors of the Company, (ii) policy limits not less than those maintained
        by
        the Company and its Subsidiaries on the date hereof, and (iii) deductibles
        not
        greater than those as are reasonable for companies engaged in the same or
        similar businesses and similarly situated.

       

      5.7           Payment
        of Taxes and Other Potential Charges and Priority Claims.  The
        Company shall, and shall cause each of its Subsidiaries to, pay or
        discharge:

       

      (i)           on
        or prior to the date on which material penalties attach thereto, all taxes,
        assessments and other governmental charges imposed upon it or any of its
        properties;

       

      (ii)           on
        or prior to the date when due, all lawful claims of materialmen, mechanics,
        carriers, warehousemen, landlords and other like Persons which, if unpaid,
        might
        result in the creation of a material Lien upon any such property;
        and

       

      (iii)           on
        or prior to the date when due, all other lawful claims which, if unpaid,
        might
        result in the creation of a Lien upon any such property or which, if unpaid,
        might give rise to a claim entitled to priority over general creditors of
        the
        Company in a case under Title 11 (Bankruptcy) of the United States Code,
        as
        amended;

       

      provided
        that unless and until foreclosure, distraint, levy, sale or similar proceedings
        shall have been commenced it need not pay or discharge any such tax, assessment,
        charge or claim so long as (x) the validity thereof is contested in good
        faith
        and by appropriate proceedings diligently conducted, and (y) such reserves
        or
        other appropriate provisions as may be required by GAAP shall have been made
        therefor.

       

      5.8           Preservation
        of Corporate Status.  The
        Company shall maintain its status as a corporation or other entity duly
        organized, validly existing and in good standing under the laws of its
        jurisdiction of incorporation or formation, and to be duly qualified to do
        business as a foreign entity and in good standing in all jurisdictions in
        which
        the ownership of its properties or the nature of its business or both make
        such
        qualification necessary.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      5.9           Governmental
        Approvals and Filings.  The
        Company shall obtain, keep and maintain in full force and effect all
        Governmental Approvals necessary in connection with or to facilitate the
        execution and delivery of this Agreement or any other Transaction Document,
        consummation of the transactions herein or therein contemplated, performance
        of
        or compliance with the terms and conditions hereof or thereof or to ensure
        the
        legality, validity, binding effect, enforceability or admissibility in evidence
        hereof or thereof. 

       

      5.10           Financial
        Accounting Practices.  The
        Company shall, and shall cause each of its Subsidiaries to, make and keep
        books,
        records and accounts which, in reasonable detail, accurately and fairly reflect
        its transactions and dispositions of its assets and maintain systems of internal
        accounting controls sufficient to provide reasonable assurances that (a)
        transactions are executed in accordance with management’s general or specific
        authorization, (b) transactions are recorded as necessary (i) to permit
        preparation of financial statements in conformity with GAAP and (ii) to maintain
        accountability for assets, (c) access to assets is permitted only in accordance
        with management’s general or specific authorization and (d) the recorded
        accountability for assets is compared with the existing assets at reasonable
        intervals and appropriate action is taken with respect to any
        differences.

       

      6.           Indemnification.

       

      6.1           General
        Indemnification.  The
        Company shall indemnify, defend and hold each Purchaser, its affiliates and
        their respective officers, directors, partners (general and limited), employees,
        agents, attorneys successors and assigns (each a “Purchaser Entity”)
        harmless from and against all Losses incurred or suffered by a Purchaser
        Entity
        as a result of the breach of any of the representations, warranties, covenants
        or agreements made by the Company in this Agreement or any of the other
        Transaction Documents, except to the extent that such Losses are the result
        of
        the gross negligence, willful misconduct or fraud of such Purchaser
        Entity.  Each Purchaser, severally and not jointly, shall indemnify,
        defend and hold the Company, its affiliates, their respective officers,
        directors, employees, agents, attorneys, successors and assigns (each a
“Company Entity”) harmless against all Losses as a result of the breach
        of any of the representations, warranties, covenants or agreements made by
        such
        Purchaser in this Agreement or any of the other Transaction Documents, except
        to
        the extent that such Losses are a result of the gross negligence, willful
        misconduct or fraud of such Company Entity.  

