Exhibit
      10.2

    


    SECURITIES
      PURCHASE AGREEMENT

    


    THIS
      SECURITIES PURCHASE AGREEMENT
      (the “Agreement”),
      dated as of December __, 2005, by and among Cape Coastal Trading Corporation,
      a
      Delaware corporation (the “Company”),
      uBid, Inc., a Delaware corporation
      with headquarters located at 8550 West Bryn Mawr Avenue, Suite 200, Chicago,
      IL
      60631 (“uBid”)
      and the investors listed on the Schedule of Investors attached hereto
as
      Exhibit A-1
      or A-2,
      as such Exhibits may be amended from time-to-time (individually,
      an “Investor”
      and collectively, the “Investors”).
      

     

    WHEREAS:
      

     

    A.  The
      Company and uBid are parties to a Merger Agreement and Plan of Reorganization
      (the “Merger
      Agreement”)
      pursuant to which, in exchange for certain consideration payable to the security
      holders of uBid prior to the Merger (the “uBid
      Stockholders”),
      a
      wholly-owned subsidiary of the Company will be merged with and into uBid, with
      uBid as the surviving entity (the “Merger”),
      which,
      as a result of the Merger, uBid will be a wholly-owned subsidiary of the
      Company. The targeted closing date for the Merger is December 22,
      2005, subject to extension by the Company in its discretion up to and including
      December 30, 2005 (the “First
      Closing Date”).

     

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

      

    C. Each
      Investor, severally and not jointly, wishes to purchase, and the Company wishes
      to sell, upon the terms and conditions stated in this Agreement, (i) that
      aggregate number of shares of the Common Stock, par value $0.001 per share,
      of
      the Company (the “Common
      Stock”),
      set forth opposite such Investor’s name in column two (2) on the Schedule of
      Investors in Exhibit A-1
      (“Initial
      Common Shares”)
      and (ii) initial warrants, in substantially the form attached hereto as
Exhibit
      F
      (the “Initial
      Warrants”)
      to acquire up to that number of additional shares of Common Stock set forth
      opposite such Investor’s name in column three (3) on the Schedule of Investors
      (as exercised, collectively, the “Initial
      Warrant Shares”).
      

    


    D. Subject
      to the terms and conditions set forth in this Agreement, the Investors shall
      have the right to purchase in Second Closing (as defined in Section 2.1(b)
      below) (i) that aggregate number of shares of the Common Stock, par value $0.001
      per share, of the Company, set forth opposite such Investor’s name in column two
      (2) on the Schedule of Investors in Exhibit A-2
      (“Additional
      Common Shares”
      and collectively with the Initial Common Shares, the “Common
      Shares”)
      and (ii) warrants, in substantially the form attached hereto as Exhibit
      F
      (the “Additional
      Warrants”
      and collectively with the Initial Warrants, the "Warrants")
      to acquire up to that number of additional shares of Common Stock set forth
      opposite such Investor’s name in column three (3) on the Schedule of Investors
      (as exercised, collectively, the “Additional
      Warrant Shares”
      and collectively with the Initial Warrant Shares, the "Warrant
      Shares").
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    E. The
      aggregate number of shares of Common Stock that shall be sold in the First
      Closing shall be at least 10,000,000
      shares of Common Stock, with the aggregate number of Common Shares to be sold
      to
      Investors in both the First Closing and the Second Closing not to exceed
13,000,000
      shares of Common Stock.

     

    F. The
      Common Shares, the Warrants and the Warrant Shares
      issued pursuant to this Agreement are
      collectively are referred to herein as the “Securities”.
      

    


    G. At
      the time of the First Closing, 8,800,000 of shares of Common Stock will be
      issued to the uBid Stockholders in connection with the Merger, with 600,667
      additional shares to be issued, in accordance with the Merger Agreement (as
      defined below). If more than $45,500,000 of Securities are sold pursuant to
      this
      Agreement, in accordance with the Merger Agreement, cash proceeds from the
      sale
      of such Securities, net of expenses related thereto, will be used to purchase
      certain shares of Common Stock issued pursuant to the Merger Agreement, up
      to
      $12,000,000 in total, if 13,000,000 shares of Common Stock are sold pursuant
      to
      this Agreement. 

     

    H. The
      Company and McGuireWoods LLP (the “Escrow
      Agent”)
      have entered into an Escrow Agreement (the “Escrow
      Agreement”)
      to provide for the safekeeping of funds received and documents executed in
      connection with the Offering. Such
      funds
      shall be held in escrow until the Closing and delivered by the Escrow Agent
      on
      behalf of the Investors to the Company upon the satisfaction of the Company’s
      closing conditions.

     

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

     

    ARTICLE
      I

    DEFINITIONS

     

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

     

    “Advice”
      has the meaning set forth in Section 6.5.

     

    “Additional
      Common Shares”
      has the meaning set forth in recitals to this Agreement.

    


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

    


    “Additional
      Warrant Shares”
      has the meaning set forth in recitals to this Agreement.

    


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

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

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

     

    “Closing”
      has the meaning set forth in Section 2.1(c).

     

    “Closing
      Date”
      has
      the meaning set forth in Section 2.3.

    


    “Closing
      Price”
      means, for any date, the closing price per share of the Common Stock for such
      date (or the nearest preceding date) on the primary Eligible Market or exchange
      on which the Common Stock is then listed or quoted.

     

    “Company
      Counsel”
      means McGuireWoods
      LLP,
      counsel to the Company.

     

    “Common
      Shares”
      has the meaning set forth in recitals to this Agreement.

     

    “Common
      Stock”
      means the common stock of the Company, par value $0.001 per share.

     

    “Current
      Trading Market”
      is the NASD OTC Bulletin Board.

    


    “Designated
      Investor” means
      Smithfield Fiduciary, LLC. 

    


    “Designated
      Investor Counsel”
      means Schulte Roth & Zabel, LLP. 

     

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

     

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

     

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

     

    “Eligible
      Market”
      means any of the New York Stock Exchange, the American Stock Exchange, The
      NASDAQ National Market, The NASDAQ Capital Market.

     

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

     

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

     

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

     

    “Excluded
      Events”
      has the meaning set forth in Section 6.1.

     

    “Excluded
      Investors”
      means SG Cowen & Co., LLC and its Affiliates.

     

    “Filing
      Date”
      means 45 days after the First Closing Date.

    


    “First
      Closing”
      has the meaning set forth in Section 2.1(a).

    


    “First
      Closing Date”
      has the meaning set
      forth in recitals to this Agreement.

    


    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

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

     

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

     

    “Intellectual
      Property Rights” has
      the meaning set forth in Section 3.1(s).

     

    “Initial
      Common Shares”
      has the meaning set forth in recitals to this Agreement. 

    


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

    


    “Initial
      Warrant Shares”
      has
      the meaning set forth in recitals to this Agreement.

    


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

     

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

     

    “Material
      Adverse Effect” has
      the meaning set forth in Section 3.1(b).

     

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

     

    “Person”
      means any individual or corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, or joint
      stock company.

     

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

     

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

    


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

     

    “Registrable
      Securities”
      means the (i) Common Shares and the Warrant Shares issued or issuable pursuant
      to the Transaction Documents, (ii) the Merger Shares and Contingent Shares
      issued pursuant to the Merger Agreement (as such terms are defined in the Merger
      Agreement), and (iii) the shares of Common Stock issuable pursuant to warrants
      assumed pursuant to the Merger Agreement and the warrants to be issued to the
      Placement Agents, together with any securities issued or issuable upon any
      stock
      split, dividend or other distribution, recapitalization, exchange or similar
      event with respect to the foregoing.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

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

     

    “Required
      Effectiveness Date”
      means 120
      days
      after the First Closing Date, provided that if the Registration Statement will
      not be reviewed by the SEC, the Required Effectiveness Date shall be 90 days
      after the First Closing Date.

     

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

     

    “SEC”
      means the Securities and Exchange Commission.

    


    “Second
      Closing”
      has the meaning set forth in Section 2.1(b).

    


    “Second
      Closing Date”
      has the meaning set forth in Section 2.3.

    


    “Second
      Closing Notice”
      has the meaning set forth in Section 2.3.

     

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

     

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

     

    “Shares”
      means shares of the Company’s Common Stock.

     

    “Subsidiary”
      means any Person in which the Company, directly or indirectly, owns capital
      stock or holds an equity or similar interest.

     

    “Trading
      Day”
      means (a) any day on which the Common Stock is listed or quoted and traded
      on its primary Trading Market, (b) if the Common Stock is not then listed
      or quoted and traded on any Eligible Market, then a day on which trading occurs
      on the NASDAQ National Market (or any successor thereto), or (c) if trading
      ceases to occur on the NASDAQ National Market (or any successor thereto), any
      Business Day.

     

    “Trading
      Market”
      means the Current Trading Market, the NASDAQ National Market or any other
      Eligible Market.

     

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

     

    “Transfer
      Agent”
      means Pacific
      Stock Transfer and Trust,
      or any successor transfer agent for the Company.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

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

     

    “Warrants”
      has the meaning set forth in recitals to this Agreement.

     

    “Warrant
      Shares”
      has the meaning set forth in recitals to this Agreement.

     

    ARTICLE
      II

    PURCHASE
      AND SALE

     

    2.1 Closings.
      

    


    (a) First
      Closing.
      Subject
      to the terms and conditions set forth in this Agreement, the Company shall
      issue
      and sell to each Investor, and each Investor shall, severally and not jointly,
      purchase from the Company on the First Closing Date, such number of Common
      Shares and Warrants set forth opposite such Investor’s name on Exhibit A-1
      for the
      First Closing hereto under the headings “Common Shares” and “Warrants” (the
“First
      Closing”).
      

    


    (b) Second
      Closing.
      Subject
      to the terms and conditions set forth in this Agreement, the Company shall
      issue
      and sell to each Investor electing to participate in such Second Closing
      pursuant to Section 2.2 below, and each such Investor so participating in the
      Second Closing shall, severally and not jointly, purchase from the Company
      on
      such Second Closing Date (as defined below), up to such number of Common Shares
      and Warrants set forth opposite such Investor’s name on Exhibit A-2
      for the
      Second Closing hereto under the headings “Common Shares” and “Warrants” (the
“Second
      Closing”)
      from
      those Common Shares and Warrants that the Company elects to offer in the Second
      Closing. Notwithstanding the foregoing, the aggregate
      number of Common Shares to be sold to Investors in both the First Closing and
      the Second Closing shall not exceed 13,000,000
      Common Shares.
      

    


    (c) Closing.
      The First
      Closing and the Second Closings are each referred to in this Agreement as a
      “Closing.”
The
      date
      and time of each Closing shall occur on the applicable Closing Date at the
      offices of McGuireWoods LLP, 1345 Avenue of the Americas, New York, NY
      10105.

    


    (d) Purchase
      Price.
      The
      purchase price for each Investor of the Initial Common Shares and the related
      Initial Warrants to be purchased by each such Investor at the First Closing
      shall be the amount set forth opposite such Investor's name on Exhibit A-1
      for the
      First Closing (the "Initial
      Purchase Price").
      Each
      Investor shall pay such purchase price for the Additional Common Shares and
      the
      related Additional Warrants as set forth opposite such Investor's name on
Exhibit
      A-2
      for the
      Second Closing at the Second Closing (the "Additional
      Purchase Price",
      and
      together with the Initial Purchase Price, the "Purchase
      Price").

