**EXHIBIT 4.4**

 

**SECURITIES PURCHASE AGREEMENT**

 

THIS SECURITIES PURCHASEAGREEMENT (this “Agreement”), is entered into as of March 31, 2003, by andamong Centiv, Inc., a Delaware corporation (the “Company”), and the purchasersidentified on Exhibit A to this Agreement (the “Purchasers”).

 

Background

 

A.  Each Purchaser desires to purchase units (“Units”) from theCompany, each Unit consisting of (i) one share of the Company’s Series BPreferred Stock, $.001 par value per share (the “Series B Preferred Stock”), havingthe rights, preferences and privileges set forth in the Certificate ofDesignations, Preferences and Rights attached hereto as Exhibit C (“Certificateof Designations”) and (ii) a warrant in the form attached hereto as Exhibit D(the “Warrants”) to purchase two shares of the Company’s Common Stock, $.001per share (“Common Stock”).  Thepurchase price per Unit shall be $5.00 (the “Purchase Price”).  The shares of Series B Preferred Stockincluded in the Units (the “Shares”) are convertible into shares of CommonStock in accordance with the Certificate of Designations.  The initial conversion ratio is ten (10)shares of Common Stock for each one (1) share of Series B Preferred Stock.  The Preferred Stock and Warrant includedwithin a Unit are not linked and may be transferred separate from each otheronce acquired by a Purchaser.

 

B.  In connection with the purchase and sale of the Units, theparties to this Agreement are entering into an Amended and Restated InvestorRights Agreement in the form attached to this Agreement as Exhibit E (the“Investor Rights Agreement”), pursuant to which the Company has agreed toprovide certain registration and other rights to the Purchasers.

 

NOW, THEREFORE, the Company and the Purchasershereby agree as follows:

 

1.               CERTAIN DEFINITIONS.

 

For purposes of thisAgreement, the following terms shall have the meanings ascribed to them asprovided below:

 

“Common Stock BeneficiallyOwned” with respect to a Purchaser or group of Purchasers includes allshares of Common Stock then held or acquirable by such Purchaser or group ofPurchasers that were acquired or are acquirable (a) directly upon exercise ofoutstanding Warrants and (b) upon conversion of Shares.

 

“Conversion Shares”shall mean the shares of Common Stock issuable upon conversion of the Series BPreferred Stock.

 

“Investment Amount”shall mean the dollar amount to be invested in the Company at the Closingpursuant to this Agreement by any Purchaser, either in cash or by conversion ofthe principal and accrued interest under the Senior Subordinated Debt, as setforth opposite such Purchaser’s name on Exhibit A.

 

“Material Adverse Effect”shall mean any material adverse effect on (i) the ability of the Company toperform its obligations hereunder (including the issuance of the Shares and theWarrants), under the Certificate of Designations, under the Warrants (includingthe issuance of the Warrant Shares)

 

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or under the Investor Rights Agreement or (ii)the business, operations, prospects, properties or financial condition of theCompany and its subsidiaries, taken as a whole.

 

“Securities” shallmean the Shares, the Warrants, the Warrant Shares and the Conversion Shares.

 

“Senior Subordinated Debt”shall mean the indebtedness evidenced by the Company’s Senior SubordinatedConvertible Promissory Notes issued under the Senior Subordinated ConvertibleBridge Loan and Warrant Agreement dated September 30, 2002 by and among theCompany and the investors identified therein.

 

“Shares” means theshares of Series B Preferred Stock to be issued and sold by the Company andpurchased by the Purchasers at the Closing, including those shares to be issuedin exchange for shares of Series A Convertible Preferred Stock pursuant toSection 2.3.

 

“Warrant Shares” shallmean the shares of capital stock issuable upon exercise of or otherwisepursuant to the Warrants.

 

2.               PURCHASE AND SALE OF SHARES AND WARRANTS.

 

2.1  Sale and Issuance ofSecurities.  The Company hasauthorized the sale and issuance of up to 1,000,000 Units.  Subject to the terms and conditions of thisAgreement, the Company will issue and sell to each Purchaser, and suchPurchaser shall purchase from the Company, the number of Units set forthopposite the name of such Purchaser on Exhibit A at the Purchase Price, for anaggregate purchase price equal to the Investment Amount set forth opposite thename of such Purchaser on Exhibit A. The commitments to purchase Units are theseveral, and not joint, obligations of each Purchaser.

 

2.2  Closing. Subject tothe satisfaction (or waiver) of the conditions set forth in Sections 6 and 7below, the closing of the purchase and sale of the Securities (the “Closing”)shall be at the offices of Gardner Carton &Douglas LLC, 191 North WackerDrive, Suite 3700, Chicago, Illinois at 12:00 noon Chicago Time on March 31,2003, or such other date or time as the parties may mutually agree (“ClosingDate”).  At the Closing, each Purchasershall pay the Company an amount equal to such Purchaser’s Investment Amount bywire transfer to the Company, in accordance with the Company’s written wiringinstructions, and/or by surrender of Senior Subordinated Debt for cancellationof principal and interest against delivery of certificates representing theShares and duly executed Warrants included in the Units being purchased by suchPurchaser.

 

2.3  Exchange of Series A Convertible Preferred Stock.  At the Closing, the Purchasers who ownSeries A Convertible Preferred Stock as set forth on Exhibit B shall exchangeSeries A Convertible Preferred Stock for shares of Series B Preferred Stock asfollows:  for each ten dollars ofInvestment Amount invested by a Purchaser, the Purchaser will surrender one (1)share of Series A Convertible Preferred Stock and the warrants, on a pro ratabasis, issued in connection with such share of Series A Convertible PreferredStock and receive in exchange from the Company two (2) shares of Series BPreferred Stock (which shares shall be in addition to the shares purchased forthe Investment Amount); provided, however, that no Warrants will be issued inconnection with the shares of Series B Preferred Stock issued pursuant to thisSection 2.3.  In addition, the warrantsto purchase Series A Preferred Stock held by such Purchasers which are notsurrendered, if any, will be converted, in accordance with their terms, intowarrants to purchase Common Stock.

 

2.4  Senior Subordinated Debt Warrant Cancellation. ThePurchasers who are paying for some or all of their Investment Amount by way ofcancellation of Senior Subordinated Debt hereby agree that upon thecancellation of such Senior Subordinated Debt, a pro rata portion of thewarrants to purchase

 

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Common Stock they were issued in connectionwith the issuance of the Senior Subordinated Debt will be cancelled inproportion to the percentage of the Senior Subordinated Debt that they holdthat is being cancelled hereunder.

 

3.               THE PURCHASER’S REPRESENTATIONS ANDWARRANTIES.

 

Each Purchaser severally andnot jointly represents and warrants to the Company as follows:

 

3.1  Purchase for Own Account. The Purchaser is purchasing the Securities for the Purchaser’s ownaccount and not with a present view towards the distribution thereof.  The Purchaser understands that the Purchasermust bear the economic risk of this investment indefinitely, unless theSecurities are registered pursuant to the Securities Act of 1933, as amended(the “Securities Act”), and any applicable state securities or blue sky laws oran exemption from such registration is available, and that the Company has nopresent intention of registering any such Securities other than as contemplatedby the Investor Rights Agreement. Notwithstanding anything in this Section 3.1to the contrary, by making the foregoing representation, the Purchaser does notagree to hold the Securities for any minimum or other specific term andreserves the right to dispose of the Securities at any time in accordance withor pursuant to a registration statement or an exemption from registration underthe Securities Act and any applicable state securities laws.

 

3.2  Information.  ThePurchaser has been furnished all materials relating to the business, financesand operations of the Company and its subsidiaries and materials relating tothe offer and sale of the Securities which have been requested by thePurchaser.  The Purchaser has beenafforded the opportunity to ask questions of the Company and has receivedsatisfactory answers to any such inquiries. Neither such inquiries nor any other due diligence investigationconducted by the Purchaser or its counsel or any of its representatives shallmodify, amend or affect the Purchaser’s right to rely on the Company’srepresentations and warranties contained in Section 4 below.