       

      6.2           Indemnification
        Principles.  For
        purposes of this Section 6, “Losses” shall mean each and all of the
        following items:  claims, losses (including, without limitation,
        losses of earnings), liabilities, obligations, payments, damages (actual,
        punitive or consequential to the extent provided in this Section 6.2), charges,
        judgments, fines, penalties, amounts paid in settlement, costs and expenses
        (including, without limitation, interest which may be imposed in connection
        therewith, costs and expenses of investigation, actions, suits, proceedings,
        demands, assessments and reasonable fees, expenses and disbursements of counsel,
        consultants and other experts).  Each Purchaser and the Company hereby
        agree that Losses shall not include punitive or consequential damages except
        to
        the extent that such Losses are the result of the gross negligence, willful
        misconduct or fraud of the party from whom the indemnification is being sought
        (the “Indemnifying Party”).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      6.3           Claim
        Notice; Right to Defend.  A
        party seeking indemnification (the “Indemnified Party”) under this
        Section 6 shall promptly upon becoming aware of the facts indicating that
        a
        claim for indemnification may be warranted, give to the Indemnifying Party
        a
        claim notice relating to such Loss (a “Claim Notice”).  Each
        Claim Notice shall specify the nature of the claim, the applicable provision(s)
        of this Agreement or other instrument under which the claim for indemnity
        arises, and, if possible, the amount or the estimated amount
        thereof.  No failure or delay in giving a Claim Notice (so long as the
        same is given prior to expiration of the representation or warranty upon
        which
        the claim is based) and no failure to include any specific information relating
        to the claim (such as the amount or estimated amount thereof) or any reference
        to any provision of this Agreement or other instrument under which the claim
        arises shall affect the obligation of the Indemnifying Party unless such
        failure
        materially and adversely prejudices the Indemnifying Party.  If such
        Loss relates to the commencement of any action or proceeding by a third person,
        the Indemnified Party shall give a Claim Notice to the Indemnifying Party
        regarding such action or proceeding and the Indemnifying Party shall be entitled
        to participate therein to assume the defense thereof with counsel reasonably
        satisfactory to the Indemnified Party.  After the delivery of notice
        from the Indemnifying Party to the Indemnified Party of its election to assume
        the defense of such action or proceeding, the Indemnifying Party shall not
        be
        liable (except to the extent the proviso to this sentence is applicable,
        in
        which event it will be so liable) to the Indemnified Party under this Section
        8
        for any legal or other expenses subsequently incurred by the Indemnified
        Party
        in connection with the defense thereof other than reasonable costs of
        investigation, provided that each Indemnified Party shall have the right
        to employ separate counsel to represent it and assume its defense (in which
        case, the Indemnifying Party shall not represent it) if (i) upon the advice
        of
        counsel, the representation of both parties by the same counsel would be
        inappropriate due to actual or potential differing interests between them,
        (ii)
        in the event the Indemnifying Party has not assumed the defense thereof within
        10 days of receipt of notice of such claim or commencement of action, and
        in
        which case the fees and expenses of one such separate counsel shall be paid
        by
        the Indemnifying Party or (iii) if such Indemnified Party who is a defendant
        in
        any action or proceeding which is also brought against the Indemnifying Party
        reasonably shall have concluded that there may be one or more legal defenses
        available to such Indemnified Party which are not available to the Indemnifying
        Party.  If any Indemnified Party employs such separate counsel it will
        not enter into any settlement agreement which is not approved by the
        Indemnifying Party, such approval not to be unreasonably withheld.  If
        the Indemnifying Party so assumes the defense thereof, it may not agree to
        any
        settlement of any such claim or action as the result of which any remedy
        or
        relief, other than monetary damages for which the Indemnifying Party shall
        be
        responsible hereunder, shall be applied to or against the Indemnified Party,
        without the prior written consent of the Indemnified Party.  In any
        action hereunder as to which the Indemnifying Party has assumed the defense
        thereof with counsel reasonably satisfactory to the Indemnified Party, the
        Indemnified Party shall continue to be entitled to participate in the defense
        thereof, with counsel of its own choice, but, except as set forth above,
        the
        Indemnifying Party shall not be obligated hereunder to reimburse the Indemnified
        Party for the costs thereof.