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    2.2 First
      Closing Date.
      Subject
      to
      the terms and conditions set forth in this Agreement, the date and time of
      the
      First Closing shall be the First Closing Date (or such later date as is mutually
      agreed to by the Company and each Investor).

    


    2.3 Second
      Closing Date.
      Subject
      to the terms and conditions set forth in this Agreement, the date and time
      of
      the Second Closings (each, a "Second
      Closing Date,"
      and
      together with the First Closing Date, each a "Closing
      Date"
      and
      collectively, the "Closing
      Dates")
      shall
      be 10:00 a.m., New York City Time, on the date specified in Section 2.3(c)
      by
      the Company in the manner set forth below with respect to Additional Common
      Shares and Additional Warrants that the Company elects to offer in the Second
      Closing.

    


    (a) Each
      Investor participating in the First Closing shall have the right participate
      in
      the Second Closing on a pro rata basis (pro rata among such Investors based
      on
      the relative number of Common Shares purchased by each in the First Closing).
      To
      exercise such participation right, such Investor participating in the First
      Closing that wishes to participate in the Second Closing shall provide written
      notice thereof to the Company on or before the thirtieth (30th)
      day
      after the First Closing Date, which notice shall specify the number of Common
      Shares (up to such Investor’s pro rata portion). 

    


    (b) If
      one or
      more Investors participating in the First Closing do not exercise their rights
      to participate in the Second Closing by giving written notice thereof by the
      thirtieth (30th)
      day
      after the First Closing Date (or waive in writing their right to so
      participate), the Company, in its discretion, may accept subscriptions for
      Common Shares and Warrants, on the same terms and conditions, from one or more
      additional persons who may become additional Investors by executing this
      Agreement or a counterpart signature page hereto. 

    


    (c) The
      Second
      Closing Date shall be the fortieth (40th)
      day
      after the First Closing Date, or if such date is not be a Business Day, the
      last
      Business Day prior thereto, provided, however, that if Investors have subscribed
      for the purchase of all Common Shares offered in the Second Closing, or if
      the
      Company elects not seek additional Investors to purchase any amounts not
      subscribed to by the Investors participating in the First Closing, the Company
      may, by written notice to all Investors participating in the Second Closing
      set
      forth an earlier date for the Second Closing Date, provided that such Investors
      are given at least two (2) Business Days written notice of such date.


    


    2.4 Closing
      Deliveries.

     

    (a) At
      each Closing, the Company shall deliver or cause to be delivered to each
      Investor the following:

     

    (i) one
      or more stock certificates, free and clear of all restrictive and other legends
      (except as expressly provided in Section 4.1(b)
      hereof), evidencing such number of Company Shares equal to the number of Shares
      set forth opposite such Investor’s name on Exhibit A-1
      or A-2, as applicable, hereto under the heading “Common Shares”,
      registered in the name of such Investor;

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (ii) a
      Warrant, issued in the name of such Investor, pursuant to which such Investor
      shall have the right to acquire such number of Warrant Shares set forth opposite
      such Investor’s name on Exhibit A-1
      or A-2,
      as applicable, hereto under the heading “Warrant Shares”;

     

    (iii) a
      legal opinion of Company Counsel dated as of the date of the First Closing,
      in
      the form of Exhibit C
      hereto executed by such counsel and delivered to the Investors; and

     

    (iv) duly
      executed Transfer Agent Instructions in the form of Exhibit
      E
      hereto acknowledged by the Company’s transfer agent.

     

    (b) On
      the
      First Closing Date, each Investor shall deliver or cause to be delivered to
      the
      Company the Initial Purchase Price set forth opposite such Investor’s name on
Exhibit A-1
      hereto
      under the heading “Purchase Price” (i) by paying United States dollars and in
      immediately available funds, by wire transfer to an account designated in
      writing to such Investor by the Company for such purpose; (ii) by tendering
      to
      the Company a promissory note issued by uBid in exchange for Securities or
      (iii)
      any combination of (i) and (ii) above. On the Second Closing Date, each Investor
      shall pay the Additional Purchase Price set forth opposite such Investor’s name
      on Exhibit
      A-2
      to the
      Company for the Additional Common Shares to be issued and sold to such Investor
      at the Additional Closing (i) by paying United States dollars and in immediately
      available funds, by wire transfer to an account designated in writing to such
      Investor by the Company for such purpose; (ii) by tendering to the Company
      a
      promissory note issued by uBid exchange for Securities or (iii) any combination
      of (i) and (ii) above. 

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Representations
      and Warranties of the Company.
      The Company hereby represents and warrants to the Investors as of the date
      hereof and as of each Closing Date as follows (which representations and
      warranties shall be deemed to apply to each subsidiary of the Company,
      including, without limitation, uBid, after giving effect to the
      Merger):

     

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

     

    (b) Organization
      and Qualification.
      Each of the Company and the Subsidiaries is an entity duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      incorporation or organization (as applicable), with the requisite legal
      authority to own and use its properties and assets and to carry on its business
      as currently conducted. Neither the Company nor any Subsidiary is in violation
      of any of the provisions of its respective certificate or articles of
      incorporation, bylaws or other organizational or charter documents. Each of
      the
      Company and the Subsidiaries is duly qualified to do business and is in good
      standing as a foreign corporation or other entity in each jurisdiction in which
      the nature of the business conducted or property owned by it makes such
      qualification necessary, except where the failure to be so qualified or in
      good
      standing, as the case may be, could not, individually or in the aggregate,
      (i) materially and adversely affect the legality, validity or
      enforceability of any Transaction Document, (ii) have or result in a
      material adverse effect on the results of operations, assets, business or
      financial condition of the Company and the Subsidiaries, taken as a whole on
      a
      consolidated basis, or (iii) materially and adversely impair the Company’s
      ability to perform fully on a timely basis its obligations under any of the
      Transaction Documents (any of (i), (ii) or (iii), a “Material
      Adverse Effect”).

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    (c) Authorization;
      Enforcement.
      The
      Company has the requisite corporate authority to enter into and to consummate
      the transactions contemplated by each of the Transaction Documents to which
      it
      is a party and otherwise to carry out its obligations hereunder and thereunder.
      The execution and delivery of each of the Transaction Documents to which it
      is a
      party by the Company and the consummation by it of the transactions contemplated
      hereby and thereby have been duly authorized by all necessary action on the
      part
      of the Company and no further consent or action is required by the Company,
      its
      Board of Directors or its stockholders. Each of the Transaction Documents to
      which it is a party has been (or upon delivery will be) duly executed by the
      Company and is, or when delivered in accordance with the terms hereof, will
      constitute, the valid and binding obligation of the Company enforceable against
      the Company in accordance with its terms, except as may be limited by
      (i) applicable bankruptcy, insolvency, reorganization or other laws of
      general application relating to or affecting the enforcement of creditors rights
      generally, and (ii) the effect of rules of law governing the availability
      of specific performance and other equitable remedies. Assuming the accuracy
      of
      the Investors representations contained in Section 3.2 hereof, the offer and
      issuance by the Company of the Securities is exempt from registration under
      the
      Securities Act.

     

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

     

    (e) Authorization
      of Securities.
      The Securities (including
      the Warrant Shares)
      are duly authorized and, when issued and paid for in accordance with the
      Transaction Documents, will be duly and validly issued, fully paid and
      non-assessable, free and clear of all Liens and shall not be subject to
      preemptive or similar rights of stockholders (other than those imposed by the
      Investors). The Company has reserved from its duly authorized capital stock
      the
      maximum number of shares of Common Stock issuable upon exercise of the
      Warrants.

     

    
      
        
        

      

      
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    (f) Capitalization.
      The aggregate number of shares and type of all authorized, issued and
      outstanding classes of capital stock, options and other securities of the
      Company (whether or not presently convertible into or exercisable or
      exchangeable for shares of capital stock of the Company) as of the date of
      this
      Agreement and assuming the sale of 10,000,000 of Securities pursuant to this
      Agreement is set forth in Schedule 3.1(f)
      hereto. All outstanding shares of capital stock are duly authorized, validly
      issued, fully paid and non-assessable and have been issued in compliance with
      all applicable securities laws. Except as disclosed in Schedule 3.1(f)
      hereto, and other than pursuant to Securities issued pursuant to this Agreement,
      the Company has not issued any other options, warrants, script rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities, rights or obligations convertible into or exercisable or
      exchangeable for, or entered into any agreement giving any Person any right
      to
      subscribe for or acquire, any shares of Common Stock, or securities or rights
      convertible or exchangeable into shares of Common Stock. Except as set forth
      on
Schedule
      3.1(f)
      hereto, and except for customary adjustments as a result of stock dividends,
      stock splits, combinations of shares, reorganizations, recapitalizations,
      reclassifications or other similar events, there are no anti-dilution or price
      adjustment provisions contained in any security issued by the Company (or in
      any
      agreement providing rights to security holders) and the issuance and sale of
      the
      Securities will not obligate the Company to issue shares of Common Stock or
      other securities to any Person (other than the Investors) and will not result
      in
      a right of any holder of securities to adjust the exercise, conversion, exchange
      or reset price under such securities. To the knowledge of the Company, except
      as
      specifically disclosed in the SEC Reports or in Schedule
      3.1(f)
      hereto, no Person or group of Related Persons beneficially owns (as determined
      pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire,
      by
      agreement with or by obligation binding upon the Company, beneficial ownership
      of in excess of 5% of the outstanding Common Stock, ignoring for such purposes
      any limitation on the number of shares of Common Stock that may be owned at
      any
      single time.

     

    (g) SEC
      Reports; Financial Statements.
      The Company has filed all reports required to be filed by it under the Exchange
      Act, including pursuant to Section 13(a)
      or 15(d)
      thereof, for the two years preceding the date hereof (the foregoing materials
      (together with any materials filed by the Company under the Exchange Act,
      whether or not required) being collectively referred to herein as the
“SEC
      Reports”)
      on a timely basis or has received a valid extension of such time of filing
      and
      has filed any such SEC Reports prior to the expiration of any such extension
      (the SEC Reports together with this Agreement and the Schedules to this
      Agreement and the Supplemental Private Placement Memorandum dated December
      15,
      2005, as updated pursuant to the Addendum thereto dated December 21, 2005,
      are
      collectively referred to as the “Disclosure
      Materials”).
      The Company has made available to the Investors or their respective
      representatives true, correct and complete copies of the SEC Reports not
      available on the EDGAR system. As of their respective dates, the SEC Reports
      complied in all material respects with the requirements of the Securities Act
      and the Exchange Act and the rules and regulations of the SEC promulgated
      thereunder, and none of the SEC Reports, when filed, contained any untrue
      statement of a material fact or omitted to state a material fact required to
      be
      stated therein or necessary in order to make the statements therein, in the
      light of the circumstances under which they were made, not misleading. The
      financial statements of the Company included in the SEC Reports comply in all
      material respects with applicable accounting requirements and the rules and
      regulations of the SEC with respect thereto as in effect at the time of filing.
      The financial statements Company included in the SEC reports and the financial
      statements of uBid included in the Disclosure Materials, as applicable, have
      been prepared in accordance with United States generally accepted accounting
      principles applied on a consistent basis during the periods involved
      (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto, and fairly present in all material respects the financial position
      of
      the Company and its consolidated Subsidiaries as of and for the dates thereof
      and the results of operations and cash flows for the periods then ended,
      subject, in the case of unaudited statements, to normal, year-end audit
      adjustments. Except as set forth on Schedule
      3.1(g),
      all material agreements to which the Company or any Subsidiary is a party or
      to
      which the property or assets of the Company or any Subsidiary are subject are
      included as part of or specifically identified in the SEC Reports.