 

3.3  Governmental Review. The Purchaser understands that no United States federal or state agencyor any other government or governmental agency has passed upon or made anyrecommendation or endorsement of the Securities.

 

3.4  Authorization; Enforcement.  The Purchaser has the requisite power and authority to enter intoand perform its obligations under this Agreement and to purchase the Units inaccordance with the terms hereof.  ThisAgreement has been duly and validly authorized, executed and delivered onbehalf of the Purchaser and is a valid and binding agreement of the Purchaserenforceable against the Purchaser in accordance with its terms, subject toapplicable bankruptcy, insolvency, reorganization, moratorium, fraudulenttransfer and other laws affecting creditors’ rights and remedies generally andto general principles of equity (regardless of whether enforcement is sought ina proceeding at law or in equity).

 

3.5  Transfer or Resale. The Purchaser understands that (i) except as provided in the InvestorRights Agreement, the Securities have not been and are not being registeredunder the Securities Act or any state securities laws, and may not betransferred unless (a) subsequently registered thereunder, (b) the Purchasershall have delivered to the Company an opinion of counsel reasonably acceptableto the Company (which opinion shall be in form, substance and scope customaryfor opinions of counsel in comparable transactions) to the effect that theSecurities to be sold or transferred may be sold or transferred under an exemptionfrom such registration, (c) sold under Rule 144 promulgated under theSecurities Act (or a successor rule), or (d) sold or transferred to anaffiliate of the Purchaser pursuant to an exemption under the Securities Act;and (ii) neither the Company nor any other person is under any obligation toregister such Securities under the Securities Act or any state securities lawsor to comply

 

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with the terms and conditions of any exemptionthereunder, in each case, other than pursuant to the Investor Rights Agreement.

 

3.6.  Legends.  The Purchaser understands that the Shares, the Warrants and,until such time as the Conversion Shares and shares of Common Stock issuabledirectly upon exercise of the Warrants have been registered under theSecurities Act as contemplated by the Investor Rights Agreement or otherwisemay be sold by the Purchaser under Rule 144, the certificates for suchConversion Shares and other shares of Common Stock  may bear a restrictive legend in substantially the followingform:

 

“The securities representedby this certificate have not been registered under the Securities Act of 1933,as amended, or the securities laws of any state of the United States.  The securities represented hereby may not beoffered or sold in the absence of an effective registration statement for thesecurities under applicable securities laws unless offered, sold or transferredunder an available exemption from the registration requirements of those laws.

 

The legend set forth above shall be removedand the Company shall issue a certificate without such legend to the holder ofany Security upon which it is stamped, if, (a) the sale of such Security isregistered under the Securities Act, (b) such holder provides the Company withan opinion of counsel, in form, substance and scope customary for opinions ofcounsel in comparable transactions, to the effect that a public sale ortransfer of such Security may be made without registration under the SecuritiesAct or (c) such holder provides the Company with reasonable assurances thatsuch Security can be sold under Rule 144(k). The Purchaser agrees to sell all Securities, including those representedby a certificate(s) from which the legend has been removed, pursuant to aneffective registration statement or under an exemption from the registrationrequirements of the Securities Act.  Inconsideration of such removal, the Purchaser agrees and covenants that inconnection with the registration of such Securities, it will sell allSecurities in accordance with the plan of distribution contained in theregistration statement pursuant to which it is selling its Securities, it willdeliver a prospectus in accordance with the prospectus delivery requirements ofthe Securities Act, and in the event that the Company informs such Purchaserthat the registration statement has ceased to be effective under the SecuritiesAct, such Purchaser shall, at the request of the Company, return its Securitiesfor legending unless at such time such Securities may be sold under Rule144(k).

 

3.7  Accredited Investor Status.  The Purchaser is an “accredited investor” as that term is definedin Rule 501(a) of Regulation D promulgated by the Securities and ExchangeCommission (“SEC”) under the Securities Act (“Regulation D”).

 

3.8  Company Reliance. The Purchaser understands that the Shares are being offered and soldand  the Warrants are being issued  to it in reliance on specific exemptionsfrom the registration requirements of United States federal and statesecurities laws and that the Company is relying upon the truth and accuracy of,and the Purchaser’s compliance with, the representations, warranties,agreements, acknowledgments, and understandings of the Purchaser set forthherein in order to determine the availability of such exemptions and theeligibility of the Purchaser to acquire the Securities.

 

4.               REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents andwarrants to each Purchaser as follows:

 

4.1  Organization and Qualification.  The Company is a corporation duly organized and existing underthe laws of Delaware, and has the requisite corporate power to own itsproperties and to carry on its business as now being conducted.  The Company is duly qualified as a foreigncorporation to do business

 

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and is in good standing in every jurisdictionin which the nature of the business conducted by it makes such qualificationnecessary and where the failure so to qualify would have a Material AdverseEffect. The Company does not have any subsidiaries and does not have an equityinterest greater than 20% in any other entity.

 

4.2  Authorization; Enforcement.  (i) The Company has the requisite corporate power and authorityto enter into and perform its obligations under this Agreement, the Certificateof Designation, the Warrants and the Investor Rights Agreement, to issue andsell the Shares and the Warrants in accordance with the terms hereof, to issuethe Warrant Shares upon exercise of the Warrants in accordance with the termsof the Warrants and to issue the Conversion Shares upon conversion of theShares in accordance with the Certificate of Designations; (ii) the execution,delivery and performance of this Agreement, the Warrants and the InvestorRights Agreement by the Company, the adoption and filing of the Certificate ofDesignations and the consummation by it of the transactions contemplated herebyand thereby (including, without limitation, the reservation for issuance and issuanceof the Shares and the issuance of the Warrants, and the reservation forissuance and issuance of the Warrant Shares and Conversion  Shares) have been duly authorized by theCompany’s Board of Directors and no further consent or authorization of the Company,its Board of Directors or its stockholders (except for ratification of theanti-dilution protection afforded to the Shares) is required; (iii) thisAgreement has been duly executed and delivered by the Company; (iv) theCertificate of Designations has been duly filed with the Delaware Secretary ofState; and (v) this Agreement constitutes, and, upon execution and delivery bythe Company of the Investor Rights Agreement and the Warrants, such agreementswill constitute, valid and binding obligations of the Company enforceableagainst the Company in accordance with their respective terms, subject toapplicable bankruptcy, insolvency, reorganization, moratorium, fraudulenttransfer and other laws affecting creditors’ rights and remedies generally and togeneral principles of equity (regardless of whether enforcement is sought in aproceeding at law or in equity).

 

4.3  Capitalization. The capitalization of the Company as of the date hereof is set forth onSection 4.3 of Schedule 4 to this Agreement (the “Disclosure Schedule”),including the authorized capital stock, the number of shares issued andoutstanding, the number of shares issuable and reserved for issuance pursuantto the Company’s stock option plans, the number of shares issuable and reservedfor issuance pursuant to securities exercisable for, or convertible into orexchangeable for any shares of capital stock. Section 4.3 of the Disclosure Schedule also sets forth the number ofShares to be issued pursuant to the terms hereof and the number of WarrantShares to be issued upon the exercise of the Warrants and the number ofConversion Shares reserved for issuance upon conversion of the Series BPreferred Stock.  All of suchoutstanding shares of the Company’s capital stock have been, or upon issuancewill be, validly issued, fully paid and nonassessable. The Series B PreferredStock has the rights, preferences and privileges set forth in the Certificateof Designations.  Except as set forth inSection 4.3 of the Disclosure Schedule, no shares of capital stock of theCompany (including the Shares and the Warrant Shares) or any of thesubsidiaries are subject to preemptive rights or any other similar rights ofthe stockholders of the Company or any liens or encumbrances.  Except for the Securities and as disclosedin Section 4.3 of the Disclosure Schedule, as of the date of this Agreement,(i) there are no outstanding options, warrants, scrip, rights to subscribe to,calls or commitments of any character whatsoever relating to, or securities orrights convertible into or exercisable or exchangeable for, any shares ofcapital stock of the Company or any of its subsidiaries, or arrangements bywhich the Company or any of its subsidiaries is or may become bound to issueadditional shares of capital stock of the Company or such subsidiaries, and(ii) there are no agreements or arrangements under which the Company or any ofits subsidiaries is obligated to register the sale of any of its or theirsecurities under the Securities Act (except the Investor RightsAgreement).  Except as set forth inSection 4.3 of the Disclosure Schedule there are no securities or instrumentscontaining anti-dilution or similar provisions that may be triggered by theissuance of the Securities in accordance with the terms of this Agreement, theWarrants or the Investor Rights Agreement