       

      7.           Certain
        Definitions.  For
        the purposes of this Agreement the following terms will have the following
        meanings:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Affiliate(s)”
        shall mean, with respect to any Person, any other Person directly or indirectly
        controlling (including but not limited to all directors and executive officers
        of such Person), controlled by, or under direct or indirect common control
        with
        such Person.  A Person shall be deemed to control a corporation for
        the purposes of this definition if such Person possesses, directly or
        indirectly, the power (i) to vote 10% or more of the securities having ordinary
        voting power for the election of directors of such corporation or (ii) to
        direct
        or cause the direction of the management and policies of such corporation,
        whether through the ownership of voting securities, by contract or
        otherwise.

       

      “Agreement”
        shall have the meaning ascribed to it in the preliminary paragraph.

       

      “Approval”
        shall have the meaning ascribed to it in Section 8.8(a).

       

      “Board
        of Directors” shall have the meaning ascribed to it in the
        recitals.

       

      “Business
        Day” shall mean any day other than a Saturday, Sunday, public holiday under
        the laws of the State of New York or any other day on which banking institutions
        are authorized to close in New York City.

       

      “Bylaws”
        shall have the meaning ascribed to it in Section 2.2.

       

      “Certificate
        of Amendment” shall have the meaning ascribed to it in the
        recitals.

       

      “Claim
        Notice” shall have the meaning ascribed to it in Section 6.3.

       

      “Closing”
        shall have the meaning ascribed to it in Section 1.4.

       

      “Closing
        Date” shall have the meaning ascribed to it in Section 1.4.

       

      “Company”
        shall have the meaning ascribed to it in the preliminary paragraph.

       

      “Company
        Entity” shall have the meaning ascribed to it in Section 6.1.

       

      “Common
        Stock” shall mean the common stock, par value $0.01 per share, of the
        Company.

       

      “Conversion
        Shares” shall have the meaning ascribed to it in Section 2.3.

       

      “Environmental
        Claim” shall mean, with respect to any Person, any action, suit, proceeding,
        notice, claim, complaint, demand, request for information or other communication
        (written or oral) against, of or to such Person by or from any other Person
        (including any Governmental Authority, citizens’ group or present or former
        employee of such Person) alleging, asserting or claiming any actual or potential
        (a) violation of or liability under any applicable environmental Law or
        regulation or (b) liability for investigatory costs, cleanup costs, governmental
        response costs, natural resources damages, personal injuries, fines or


       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      penalties
        arising out of, based on or resulting from the presence, or release into
        the
        environment, of any Hazardous Materials at any location, whether or not owned
        by
        such Person.

       

      “Exchange
        Act” shall have the meaning ascribed to it in Section 2.10.

       

      “Existing
        Certificate” shall have the meaning ascribed to it in Section
        2.2.

       

      “Financial
        Statements” shall have the meaning ascribed to it in
        Section 2.11.

       

      “GAAP”
        shall mean generally accepted accounting principles for financial reporting
        in
        the United States, applied on a consistent basis.

       

      “Governmental
        Approval” shall mean any approval, order, consent, waiver, authorization,
        certificate, license, permit or validation of, or exemption or other action
        by,
        or filing, recording or registration with, or notice to, any Governmental
        Authority.