     

    
      
        
        

      

      
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    (h) Absence
      of Changes.
      Since the date of the latest audited financial statements included within the
      SEC Reports, except as specifically disclosed in the SEC Reports, the Disclosure
      Materials, or in Schedule
      3.1(h)
      hereto or incident to the transactions contemplated hereby or in connection
      with
      the Merger, (i) there has been no event, occurrence or development that,
      individually or in the aggregate, has had or that could result in a Material
      Adverse Effect, (ii) neither the Company nor its Subsidiaries have incurred
      any material liabilities other than (A) trade payables and accrued expenses
      incurred in the ordinary course of business consistent with past practice and
      indebtedness disclosed therein and (B) liabilities not required to be
      reflected in the Company’s financial statements pursuant to GAAP or required to
      be disclosed in filings made with the SEC, (iii) neither the Company nor
      its Subsidiaries have altered their method of accounting or the identity of
      its
      auditors, except as disclosed in its SEC Reports, (iv) neither the Company
      nor its Subsidiaries have declared or made any dividend or distribution of
      cash
      or other property to their stockholders, in their capacities as such, or
      purchased, redeemed or made any agreements to purchase or redeem any shares
      of
      their capital stock (except for repurchases by the Company or its Subsidiaries
      of shares of capital stock held by employees, officers, directors, or
      consultants pursuant to an option of the Company or its Subsidiaries to
      repurchase such shares upon the termination of employment or services), and
      (v) except as reflected therein, neither the Company nor its Subsidiaries
      have issued any equity securities to any officer, director or Affiliate, except
      pursuant to existing Company stock-based plans. Neither the Company nor its
      Subsidiaries have taken any steps to seek protection pursuant to any bankruptcy
      law nor does the Company or its Subsidiaries have any knowledge or reason to
      believe that its creditors intend to initiate involuntary bankruptcy proceedings
      or any actual knowledge of any fact that would reasonably lead a creditor to
      do
      so. Neither the Company nor its Subsidiaries are Insolvent (as defined below)
      as
      of the date hereof, and after giving effect to the transactions contemplated
      hereby to occur at the applicable Closing, will not be Insolvent. For purposes
      of this Section 3.1(h), “Insolvent” means (i) the present fair saleable value of
      the Company’s assets is less than the amount required to pay the Company’s total
      Indebtedness (as defined in Section 3.1(aa)), (ii) the Company is unable to
      pay
      its debts and liabilities, subordinated, contingent or otherwise, as such debts
      and liabilities become absolute and matured, (iii) the Company intends to incur
      or believes that it will incur debts that would be beyond its ability to pay
      as
      such debts mature or (iv) the Company has unreasonably small capital with which
      to conduct the business in which it is engaged as such business is now conducted
      and is proposed to be conducted.

     

    
      
        
        

      

      
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    (i) Absence
      of Litigation.
      Except as set forth on Schedule
      3.1(i)
      hereto, there is no action, suit, claim, arbitration or proceeding, or, to
      the
      Company’s knowledge, inquiry or investigation, before or by any court, public
      board, government agency, self-regulatory organization or body pending or,
      to
      the knowledge of the Company, threatened against or affecting the Company or
      any
      of its Subsidiaries that could, individually or in the aggregate, have a
      Material Adverse Effect.  

    


    (j) Compliance.
      Neither the Company nor any Subsidiary, except in each case as could not,
      individually or in the aggregate, reasonably be expected to have or result
      in a
      Material Adverse Effect, (i) is in default under or in violation of (and no
      event has occurred that has not been waived that, with notice or lapse of time
      or both, would result in a default by the Company or any Subsidiary under),
      nor
      has the Company or any Subsidiary received written notice of a claim that it
      is
      in default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of
      any statute, rule or regulation of any governmental authority. 

     

    (k) Title
      to Assets.
      The Company and the Subsidiaries have good and marketable title in fee simple
      to
      all real property owned by them that is material to the business of the Company
      and the Subsidiaries and good and marketable title in all personal property
      owned by them that is material to the business of the Company and the
      Subsidiaries, in each case free and clear of all Liens, except for Liens that
      do
      not, individually or in the aggregate, have or result in a Material Adverse
      Effect. Any real property and facilities held under lease by the Company and
      the
      Subsidiaries are held by them under valid, subsisting and enforceable leases
      of
      which the Company and the Subsidiaries are in material compliance.

     

    (l) No
      General Solicitation; Placement Agent’s Fees.
      Neither the Company, any of its Affiliates, nor any Person acting on its or
      their behalf, has engaged in any form of general solicitation or general
      advertising (within the meaning of Regulation D) in connection with the
      offer or sale of the Securities. The Company shall be responsible for the
      payment of any placement agent’s, financial advisory or brokers’ fees (other
      than for persons engaged by any Investor or its investment advisor) relating
      to
      or arising out of the issuance of the Securities pursuant to this Agreement.
      The
      Company shall pay, and hold each Investor harmless against, any liability,
      loss
      or expense (including, without limitation, reasonable attorney’s fees and
      out-of-pocket expenses) arising in connection with any such claim for fees
      arising out of the issuance of the Securities pursuant to this Agreement. The
      Company acknowledges that uBid has engaged SG Cowen & Co., LLC as the lead
      placement agent and Think Equity Partners LLC as a co-agent (the “Placement
      Agents”)
      in connection with the sale of the Securities by the Company. Other than the
      Placement Agents, neither the Company nor uBid has engaged any placement agent
      or other agent in connection with the sale of the Securities.

     

    (m)  Private
      Placement.
      Neither the Company nor, any Person acting on the Company’s behalf has sold or
      offered to sell or solicited any offer to buy the Securities by means of any
      form of general solicitation or advertising. Neither the Company nor any of
      its
      Affiliates nor, any Person acting on the Company’s behalf has, directly or
      indirectly, at any time within the past six months, made any offer or sale
      of
      any security or solicitation of any offer to buy any security under
      circumstances that would (i) eliminate the availability of the exemption
      from registration under Regulation D under the Securities Act in connection
      with the offer and sale by the Company of the Securities as contemplated hereby,
      or (ii) cause the offering of the Securities pursuant to the Transaction
      Documents to be integrated with prior offerings by the Company for purposes
      of
      any applicable law, regulation or stockholder approval provisions, including,
      without limitation, under the rules and regulations of any Trading Market.
      The
      Company is not required to be registered as, and is not an Affiliate of, an
      “investment company” within the meaning of the Investment Company Act of 1940,
      as amended. The Company is not required to be registered as, a United States
      real property holding corporation within the meaning of the Foreign Investment
      in Real Property Tax Act of 1980.

     

    
      
        
        

      

      
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    (n) Listing
      and Maintenance Requirements.
      The Company has not, in the twelve months preceding the date hereof, received
      notice (written or oral) from any Trading Market on which the Common Stock
      is or
      has been listed or quoted to the effect that the Company is not in compliance
      with the listing or maintenance requirements of such Trading Market. The Company
      is in compliance with all such listing and maintenance
      requirements.

     

    (o) Registration
      Rights.
      Except as described in Schedule
      3.1(o),
      the Company has not granted or agreed to grant to any Person any rights
      (including “piggy-back” registration rights) to have any securities of the
      Company registered with the SEC or any other governmental authority that have
      not been satisfied or waived.

     

    (p) Application
      of Takeover Protections.
      Except as described in Schedule
      3.1(p),
      there is no control share acquisition, business combination, poison pill
      (including any distribution under a rights agreement) or other similar
      anti-takeover provision under the Company’s charter documents or the laws of its
      state of incorporation (“Takeover Protections”) that is or could become
      applicable to any of the Investors as a result of the Investors and the Company
      fulfilling their obligations or exercising their rights under the Transaction
      Documents, including, without limitation, as a result of the Company’s issuance
      of the Securities and the Investors’ ownership of the Securities.
      The
      Company and its board of directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Certificate of Incorporation
      or the laws of the jurisdiction of its incorporation which is or could become
      applicable to any Investor as a result of the transactions contemplated by
      this
      Agreement, including, without limitation, the Company’s issuance of the
      Securities and any Investor’s ownership of the Securities.

     

    (q) Disclosure.
      The
      Company confirms that neither it nor any officers, directors or Affiliates,
      has
      provided any of the Investors (other than Excluded Investors) or their agents
      or
      counsel with any information that constitutes or might constitute material,
      nonpublic information (other than the existence and terms of the issuance of
      Securities, as contemplated by this Agreement). The
      Company understands and confirms that each of the Investors will rely on the
      foregoing representations in effecting transactions in securities of the Company
      (other than Excluded Investors). All disclosure provided by the Company to
      the
      Investors regarding the Company, its business and the transactions contemplated
      hereby, including the Schedules to this Agreement, furnished by or on the behalf
      of the Company are true and correct in all material respects and do not contain
      any untrue statement of a material fact or omit to state any material fact
      necessary in order to make the statements made therein, in the light of the
      circumstances under which they were made, not misleading. To the Company’s
      knowledge, no event or circumstance has occurred or information exists with
      respect to the Company or any of its Subsidiaries or its or their business,
      properties, operations or financial conditions, which, under applicable law,
      rule or regulation, requires public disclosure or announcement by the Company
      but which has not been so publicly announced or disclosed. The Company
      acknowledges and agrees that no Investor (other than Excluded Investors) makes
      or has made any representations or warranties with respect to the transactions
      contemplated hereby other than those specifically set forth in the Transaction
      Documents.

     

    
      
        
        

      

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

     

    (s) Patents
      and Trademarks.
      The Company and its Subsidiaries own, or possess adequate rights or licenses
      to
      use, all trademarks, trade names, service marks, service mark registrations,
      service names, patents, patent rights, copyrights, inventions, licenses,
      approvals, governmental authorizations, trade secrets and other intellectual
      property rights (“Intellectual
      Property Rights”)
      necessary to conduct their respective businesses
      as presently conducted. Except as set forth on Schedule
      3.1(s),
      there is no current claim, action or proceeding, or to the knowledge of the
      Company, being threatened or brought, against the Company or its Subsidiaries
      regarding its Intellectual Property Rights. The Company is unaware of any facts
      or circumstances, which might give rise to any of the foregoing infringements
      or
      claims, actions or proceedings. The Company and its Subsidiaries have taken
      reasonable security measures to protect the secrecy, confidentiality and value
      of all of their intellectual properties.
      Except as
      set forth in Schedule
      3.1(s),
      since
      April 2003, none of the uBid’s Intellectual Property Rights have expired,
      terminated or have been abandoned, or are expected to expire or terminate
      without renewal, or be abandoned, within three years from the date of this
      Agreement, except for such expirations or terminations without renewal, or
      abandonments, in either case which would not, individually or in the aggregate
      have a Material Adverse Effect.

