Document:

ex10-1.htm

    Exhibit
10.1

    

     

    

     

    

     

    

     

    SECURITIES
PURCHASE AGREEMENT

     

    between

     

    PROXIM
WIRELESS CORPORATION

     

    and

     

    LLOYD
I. MILLER, III, as a Purchaser

     

    MILFAM
II L.P., as a Purchaser

     

    

     

    Dated
as of July 25, 2008

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

     

    TABLE
OF CONTENTS

     

    

     

    
      	
              ARTICLE
      I PURCHASE AND SALE OF SECURITIES

            	
              - 1
      -

            
	 	 
	
              SECTION
      1.01.

            	
              The
      Notes

            	
              - 1
      -

            
	 	 	 
	
              SECTION
      1.02.

            	
              The
      Warrant

            	
              - 1
      -

            
	 	 	 
	
              SECTION
      1.03.

            	
              Purchase
      and Sale of the Securities

            	
              - 1
      -

            
	 	 	 
	
              SECTION
      1.04.

            	
              Payments
      and Endorsements

            	
              - 2
      -

            
	 	 	 
	
              SECTION
      1.05.

            	
              Interest
      Rate for Note; Payment of Principal for Note

            	
              - 2
      -

            
	 	 	 
	
              SECTION
      1.06.

            	
              Prepayment
      of Notes

            	
              - 3
      -

            
	 	 	 
	
              SECTION
      1.07.

            	
              Payment
      on Non-Business Days

            	
              - 3
      -

            
	 	 	 
	
              SECTION
      1.08.

            	
              Registration
      of Notes

            	
              - 4
      -

            
	 	 	 
	
              SECTION
      1.09.

            	
              Transfer
      and Exchange of Notes

            	
              - 4
      -

            
	 	 	 
	
              SECTION
      1.10.

            	
              Replacement
      of Note

            	
              - 4
      -

            
	 	 	 
	
              SECTION
      1.11.

            	
              Cancellation
      of PIPE Warrants

            	
              - 5
      -

            
	 	 	 
	
              ARTICLE
      II REPRESENTATIONS AND WARRANTIES OF THE COMPANY

            	
              - 5
      -

            
	 	 
	
              SECTION
      2.01.

            	
              Organization,
      Qualifications and Corporate Power

            	
              - 5
      -

            
	 	 	 
	
              SECTION
      2.02.

            	
              Authorization
      of Agreements, Etc.

            	
              - 6
      -

            
	 	 	 
	
              SECTION
      2.03.

            	
              Validity

            	
              - 6
      -

            
	 	 	 
	
              SECTION
      2.04.

            	
              Authorized
      Capital Stock

            	
              - 6
      -

            
	 	 	 
	
              SECTION
      2.05.

            	
              SEC
      Filings, Other Filings and Regulatory Compliance

            	
              - 7
      -

            
	 	 	 
	
              SECTION
      2.06.

            	
              Listing

            	
              - 7
      -

            
	 	 	 
	
              SECTION
      2.07.

            	
              Governmental
      Approvals

            	
              - 7
      -

            
	 	 	 
	
              SECTION
      2.08.

            	
              Offering
      of the Securities

            	
              - 8
      -

            
	 	 	 
	
              SECTION
      2.09.

            	
              No
      Integrated Offering

            	
              - 8
      -

            
	 	 	 
	
              SECTION
      2.10.

            	
              Material
      Changes

            	
              - 8
      -

            
	 	 	 
	
              SECTION
      2.11.

            	
              Litigation

            	
              - 9
      -

            
	 	 	 
	
              SECTION
      2.12.

            	
              Ownership
      of Property; Liens

            	
              - 9
      -

            
	 	 	 
	
              SECTION
      2.13.

            	
              Intellectual
      Property Rights

            	
              - 9
      -

            
	 	 	 
	
              SECTION
      2.14.