       

      “Governmental
        Authority” shall mean any government or political subdivision or any agency,
        authority, bureau, central bank, commission, department or instrumentality
        of
        either, or any court, tribunal, grand jury or arbitrator, in each case whether
        foreign or domestic.

       

      “Hazardous
        Material(s)” shall mean any element, compound, substance or other material
        (including, without limitation, any pollutant, contaminant, hazardous waste,
        hazardous substance, chemical substance, or product) that is listed, classified
        or regulated pursuant to any Environmental Law, including, without limitation,
        any petroleum product, by-product or additive, asbestos, presumed
        asbestos-containing material, asbestos-containing material, medical waste,
        chlorofluorocarbon, hydrochlorofluorocarbon, lead-containing paint,
        polychlorinated biphenyls, radioactive material or radon.

       

      “Hereof”,
        “hereto”, “hereunder” and similar terms shall refer to this
        Agreement and not to any particular paragraph or provision of this
        Agreement.

       

      “Indemnified
        Party” shall have the meaning ascribed to it in Section 6.3.

       

      “Indemnifying
        Party” shall have the meaning ascribed to it in Section 6.2.

       

      “Knowledge”
        shall mean with respect to the Company, the knowledge, after diligent
        investigation, of the directors, officers and senior management of the Company
        and of the person or persons in such entity with responsibility for the matter
        with respect to which the knowledge is applicable.

       

      “Law”
        shall mean the Company’s certificate of incorporation, as amended, the By-laws
        and any foreign, federal, state or local law, statute, rule, regulation,
        ordinance, code, directive, writ, injunction, decree, judgment or order
        applicable to the Company or the Subsidiaries.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Lien(s)”
shall
        mean any
        mortgage, deed of trust, pledge, lien, security interest, charge or other
        encumbrance or security arrangement of any nature whatsoever, including any
        conditional sale or title retention arrangement, and any assignment, deposit
        arrangement or lease intended as, or having the effect of, security, other
        than
        those which together do not have a Material Adverse Effect.

       

      “Losses”
        shall have the meaning ascribed to it in Section 6.2.

       

      “Lien(s)”
        shall mean any mortgage, deed of trust, pledge, lien, security interest,
        charge
        or other encumbrance or security arrangement of any nature whatsoever, including
        any conditional sale or title retention arrangement, and any assignment,
        deposit
        arrangement or lease intended as, or having the effect of,
        security.

       

      “Material
        Adverse Effect” shall mean an effect which is materially adverse to the
        business, assets, properties, operations, results of operations or condition
        (financial or otherwise) of the Company individually or of the Company and
        the
        Subsidiaries taken as a whole (excluding general economic conditions or acts
        of
        war or terrorism).

       

      “Nasdaq”
        shall have the meaning ascribed to it in Section 2.5.

       

      “New
        Securities” shall have the meaning ascribed to it in Section
        3.4.

       

      “Options”
        shall have the meaning ascribed to it in Section 2.4.

       

      “Person”
        shall mean an individual, corporation, limited liability company, partnership,
        trust, incorporated or unincorporated organization, joint venture, joint
        stock
        company, or a government or any agency or political subdivision thereof or
        other
        entity of any kind.

       

      “Purchased
        Securities” shall have the meaning ascribed to it in
        Section 1.3.

       

      “Purchaser(s)”
        shall have the meaning ascribed to it in the preliminary paragraph.

       

      “Purchaser
        Entity” shall have the meaning ascribed to it in Section 6.1.

       

      “Registration
        Rights Agreement Amendment” shall have the meaning ascribed to it in the
        recitals.

       

      “Release”
        shall mean any past or present release, spill, leak, leaching, pumping, pouring,
        emitting, emptying, discharging, injecting, escaping, disposing or
        dumping.

       

      “Responsible
        Officer” shall mean the President, Chief Executive Officer, Vice President
        of Finance or Chief Financial Officer of the Company.