 

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and the holders of the securities andinstruments listed in Section 4.3 of such Disclosure Schedule have waived anyrights they may have under such anti-dilution or similar provisions inconnection with the issuance of the Securities in accordance with the terms ofthis Agreement, the Warrants or the Investor Rights Agreement.  The Company has made available to eachPurchaser true and correct copies of the Company’s Certificate of Incorporationas in effect on the date hereof (“Certificate of Incorporation”), the Company’sBy-laws as in effect on the date hereof (the “By-laws”) and all otherinstruments and agreements governing securities convertible into or exercisableor exchangeable for capital stock of the Company, except for stock optionsgranted under any employee benefit plan or director stock option plan of theCompany.

 

4.4  Issuance of Shares. The Shares are duly authorized and when issued and paid for inaccordance with the terms hereof, will be validly issued, fully paid andnon-assessable, and free from all taxes, liens, claims and encumbrances, andwill not be subject to preemptive rights or other similar rights ofstockholders of the Company and will not impose personal liability upon theholder thereof. The Warrant Shares are duly authorized and reserved forissuance, and, upon exercise of the Warrants in accordance with the termsthereof, the Warrant Shares will be validly issued, fully paid andnon-assessable and free from all taxes and liens, claims and encumbrances andwill not be subject to preemptive rights or other similar rights ofstockholders of the Company and will not impose personal liability upon theholder thereof. The Conversion Shares are duly authorized and reserved forissuance, and, upon conversion of the Series B Preferred Stock in accordancewith the terms of the Certificate of Designations, will be validly issued,fully paid and non-assessable and free from all taxes and liens, claims andencumbrances and will not be subject to preemptive rights or other similarrights of stockholders of the Company and will not impose personal liabilityupon the holder thereof.

 

4.5  No Conflicts.  Theexecution, delivery and performance of this Agreement, the Investor RightsAgreement and the Warrants by the Company, and the consummation by the Companyof the transactions contemplated hereby and thereby (including, withoutlimitation, the reservation for issuance and issuance of the Shares, ConversionShares and the Warrant Shares and the issuance of the Warrants) will not (i)conflict with or result in a violation of the Company’s Certificate ofIncorporation (including the Certificate of Designations, Preferences andRights of the Series A Convertible Preferred Stock) or By-laws or (ii) conflictwith, or constitute a default (or an event which, with notice or lapse of timeor both, would become a default) under, or give to others any rights oftermination, amendment, acceleration or cancellation of any agreement,indenture or instrument to which the Company is a party, or result in aviolation of any law, rule, regulation, order, judgment or decree (includingUnited States federal and state securities laws and regulations) applicable tothe Company or by which any property or asset of the Company is bound oraffected. The Company is not in violation of its Certificate of Incorporation,By-laws and other organizational documents and the Company is not in default(and no event has occurred which, with notice or lapse of time or both, wouldput the Company or any of its subsidiaries in default) under, nor has thereoccurred any event giving others (with notice or lapse of time or both) anyrights of termination, amendment, acceleration or cancellation of, anyagreement, indenture or instrument to which the Company is a party, except foractual or possible violations, defaults or rights as would not, individually orin the aggregate, have a Material Adverse Effect.  The business of the Company is not being conducted in violationof any law, ordinance or regulation of any governmental entity, except foractual or possible violations, if any, the sanctions for which either singly orin the aggregate would not have a Material Adverse Effect. Except as set forthin Section 4.5 of the Disclosure Schedule and except as specificallycontemplated by this Agreement or the Warrants and as required under theSecurities Act and any applicable state securities laws, the Company is notrequired to obtain any consent, approval, authorization or order of, or makeany filing or registration with, any court or governmental agency or anyregulatory or self regulatory agency in order for it to execute, deliver orperform any of its obligations under this Agreement (including, withoutlimitation, the issuance and sale of the Shares and Warrants as

 

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provided hereby), the Certificate ofDesignations (including the issuance of the Conversion Shares) or the Warrants (includingthe issuance of the Warrant Shares), in each case in accordance with the termshereof or thereof.  Except as set forthin Section 4.5 of the Disclosure Schedule, the Company is not in violation ofthe listing requirements of the Nasdaq Stock Market (“Nasdaq”) and does notreasonably anticipate that the Common Stock will be delisted by Nasdaq in theforeseeable future based on its rules (and interpretations thereof) ascurrently in effect.

 

4.6.  SEC Documents; Financial Statements.  Since January 1, 2000, the Company hastimely filed all reports, schedules, forms, statements and other documentsrequired to be filed by it with the SEC pursuant to the Securities Exchange Actof 1934, as amended (the “Exchange Act”), and has filed all registration statementsand other documents required to be filed by it with the SEC pursuant to theSecurities Act (all of the foregoing, including the financial statements andschedules thereto and documents incorporated by reference therein, the “SECDocuments”). As of their respective dates, the SEC Documents complied in allmaterial respects with the requirements of the Exchange Act or the SecuritiesAct, as the case may be, and the rules and regulations of the SEC promulgatedthereunder applicable to the SEC Documents, and none of the SEC Documents, atthe time they were filed with the SEC, contained any untrue statement of amaterial fact or omitted to state a material fact required to be stated thereinor necessary in order to make the statements therein, in light of thecircumstances under which they were made, not misleading.  Any statements made in any such SECDocuments that are or were required to be updated or amended under applicablelaw have been so updated or amended.  Asof their respective dates, the financial statements of the Company included inthe SEC Documents complied in all material respects with applicable accountingrequirements and the published rules and regulations of the SEC applicable withrespect thereto.  Such financialstatements have been prepared in accordance with United States generallyaccepted accounting principles, consistently applied, during the periodsinvolved (except (i) as may be otherwise indicated in such financial statementsor the notes thereto, or (ii) in the case of unaudited interim statements, tothe extent they may not include footnotes or may be condensed or summarystatements) and fairly present in all material respects the consolidatedfinancial position of the Company and its subsidiaries as of the dates thereofand the results of their operations and cash flows for the periods then ended(subject, in the case of unaudited statements, to normal year-end auditadjustments).  Except as set forth inthe SEC Documents, the Company has no liabilities, contingent or otherwise,other than (i) liabilities incurred in the ordinary course of businesssubsequent to the date of such SEC Documents and (ii) obligations undercontracts and commitments incurred in the ordinary course of business and notrequired under generally accepted accounting principles to be reflected in suchSEC Documents, which liabilities and obligations referred to in clauses (i) and(ii), individually or in the aggregate, would not have a Material AdverseEffect. Except as disclosed in the SEC Documents, since December 31, 2000,there has been no change by the Company in the method for which it accounts forrevenues or expenses under generally accepted accounting principles.

 

4.7  Absence of Certain Changes.  Except as disclosed in the SEC Documents, since September 30,2002, there has been no change or development which individually or in theaggregate has had or could reasonably be expected to have a Material AdverseEffect.

 

4.8  Absence of Litigation. Except as disclosed in the SEC Documents, there is no action, suit,proceeding, inquiry or investigation before or by any court, public board,government agency, self-regulatory organization or body pending or, threatenedin writing against or affecting the Company, or any of its subsidiaries, or anyof their directors or officers in their capacities as such which wouldreasonably be expected to have a Material Adverse Effect or which wouldadversely affect the validity, enforceability of, or the authority or abilityof the Company to perform its obligations under this Agreement (including theissuance of the Shares and the Warrants), the Certificate of Designations(including the issuance of the Conversion Shares). the Investor RightsAgreement, the Warrants

 

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(including the issuance of the Warrant Shares)or any other agreement or document delivered pursuant hereto or thereto.