     

    (t) Insurance.
      The Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses and location in which the Company and the
      Subsidiaries are engaged. Neither the Company nor any Subsidiary has any
      knowledge that it will not be able to renew its existing insurance coverage
      as
      and when such coverage expires or to obtain similar coverage from similar
      insurers as may be necessary to continue its business without a significant
      increase in cost.

     

    
      
        
        

      

      
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    (u) Regulatory
      Permits.
      The Company and the Subsidiaries possess all certificates, authorizations and
      permits issued by the appropriate federal, state, local or foreign regulatory
      authorities necessary to conduct their respective businesses as described in
      the
      SEC Reports, except where the failure to possess such permits does not,
      individually or in the aggregate, have or result in a Material Adverse Effect
      (“Material
      Permits”),
      and neither the Company nor any Subsidiary has received any written notice
      of
      proceedings relating to the revocation or modification of any Material
      Permit.

     

    (v) Transactions
      With Affiliates and Employees.
      Except as set forth in Schedule
      3.1(v),
      none of the officers, directors or employees of the Company is a party to any
      transaction that would be required to be reported on Form 10-KSB with the
      Company or any of its Subsidiaries (other than for ordinary course services
      as
      employees, officers or directors), including any contract, agreement or other
      arrangement providing for the furnishing of services to or by, providing for
      rental of real or personal property to or from, or otherwise requiring payments
      to or from any such officer, director or employee or, to the Company’s
      knowledge, any corporation, partnership, trust or other entity in which any
      such
      officer, director, or employee has a substantial interest or is an officer,
      director, trustee or partner. 

     

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

     

    (x) Sarbanes-Oxley
      Act.
      The Company is in compliance with applicable requirements of the Sarbanes-Oxley
      Act of 2002 and applicable rules and regulations promulgated by the SEC
      thereunder, except where such noncompliance would not have, individually or
      in
      the aggregate, a Material Adverse Effect.

     

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

    


    
      
        
        

      

      
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    (z) OFAC.
      Neither
      the Company nor any of its Subsidiaries (i) is a Person whose property or
      interest in property is blocked or subject to blocking pursuant to Section
      1 of
      Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
      Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism
      (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or transactions
      prohibited by Section 2 of such executive order, or is otherwise associated
      with
      any such Person in any manner violative of Section 2 of such executive order,
      or
      (iii) is a Person on the list of Specially Designated Nationals and Blocked
      Persons or subject to the limitations or prohibitions under any other U.S.
      Department of Treasury’s Office of Foreign Assets Control regulation or
      executive order. 

    


    (aa) Patriot
      Act.
      To the
      extent applicable, both the Company and its Subsidiaries are in compliance,
      in
      all material respects, with the (i) Trading with the Enemy Act, as amended,
      and
      each of the foreign assets control regulations of the United States Treasury
      Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
      legislation or executive order relating thereto, and (ii) Uniting and
      Strengthening America by Providing Appropriate Tools Required to Intercept
      and
      Obstruct Terrorism (USA Patriot Act of 2001).

     

    (bb) Indebtedness.
      Except
      as disclosed in Schedule
      3.1 (bb),
      neither
      the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness
      (as
      defined below), (ii) is in violation of any term of or in default under any
      contract, agreement or instrument relating to any Indebtedness, except where
      such violations and defaults would not result, individually or in the aggregate,
      in a Material Adverse Effect, or (iii) is a party to any contract, agreement
      or
      instrument relating to any Indebtedness, the performance of which, in the
      judgment of the Company’s officers, has or is expected to have a Material
      Adverse Effect. Schedule
      3.1(bb)
      provides
      a detailed description of the material terms of any such outstanding
      Indebtedness. For purposes of this Agreement: (x) “Indebtedness” of any Person
      means, without duplication (A) all indebtedness for borrowed money, (B) all
      obligations issued, undertaken or assumed as the deferred purchase price of
      property or services (other than trade payables entered into in the ordinary
      course of business), (C) all reimbursement or payment obligations with respect
      to letters of credit, surety bonds and other similar instruments, (D) all
      obligations evidenced by notes, bonds, debentures or similar instruments,
      including obligations so evidenced incurred in connection with the acquisition
      of property, assets or businesses, (E) all indebtedness created or arising
      under
      any conditional sale or other title retention agreement, or incurred as
      financing, in either case with respect to any property or assets acquired with
      the proceeds of such indebtedness (even though the rights and remedies of the
      seller or bank under such agreement in the event of default are limited to
      repossession or sale of such property), (F) all monetary obligations under
      any
      leasing or similar arrangement which, in connection with generally accepted
      accounting principles, consistently applied for the periods covered thereby,
      is
      classified as a capital lease, (G) all indebtedness referred to in clauses
      (A)
      through (F) above secured by (or for which the holder of such Indebtedness
      has
      an existing right, contingent or otherwise, to be secured by) any mortgage,
      lien, pledge, charge, security interest or other encumbrance upon or in any
      property or assets (including accounts and contract rights) owned by any Person,
      even though the Person which owns such assets or property has not assumed or
      become liable for the payment of such indebtedness, and (H) all Contingent
      Obligations in respect of indebtedness or obligations of others of the kinds
      referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means,
      as to any Person, any direct or indirect liability, contingent or otherwise,
      of
      that Person with respect to any indebtedness, lease, dividend or other
      obligation of another Person if the primary purpose or intent of the Person
      incurring such liability, or the primary effect thereof, is to provide assurance
      to the obligee of such liability that such liability will be paid or discharged,
      or that any agreements relating thereto will be complied with, or that the
      holders of such liability will be protected (in whole or in part) against loss
      with respect thereto; and (z) “Person” means an individual, a limited liability
      company, a partnership, a joint venture, a corporation, a trust, an
      unincorporated organization and a government or any department or agency
      thereof.

    


    
      
        
        

      

      
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    (cc) Employee
      Relations.
      Neither
      Company nor any of its Subsidiaries is a party to any collective bargaining
      agreement or employs any member of a union. The Company and its Subsidiaries
      believe that their relations with their employees are good. No executive officer
      of the Company or any of its Subsidiaries (as defined in Rule 501(f) of the
      Securities Act) has notified the Company or any such Subsidiary that such
      officer intends to leave the Company or any such Subsidiary or otherwise
      terminate such officer’s employment with the Company or any such Subsidiary. No
      executive officer of the Company or any of its Subsidiaries, to the knowledge
      of
      the Company or any such Subsidiary, is now, or expects to be, in violation
      of
      any material term of any employment contract, confidentiality, disclosure or
      proprietary information agreement, non-competition agreement, or any other
      contract, agreement or any restrictive covenant, and the continued employment
      of
      each such executive officer does not subject the Company or any such Subsidiary
      to any liability with respect to any of the foregoing matters.
      The
      Company and its Subsidiaries are in compliance with all federal, state, local
      and foreign laws and regulations respecting labor, employment and employment
      practices and benefits, terms and conditions of employment and wages and hours,
      except where failure to be in compliance would not, either individually or
      in
      the aggregate, reasonably be expected to result in a Material Adverse Effect.
      There are no material complaints or charges against the Company or its
      Subsidiaries pending or, to the knowledge of the Company and its Subsidiaries,
      threatened to be filed with any Governmental Authority or arbitrator based
      on,
      arising out of, in connection with, or otherwise relating to the employment
      or
      termination of employment by the Company or its Subsidiaries of any individual.
      

     

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

     

    (ee) Subsidiary
      Rights.
      Except as set forth in Schedule
      3.1(ee),
      the Company or one of its Subsidiaries has the unrestricted right to vote,
      and
      (subject to limitations imposed by applicable law) to receive dividends and
      distributions on, all capital securities of its Subsidiaries as owned by the
      Company or such Subsidiary.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    (ff) Tax
      Status.
      The Company and each of its Subsidiaries (i) has made or filed all foreign,
      federal and state income and all other tax returns, reports and declarations
      required by any jurisdiction to which it is subject, (ii) has paid all taxes
      and
      other governmental assessments and charges that are material in amount, shown
      or
      determined to be due on such returns, reports and declarations, except those
      being contested in good faith and (iii) has set aside on its books provision
      reasonably adequate for the payment of all taxes for periods subsequent to
      the
      periods to which such returns, reports or declarations apply. There are no
      unpaid taxes in any material amount claimed to be due by the taxing authority
      of
      any jurisdiction, and the officers of the Company know of no basis for any
      such
      claim.

    


    (gg) Manipulation
      of Price.
      The
      Company has not, and to its knowledge no one acting on its behalf has, (i)
      taken, directly or indirectly, any action designed to cause or to result in
      the
      stabilization or manipulation of the price of any security of the Company or
      to
      facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
      purchased, or paid any compensation for soliciting purchases of, any of the
      Securities, or (iii) except for the actions taken by the Placement Agents in
      connection with the transactions contemplated hereby, paid or agreed to pay
      to
      any person any compensation for soliciting another to purchase any other
      securities of the Company, none of which shall be in violation of any applicable
      securities laws.

     

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

     

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

     

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

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

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

     

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

     

    (e) Access
      to Information.
      Such Investor acknowledges that it has reviewed the Disclosure Materials and
      has
      been afforded: (i) the opportunity to ask such questions as it has deemed
      necessary of, and to receive answers from, representatives of the Company
      concerning the terms and conditions of the offering of the Securities and the
      merits and risks of investing in the Securities; (ii) access to information
      (other than material non-public information) about the Company and the
      Subsidiaries and their respective financial condition, results of operations,
      business, properties, management and prospects sufficient to enable it to
      evaluate its investment; and (iii) the opportunity to obtain such
      additional information that the Company possesses or can acquire without
      unreasonable effort or expense that is necessary to make an informed investment
      decision with respect to the investment. Neither such inquiries nor any other
      investigation conducted by or on behalf of such Investor or its representatives
      or counsel shall modify, amend or affect such Investor’s right to rely on the
      truth, accuracy and completeness of the Disclosure Materials and the Company’s
      representations and warranties contained in the Transaction
      Documents.

     

    (f) No
      Governmental Review.
      Such Investor understands that no United States federal or state agency or
      any
      other government or governmental agency has passed on or made any recommendation
      or endorsement of the Securities or the fairness or suitability of the
      investment in the Securities nor have such authorities passed upon or endorsed
      the merits of the offering of the Securities.

     

    (g) No
      Conflicts.
      The execution, delivery and performance by such Investor of this Agreement
      and
      the consummation by such Investor of the transactions contemplated hereby will
      not (i) result in a violation of the organizational documents of such
      Investor or (ii) conflict with, or constitute a default (or an event which
      with notice or lapse of time or both would become a default) under, or give
      to
      others any rights of termination, amendment, acceleration or cancellation of,
      any agreement, indenture or instrument to which such Investor is a party, or
      (iii) result in a violation of any law, rule, regulation, order, judgment
      or decree (including federal and state securities laws) applicable to such
      Investor, except in the case of clauses (ii) and (iii) above, for such that
      are
      not material and do not otherwise affect the ability of such Investor to
      consummate the transactions contemplated hereby.