       

      “SEC”
        shall have the meaning ascribed to it in Section 2.10.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “SEC
        Reports” shall mean the Company’s (i) Annual Report on Form 10-K for the
        years ended March 31, 2006, 2005, and 2004, (ii) all definitive proxy statements
        relating to the Company’s meeting of shareholders (whether annual or special)
        held since April 1, 2006 and (iii) all other reports or registration statements
        filed by the Company with the SEC since April 1, 2006.

       

      “Securities
        Act” shall have the meaning ascribed to it in Section 2.8.

       

      “Series
        A Preferred Stock” shall mean, collectively, the Series A-1 Preferred Stock,
        Series A-2 Preferred Stock, Series A-3 Preferred Stock, Series A-4 Preferred
        Stock, Series A-5 Preferred Stock, Series A-6 Preferred Stock,  Series
        A-7 Preferred Stock and the Series A-8 Preferred Stock, each $0.001 par value
        per share, of the Company.

       

      “Series
        A-8 Preferred Stock” shall mean the Series A-8 Preferred Stock, $0.001 par
        value per share, of the Company.

       

      “Series
        A-8 Purchased Shares” shall have the meaning ascribed to it in the
        recitals.

       

      “Shareholders’
        Agreement” shall have the meaning ascribed to it in the
        recitals.

       

      “63%
        in Interest Purchasers” shall mean the Purchasers owning Purchased
        Securities, the original purchase price of which constitutes at least 63%
        of the
        amounts invested by all of the Purchasers in all of the then outstanding
        Purchased Securities.

       

      “Subsidiary(ies)”
        shall mean any other corporation, limited liability company, association,
        joint
        stock company, joint venture or business trust of which, as of the date hereof
        or hereafter, (i) more than fifty percent (50%) of the outstanding voting
        stock,
        share capital or other equity interests is owned either directly or indirectly
        by any Person or one or more of its Subsidiaries, or (ii) the management
        of
        which is otherwise controlled, directly, or indirectly through one or more
        intermediaries, or both, by any Person and/or its
        Subsidiaries.  Unless otherwise specified to the contrary herein,
        Subsidiary(ies) shall refer to the Company’s Subsidiary(ies).

       

      “Transaction
        Document(s)” shall mean, collectively, this Agreement, the Purchased
        Securities, the Registration Rights Agreement Amendment and all other agreements
        and instruments and any other documents, certificates, instruments or agreements
        executed pursuant to or in connection with any such document or this Agreement,
        as such documents may be amended from time to time.

       

      “Warrants”
        shall have the meaning ascribed to it in the recitals.

       

      8.           Miscellaneous.

       

      8.1           Survival
        of Representations and Warranties.  The
        representations and warranties of the Company and Purchasers contained in
        or
        made pursuant to this Agreement shall survive the execution and delivery
        of this
        Agreement and the other Transaction Documents 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      until
        the
        date that is three months following the end of the second fiscal year of
        the
        Company ending after the Closing Date.

       

      8.2           Successors
        and Assigns.  Except
        as otherwise provided herein, the terms and conditions of this Agreement
        shall
        inure to the benefit of and be binding upon the respective successors and
        assigns of the parties (including transferees of any Purchased
        Securities).  Nothing in this Agreement, express or implied, is
        intended to confer upon any party other than the parties hereto or their
        respective successors and assigns any rights, remedies, obligations, or
        liabilities under or by reason of this Agreement, except as expressly provided
        in this Agreement.  Subject to applicable securities laws and the
        Shareholders’ Agreement, each Purchaser shall have the right to assign all of
        the rights, title and interest of such Purchaser pursuant to this Agreement,
        including, without limitation, the right to purchase the Purchased Securities
        and any shares of Common Stock issuable upon conversion or exercise thereof,
        to
        any third party reasonably acceptable to the Company.