 

4.9  Intellectual Property. The Company owns or is licensed to use all patents, patent applications,trademarks, trademark applications, trade names, service marks, copyrights,copyright applications, licenses, permits, know-how (including trade secretsand other unpatented and/or unpatentable proprietary or confidentialinformation, systems or procedures) and other similar rights and proprietaryknowledge (collectively, “Intangibles”) necessary for the conduct of itsbusiness as now being conducted and as proposed to be conducted.  To the knowledge of the Company, afterreasonable inquiry, the Company is not infringing or in conflict with any otherperson with respect to any Intangibles which, individually or in the aggregate,if the subject of an unfavorable decision, ruling or finding, would have aMaterial Adverse Effect. The Company has not received written notice that it isinfringing upon third party Intangibles. The Company has not entered into any consent, indemnification,forbearance to sue or settlement agreements with respect to the validity of theCompany’s ownership or right to use its Intangibles and to the Company’s knowledge,after reasonable inquiry, there is no basis for any claim relating to anyconsent, indemnification, forbearance to sue or settlement agreement withrespect to the validity of the Company’s or such subsidiary’s ownership orright to use its Intangibles to be successful. The Intangibles are valid and enforceable, and no registration relatingthereto has lapsed, expired or been abandoned or canceled or is the subject ofcancellation or other adversarial proceedings, and all applications thereforare pending and in good standing. The Company has complied, in all materialrespects, with its contractual obligations relating to the protection of theIntangibles used pursuant to licenses. To the Company’s knowledge, no person is infringing on or violating theIntangibles owned or used by the Company.

 

4.10  Foreign Corrupt Practices.  Neither the Company, nor any director orofficer, nor, to the Company’s knowledge, any agent, employee or other personacting on behalf of the Company or any of its subsidiaries has, in the courseof such person’s actions for, or on behalf of, the Company, used any corporatefunds for any unlawful contribution, gift, entertainment or other unlawfulexpenses relating to political activity; made any direct or indirect unlawfulpayment to any foreign or domestic government official or employee fromcorporate funds; violated or is in violation of any provision of the UnitedStates Foreign Corrupt Practices Act of 1977; or made any bribe, rebate,payoff, influence payment, kickback or other unlawful payment to any foreign ordomestic government official or employee.

 

4.11  Environment.  Except as disclosed in the SEC Documents (i)there is no environmental liability, nor factors likely to give rise to anyenvironmental liability, affecting any of the properties of the Company that,individually or in the aggregate, would have a Material Adverse Effect and (ii)the Company has not violated any environmental law applicable to it now orpreviously in effect, other than such violations or infringements that,individually or in the aggregate, have not had and will not have a MaterialAdverse Effect.

 

4.12  Title.  The Company has good title in fee simple to all real property andgood title to all personal property owned by it which is material to itsbusiness, free and clear of all liens, encumbrances and defects except forliens to secure the Company’s bank lines of credit and such defects in titlethat, individually or in the aggregate, could not have a Material AdverseEffect.  Any real property andfacilities held under lease by the Company are held by the Company under valid,subsisting and enforceable leases with such exceptions which have not had andwill not have a Material Adverse Effect.

 

4.13  Insurance.  The Company maintains such insurance relating to its business,operations, assets, key-employees and officers and directors as is appropriateto their  business, assets andoperations, in such amounts and against such risks as are customarily carriedand insured against by owners of

 

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comparable businesses, assets and operations,and such insurance coverages will be continued in full force and effect to andincluding the Closing Date other than those insurance coverages in respect ofwhich the failure to continue in full force and effect could not reasonably beexpected to have a Material Adverse Effect.

 

4.14  Disclosure.  All information relating to or concerning the Company set forthin this Agreement or provided to the Purchaser in connection with thetransactions contemplated hereby, including the disclosure contained inSchedule 4, viewed in its entirety, is true and correct in all materialrespects and the Company has not omitted to state any material fact necessaryin order to make the statements made herein or therein, in light of thecircumstances under which they were made, not misleading.  No event or circumstance has occurred orexists with respect to the Company or its businesses, properties, operations,prospects or financial conditions, which has not been publicly disclosed but,under applicable law, rule or regulation, would be required to be disclosed bythe Company in a registration statement filed on the date hereof by the Companyunder the Securities Act with respect to a primary issuance of the Company’ssecurities.  The Company has notprovided, and without the Purchaser’s request therefore, will not hereafterprovide to the Purchaser, any information which, according to applicable law,rule or regulation, should have been disclosed publicly by the Company butwhich has not been disclosed.

 

4.15  Acknowledgment Regarding the Purchaser’sPurchase of the Securities. The Company acknowledges and agrees that thePurchaser is not acting as a financial advisor or fiduciary of the Company (orin any similar capacity) with respect to this Agreement or the transactionscontemplated hereby, and the relationship between the Company and the Purchaseris “arms length” and that any statement made by the Purchaser or any of itsrepresentatives or agents in connection with this Agreement and thetransactions contemplated hereby is not advice or a recommendation and ismerely incidental to the Purchaser’s purchase of Securities and has not beenrelied upon by the Company, its officers or directors in any way. The Companyfurther represents to the Purchaser that the Company’s decision to enter intothis Agreement has been based solely on an independent evaluation by theCompany and its representatives.

 

4.16  No Brokers.  The Company has not engaged any person, whose fees are being paidexclusively by the Company, to which or to whom brokerage commissions, finder’sfees, financial advisory fees or similar payments are or will become due inconnection with this Agreement or the transactions contemplated.

 

4.17  Tax Status.  The Company has made or filed (or has sought extensions for) allmaterial federal, state and local income and all other tax returns, reports anddeclarations required by any jurisdiction to which it is subject (unless and onlyto the extent that the Company has set aside on its books provisions adequatefor the payment of all unpaid and unreported taxes) and has paid all taxes andother governmental assessments and charges that are material  in amount, shown or determined to be due onsuch returns, reports and declarations, except those being contested in goodfaith and has set aside on its books provisions adequate for the payment of alltaxes for periods subsequent to the periods to which such returns, reports ordeclarations apply.  Except with respectto amounts totaling in the aggregate less than $50,000, there are no unpaidtaxes claimed to be due by the taxing authority of any jurisdiction.  The Company has not executed a waiver withrespect to any statute of limitations relating to the assessment or collectionof any federal, state or local tax. Since January 1, 1996, none of the Company’s tax returns has been or isbeing audited by any taxing authority.

 

4.18  Transactions withAffiliates.  Except for(i) stock options and stock issuances disclosed in Section 4.3 of theDisclosure Schedule, (ii) regular salary payments and fringe benefits under an

 

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individual’scompensation package with the Company, and (iii) transactions disclosed inSection 4.18 of the Disclosure Schedule, none of the officers, employees,directors or other affiliates of the Company are a party to any transactionswith the Company and there have been no assumptions or guarantees by theCompany of any obligations of such affiliates or loans by the Company to anysuch affiliates.

 

4.19  No General Solicitation.  Neither the Company nor any personparticipating on the Company’s behalf in the transactions contemplated herebyhas conducted any “general solicitation” or “general advertising”  as such terms are used in Regulation D, withrespect to any of the Securities being offered hereby.

 

4.20  No Integrated Offering.  Neither the Company, nor any of itsaffiliates, nor any person acting on its or their behalf, has, directly orindirectly, made any offers or sales of any security or solicited any offers tobuy any security under circumstances that would require registration of theSecurities being offered hereby under the Securities Act or cause this offeringof Securities to be integrated with any prior offering of securities of theCompany for purposes of the Securities Act or any applicable stockholderapproval provisions.