     

    (h) Illegal
      Transactions.
      Such
      Investor has not directly or indirectly, nor has any Person acting on behalf
      of
      or pursuant to any understanding with such Investor, engaged in any transactions
      in the securities of the Company (including, without limitations, any Short
      Sales involving the Company’s securities) since the time that the name of the
      Company was disclosed to Investors by the Company, a Placement Agent(s) or
      any
      other Person regarding an investment in the Company, excluding any bridge notes
      or bridge warrants issued to such Investor, if applicable. Such Investor
      covenants that neither it nor any Person acting on its behalf or pursuant to
      any
      understanding with it will engage in any transactions in the securities of
      the
      Company (including Short Sales) prior to the time that the transactions
      contemplated by this Agreement are publicly disclosed, excluding conversion
      of
      any such bridge notes, if applicable.
      As used
      in this Agreement, “Short
      Sales”
include,
      without limitation, all “short sales” as defined in Rule 200 promulgated under
      Regulation SHO under the Exchange Act and all types of direct and indirect
      stock
      pledges, forward sale contracts, options, puts, calls, short sales, swaps and
      similar arrangements (including on a total return basis), and sales and other
      transactions through non-U.S. broker-dealers or foreign regulated
      brokers.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    (i) No
      Legal, Tax or Investment Advice.
      Such
      Investor understands that nothing in this Agreement or any other materials
      presented by or on behalf of the Company to the Investor in connection with
      the
      purchase of the Securities constitutes legal, tax or investment advice. Such
      Investor has consulted such legal, tax and investment advisors as it, in its
      sole discretion, has deemed necessary or appropriate in connection with its
      purchase of the Securities. Such Investor understands that the Placement Agents
      have acted solely as the agent of the Company in this placement of the
      Securities, and that the Placement Agents make no representation or warranty
      with regard to the merits of this transaction or as to the accuracy of any
      information such Investor may have received in connection therewith. Such
      Investor acknowledges that he has not relied on any information or advice
      furnished by or on behalf of the Placement Agents.

    


    (j) Registration
      Questionnaire.
      Each
      Investor has completed or caused to be completed the Questionnaires and
      Certificates attached hereto as Exhibit
      B
      (B-1 to
      B-3) and on the signature page for use in preparation of the Registration
      Statement and the answers to the Questionnaires and Certificates and on such
      signature page are true and correct in all material respects as of the date
      of
      this Agreement and will be true and correct in all material respects as of
      the
      effective date of the Registration Statement; provided that such Investor shall
      be entitled to update such information by providing written notice thereof
      to
      the Company prior to the effective date of the Registration
      Statement.

     

    ARTICLE
      IV

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1 Transfer
      Restrictions.

     

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

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

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

     

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

     

    Certificates
      evidencing Securities shall not be required to contain such legend or any other
      legend (i) if the Securities are registered for resale under the Securities
      Act
      or any sale of such Securities pursuant to Rule 144, (ii) if such
      Securities are eligible for sale under Rule 144(k), or (iii) if such legend
      is
      not required under applicable requirements of the Securities Act (including
      controlling judicial interpretations and pronouncements issued by the Staff
      of
      the SEC). The Company shall cause its counsel to issue the legal opinion
      included in the Transfer Agent Instructions to the Transfer Agent on the
      Effective Date. Following the Effective Date or at such earlier time as a legend
      is no longer required for certain Securities, the Company will no later than
      three (3) Trading Days following the delivery by an Investor to the Transfer
      Agent of a legended certificate representing such Securities or an exercise
      notice pursuant to a Warrant, deliver or cause to be delivered to such Investor
      a certificate representing such Securities that is free from all restrictive
      and
      other legends. The Company may not make any notation on its records or give
      instructions to the Transfer Agent that enlarge the restrictions on transfer
      set
      forth in this Section.

     

    If
      within three (3) Trading Days after the Transfer Agent’s receipt of a legended
      certificate representing such Securities or an exercise notice pursuant to
      a
      Warrant, the Company’s Transfer Agent shall fail to issue and deliver to such
      Investor a certificate representing such Securities that is free from all
      restrictive and other legends, and if on or after such Trading Day the Investor
      purchases (in an open market transaction or otherwise) shares of Common Stock
      to
      deliver in satisfaction of a sale by the Investor of shares of Common Stock
      that
      the Investor anticipated receiving from the Company without any restrictive
      legend (a “Buy-In”), then the Company shall, within three (3) Trading Days after
      the Investor’s request and in the Investor’s discretion, either (i) pay cash to
      the Investor in an amount equal to the Investor’s total purchase price
      (including brokerage commissions, if any) for the shares of Common Stock so
      purchased (the “Buy-In Price”), at which point the Company’s obligation to
      deliver such certificate shall terminate, or (ii) promptly honor its obligation
      to deliver to the Investor a certificate or certificates representing such
      shares of Common Stock and pay cash to the Investor in an amount equal to the
      excess (if any) of the Buy-In Price over the product of (A) such number of
      shares of Common Stock, times (B) the closing bid price on the date of delivery
      of such legended certificate.

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

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

     

    4.2 Furnishing
      of Information.
      As long as any Investor owns Securities, the Company covenants to timely file
      (or obtain extensions in respect thereof and file within the applicable grace
      period) all reports required to be filed by the Company after the date hereof
      pursuant to the Exchange Act. Upon the reasonable request of any Investor,
      the
      Company shall deliver to such Investor a written certification of a duly
      authorized officer as to whether it has complied with the preceding sentence.
      The Company further covenants that it will take such further action as any
      holder of Securities may reasonably request to satisfy the provisions of this
      Section 4.2.

     

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

     

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

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    4.5 Securities
      Laws Disclosure; Publicity.
      The
      Company shall, on or before 8:30 a.m., New York time, on the first Trading
      Day
      following execution of this Agreement, issue a press release acceptable to
      the
      Designated Investor disclosing all material terms of the transactions
      contemplated hereby. In accordance with timing and form required by the
      Exchange Act, on or prior to the 4th
      Business
      Day after the First Closing Date, the Company shall file a Current Report on
      Form 8-K with the SEC (the “8-K
      Filing”)
      describing the material terms of the transactions contemplated by the
      Transaction Documents and including as exhibits to such Current Report on Form
      8-K Filing this Agreement and the form of Warrants.  From
      and
      after the filing of the 8-K Filing with the SEC, no Investor shall be in
      possession of any material, nonpublic information received from the Company,
      any
      of its Subsidiaries or any of its respective officers, directors, employees
      or
      agents, that is not disclosed in the 8-K Filing. 
      Thereafter, the Company shall timely file any filings and notices required
      by
      the SEC or applicable law with respect to the transactions contemplated hereby
      and provide copies thereof to the Investors promptly after filing.  Except
      with respect to the 8-K Filing and the press release referenced above (a copy
      of
      which will be provided to the Designated Investor for their review as early
      as
      practicable prior to its filing), the Company shall, at least two (2) Trading
      Days prior to the filing or dissemination of any disclosure required by this
      paragraph, provide a copy thereof to the Designated Investor for their review;
      provided, however, to the extent such disclosures specifically identifies a
      specific Investor, the Company shall provide such Investor an opportunity to
      review the disclosure.  The Company shall consult with the Designated
      Investor in issuing any press releases or otherwise making public statements
      or
      filings and other communications with the SEC or any regulatory agency or
      Trading Market with respect to the transactions contemplated hereby, and the
      Company shall not issue any such press release or otherwise make any such public
      statement, filing or other communication without the prior consent of the
      Designated Investor, except if such disclosure is required by law, in which
      case
      the disclosing party shall promptly provide the other party with prior notice
      of
      such public statement, filing or other communication.  Each Investor shall
      consult with the Company in issuing any press releases or otherwise making
      public statements or filings and other communications with the SEC or any
      regulatory agency or Trading Market with respect to the transactions
      contemplated hereby, and no Investor shall issue any such press release or
      otherwise make any such public statement, filing or other communication without
      the prior consent of the Company, except if such disclosure is required by
      law,
      in which case the disclosing party shall promptly provide the other party with
      prior notice of such public statement, filing or other communication. 
Notwithstanding the foregoing, the Company shall not publicly disclose the
      name
      of any Investor, or include the name of any Investor in any press release
      without the prior written consent of such Investor.  The Company shall not,
      and shall cause each of its Subsidiaries and its and each of their respective
      officers, directors, employees and agents not to, provide any Investor with
      any
      material nonpublic information regarding the Company or any of its Subsidiaries
      from and after the issuance of the above referenced press release without the
      express written consent of such Investor.

     

    4.6 Use
      of Proceeds.
      The Company may only use the net proceeds from the sale of the Securities as
      set
      forth on Schedule
      4.6.
      Pending these uses, the Company intends to invest the net proceeds from this
      offering in short-term, interest-bearing, investment-grade securities, or as
      otherwise pursuant to the Company’s customary investment policies.

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

    ARTICLE
      V

    CONDITIONS

     

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

     

    (a) Representations
      and Warranties.
      The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except for those representations and warranties that are
      qualified by materiality or Material Adverse Effect, which shall be true and
      correct in all respects) as of the date when made and as of the Closing Date
      as
      though made at that time (except for representations and warranties that speak
      as of a specific date) and the Company shall have performed, satisfied and
      complied in all material respects with the covenants, agreements and conditions
      required by the Transaction Documents to be performed, satisfied or complied
      with by the Company at or prior to the Closing Date. Such Investor shall have
      received a certificate, executed by the Chief Executive Officer of the Company
      and uBid, dated as of the Closing Date, to the foregoing effect and as to such
      other matters as may be reasonably requested by such Investor in the form
      attached hereto as Exhibit
      G.

     

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

    


    (c) The
      Company shall have delivered to the Designated Investor a certificate evidencing
      the formation and good standing of the Company and each of its Subsidiaries
      in
      each such entity’s jurisdiction of formation issued by the Secretary of State
      (or comparable office) of such jurisdiction, as of a date within 10 days of
      the
      Closing Date.

    


    (d) The
      Company shall have delivered to the Designated Investor a certificate evidencing
      the Company’s qualification as a foreign corporation and good standing issued by
      the Secretary of State (or comparable office) of each jurisdiction in which
      the
      Company, as applicable, conducts business, as of a date within 10 days of the
      Closing Date.

    


    (e) The
      Company shall have delivered to the Designated Investor a certified copy of
      the
      Certificate of Incorporation of the Company as certified by the Secretary of
      State of its state of incorporation within ten (10) days of the Closing
      Date.

    


    (f) Both
      the
      Company and uBid shall have delivered to such Investor a certificate, executed
      by the Secretary of the Company dated as of the Closing Date, as to (i) the
      resolutions consistent with Section 3.1(c) as adopted by the Company’s Board of
      Directors in a form reasonably acceptable to such Investor, (ii) the Certificate
      of Incorporation, as in effect at the Closing and (iii) the Bylaws, as in
      effect at the Closing, in the form attached hereto as Exhibit
      H.