       

      8.3           Governing
        Law.  This
        Agreement shall be governed by and construed under the laws of the State
        of New
        York, excluding the application of any conflicts of laws principles which
        would
        require the application of the laws of another state.

       

      8.4           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.

       

      8.5           Titles
        and Subtitles.  The
        titles and subtitles used in this Agreement are used for convenience only
        and
        are not to be considered in construing or interpreting this
        Agreement.

       

      8.6           Notices.  All
        notices and other communications required or permitted hereunder shall be
        in
        writing.  Notices shall be delivered personally, via recognized
        overnight courier (such as Federal Express, DHL or Airborne Express) or via
        certified or registered mail.  Notices may be delivered via facsimile
        or e-mail, provided that by no later than two days thereafter such notice
        is
        confirmed in writing and sent via one of the methods described in the previous
        sentence.  Notices shall be addressed as follows:

       

      (a)           if
        to a Purchaser, to such Purchaser’s address set forth on Schedule I
        hereto; and

       

      (b)           if
        to the Company, to MTM Technologies, Inc., 1200 High Ridge Road, Stamford,
        Connecticut 06905, Attention: General Counsel, facsimile number (203) 975-3701,
        or at such other address or facsimile number as the Company shall have furnished
        in writing to the Purchasers, with a copy to Thelen Reid Brown Raysman &
Steiner LLP, 875 Third Avenue, New York, New York 10022, Attention: E. Ann
        Gill,
        facsimile number (212) 603.2001.

       

      All
        notices shall be effective upon receipt.

       

      8.7           Expenses.  The
        Company shall pay all costs and expenses that it incurs with respect to the
        negotiation, execution, delivery and performance of this Agreement and the
        transactions contemplated hereby.  If the transactions contemplated
        hereby are consummated on 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      the
        Closing Date or if the Company enters into a transaction with another potential
        purchaser not affiliated with any Purchaser on substantially the terms set
        forth
        in this Agreement, the Company shall reimburse the Purchasers for the reasonable
        out-of-pocket expenses (including legal fees and disbursements paid to counsel
        to the Purchasers), which the Purchasers have incurred with respect to the
        negotiation, execution, delivery and performance of this Agreement, the other
        Transaction Documents and the transactions contemplated hereby and thereby
        in an
        amount not exceeding twenty-five thousand dollars ($25,000).

       

      8.8           Consents,
        Amendments and Waivers.  Any
        term of this Agreement may be amended, and the observance of any term hereof
        may
        be waived (either generally or in a particular instance), only with the written
        consent of the 63% in Interest Purchasers and the written consent of the
        Company.  Any amendment or waiver effected in accordance with this
        Section 8.8 shall be binding upon each of the parties hereto.

       

      8.9           Severability.  Whenever
        possible, each provision of this Agreement will be interpreted in such manner
        as
        to be effective and valid under applicable law, but if any provision of this
        Agreement is held to be invalid, illegal or unenforceable in any respect
        under
        any applicable Law or rule in any jurisdiction, such invalidity, illegality
        or
        unenforceability will not affect any other provision or any other jurisdiction,
        but this Agreement will be reformed, construed and enforced in such jurisdiction
        to the greatest extent possible to carry out the intentions of the parties
        hereto.

       

      8.10           Entire
        Agreement.  Each
        party hereby acknowledges that no other party or any other person or entity
        has
        made any promises, warranties, understandings or representations whatsoever,
        express or implied, not contained in the Transaction Documents and acknowledges
        that it has not executed the Transaction Documents in reliance upon any such
        promises, representations, understandings or warranties not contained herein
        or
        therein and that the Transaction Documents supersede all prior agreements
        and
        understandings between the parties with respect thereto.  There are no
        promises, covenants or undertakings other than those expressly set forth
        or
        provided for in the Transaction Documents.