            	
              Insurance

            	
              -
      10 -

            
	 	 	 
	
              SECTION
      2.15.

            	
              Compliance
      with Other Instruments

            	
              -
      10 -

            
	 	 	 
	
              SECTION
      2.16.

            	
              Tax
      Returns and Payments

            	
              -
      10 -

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      	
              SECTION
      2.17.

            	
              Environmental
      and Safety Laws

            	
              -
      11 -

            
	 	 	 
	
              SECTION
      2.18.

            	
              ERISA

            	
              -
      11 -

            
	 	 	 
	
              SECTION
      2.19.

            	
              Brokers

            	
              -
      11 -

            
	 	 	 
	
              SECTION
      2.20.

            	
              Labor
      Relations

            	
              -
      11 -

            
	 	 	 
	
              SECTION
      2.21.

            	
              Customers

            	
              -
      11 -

            
	 	 	 
	
              SECTION
      2.22.

            	
              Solvency

            	
              -
      12 -

            
	 	 	 
	
              SECTION
      2.23.

            	
              Representations
      Complete

            	
              -
      12 -

            
	 	 	 
	
              ARTICLE
      III REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

            	
              -
      12 -

            
	 	 
	
              SECTION
      3.01.

            	
              Requisite
      Power and Authority

            	
              -
      12 -

            
	 	 	 
	
              SECTION
      3.02.

            	
              Investment
      Representations

            	
              -
      12 -

            
	 	 	 
	
              SECTION
      3.03.

            	
              Purchaser
      Bears Economic Risk

            	
              -
      13 -

            
	 	 	 
	
              SECTION
      3.04.

            	
              Acquisition
      for Own Account

            	
              -
      13 -

            
	 	 	 
	
              SECTION
      3.05.

            	
              Purchaser
      Can Protect Its Interest

            	
              -
      13 -

            
	 	 	 
	
              SECTION
      3.06.

            	
              Accredited
      Investor

            	
              -
      13 -

            
	 	 	 
	
              SECTION
      3.07.

            	
              Legends

            	
              -
      13 -

            
	 	 	 
	
              ARTICLE
      IV CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS

            	
              -
      14 -

            
	 	 
	
              SECTION
      4.01.

            	
              Agreement

            	
              -
      14 -

            
	 	 	 
	
              SECTION
      4.02.

            	
              Notes

            	
              -
      14 -

            
	 	 	 
	
              SECTION
      4.03.

            	
              Warrants

            	
              -
      15 -

            
	 	 	 
	
              SECTION
      4.04.

            	
              Subordination
      Agreement

            	
              -
      15 -

            
	 	 	 
	
              SECTION
      4.05.

            	
              Comerica
      Consent

            	
              -
      15 -

            
	 	 	 
	
              SECTION
      4.06.

            	
              Legal
      Opinion

            	
              -
      15 -

            
	 	 	 
	
              SECTION
      4.07.

            	
              Representations
      and Warranties to be True and Correct

            	
              -
      15 -

            
	 	 	 
	
              SECTION
      4.08.

            	
              Performance

            	
              -
      15 -

            
	 	 	 
	
              SECTION
      4.09.

            	
              All
      Proceedings to be Satisfactory

            	
              -
      15 -

            
	 	 	 
	
              SECTION
      4.10.

            	
              Supporting
      Documents

            	
              -
      14 -

            
	 	 	 
	
              ARTICLE
      V COVENANTS OF THE COMPANY

            	
              -
      16 -

            
	 	 
	
              SECTION
      5.01.

            	
              Financial
      Statements, Reports, Notices, Etc.

            	
              -
      16 -

            
	 	 	 
	
              SECTION
      5.02.

            	
              Corporate
      Existence; Maintenance of Business

            	
              -
      18 -

            
	 	 	 
	
              SECTION
      5.03.

            	
              Properties,
      Insurance

            	
              -
      18 -

            
	 	 	 
	
              SECTION
      5.04.