    


    (g) The
      Common
      Shares (i) shall be designated for quotation or listed on the Current Trading
      Market and (ii) shall not have been suspended, as of the Closing Date, by the
      SEC or the Current Trading Market from trading on the Current Trading Market
      nor
      shall suspension by the SEC or the Current Trading Market have been threatened,
      as of the Closing Date, either (A) in writing by the SEC or the Current Trading
      Market or (B) by failing to satisfy any requirements for trading on the Current
      Trading Market. 

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    (h) The
      Company shall have obtained all governmental, regulatory or third party consents
      and approvals, if any, necessary for the sale of the Securities.

    


    (i) each
      Investor shall have purchased and paid for the Common Shares and Warrants being
      purchased by it on the Closing Date, and the aggregate purchase price paid
      by
      all of the Investors for the Common Shares and Warrants being purchased by
      them
      on the First Closing shall be at least $45,000,000.

    


    (j) Contemporaneously
      with the First Closing, the Merger shall have been consummated; 

    


    (k) The
      stockholders of the Company set forth on Schedule
      6.6
      shall
      have agreed to be subject to the lock-up provisions set forth in the Form of
      Lock-Up Agreement attached hereto as Exhibit
      I;
      and

    


    (l) The
      Company shall have delivered to such Investor such other documents relating
      to
      the transactions contemplated by this Agreement as such Investor or its counsel
      may reasonably request.

     

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

     

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

     

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

     

    ARTICLE
      VI

    REGISTRATION
      RIGHTS

     

    6.1 Shelf
      Registration.

     

    (a) As
      promptly as possible, and in any event on or prior to the Filing Date, the
      Company shall prepare and file with the SEC a “Shelf” Registration Statement
      covering the resale of all Registrable Securities for an offering to be made
      on
      a continuous basis pursuant to Rule 415. The Registration Statement shall be
      on
      Form S-1 and shall contain (except if otherwise directed by the Investors or
      the
      SEC) the “Plan of Distribution” attached hereto as Exhibit
      D.
      The
      Company shall undertake to register the Registrable Securities on Form S-3
      as
      soon as such form is available, provided that the Company shall maintain the
      effectiveness of the Registration Statement then in effect until such time
      as a
      Registration Statement on Form S-3 covering the Registrable Securities has
      been
      declared effective by the SEC or the Company is no longer obligated to maintain
      a registration statement for the Registrable Securities pursuant to the terms
      hereof.

     

    
      
        
        

      

      
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    (b) The
      Company shall use its reasonable best efforts to cause the Registration
      Statement to be declared effective by the SEC as promptly as possible after
      the
      filing thereof, but in any event prior to the Required Effectiveness Date,
      and
      shall use its reasonable best efforts to keep the Registration Statement
      continuously effective under the Securities Act until the earlier of the date
      that all Registrable Securities covered by such Registration Statement have
      been
      sold or can be sold publicly under Rule 144(k) (the “Effectiveness
      Period”).

     

    (c) The
      Company shall notify the Investors in writing on the Business Day it receives
      notification from the SEC that the Registration Statement has been declared
      effective, or the following Business Day if the notification is received after
      2:00 p.m., New York City time; provided that the Company shall notify all
      Investors on the same Business Day.

     

    (d) Should
      an Event (as defined below) occur, then upon the occurrence of such Event,
      and
      on every monthly anniversary thereof until the applicable Event is cured, as
      partial relief for the damages suffered therefrom by the Investors (which remedy
      shall not be exclusive of any other remedies available under this Agreement,
      at
      law or in equity), the Company shall pay to each Investor an amount in cash,
      as
      liquidated damages and not as a penalty, equal to 1.0% of (i) the number of
      Securities held by such Investor as of the date of such Event, multiplied by
      (ii) the purchase price paid by such Investor for such Securities then held.
      The
      payments to which an Investor shall be entitled pursuant to this Section 6.1(d)
      are referred to herein as “Event
      Payments”.
      Any Event Payments payable pursuant to the terms hereof shall apply on a
      pro-rata basis for any portion of a month prior to the cure of an Event. In
      the
      event the Company fails to make Event Payments in a timely manner, such Event
      Payments shall bear interest at the rate of 1.0% per month (prorated for partial
      months) until paid in full. All pro rated calculations made pursuant to this
      paragraph shall be based upon the actual number of days in such pro rated month.
      

     

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

     

    (i) the
      Registration Statement is not filed on or prior to the Filing Date or
      is not declared effective on or prior to the Required Effectiveness
      Date;
      provided, however if the Company files a Registration Statement without
      affording the Designated Investor the opportunity to review and comment the
      same
      prior to filing as required herein, the Company shall not be deemed to have
      satisfied this requirement;

     

    (ii) except
      (A) as provided for in Section
      6.1(e),
      (B) if the Company is involved in a “Rule 13e-3 transaction” as defined in
      Rule 13e-3 under the Exchange Act, or (C) a merger or consolidation of the
      Company or a sale of more than one-half of the assets of the Company in one
      or a
      series of related transactions, unless following such transaction or series
      of
      transactions, the holders of the Company’s securities prior to the first such
      transaction continue to hold at least 50% of the voting rights and equity
      interests of the surviving entity or acquirer (clauses (B) and (C),
      collectively, the “Excluded
      Events”),
      after the Effective Date, an Investor is not permitted to sell Registrable
      Securities under the Registration Statement (or a subsequent Registration
      Statement filed in replacement thereof) for any reason (other than the fault
      of
      such Investor) for five or more Trading Days (whether or not
      consecutive);

     

    
      
        
        

      

      
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    (iii) except
      as a result of the Excluded Events, the Common Stock is not listed or quoted,
      or
      is suspended from trading, on an Eligible Market for a period of three Trading
      Days (which need not be consecutive Trading Days) during the Effectiveness
      Period;

     

    (iv) the
      Company fails for any reason to deliver a certificate evidencing any Securities
      to an Investor within three Trading Days after delivery of such certificate
      is
      required pursuant to any Transaction Document or the exercise rights of the
      Investors pursuant to the Warrants are otherwise suspended for any reason;
      or

     

    (v) the
      Company fails to have available a sufficient number of authorized but unissued
      and otherwise unreserved shares of Common Stock available to issue Warrant
      Shares upon any exercise of the Warrants or, except as a result of the Excluded
      Events, during the Effectiveness Period, any Shares or Warrant Shares are not
      listed on an Eligible Market.

     

    (e) Notwithstanding
      anything in this Agreement to the contrary, after sixty (60) consecutive Trading
      Days of continuous effectiveness of the initial Registration Statement filed
      and
      declared effective pursuant to this Agreement, the Company may, by written
      notice to the Investors, suspend sales under a Registration Statement after
      the
      Effective Date thereof and/or require that the Investors immediately cease
      the
      sale of shares of Common Stock pursuant thereto and/or defer the filing of
      any
      subsequent Registration Statement if the Company is engaged in a material
      merger, acquisition or sale and the Board of Directors determines in good faith,
      by appropriate resolutions, that, as a result of such activity, (A) it
      would be materially detrimental to the Company (other than as relating solely
      to
      the price of the Common Stock) to maintain a
      Registration Statement at such time and (B) it is in the best interests of
      the Company to defer proceeding with such registration at such time.
      Notwithstanding the foregoing, the Company shall not, and shall cause each
      of
      its Subsidiaries and its and each of their respective officers, directors,
      employees and agents not to, provide any Investor with any material nonpublic
      information regarding the Company or any of its Subsidiaries about the foregoing
      merger, sale or acquisition without the express written consent of such
      Investor.  Upon
      receipt of such notice, each Investor shall immediately discontinue any sales
      of
      Registrable Securities pursuant to such registration until such Investor has
      received copies of a supplemented or amended Prospectus or until such Investor
      is advised in writing by the Company that the then-current Prospectus may be
      used and has received copies of any additional or supplemental filings that
      are
      incorporated or deemed incorporated by reference in such Prospectus. In no
      event, however, shall this right be exercised to suspend sales beyond the period
      during which (in the good faith determination of the Company’s Board of
      Directors) the failure to require such suspension would be materially
      detrimental to the Company. The Company’s rights under this Section
      6(e)
      may be exercised for a period of no more than twenty (20) days at a time and
      not
      more than three times in any twelve-month period, without such suspension being
      considered as part of an Event Payment determination. Immediately after the
      end
      of any suspension period under this Section
      6(e),
      the Company shall take all necessary actions (including filing any required
      supplemental prospectus) to restore the effectiveness of the applicable
      Registration Statement and the ability of the Investors to publicly resell
      their
      Registrable Securities pursuant to such effective Registration
      Statement.

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    (f) The
      Company shall not, from the date hereof until the Effective Date of the
      Registration Statement, prepare and file with the SEC a registration statement
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other than a Registration
      Statement or Form S-8.

     

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

     

    (a) (i) Subject
      to Section
      6.1(e),
      prepare and file with the SEC such amendments, including post-effective
      amendments, to each Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep the Registration Statement continuously
      effective, as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the SEC such additional Registration Statements
      in order to register for resale under the Securities Act all of the Registrable
      Securities; (ii) cause the related Prospectus to be amended or supplemented
      by any required Prospectus supplement, and as so supplemented or amended to
      be
      filed pursuant to Rule 424; (iii) respond as promptly as reasonably
      possible, and in any event within twelve (12) Trading Days (except to the extent
      that the Company reasonably requires additional time to respond to accounting
      comments), to any comments received from the SEC with respect to the
      Registration Statement or any amendment thereto and as promptly as reasonably
      possible provide the Lead Investor Counsel true and complete copies of all
      correspondence from and to the SEC relating to the Registration Statement;
      and
      (iv) comply in all material respects with the provisions of the Securities
      Act and the Exchange Act with respect to the disposition of all Registrable
      Securities covered by the Registration Statement during the applicable period
      in
      accordance with the intended methods of disposition by the Investors thereof
      set
      forth in the Registration Statement as so amended or in such Prospectus as
      so
      supplemented.

     

    (b) Notify
      each Investor as promptly as reasonably possible of any of the following events:
      (i) the SEC notifies the Company whether there will be a “review” of any
      Registration Statement; (ii) the SEC comments in writing on any
      Registration Statement; (iii) any Registration Statement or any
      post-effective amendment is declared effective; (iv) the SEC or any other
      Federal or state governmental authority requests any amendment or supplement
      to
      any Registration Statement or Prospectus or requests additional information
      related thereto; (v) the SEC issues any stop order suspending the
      effectiveness of any Registration Statement or initiates any Proceedings for
      that purpose; (vi) the Company receives notice of any suspension of the
      qualification or exemption from qualification of any Registrable Securities
      for
      sale in any jurisdiction, or the initiation or threat of any Proceeding for
      such
      purpose; or (vii) the financial statements included in any Registration
      Statement become ineligible for inclusion therein or any statement made in
      any
      Registration Statement or Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference is untrue in any material respect or any
      revision to a Registration Statement, Prospectus or other document is required
      so that it will not contain any untrue statement of a material fact or omit
      to
      state any material fact required to be stated therein or necessary to make
      the
      statements therein, in the light of the circumstances under which they were
      made, not misleading.