 

4.21  Form S-3 Eligibility.  The Company is currently eligible toregister the resale of its Common Stock on a registration statement on Form S-3under the Securities Act.  To theCompany’s knowledge, after reasonable investigation, there exist no facts orcircumstances (including without limitation any required approvals or waiversof any circumstances that may delay or prevent the obtaining of accountant’sconsents) that would prohibit or delay the preparation and filing of aregistration statement on Form S-3 with respect to the Registrable Securities(as defined in the Investor Rights Agreement).

 

4.22  Employees and Consultants. None ofthe employees of the Company is represented by any labor union, and there is nolabor strike or other labor trouble pending with respect to the Company(including, without limitation, any organizational drive) or, to the Company’sknowledge, threatened.  No officer orkey employee of the Company has advised the Company (orally or in writing) thathe intends to terminate his employment with the Company. Each employee andconsultant of the Company and each subsidiary has executed in favor of theCompany or such subsidiary, the Company’s (or such subsidiary’s) standard formconfidentiality and proprietary inventions assignment agreement.

 

4.23                           Outstandingindebtedness.  Section 4.3of Schedule 4 contains a list of all outstanding indebtedness of the Company,other than trade payables and accrued liabilities incurred in the ordinarycourse of business, as of February 28, 2003. The Company has not incurred any material indebtedness since thatdate.  The Company will not use theproceeds of this offering to repay any such indebtedness, other than SeniorSubordinated Debt which is not surrendered for cancellation to purchase Unitshereunder.

 

5.               COVENANTS.

 

5.1  Best Efforts.  Theparties shall use their best efforts timely to satisfy each of the conditionsset forth in Section 6 and Section 7 of this Agreement.

 

5.2  Form D.  TheCompany agrees to file a Form D with respect to the Securities as requiredunder Regulation D and to provide a copy thereof to each Purchaser promptlyafter such filing.  The Company shalltake such action as the Company shall reasonably determine is necessary toqualify the Securities for sale to the Purchasers pursuant to this Agreementunder applicable securities or “blue sky” laws of the states of the UnitedStates or obtain exemption therefrom, and shall provide evidence of any suchaction so taken to each Purchaser on or prior to the Closing Date.

 

10

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5.3  Reporting Status. So long as any Purchaser beneficially owns any Securities or has theright to acquire any Securities pursuant to this Agreement, the Certificate ofDesignations or the Warrants, the Company shall timely file all reportsrequired to be filed with the SEC pursuant to the Exchange Act, and shall notterminate its status as an issuer required to file reports under the ExchangeAct even if the Exchange Act or the rules and regulations thereunder wouldpermit such termination, provided, however, that the obligations of the Companyin this Section 5.3 shall terminate on the date on which (i) all rights toacquire Securities pursuant to this Agreement, the Certificate of Designationsor the Warrants have been exercised in full or have expired, and (ii) allSecurities beneficially owned by all Purchasers and their permitted assigns maybe immediately sold to the public in a single transaction pursuant to Rule144(k) under the Securities Act or otherwise without registration orrestriction.

 

5.4  Expenses.  The Company and the Purchasers will eachbear their respective legal and other fees and expenses in connection with thetransactions contemplated in this Agreement; provided, however, the Companyshall pay the reasonable fees and expenses of a single counsel to the Purchasers,not to exceed $50,000.

 

5.5  Reservation of Shares. The Company has and shall at all times have authorized and reserved forthe purpose of issuance a sufficient number of shares of Common Stock andSeries B Preferred Stock to provide for the issuance of the Shares as providedin Section 2 hereof, the issuance of the Conversion Shares upon conversion ofthe Series B Preferred Stock pursuant to the Certificate of Designations, andthe full exercise of the Warrants and the issuance of the Warrant Shares inconnection therewith and as otherwise required hereby and by the Warrants.  The Company shall not reduce the number ofshares of Common Stock and Series B Preferred Stock reserved for issuance underthis Agreement (except as a result of the issuance of the Shares hereunder),the Certificate of Designations (except as a result of the conversion of theSeries B Preferred Stock) or the Warrants (except as a result of the expirationof the Warrants or the issuance of the Warrant Shares upon the exercise of theWarrants), without the consent of the Purchasers.

 

5.6  Listing.  TheCompany will use its commercially reasonable efforts to continue the listingand trading of its Common Stock on Nasdaq and will comply in all respects withthe Company’s reporting, filing and other obligations under the bylaws or rulesof Nasdaq.

 

5.7  Corporate Existence. The Company shall maintain its corporate existence, except in the eventof a merger, consolidation or sale of all or substantially all of the Company’sassets in which the  surviving orsuccessor entity in such transaction (a) assumes the Company’s obligationshereunder and under the Warrants and under the agreements and instrumentsentered into in connection herewith and (b) is a publicly traded Company whosecommon stock is listed and trades on Nasdaq, the New York Stock Exchange(“NYSE”) or the American Stock Exchange (“AMEX”), provided, however, that theobligations in this Section 5.7 shall terminate on the date that each Purchaseror its assignee no longer has any right to acquire Securities pursuant to thisAgreement, upon conversion of the Series B Preferred Stock or upon exercise ofthe Warrants, and all Securities beneficially owned by the Purchasers and theirpermitted assigns may be immediately sold to the public in a single transactionpursuant to Rule 144(k) under the Securities Act or otherwise withoutregistration or restriction.

 

5.8  No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting onits or their behalf, shall, directly or indirectly, make any offers or sales ofany security or solicit any offers to buy any security under circumstances thatwould require registration of the Securities being offered hereby under theSecurities Act or cause this offering of Securities to be integrated with anyprior

 

11

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or future offering of securities of theCompany for purposes of the Securities Act or any applicable stockholderapproval provisions.

 

5.9                                 Anti-DilutionProtection. Notwithstanding anything contained in theCertificate of Designations, for a period of time beginning on the date ofissuance of the Series B Preferred Stock and ending on the date thestockholders of the Company ratify the issuance of the Series B Preferred Stock(which ratification will be submitted to stockholders for approval at the nextannual meeting of stockholders of the Company), the anti-dilution protectionprovided under Section B(4)(e)(iv) of the Certificate of Designations in theform of an automatic reduction of the Series B Preferred “Conversion Price” inthe event the Company issues “Additional Shares of Common Stock” for aconsideration per share less than the “Conversion Price” then in effect shallhave no force and effect.  The Companyshall use its best efforts to obtain such ratification at a meeting ofstockholders of the Company on or before July 31, 2003.

 

5.10                           No FurtherIssuances.  The Companywill not, without the prior written consent of the Purchasers holding amajority of the then outstanding Series B Preferred Stock issued pursuant tothis Agreement, issue any additional shares of Series B Preferred Stock.

 

6.               CONDITIONS TO THE COMPANY’S OBLIGATION TOSELL.

 

The obligation of the Companyhereunder to issue and sell Units to a Purchaser at the Closing is subject tothe satisfaction, at or before the Closing Date, of each of the followingconditions; provided, however, that these conditions are for the Company’s solebenefit and may be waived by the Company at any time in its sole discretion.

 

6.1  Execution of Agreements. The applicable Purchaser shallhave executed the signature page to this Agreement and the Investor RightsAgreement, and delivered the same to the Company.

 

6.2  Payment of Investment Amount. The applicable Purchaser shall have delivered to the Company suchPurchaser’s Investment Amount in accordance with Section 2 above.

 

6.3  Representations and Warranties True.  The representations and warranties of theapplicable Purchaser shall be true and correct as of the date when made and asof the Closing Date as though made at that time, and the applicable Purchasershall have performed, satisfied and complied in all material respects with thecovenants, agreements and conditions required by this Agreement to be performed,satisfied or complied with by the applicable Purchaser at or prior to theClosing Date.

 

6.4  No Prohibitions. No statute, rule, regulation, executive order, decree, ruling orinjunction shall have been enacted, entered, promulgated or endorsed by anycourt or governmental authority of competent jurisdiction or anyself-regulatory organization having authority over the matters contemplatedhereby which prohibits the consummation of any of the transactions contemplatedby this Agreement.