            	
              Use
      of Proceeds

            	
              -
      18 -

            
	 	 	 
	
              SECTION
      5.05.

            	
              Compliance
      with Laws

            	
              -
      18 -

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      	
              SECTION
      5.06.

            	
              Keeping
      of Records and Books of Account

            	
              -
      18 -

            
	 	 	 
	
              SECTION
      5.07.

            	
              Dividends
      and Certain Other Restricted Payments

            	
              -
      18 -

            
	 	 	 
	
              SECTION
      5.08.

            	
              Capital
      Expenditures

            	
              -
      18 -

            
	 	 	 
	
              SECTION
      5.09.

            	
              Mergers,
      Consolidations and Asset Sales

            	
              -
      19 -

            
	 	 	 
	
              SECTION
      5.10.

            	
              Acquisitions

            	
              -
      19 -

            
	 	 	 
	
              SECTION
      5.11.

            	
              Prepayment
      of Indebtedness

            	
              -
      19 -

            
	 	 	 
	
              SECTION
      5.12.

            	
              Incurrence
      of Indebtedness

            	
              -
      19 -

            
	 	 	 
	
              SECTION
      5.13.

            	
              Change
      in the Nature of Business

            	
              -
      20 -

            
	 	 	 
	
              SECTION
      5.14.

            	
              Encumbrances

            	
              -
      21 -

            
	 	 	 
	
              SECTION
      5.15.

            	
              Access
      to Facilities

            	
              -
      21 -

            
	 	 	 
	
              SECTION
      5.16.

            	
              Intellectual
      Property Rights

            	
              -
      21 -

            
	 	 	 
	
              SECTION
      5.17.

            	
              Taxes

            	
              -
      22 -

            
	 	 	 
	
              ARTICLE
      VI EVENT OF DEFAULT

            	
              -
      22 -

            
	 	 
	
              ARTICLE
      VII MISCELLANEOUS

            	
              -
      24 -

            
	 	 
	
              SECTION
      7.01.

            	
              Expenses

            	
              -
      24 -

            
	 	 	 
	
              SECTION
      7.02.

            	
              Survival
      of Agreements

            	
              -
      24 -

            
	 	 	 
	
              SECTION
      7.03.

            	
              Indemnification

            	
              -
      24 -

            
	 	 	 
	
              SECTION
      7.04.

            	
              Parties
      in Interest

            	
              -
      24 -

            
	 	 	 
	
              SECTION
      7.05.

            	
              Notices

            	
              -
      24 -

            
	 	 	 
	
              SECTION
      7.06.

            	
              Governing
      Law

            	
              -
      25 -

            
	 	 	 
	
              SECTION
      7.07.

            	
              Entire
      Agreement

            	
              -
      26 -

            
	 	 	 
	
              SECTION
      7.08.

            	
              Counterparts

            	
              -
      26 -

            
	 	 	 
	
              SECTION
      7.09.

            	
              Due
      Diligence

            	
              -
      26 -

            
	 	 	 
	
              SECTION
      7.10.

            	
              Successors
      and Assigns

            	
              -
      26 -

            
	 	 	 
	
              SECTION
      7.11.

            	
              Amendments
      and Waivers; Exercise of Rights

            	
              -
      26 -

            
	 	 	 
	
              SECTION
      7.12.

            	
              Severability

            	
              -
      27 -

            
	 	 	 
	
              SECTION
      7.13.

            	
              Titles
      and Subtitles

            	
              -
      27 -

            
	 	 	 
	
              SECTION
      7.14.

            	
              Jointly
      Drafted

            	
              -
      27 -

            
	 	 	 
	
              SECTION
      7.15.

            	
              Further
      Assurances

            	
              -
      27 -

            
	 	 	 

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    THIS SECURITIES PURCHASE AGREEMENT
(as amended, supplemented or otherwise modified from time to time) (the
“Agreement”) is
dated as of July  25, 2008, by and between Proxim Wireless Corporation
(f/k/a Terabeam, Inc.), a Delaware corporation (the “Company”) and the
purchasers named in the attached Schedule 1
hereto (each individually a “Purchaser” and
collectively the “Purchasers”).