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    (f) (i) In
      the time and manner required by each Trading Market, prepare and file with
      such
      Trading Market an additional shares listing application covering all of the
      Registrable Securities; (ii) take all steps necessary to cause such
      Registrable Securities to be approved for listing on each Trading Market as
      soon
      as possible thereafter; (iii) provide to Investor Counsel evidence of such
      listing; and (iv) except as a result of the Excluded Events, during the
      Effectiveness Period, maintain the listing of such Registrable Securities on
      each such Trading Market or another Eligible Market.

     

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

     

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

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

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

     

    (j) Cooperate
      with any reasonable due diligence investigation undertaken by the Investors
      in
      connection with the sale of Registrable Securities, including, without
      limitation, by making available documents and information; provided that the
      Company will not deliver or make available to any Investor material, nonpublic
      information unless such Investor specifically requests in advance to receive
      material, nonpublic information in writing.

     

    (k) Comply
      with all rules and regulations of the SEC applicable to the registration of
      the
      Securities. 

    


    (l) If
      after
      the execution of this Agreement, any Investor is deemed, or may be deemed,
      to be
      an underwriter, at the reasonable request of any Investor, the Company shall
      furnish to such Investor, on the date of the effectiveness of the Registration
      Statement and thereafter from time to time on such dates as an Investor may
      reasonably request (i) a letter, dated such date, from the Company’s independent
      certified public accountants in form and substance as is customarily given
      by
      independent certified public accountants to underwriters in an underwritten
      public offering, addressed to the Investors, and (ii) an opinion, dated as
      of
      such date, of counsel representing the Company for purposes of such Registration
      Statement, in form, scope and substance as is, at the time requested,
      customarily given by counsel to an issuer in an underwritten public offering,
      addressed to the Investors.

    


    (m) If
      after
      the execution of this Agreement, any Investor is deemed, or may be deemed,
      to be
      an underwriter, the Company shall make available for inspection by (i) any
      Investor, (ii) legal counsel for such Investor and (iii) one firm of accountants
      or other agents retained by the Investors (collectively, the “Inspectors”),
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the “Records”),
      as
      shall be reasonably deemed necessary by each Inspector, and cause the Company’s
      officers, directors and employees to supply all information which any Inspector
      may reasonably request; provided, however, that each Inspector shall agree
      to
      hold in strict confidence and shall not make any disclosure (except to an
      Investor) or use of any Record or other information which the Company determines
      in good faith to be confidential, and of which determination the Inspectors
      are
      so notified, unless (a) the disclosure of such Records is necessary to avoid
      or
      correct a misstatement or omission in any Registration Statement or is otherwise
      required under the Securities Act, (b) the release of such Records is ordered
      pursuant to a final, non-appealable subpoena or order from a court or government
      body of competent jurisdiction, or (c) the information in such Records has
      been
      made generally available to the public other than by disclosure in violation
      of
      this or any other agreement of which the Inspector has knowledge. Each Investor
      agrees that it shall, upon learning that disclosure of such Records is sought
      in
      or by a court or governmental body of competent jurisdiction or through other
      means, give prompt notice to the Company and allow the Company, at its expense,
      to undertake appropriate action to prevent disclosure of, or to obtain a
      protective order for, the Records deemed confidential. Nothing herein (or in
      any
      other confidentiality agreement between the Company and any Investor) shall
      be
      deemed to limit the Investors’ ability to sell Registrable Securities in a
      manner which is otherwise consistent with applicable laws and
      regulations.

     

    
      
        
        

      

      
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    6.3 Registration
      Expenses.
      The
      Company shall pay all fees and expenses incident to the performance of or
      compliance with Article VI of this Agreement by the Company, including
      without limitation (a) all registration and filing fees and expenses,
      including without limitation those related to filings with the SEC, any Trading
      Market and in connection with applicable state securities or Blue Sky laws,
      (b) printing expenses (including without limitation expenses of printing
      certificates for Registrable Securities), (c) messenger, telephone and
      delivery expenses, (d) fees and disbursements of counsel for the Company,
      (e) fees and expenses of all other Persons retained by the Company in
      connection with the consummation of the transactions contemplated by this
      Agreement, and (f) all listing fees to be paid by the Company to the
      Trading Market. The Company shall also reimburse each Designated Investor for
      the fees and disbursements of the Designated Investor Counsel in connection
      with
      registration, filing or qualification of the Registration Statement which amount
      shall be limited to $10,000; provided,
      however,
      that
      such amount shall be limited to $5,000 if the SEC does not review the
      Registration Statement.

     

    6.4 Indemnification

     

    (a) Indemnification
      by the Company.
      The Company shall, notwithstanding any termination of this Agreement, indemnify
      and hold harmless each Investor, the officers, directors, partners, members,
      agents and employees of each of them, each Person who controls any such Investor
      (within the meaning of Section 15 of the Securities Act or Section 20
      of the Exchange Act) and the officers, directors, partners, members, agents
      and
      employees of each such controlling Person, to the fullest extent permitted
      by
      applicable law, from and against any and all Losses, as incurred, arising out
      of
      or relating to (i) any misrepresentation or breach of any representation or
      warranty made by the Company in the Transaction Documents or any other
      certificate, instrument or document contemplated hereby or thereby, (ii) any
      breach of any covenant, agreement or obligation of the Company contained in
      the
      Transaction Documents or any other certificate, instrument or document
      contemplated hereby or thereby, (iii) any cause of action, suit or claim brought
      or made against such Indemnified Party (as defined in Section 6.4(c) below)
      by a
      third party (including for these purposes a derivative action brought on behalf
      of the Company), arising out of or resulting from (x) execution, delivery,
      performance or enforcement of the Transaction Documents or any other
      certificate, instrument or document contemplated hereby or thereby, (y) any
      transaction financed or to be financed in whole or in part, directly or
      indirectly, with the proceeds of the issuance of the Securities, or (z) the
      status of Indemnified Party as holder of the Securities or (iv) any untrue
      or
      alleged untrue statement of a material fact contained in the Registration
      Statement, any Prospectus or any form of Company prospectus or in any amendment
      or supplement thereto or in any Company preliminary prospectus, or arising
      out
      of or relating to any omission or alleged omission of a material fact required
      to be stated therein or necessary to make the statements therein (in the case
      of
      any Prospectus or form of prospectus or supplement thereto, in the light of
      the
      circumstances under which they were made) not misleading, except to the extent,
      but only to the extent, that (A) such untrue statements, alleged untrue
      statements, omissions or alleged omissions are based solely upon information
      regarding such Investor furnished in writing to the Company by such Investor
      for
      use therein, or to the extent that such information relates to such Investor
      or
      such Investor’s proposed method of distribution of Registrable Securities, or
      (B) in the case of an occurrence of an event of the type specified in
Section
      6.2(b)(v)-(vii),
      the use by such Investor of an outdated or defective Prospectus after the
      Company has timely notified such Investor in writing that the Prospectus is
      outdated or defective and prior to the receipt by such Investor of the Advice
      contemplated in Section 6.5.
      The Company shall notify the Investors promptly of the institution, threat
      or
      assertion of any Proceeding of which the Company is aware in connection with
      the
      transactions contemplated by this Agreement. 

     

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

    (b) Indemnification
      by Investors.
      Each Investor shall, severally and not jointly, indemnify and hold harmless
      the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15
      of the Securities Act and Section 20
      of the Exchange Act), and the directors, officers, agents or employees of such
      controlling Persons, to the fullest extent permitted by applicable law, from
      and
      against all Losses (as determined by a court of competent jurisdiction in a
      final judgment not subject to appeal or review) arising solely out of any untrue
      statement of a material fact contained in the Registration Statement, any
      Prospectus, or any form of prospectus, or in any amendment or supplement
      thereto, or arising solely out of any omission of a material fact required
      to be
      stated therein or necessary to make the statements therein (in the case of
      any
      Prospectus or form of prospectus or supplement thereto, in the light of the
      circumstances under which they were made) not misleading to the extent, but
      only
      to the extent, that such untrue statement or omission is contained in any
      information so furnished by such Investor to the Company in writing specifically
      for inclusion in such Registration Statement or such Prospectus or to the extent
      that (i) such untrue statements or omissions are based solely upon
      information regarding such Investor furnished to the Company by such Investor
      expressly for use therein, or to the extent that such information relates to
      such Investor or such Investor’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by such Investor
      expressly for use in the Registration Statement, such Prospectus or such form
      of
      Prospectus or in any amendment or supplement thereto or (ii) in the case of
      an occurrence of an event of the type specified in Section
      6.2(b)(v)-(vii),
      the use by such Investor of an outdated or defective Prospectus after the
      Company has notified such Investor in writing that the Prospectus is outdated
      or
      defective and prior to the receipt by such Investor of the Advice contemplated
      in Section 6.5.
      In no event shall the liability of any selling Investor hereunder be greater
      in
      amount than the dollar amount of the net proceeds received by such Investor
      upon
      the sale of the Registrable Securities giving rise to such indemnification
      obligation.

     

    (c) Conduct
      of Indemnification Proceedings.
      If any Proceeding shall be brought or asserted against any Person entitled
      to
      indemnity hereunder (an “Indemnified
      Party”),
      such Indemnified Party shall promptly notify the Person from whom indemnity
      is
      sought (the “Indemnifying
      Party”)
      in writing, and the Indemnifying Party shall assume the defense thereof,
      including the employment of counsel reasonably satisfactory to the Indemnified
      Party and the payment of all fees and expenses incurred in connection with
      defense thereof; provided, that the failure of any Indemnified Party to give
      such notice shall not relieve the Indemnifying Party of its obligations or
      liabilities pursuant to this Agreement, except (and only) to the extent that
      it
      shall be finally determined by a court of competent jurisdiction (which
      determination is not subject to appeal or further review) that such failure
      shall have proximately and materially adversely prejudiced the Indemnifying
      Party.

     

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (i) the Indemnifying Party has agreed in writing to pay such fees
      and expenses; or (ii) the Indemnifying Party shall have failed promptly to
      assume the defense of such Proceeding and to employ counsel reasonably
      satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
      named parties to any such Proceeding (including any impleaded parties) include
      both such Indemnified Party and the Indemnifying Party, and such Indemnified
      Party shall have been advised by counsel that a conflict of interest is likely
      to exist if the same counsel were to represent such Indemnified Party and the
      Indemnifying Party (in which case, if such Indemnified Party notifies the
      Indemnifying Party in writing that it elects to employ separate counsel at
      the
      expense of the Indemnifying Party, the Indemnifying Party shall not have the
      right to assume the defense thereof and such counsel shall be at the expense
      of
      the Indemnifying Party). It being understood, however, that the Indemnifying
      Party shall not, in connection with any one such Proceeding be liable for the
      fees and expenses of more than one separate firm of attorneys at any time for
      all Indemnified Parties, which firm shall be appointed by a majority of the
      Indemnified Parties; provided, however, that in the case a single firm of
      attorneys would be inappropriate due to actual or potential differing interests
      of conflicts between such Indemnified Parties and any other party represented
      by
      such counsel in such Proceeding or otherwise, then the Indemnifying Party shall
      be liable for the fees and expenses of one additional firm of attorneys with
      respect to such Indemnified Parties. The Indemnifying Party shall not be liable
      for any settlement of any such Proceeding effected without its written consent,
      which consent shall not be unreasonably withheld. No Indemnifying Party shall,
      without the prior written consent of the Indemnified Party, effect any
      settlement of any pending Proceeding in respect of which any Indemnified Party
      is a party, unless such settlement includes an unconditional release of such
      Indemnified Party from all liability on claims that are the subject matter
      of
      such Proceeding.