 

6.5  Certificate of Designations.  The Certificate of Designations shall have been filed with theDelaware Secretary of State.

 

7.               CONDITIONS TO EACH PURCHASER’S OBLIGATION TOPURCHASE SHARES AND WARRANTS.

 

The obligation of eachPurchaser hereunder to purchase Units to be purchased by it hereunder issubject to the satisfaction, at or before the Closing Date, of each of thefollowing conditions, provided that

 

12

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these conditions are for such Purchaser’s solebenefit and may be waived by such Purchaser at any time in such Purchaser’ssole discretion:

 

7.1  Execution of Agreements. The Company shall have executed the signature pages to this Agreementand the Investor Rights Agreement, and delivered the same to the Purchaser.

 

7.2  Delivery of Shares and Warrants.  The Company shall have delivered to the Purchaser duly executedcertificates representing the number of Shares and duly executed Warrants beingpurchased by such Purchaser, including the Shares issuable under Section 2.3.

 

7.3 Representations andWarranties True.  Therepresentations and warranties of the Company shall be true and correct as ofthe date when made and as of the Closing Date as though made at that time andthe Company shall have performed, satisfied and complied in all materialrespects with the covenants, agreements and conditions required by thisAgreement to be performed, satisfied or complied with by the Company at orprior to the Closing Date.  The Purchasershall have received a certificate, executed on behalf of the Company by itsChief Financial Officer, dated as of the Closing Date, to the foregoing effectand attaching true and correct copies of the resolutions adopted by theCompany’s Board of Directors authorizing the execution, delivery andperformance by the Company of its obligations under this Agreement, theWarrants and the Investor Rights Agreement.

 

7.4  No Prohibitions. No statute, rule, regulation, executive order, decree, ruling,injunction, action, proceeding or interpretation shall have been enacted,entered, promulgated, endorsed or adopted by any court or governmentalauthority of competent jurisdiction or any self-regulatory organization, or thestaff of any thereof, having authority over the matters contemplated hereby whichquestions the validity of, or challenges or prohibits the consummation of, anyof the transactions contemplated by this Agreement.

 

7.5  Opinion Letter. The Purchaser shall have received a signed opinion letter of GardnerCarton & Douglas LLC, the Company’s counsel with respect to thetransactions under this Agreement, dated as of the Closing Date, covering thematters set forth in Exhibit F to this Agreement and in form and substancesatisfactory to the Purchasers.

 

7.6  No Material Adverse Effect.  From the date of this Agreement through the Closing Date, thereshall not have occurred any Material Adverse Effect.

 

7.7  Minimum Investment Amount.  Purchasers will be purchasing Units with a minimum aggregateInvestment Amount of $1,250,000 (excluding for these purposes the cancellationof Senior Subordinated Debt).

 

7.8  Certificate of Designations.  The Certificate of Designations shall have been filed with theDelaware Secretary of State.

 

7.9  Nasdaq Listing. The Company shall have filed Notification Form: Listing of AdditionalShares for listing the Conversion Shares and the Warrant Shares for quotationon Nasdaq and trading in the Common Stock (or on Nasdaq generally) shall nothave been suspended.

 

8.               GOVERNING LAW; MISCELLANEOUS.

 

8.1  Governing Law; Jurisdiction.  This Agreement shall be governed by and construed in accordancewith the laws of the State of California applicable to contracts made and to beperformed in

 

13

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the State of California.  Each party hereto irrevocably consents tothe non-exclusive jurisdiction of the United States federal courts and thestate courts located in San Francisco, California in any suit or proceedingbased on or arising under this Agreement. Each party hereto irrevocably waives the defense of an inconvenientforum to the maintenance of such suit or proceeding in such courts.  Each party hereto further agrees thatservice of process upon the Company mailed by first class mail to the addressset forth in Section 8.6 shall be deemed in every respect effective service ofprocess upon the Company in any such suit or proceeding.  Nothing herein shall affect the right of anyPurchaser to serve process in any other manner permitted by law. Each partyhereto agrees that a final non-appealable judgment in any such suit orproceeding shall be conclusive and may be enforced in other jurisdictions bysuit on such judgment or in any other lawful manner.

 

8.2  Counterparts.  ThisAgreement may be executed in two or more counterparts, all of which shall beconsidered one and the same agreement and shall become effective whencounterparts have been signed by each party and delivered to the otherparty.  This Agreement, once executed bya party, may be delivered to the other parties hereto by facsimile transmissionof a copy of this Agreement bearing the signature of the party so deliveringthis Agreement. In the event any signature is delivered by facsimiletransmission, the party using such means of delivery shall cause the manuallyexecuted signature pages hereof to be physically delivered to the other partywithin five (5) days of the execution hereof.

 

8.3  Headings.  Theheadings of this Agreement are for convenience of reference and shall not formpart of, or affect the interpretation of, this Agreement.

 

8.4  Severability.  Ifany provision of this Agreement shall be invalid or unenforceable in anyjurisdiction, such invalidity or unenforceability shall not affect the validityor enforceability of the remainder of this Agreement or the validity orenforceability of this Agreement in any other jurisdiction.

 

8.5  Entire Agreement; Amendments; Waiver.  This Agreement and the instrumentsreferenced herein contain the entire understanding of the parties with respectto the matters covered herein and therein and, except as specifically set forthherein or therein, neither the Company nor the Purchasers make anyrepresentation, warranty, covenant or undertaking with respect to suchmatters.  No provision of this Agreementmay be waived or amended other than by an instrument in writing signed by theCompany and by the Purchasers as provided in Section 8.12 hereof.  Any waiver by the Purchasers, on the onehand, or the Company, on the other hand, of a breach of any provision of thisAgreement shall not operate as or be construed to be a waiver of any otherbreach of such provision of or any breach of any other provision of thisAgreement.  The failure of thePurchasers, on the one hand, or the Company, on the other hand to insist uponstrict adherence to any term of this Agreement on one or more occasions shallnot be considered a waiver or deprive that party of the right thereafter toinsist upon strict adherence to that term or any other term of this Agreement.

 

8.6  Notices.  Anynotices required or permitted to be given under the terms of this Agreementshall be sent by certified or registered mail (return receipt requested) ordelivered personally or by courier or by confirmed facsimile, and shall beeffective five (5) days after being placed in the mail, if mailed, one (1)business day after being deposited with a nationally recognized overnightdelivery service, or immediately if delivered personally, by same-day courieror by confirmed facsimile in each case addressed to a party in accordance withthis Section 8.6.  The addresses forsuch communications shall be:

 

If to the Company:

 

Centiv,Inc.

998Forest Edge Drive

 

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VernonHills, IL 60061

TelephoneNo.:  847-876-8300

FacsimileNo.:  847-955-1269

Attention:  President

 

With a copy to:

 

GardnerCarton & Douglas LLC

191North Wacker Drive, Suite 3700

Chicago,IL  60610

TelephoneNo.:  312-569-1142

FacsimileNo.:  312-569-3142

Attention:  Stephen A. Tsoris

 

If to the Purchaser, to the address of suchPurchaser set forth on Exhibit A to this Agreement, with a copy to:

 

RichardFriedman, Esq.

9705Eagle Rising Cove

Austin,TX 78730

TelephoneNo.:   (512) 338-0145

TelecopyNo.:    (512) 338-9131

 

Each party shall providenotice to the other parties of any change in address.

 

8.7  Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of theparties and their successors and permitted assigns.  The Purchasers may assign their rights under this Agreement, inwhole or in part, in connection with a transfer of the Securities to which suchrights relate.  The Company shall notassign this Agreement or any rights or obligations hereunder without the priorwritten consent of the  Purchasers,except in connection with a merger, consolidation or sale of all orsubstantially all of the Company’s assets in which the surviving or successorentity in such transaction (a) assumes the Company’s obligations hereunder andunder the Warrants and under the agreements and instruments entered into inconnection herewith and (b) is a publicly traded Company whose common stock islisted and trades on Nasdaq, NYSE or AMEX.