     

    WHEREAS, the Company wishes to
issue and sell to the Purchasers (x) $3,000,000 in the initial aggregate stated
principal amount of its promissory notes (as amended, supplemented, or otherwise
modified from time to time, and together with any note or notes issued in
exchange for or in replacement thereof, individually, a “Note” and,
collectively, the “Notes”) and (y)
warrants to purchase an aggregate amount of 1,250,000 shares of Company common
stock, par value $0.01, at an exercise price of $0.53 (as amended, supplemented,
or otherwise modified from time to time, and together with any warrant or
warrants issued in exchange for or in replacement thereof, individually a “Warrant” and,
collectively, the “Warrants”)
(collectively the Notes and the Warrants referred to herein as the “Securities”);
and

     

    WHEREAS, the Company will use
the funds received in connection with the purchase of the Securities by the
Purchasers for general corporate purposes; and

     

    WHEREAS, subject to the
foregoing recitals, the Purchasers, severally, wish to purchase the Securities
on the terms and subject to the conditions set forth in this
Agreement.

     

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained in this
Agreement, the parties agree as follows:

     

    ARTICLE
I

     

    PURCHASE
AND SALE OF SECURITIES

     

    SECTION
1.01.    The
Notes.  On the terms and subject to the conditions hereof, the
Company has authorized and agreed to issue and sell to the Purchasers, in the
respective initial stated principal amounts set forth in the schedule of
Purchasers attached hereto in Schedule 1 (the
“Schedule of
Purchasers”), the Company’s Promissory Notes, due July 25, 2011 (the
“Maturity
Date”), in the original aggregate stated principal amount of
$3,000,000.  The Notes will be substantially in the form set forth in
Exhibit A
hereto.

     

    SECTION
1.02.    The
Warrant.  On the terms and
subject to the conditions hereof, the Company has authorized and agreed to issue
to the Purchasers pro
rata, according to each Purchaser’s proportion of the aggregate principal
amount of the Notes, warrants for the purchase of an aggregate of 1,250,000
shares of the Company’s common stock at an exercise price of $0.53 with a term
of ten (10) years.  The Warrants will be substantially in the form set
forth as Exhibit
B.

     

    SECTION
1.03.    Purchase
and Sale of the Securities.  Subject to and in reliance upon
the representations, warranties, terms and conditions of this Agreement, the
Purchasers, severally and not jointly, agree to purchase, the Securities set
forth opposite their respective names in the Schedule of Purchasers set forth on
Schedule I for
the aggregate cash purchase price set forth therein.  The closing of
such purchase and sale (the “Closing”) will be
held at the office of

     

    

    
      
        
           

        

        
          - 1
-

          
            

          

        

        
           

        

      

    

    

    Andrews
Kurth LLP, 450 Lexington Ave., New York, NY 10017, on July 25, 2008 (the “Closing Date”) at
10:00 A.M., Eastern Standard Time, or on such other date and at such time as may
be mutually agreed upon.  At the Closing, the Company will issue and
deliver to each Purchaser (x) one Note, payable to the order of such Purchaser,
in the principal amount set forth opposite such Purchaser’s name in the Schedule
of Purchasers set forth on Schedule I and (y) a
warrant, registered in the name of such Purchaser and evidencing the number of
Warrants set opposite such Purchaser’s name in the Schedule of Purchasers set
forth on Schedule
I.  Such deliveries will be made against delivery to the
Company of a wire transfer by each Purchaser to the account of the Company, in
the amount (which reflects the reduction as set forth in the next sentence of
this Section
1.03) set forth opposite the name of such Purchaser in the Schedule of
Purchasers under the heading “Aggregate Net Purchase Price
for Securities.”  The Aggregate Net Purchase Price for
Securities owed by each Purchaser to the Company has been calculated by taking
into account a fee payable by the Company to the Purchasers equal to 1.50% of
the aggregate principal amount of the Notes.  The amount of such fee
is set forth opposite the name of each Purchaser on the Schedule of Purchasers
under the heading “Fee
Amount.”