       

      8.11           Delays
        or Omissions.  No
        delay or omission to exercise any right, power or remedy accruing to any
        party
        under this Agreement, upon any breach or default of any other party under
        this
        Agreement, shall impair any such right, power or remedy of such nonbreaching
        or
        nondefaulting party nor shall it be construed to be a waiver of any such
        breach
        or default, or an acquiescence therein, or of or in any similar breach or
        default thereafter occurring; nor shall any waiver of any single breach or
        default be deemed a waiver of any other breach or default theretofore or
        thereafter occurring.

       

      8.12           Facsimile
        Signatures.  Any
        signature page delivered by a fax machine shall be binding to the same extent
        as
        an original signature page, with regard to any agreement subject to the terms
        hereof or any amendment thereto.  Any party who delivers such a
        signature page agrees to deliver promptly an original counterpart to each
        party
        to whom the faxed signature page was sent.

       

      8.13           Other
        Remedies.  In
        addition to those remedies specifically set forth herein and in the Transaction
        Documents, if any, each party may proceed to protect and enforce
        its

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       rights
        under this Agreement and the Transaction Documents either by suit in equity
        and/or by action at law, including, but not limited to, an action for damages
        as
        a result of any such breach and/or an action for specific performance of
        any
        such covenant or agreement contained in this Agreement or in the Transaction
        Documents.  No right or remedy conferred upon or reserved to any party
        under this Agreement or the Transaction Documents is intended to be exclusive
        of
        any other right or remedy, and every right and remedy shall be cumulative
        and in
        addition to every other right and remedy given under this Agreement and the
        Transaction Documents or now and hereafter existing under applicable
        law.

       

      8.14           Further
        Assurances.  At
        any time or from time to time after the Closing, the Company, on the one
        hand,
        and the Purchasers, on the other hand, agree to cooperate with each other,
        and
        at the request of the other party, to execute and deliver any further
        instruments or documents and to take all such further action as the other
        party
        may reasonably request in order to evidence or effectuate the consummation
        of
        the transactions contemplated hereby relating to the purchase contemplated
        herein and to otherwise carry out the intent of the parties
        hereunder.

       

      8.15           Exchanges;
        Lost, Stolen or Mutilated Stock Certificates and Warrants.  Upon
        surrender by any Purchaser to the Company of any stock certificate or Warrant,
        the Company at its expense shall issue in exchange therefor, and deliver
        to such
        Purchaser, a replacement stock certificate or Warrant. Upon receipt of evidence
        satisfactory to the Company of the loss, theft, destruction or mutilation
        of any
        stock certificate or Warrant and in case of any such loss, theft or destruction,
        upon delivery of an indemnity agreement, satisfactory to the Company, or
        in case
        of any such mutilation, upon surrender and cancellation of such stock
        certificate or Warrant, the Company shall issue and deliver to such Purchaser
        a
        new stock certificate or Warrant of like tenor, in lieu of such lost, stolen
        or
        mutilated stock certificate or Warrant.

       

      8.16           Nasdaq
        Compliance.  Article FOURTH (B)(4)(a)(v) of the Existing
        Certificate provides for certain adjustments to be made to the Series A
        Conversion Price (as defined therein) upon the occurrence of certain events
        listed therein.  The Company shall not issues any Series A-8 Preferred
        Shares or Warrants or common stock of the Company pursuant to such provision
        without compliance with Rule 4350 of the Nasdaq Rules, specifically, obtaining
        shareholder approval prior to such issuance, if so required.

       

      8.17           Further
        Assurances.  If shareholder approval is required for any
        securities to be issued pursuant to the provisions of Article FOURTH
        (B)(4)(a)(v) of the Existing Certificate the Company shall request such
        shareholder consent in its next annual shareholders meeting held after such
        requirement arises.  Such annual meeting of the Company’s shareholders
        shall be held in compliance with the rules of the SEC regarding proxies,
        consents and authorizations of shareholders in Section 14 of the Exchange
        Act,
        and the rules and regulations promulgated thereunder and shall make all
        appropriate filings related thereto with the SEC to give effect thereto,
        and to
        approve the authorization and issuance of such securities.