 

8.8.  Survival.  The agreements and covenants set forth in Section 5 shall survivethe closing.  The representations andwarranties of the Purchasers set forth in Section 3 and of the Company setforth in Section 4 shall survive the Closing Date, notwithstanding any duediligence investigation conducted by or on behalf of the Company or thePurchasers, respectively.  Moreover,none of the representations and warranties made by the Company herein shall actas a waiver of any rights or remedies a Purchaser may have under applicablefederal or state securities laws.

 

8.9.  Publicity.  The Company and Talkot Capital as the representative of thePurchasers shall have the right to review and comment upon the issuance of anypress releases, any SEC filing, or any other public filings or statements withrespect to the transactions contemplated hereby.  Each Purchaser shall be provided documents to review at least twobusiness days prior to the filing or other issuance thereof except that draftpress releases shall be provided to each Purchaser at least one business dayprior to issuance. Within five business days after the Closing Date, theCompany shall file a Current Report on Form 8-K or other appropriate form withthe SEC disclosing the transactions contemplated hereby.

 

15

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8.10  Joint Participation in Drafting.  Each party to this Agreement hasparticipated in the negotiation and drafting of this Agreement, the InvestorRights Agreement and the Warrants. As such, the language used herein andtherein shall be deemed to be the language chosen by the parties hereto toexpress their mutual intent, and no rule of strict construction will be appliedagainst any party to this Agreement, the Investor Rights Agreement or theWarrants.

 

8.11  Equitable Relief.  The Company acknowledges that a breach by itof its obligations hereunder will cause irreparable harm to a Purchaser byvitiating the intent and purpose of the transactions contemplated hereby.  Accordingly, the Company acknowledges thatthe remedy at law for a breach of its obligations hereunder will be inadequateand agrees, in the event of a breach or threatened breach by the Company of theprovisions of this Agreement, that a Purchaser shall be entitled, in additionto all other available remedies, to an injunction restraining any breach andrequiring immediate issuance and transfer, without the necessity of showingeconomic loss and without any bond or other security being required.

 

8.12  Determinations.  Except as otherwise expressly providedherein, all amendments, consents, approvals and other determinations to be madeby the Purchasers pursuant to this Agreement and all waivers to or of anyprovisions in this Agreement prior to the Closing Date shall be made byPurchasers that have agreed to invest more than 50% of the aggregate InvestmentAmounts to be invested by all Purchasers and except as otherwise expresslyprovided herein, all amendments, consents, approvals and other determinationsto be made by the Purchasers pursuant to this Agreement and all waivers to orof any provisions in this Agreement after the Closing Date shall be made byPurchasers who beneficially own more than 50% of the Common Stock BeneficiallyOwned by all Purchasers (or their permitted assigns) at the time of suchamendment, consent, approval or other determination.

 

8.13 Conflict Waiver. Each Purchaser hereby acknowledges that Richard Friedman, Esq. isrepresenting the interests of multiple Purchasers in connection with thetransactions contemplated by this Agreement and hereby waives any conflict ofinterest with respect to such representation that may result from particularPurchasers having interests potentially in conflict with other Purchasers withrespect to such transactions.

 

IN WITNESS WHEREOF, thePurchasers and the Company have executed this Agreement as of the date setforth in the first paragraph of this Agreement.

 
|   | COMPANY:     |
|--------|--------------|
|   |         |
|   | CENTIV, INC. |
|   |         |
|   |         |
|   | By:          | /s/ Thomas M. Mason |   |   |
|   | Title:       | Chief Financial Officer |   |
|        |              |  |  |  |  |  |

 

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CENTIV,INC.

SECURITIESPURCHASE AGREEMENT

PURCHASERSIGNATURE PAGE

 
|   |   |   |                        |   |
|--------|--------|--------|-----------------------------|--------|
|   |   |   | (PRINT NAME OF PURCHASER)   |
|   |   |   |                        |
|   |   |   |                        |   |
|   |   |   | (SIGNATURE)                 |
|   |   |   |                        |
|   |   |   |                        |   |
|   |   |   | (PRINTED NAME OF SIGNATORY) |
|   |   |   |                        |
|   |   |   |                        |   |
|   |   |   | (TITLE OF SIGNATORY)        |

 

 

Exhibits and Schedules

 

Exhibit A – Schedule of Purchasers

Exhibit B – Series A Exchange

Exhibit C – Certificate of Designations,Preferences and Rights

Exhibit D – Form of Warrant

Exhibit E – Investor Rights Agreement

Exhibit F – Form of Opinion of Company Counsel

 

Schedule 4 – Disclosure Schedule

 

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**EXHIBIT A**

 

**SCHEDULE OF PURCHASERS**

 
| **Name and  address**                                                                                                                                                                                                                  |   | **Cash  Invested at  Closing** |    | **Senior  Subordinated  Debt Cancelled at  Closing (including  interest)** |   | **Investment  Amount** |   | **Number of  Units  Purchased** |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|----------------------------------------------------------------------------|--------|------------------------|--------|---------------------------------|---------|
| Talkot Crossover Fund  2400 Bridgeway, Suite 300  Sausalito, CA 94965  Telephone No.:  (415) 332-3760  Telecopy No.:  (415) 332-3760  x6019  Attention:  Thomas B. Akin                                                 |   | $                              | 500,000 |                                                                       | $      | 25,000                 |   | $                               | 525,000 |   | 105,000 |   |
|                                                                                                                                                                                                                                   |   |                           |    |                                                                       |   |                   |   |                            |    |   |   |   |
| Thomas B. Akin  2400 Bridgeway, Suite 300  Sausalito, CA 94965  Telephone No.:  (415) 332-3760  Telecopy No.:  (415) 332-3760  x6019                                                                                         |   | $                              | 500,000 |                                                                       | $      | 25,000                 |   | $                               | 525,000 |   | 105,000 |   |
|                                                                                                                                                                                                                                   |   |                           |    |                                                                       |   |                   |   |                            |    |   |   |   |
| EDJ Limited  c/o Deltec Bank & Trust  Deltec House/Lyford Cay  P.O. Box N-3229  Nassau, Bahamas  Telephone No.:  (415) 461-4410  Telecopy No.:  (415) 461-4405  Attention:  Jeffrey H. Porter                       |   | $                              | 100,000 |                                                                       | $      | 0                      |   | $                               | 100,000 |   | 20,000 |   |
|                                                                                                                                                                                                                                   |   |                           |    |                                                                       |   |                   |   |                            |    |   |   |   |
| Ben Joseph Partners  300 Drakes Landing Road, Suite 175  Greenbrae, CA 94904-3124  Telephone No.:  (415) 461-4410  Telecopy No.:  (415) 461-4405  Attention:  Jeffrey H. Porter                                         |   | $                              | 50,000  |                                                                       | $      | 0                      |   | $                               | 50,000  |   | 10,000 |   |
|                                                                                                                                                                                                                                   |   |                           |    |                                                                       |   |                   |   |                            |    |   |   |   |
| Pennell Venture Partners

Marathon  Fund II, LP

Pennell Venture Partners  10 Jones Street, 6th Floor  New York, NY 10014  Telephone No.:  (212) 206-1295  Telecopy No.:  (646) 365-3195  Attention:  Thomas B. Pennell |   | $                              | 200,000 |                                                                       | $      | 0                      |   | $                               | 200,000 |   | 40,000 |   |

 