     

    SECTION
1.04.    Payments
and Endorsements.  Payments of principal and interest on the
Notes will be made directly by check duly mailed or delivered to the Purchasers
at their addresses referred to in the Schedule of Purchasers attached as Schedule I or
made to the account of the Purchaser by wire transfer referred to in the
Schedule of Purchasers attached as Schedule I or at
such other address or account as such Purchaser may subsequently request in any
notice delivered by such Purchaser to the Company. 

     

    SECTION
1.05.    Interest
Rate for Note; Payment of Principal for Note.  The Notes will
accrue interest at the rate of sixteen percent (16%) per
annum.  Interest will be due and payable monthly in arrears on the
last day of each calendar month (each, an “Interest Payment
Date”) and shall be computed on the basis of a 360-day year and paid for
the actual number of days elapsed, with the first interest payment due July 31,
2008.  In lieu of paying in cash the interest accrued to any Interest
Payment Date, and at the Company’s sole discretion, the interest may be paid in
kind at the rate of nineteen percent (19%) per annum, compounding monthly, in
which case the accrued interest will be added to the principal amount of the
Notes on the applicable Interest Payment Date, and interest will accrue on such
aggregate principal amount thereafter.  The principal amount owed to
the Purchasers under the Notes (including capitalized interest) and all accrued
but unpaid interest thereon shall be due and payable in full on the Maturity
Date unless otherwise required to be paid earlier pursuant to the terms and
conditions of this Agreement, including, without limitation, if earlier prepaid
pursuant to the terms and conditions set forth in Section 1.06 herein
or accelerated pursuant to the terms and conditions set forth in Article VI
herein.  In the event any payment under a Note is not timely made when
due, interest will accrue on such late payment at an amount equal to twenty-two
percent (22%) per annum from and including the date such late payment was due to
(but excluding) the date such late payment is paid to the
Purchasers.  All amounts payable under the Notes and hereunder shall
be paid in lawful money of the United States without setoff or withholding of
any kind.

     

    SECTION
1.06.     Prepayment
of Notes.  The Notes will be payable by the Company prior to
the Maturity Date as follows:

     

    

    
      
        
           

        

        
          - 2
-

          
            

          

        

        
           

        

      

    

    

    

     

    (a)           Voluntary Prepayment by the
Company.  At any time until the Notes have been repaid in full,
the Company may, at its sole option, redeem, all or any portion of
the  outstanding principal amount of the Notes (including any
capitalized interest added to the principal amount of the Notes thereto) (such
portion of the outstanding principal amount so prepaid, hereinafter referred to
for purposes of this Section 1.06 as the
“Prepayment
Amount”) by paying to the holders of the Notes 102% of the Prepayment
Amount, with such payments to be apportioned ratably among the Purchasers or
their transferees according to the unpaid principal balance and accrued but
unpaid interest thereon to which such payments relate; provided, however, that the
Company shall provide the Purchasers with not less than five (5) Business Days’
advance notice of any such prepayment.  For purposes of this
Agreement, the term “Business Day” shall
mean any day of the week other than Saturday, Sunday or any other day of the
week on which commercial banks in the State of New York are authorized or
required by law to be closed.