       

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

       

       

      
        
          	 	
                  The
                    Company:

                
	 	 
	 	
                  MTM
                    TECHNOLOGIES, INC.

                
	 	 	 
	 	 	 
	 	 	 
	 	
                  By:

                	/s/
                  J.W. Braukman III
	 	 	
                  Name:   J.W.
                    Braukman III

                  Title:     SVP
                    and Chief Financial Officer

                
	 	 	 


        

      

      
 

      
        
          
          

        

        
          Schedule
            I
            - Page 1

          
            

          

        

        
          
          

        

      

      


      
        
          	 	
                  The
                    Purchasers:

                
	 	 
	 	
                  PEQUOT
                    PRIVATE EQUITY FUND III, L.P.

                
	 	 	 
	 	
                  By:

                	
                  Pequot
                    Capital Management, Inc.,

                  its
                    Investment Manager

                
	 	 	 
	 	 	 
	 	 	
                  By:

                	/s/
	 	 	 	
                  Name:

                  Title:

                
	 	 	 
	 	 	 
	 	 	 
	 	
                  PEQUOT
                    OFFSHORE PRIVATE EQUITY PARTNERS III, L.P.

                
	 	 	 
	 	
                  By:

                	
                  Pequot
                    Capital Management, Inc.,

                  its
                    Investment Manager

                
	 	 	 
	 	 	 
	 	 	
                  By:

                	/s/
	 	 	 	
                  Name:

                  Title:

                


        

      

      


       

      


      
        
          
          

        

        
          Schedule
            I
            - Page 2

          
            

          

        

        
          
          

        

      

      


      


      Schedule
        I

       

      Names
        and Addresses of Purchasers

       

      Pequot
        Private Equity Fund III, L.P.

      c/o
        Pequot Capital Management, Inc.

      500
        Nyala
        Farm Road

      Westport,
        Connecticut 06880

      Attention:  Carlos
        Rodrigues

      Fax:  (203)
        429-2420

       

      with
        a
        copy to:

       

      Aryeh
        Davis

      c/o
        Pequot Capital Management, Inc.

      153
        East
        53rd Street

      New
        York,
        New York 10022

      Fax:  (212)
        651-3481

       

      Pequot
        Offshore Private Equity Partners III, L.P.

      c/o
        Pequot Capital Management, Inc.

      500
        Nyala
        Farm Road

      Westport,
        Connecticut 06880

      Attention:  Carlos
        Rodrigues

      Fax:  (203)
        429-2420

       

      with
        a
        copy to:

       

      Aryeh
        Davis

      c/o
        Pequot Capital Management, Inc.

      153
        East
        53rd Street

      New
        York,
        New York 10022

      Fax:  (212)
        651-3481

       

      
        
          
          

        

        
          Schedule
            I
            - Page 3

          
            

          

        

        
          
          

        

      

      


      Schedule
        II

       

      Schedule
        of Securities Purchased

       

      
        	
                NAME
                  OF PURCHASER

              	
                NUMBER
                  OF SERIES A-8 

                PURCHASED
                  SHARES

              	
                NUMBER
                  OF

                WARRANT
                  SHARES

              	
                SERIES
                  A-8 SHARES AND

                WARRANT
                  PURCHASE PRICE

              
	
                Pequot
                  Private Equity Fund III, L.P.

                 

              	
                651,566

              	
                781,879

              	
                $3,067,572.73

              
	
                Pequot
                  Offshore Private Equity Partners III, L.P.

                 

              	
                91,849

              	
                110,219

              	
                $432,427.09

              
	
                Totals

              	
                743,415

              	
                892,098

              	
                $3,499,997.82

              


      

      


       

      
        
          
          

        

        
          Schedule
            II - Page 1