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| **Name and  address**                                                                                                                      |   | **Cash  Invested at  Closing** |          | **Senior  Subordinated  Debt Cancelled at  Closing (including  interest)** |   | **Investment  Amount** |       | **Number of  Units  Purchased** |          |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------------|----------------------------------------------------------------------------|--------|------------------------|------------|---------------------------------|---------------|
| John Larkin  Centiv, Inc.  998 Forest Edge Drive  Vernon Hills, **IL**  60061  Telephone:  847-876-8302  Fax:  847-955-1269 |   | $                              | 100,000       |                                                                       | $      | 0                      |       | $                               | 100,000       |   | 20,000 |   |
|                                                                                                                                       |   |                           |          |                                                                       |   |                   |       |                            |          |   |   |   |
| Jim Corfman  Minotaur Fund, L.P.  131 Olive Hill Lane  Woodside, CA  94062                                                            |   | $                              | 500,000       |                                                                       | $      | 300,000                |       | $                               | 800,000       |   | 160,000 |   |
|                                                                                                                                       |   |                           |          |                                                                       |   |                   |       |                            |          |   |   |   |
| Jeff Porter  Porter Partners, L.P.  300 Drakes Landing Road  Suite 175  Greenbrae, CA  94904-3124                                     |   | $                              | 50,000        |                                                                       | $      | 150,000                |       | $                               | 200,000       |   | 40,000 |   |
|                                                                                                                                       |   |                           |          |                                                                       |   |                   |       |                            |          |   |   |   |
| **TOTAL**                                                                                                                                  |   | **$**                          | **2,000,000** | ** **                                                                 | **$**  | **500,000**            | ** ** | **$**                           | **2,500,000** | ** ** | **500,000** | ** ** |

 

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EXHIBITB

 

SERIESA EXCHANGE

 
| **Name of  Purchaser**                                                                                                   |   | **Shares of  Series A Convertible Preferred  Stock to be surrendered** |       | **Shares of  Series B Preferred Stock to  be issued in exchange** |       |
|--------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|------------|-------------------------------------------------------------------|------------|
| Talkot Crossover Fund  2400 Bridgeway, Suite 200  Sausalito, CA 94965                                                    |   | 50,000                                                                 |       | 100,000                                                           |       |
|                                                                                                                     |   |                                                                   |       |                                                              |       |
| Thomas B. Akin  2400 Bridgeway, Suite 200  Sausalito, CA 94965                                                           |   | 50,000                                                                 |       | 100,000                                                           |       |
|                                                                                                                     |   |                                                                   |       |                                                              |       |
| Pennell Venture Partners  Marathon Fund II, LP  Pennell Venture Partners  10 Jones Street, 6th Floor  New York, NY 10014 |   | 20,000                                                                 |       | 40,000                                                            |       |
|                                                                                                                     |   |                                                                   |       |                                                              |       |
| EDJ Limited  c/o Deltec Bank & Trust  Deltec House/Lyford Cay  P.O. Box N-3229  Nassau, Bahamas                      |   | 10,000                                                                 |       | 20,000                                                            |       |
|                                                                                                                     |   |                                                                   |       |                                                              |       |
| Ben Joseph Partners  300 Drakes Landing Road,  Suite 175  Greenbrae, CA 94904-3124                                       |   | 5,000                                                                  |       | 10,000                                                            |       |
|                                                                                                                     |   |                                                                   |       |                                                              |       |
| **TOTAL**                                                                                                                |   | **135,000**                                                            | ** ** | **270,000**                                                       | ** ** |

 

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EXHIBITC

 

CERTIFICATEOF DESIGNATIONS

 

See Exhibit 3.3

 

21

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EXHIBITD

 

FORMOF WARRANT

 

See Exhibit 4.5

 

22

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EXHIBITE

 

AMENDEDAND RESTATED INVESTOR RIGHTS AGREEMENT

 

See Exhibit 4.5

 

23

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EXHIBITF

 

COMPANYCOUNSEL OPINION MATTERS

 

These opinions will be delivered subject to Gardner Carton & DouglasLLC’s standard exceptions, conditions and caveats in similar opinions,including, without limitation, knowledge qualifiers where appropriate and astatement that the opinions are limited to the laws of the States of Illinoisand Delaware and the federal laws of the United States.

 

### (1)                                  The Company is a corporationduly incorporated, validly existing and in good standing under the laws of thestate of Delaware and has the corporate power to own and hold its propertiesand to carry on its business as currently conducted.  The Company is duly qualified to do business in Illinois and isin good standing in that state.

 

(2)                                  The Company hasthe corporate power to execute, deliver and perform its obligations under theAgreement, the Investor Rights Agreement and the Warrants (collectively, the“Transaction Documents”).

 

(3)                                  Each of theTransaction Documents and the Certificate of Designations has been dulyauthorized by all requisite corporate action on the part of the Company.  Each of the Transaction Documents has beenduly executed and delivered on behalf of the Company and constitutes the legal,valid and binding obligation of the Company, enforceable in accordance with itsterms.

 

(4)                                  The authorizedcapital stock of the Company consists of Forty Million (40,000,000) shares,consisting of Thirty Five Million (35,000,000) shares of Class A Common Stock,per value $0.001 per share and Five Million (5,000,000) shares of PreferredStock, par value $0.001 per share, 1,000,000 of which have been designated SeriesA Convertible Preferred Stock and have the rights, preferences and privilegesset forth in the Series A Convertible Preferred Stock Certificate ofDesignations and 1,000,000 of which have been designated Series B ConvertiblePreferred Stock and have the rights preferences and privileges set forth in theSeries B Convertible Preferred Stock Certificate of Designations.  To our knowledge, Section 4.3 of theDisclosure Statement does not omit any outstanding capital stock of the Companyor its subsidiaries or any outstanding options, warrants, scrip, rights tosubscribe to, calls or commitments of any character whatsoever relating to, orsecurities or rights convertible into or exercisable or exchangeable for, anyshares of capital stock of the Company or any of its subsidiaries, orarrangements by which the Company or any of its subsidiaries is or may becomebound to issue additional shares of capital stock.

 

(5)                                  The Shares andWarrants to be issued under the Securities Purchase Agreement have been duly authorizedand, when issued and paid for in accordance with the provisions of theSecurities Purchase Agreement, will be validly issued, and the Shares will befully paid and nonassessable.  Anyshares of Common Stock issuable under the Warrants when issued in accordancewith the terms of the Warrants will be validly issued, fully paid andnon-assesssable.  Any shares of CommonStock issuable upon conversion of the Series B Preferred Stock when issued inaccordance with the terms of the Certificate of Designations will be validlyissued, fully paid and non-assesssable.

 

(6)                                  The executionand delivery by the Company of each of the Transaction Documents and theperformance by the Company of its obligations thereunder will not (a) result inany breach or violation of the terms or provisions of the Company’s Certificateof Incorporation (including the Series A Convertible Preferred StockCertificate of Desingations) or Bylaws, (b) conflict with or contravene any lawor regulation of any state or U.S. federal governmental authority applicable tothe Company or its assets and property, (c) conflict with or contravene anywrit, judgment or decree applicable to the

 

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Companyor its assets and properties of which we have knowledge, or (d) conflict with,or constitute a default (or an event which, with notice or lapse of time orboth, would become a default) under, or give to others any rights oftermination, amendment, acceleration or cancellation of any agreement, indentureor instrument to which the Company or any of its subsidiaries is a party thatis filed as an exhibit to, or incorporated by reference in, any of the SECDocuments.

 

(7)                                  To ourknowledge, there is no action, suit, investigation or proceeding pending orovertly threatened in writing against the Company by or before any court,arbitrator or governmental body, department, commission, board, bureau, agency,or instrumentality which questions the validity of any of the TransactionDocuments, the Shares, or the performance by the Company if its obligationsunder any of the Transaction Documents.

 

### (8)                                  No consent, approval,authorization, or order of, and no notice to or filing with, any state or U.S.federal governmental agency or body (other than any securities law filings), orany court or any Delaware governmental agency with respect to the DelawareGeneral Corporation Law, is required to be obtained or made by the Company forthe execution and delivery by the Company of the Transaction Documents or performanceby the Company of its obligations under any of the Transaction Documents or theCertificate of Designations, except such as have been obtained or made, or arecontemplated by the Securities Purchase Agreement to be made after the Closing.

 

(9)                                  The Series BConvertible Preferred Stock Certificate of Designations has been duly filedwith the Delaware Secretary of State.

 

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