     

    All
      fees and expenses of the Indemnified Party (including reasonable fees and
      expenses to the extent incurred in connection with investigating or preparing
      to
      defend such Proceeding in a manner not inconsistent with this Section) shall
      be
      paid to the Indemnified Party, as incurred, within ten (10) Trading Days of
      written notice thereof to the Indemnifying Party (regardless of whether it
      is
      ultimately determined that an Indemnified Party is not entitled to
      indemnification hereunder; provided, that the Indemnifying Party may require
      such Indemnified Party to undertake to reimburse all such fees and expenses
      to
      the extent it is finally judicially determined that such Indemnified Party
      is
      not entitled to indemnification hereunder). 

     

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

     

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

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

     

    The
      indemnity and contribution agreements contained in this Section
      6.4 are in addition to any liability that the Indemnifying Parties may have
      to
      the Indemnified Parties.

     

    6.5 Dispositions.
      Each Investor agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it in connection with sales
      of Registrable Securities pursuant to the Registration Statement. Each Investor
      further agrees that, upon receipt of a notice from the Company of the occurrence
      of any event of the kind described in Sections
      6.2(b)(v),
      (vi)
      or (vii),
      such Investor will discontinue disposition of such Registrable Securities under
      the Registration Statement until such Investor’s receipt of the copies of the
      supplemented Prospectus and/or amended Registration Statement contemplated
      by
Section
      6.2(i),
      or until it is advised in writing (the “Advice”)
      by the Company that the use of the applicable Prospectus may be resumed, and,
      in
      either case, has received copies of any additional or supplemental filings
      that
      are incorporated or deemed to be incorporated by reference in such Prospectus
      or
      Registration Statement. The Company may provide appropriate stop orders to
      enforce the provisions of this paragraph.

     

    6.6 No
      Piggyback on Registrations.
      Other than as set forth on Schedule
      6.6,
      neither the Company nor any of its security holders (other than the Investors
      in
      such capacity pursuant hereto) may include securities of the Company in the
      Registration Statement other than the Registrable Securities, and the Company
      shall not after the date hereof enter into any agreement providing any such
      right to any of its security holders.

     

    6.7 Piggy-Back
      Registrations.
      If at any time during the Effectiveness Period there is not an effective
      Registration Statement covering all of the Registrable Securities and the
      Company shall determine to prepare and file with the SEC a registration
      statement relating to an offering for its own account or the account of others
      under the Securities Act of any of its equity securities, other than on Form
      S-4
      or Form S-8 (each as promulgated under the Securities Act) or their then
      equivalents relating to equity securities to be issued solely in connection
      with
      any acquisition of any entity or business or equity securities issuable in
      connection with stock option or other employee benefit plans, then the Company
      shall send to each Investor written notice of such determination and if, within
      ten days after receipt of such notice, any such Investor shall so request in
      writing, the Company shall include in such registration statement all or any
      part of such Registrable Securities such Investor requests to be
      registered.

     

     

    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

    ARTICLE
      VII

    MISCELLANEOUS

     

    7.1 Termination.
      This Agreement may be terminated by uBid, the Company or any Investor, by
      written notice to the other parties, if the First Closing has not been
      consummated by the third (3rd) Business Day following the date of this
      Agreement; provided that no such termination will affect the right of any party
      to sue for any breach by the other party (or parties).

     

    7.2 Entire
      Agreement.
      The Transaction Documents, together with the Exhibits and Schedules thereto,
      contain the entire understanding of the parties with respect to the subject
      matter hereof and supersede all prior agreements and understandings, oral or
      written, with respect to such matters, which the parties acknowledge have been
      merged into such documents, exhibits and schedules. At or after the Closing,
      and
      without further consideration, the Company will execute and deliver to the
      Investors such further documents as may be reasonably requested in order to
      give
      practical effect to the intention of the parties under the Transaction
      Documents.

     

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

     

    7.4 Amendments;
      Waivers.
      No provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and each of
      the
      Investors or, in the case of a waiver, by the party against whom enforcement
      of
      any such waiver is sought. No waiver of any default with respect to any
      provision, condition or requirement of this Agreement shall be deemed to be
      a
      continuing waiver in the future or a waiver of any subsequent default or a
      waiver of any other provision, condition or requirement hereof, nor shall any
      delay or omission of either party to exercise any right hereunder in any manner
      impair the exercise of any such right. Notwithstanding the foregoing, a waiver
      or consent to depart from the provisions hereof with respect to a matter that
      relates to the rights of the Investors under Article VI
      may be given by the holders holding at least two-thirds (2/3) of the Registrable
      Securities issued to the Investors to which such waiver or consent
      relates.

     

    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

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

     

    7.6 Successors
      and Assigns.
      This Agreement shall be binding upon and inure to the benefit of the parties
      and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of the Investors. Any Investor may assign its rights under this
      Agreement to any Person to whom such Investor assigns or transfers any
      Securities, provided such transferee agrees in writing to be bound, with respect
      to the transferred Securities, by the provisions hereof that apply to the
“Investors.” Notwithstanding anything to the contrary herein, Securities may be
      assigned to any Person in connection with a bona fide margin account or other
      loan or financing arrangement secured by such Securities.

     

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

     

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

     

    
      
        
        

      

      
        -36-

        
          

        

      

      
        
        

      

    

    7.9 Survival.
      The representations and warranties, agreements and covenants contained herein
      shall survive the Closing.

     

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

     

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

     

    7.12 Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever any Investor
      exercises a right, election, demand or option owed to such Investor by the
      Company under a Transaction Document and the Company does not timely perform
      its
      related obligations within the periods therein provided, then, prior to the
      performance by the Company of the Company’s related obligation, such Investor
      may rescind or withdraw, in its sole discretion from time to time upon written
      notice to the Company, any relevant notice, demand or election in whole or
      in
      part without prejudice to its future actions and rights.

     

    7.13 Replacement
      of Securities.
      If any certificate or instrument evidencing any Securities is mutilated, lost,
      stolen or destroyed, the Company shall issue or cause to be issued in exchange
      and substitution for and upon cancellation thereof, or in lieu of and
      substitution therefor, a new certificate or instrument, but only upon receipt
      of
      evidence reasonably satisfactory to the Company of such loss, theft or
      destruction and the execution by the holder thereof of a customary lost
      certificate affidavit of that fact and an agreement to indemnify and hold
      harmless the Company for any losses in connection therewith. The applicants
      for
      a new certificate or instrument under such circumstances shall also pay any
      reasonable third-party costs associated with the issuance of such replacement
      Securities.

     

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


     

    
      
        
        

      

      
        -37-

        
          

        

      

      
        
        

      

    

    7.15 Payment
      Set Aside.
      To the extent that the Company makes a payment or payments to any Investor
      hereunder or any Investor enforces or exercises its rights hereunder or
      thereunder, and such payment or payments or the proceeds of such enforcement
      or
      exercise or any part thereof are subsequently invalidated, declared to be
      fraudulent or preferential, set aside, recovered from, disgorged by or are
      required to be refunded, repaid or otherwise restored to the Company by a
      trustee, receiver or any other person under any law (including, without
      limitation, any bankruptcy law, state or federal law, common law or equitable
      cause of action), then to the extent of any such restoration the obligation
      or
      part thereof originally intended to be satisfied shall be revived and continued
      in full force and effect as if such payment had not been made or such
      enforcement or setoff had not occurred.

     

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

     

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

     

    [SIGNATURE
      PAGES TO FOLLOW]

     

    
      
        
        

      

      
        -38-

        
          

        

      

      
        
        

      

    

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

    
      
        	 	 	 
	 	CAPE
                COASTAL TRADING CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	Name: 	
                
Geoffrey
                Alison  
	 	Title: 	President 
	 	 	 


      

      
        	
              	 	 
	 	uBID,
                INC.
	 
 	 
 	 
 
	 	By:  	 
	 	Name: 	
                
Robert
                H. Tomlinson, Jr.  
	 	Title: 	President & Chief Executive
                Officer 
	 	 	 
	 	 	 
	 	Address for Notice: 
	 	 	 
	 	8550 West Bryn Mawr 
	 	Suite 200 
	 	Chicago, IL 60631 
	 	 	 
	 	Facsimile No.:
                773-272-4055 
	 	Telephone No.:
                773-272-4461 
	 	Attn: Tomlinson 
	 	 
	 	With a copy to: McGuireWoods
                LLP 
	 	 	Facsimile: (212)
                548-2175 
	 	 	
                Telephone: (212)
                  548-2138 

              
	 	 	Attn:  Louis
                W. Zehil 


      

    

    
       

      
        
        

      

       

      
        -39-

        
          

        

      

      
        
        

      

    

    Investor
      Signature Page

     

    By
      its execution and delivery of this signature page, the undersigned Investor
      hereby joins in and agrees to be bound by the terms and conditions of the
      Securities Purchase Agreement dated as of December __, 2005 (the “Purchase
      Agreement”) by and among Cape
      Coastal Trading Corporation,
      uBid, Inc. and
      the Investors (as defined therein), as to the number of shares of Common Stock
      and Warrants set forth below, and authorizes this signature page to be attached
      to the Purchase Agreement or counterparts thereof.

    
      	 	 	 	 
	 	 	 	Name of Investor: 
	 	 	 	 
	 	 	 	
              
  
	 	 	 	By: 
	 	 	 	
              
                
  

            
	
            	 	 	Name:
	 	 	 	Title:
	 	 	 	 
	 	 	 	Address:  
	 	 	 	
              
                
  

            
	 	 	 	
              
   
	 	 	 	Telephone No.: 
	 	 	 	 
	 	 	 	Facsimile No.: 
	 	 	 	
              
                
  

            
	 	 	 	Number of Shares: 
	 	 	 	
              
                
  

            
	 	 	 	Number of Warrants: 
	 	 	 	
              
                
  

            
	 	 	 	Aggregate Purchase Price:
              $ 
	 	 	 	
              
                
  

            
	 	 	 	 
	 	 	 	 
	Agreed to and accepted this 	 	 	 
	___ day of December, 2005 	 	 	 
	 	 	 	 
	CAPE COASTAL TRADING
              CORPORATION 	 	 	 
	 	 	 	 
	 	 	 	 
	By: 	 	 	 
	
              
                
  

            	 	 	 
	Name: 	 	 	 
	Title: 	 	 	 


    

     

     

    
      
        
        

      

      
        -40-