     

    (b)           Mandatory Prepayment on
Change of Control.  At any time until the Notes have been
repaid in full, the Company will redeem the Notes in their entirety upon the
occurrence of a Change of Control by paying to the holders of the Notes 102% of
the entire outstanding principal amount then due and owing under the Notes
(including any capitalized interest added to principal amount of the Notes
thereto) along with any and all accrued but unpaid interest through the date of
repayment on the closing date of the Change of Control.  Such payments
will be apportioned ratably among the Note holders according to the unpaid
principal balance and accrued but unpaid interest thereon to which such payments
relate.  “Change of Control”
means the event of (i) a merger, consolidation, recapitalization or share
exchange in which the holders of the voting stock of the Company immediately
prior to such merger, consolidation, recapitalization or share exchange will not
own 50% or more of the voting stock of the continuing or surviving corporation
or other entity, or the parent company of such corporation or other entity,
immediately after such merger, consolidation, recapitalization or share
exchange, (ii) the sale, assignment, conveyance, transfer, lease or other
disposition (other than the grant of a security interest) of all or
substantially all of the assets of Company to any person or group of related
persons, or (iii) any sale or other disposition of the voting stock of the
Company representing 50% or more of the total voting power of the Company’s
outstanding capital stock in a single transaction or a series of related
transactions to any person, or group of related persons.

     

    SECTION
1.07.    Payment
on Non-Business Days.  Whenever any payment to be made under
any Note or hereunder is due on a day that is not a Business Day, such payment
may be made on the next succeeding Business Day, and such extension of time will
in such case be included in the computation of payment of interest due.

     

    SECTION
1.08.    Registration
of Notes.  The Company will maintain at its principal office a
register of the Notes and will record therein the names and addresses of the
registered holders of the Notes, the address to which notices are to be sent and
the address to which payments are to be made as designated by the registered
holder if other than the address of the holder, and the particulars of all
transfers, exchanges and replacements of Notes.  No transfer of a Note
will be valid unless made on such register for the registered holder or his
executors or administrators or his or their duly appointed attorney, upon
surrender therefor for exchange as hereinafter provided, accompanied by an
instrument in writing, in form and execution reasonably

     

    

    
      
        
           

        

        
          - 3
-

          
            

          

        

        
           

        

      

    

    

    satisfactory
to the Company.  Each Note issued hereunder, whether originally or
upon transfer, exchange or replacement of a Note or Notes, will be registered on
the date of execution thereof by the Company and will be dated the date to which
interest has been paid on such Notes or Note.  The registered holder
of a Note will be that person in whose name the Note has been so registered by
the Company.  A registered holder will be deemed the owner of a Note
for all purposes of this Agreement and, subject to the provisions hereof, will
be entitled to the principal and interest evidenced by such Note free from all
equities or rights of setoff or counterclaim between the Company and the
transferor of such registered holder or any previous registered holder of such
Note.

     

    SECTION
1.09.    Transfer
and Exchange of Notes.  The registered holder of any Note may,
prior to maturity or prepayment thereof and in accordance with the terms of the
Note, surrender such Note or Notes at the principal office of the Company for
transfer or exchange; provided, however, the
registered holder of any Note or Notes will not transfer any such Note without
providing notice to the  Company.  Within a reasonable time
after notice to the Company from a registered holder of its intention to make
such exchange and without expense (other than transfer taxes, if any) to such
registered holder, the Company will issue in exchange therefor another Note or
Notes, in such denominations as requested by the registered holder, for the same
aggregate principal amount as the unpaid principal amount of the Note or Notes
so surrendered and having the same maturity and rate of interest, containing the
same provisions and subject to the same terms and conditions as the Note or
Notes so surrendered.  Each new Note will be made payable to such
person or persons, or registered assigns, as the registered holder of such
surrendered Note or Notes may designate, and such transfer or exchange will be
made in such a manner that no gain or loss of principal or interest will result
therefrom.

     

    SECTION
1.10.    Replacement
of Note.  Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of any Note and, if
requested in the case of any such loss, theft or destruction, upon delivery of
an indemnity bond or other agreement or security reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender and cancellation
of such Note, the Company will issue a new Note, of like tenor and amount and
dated the date to which interest has been paid, in lieu of such lost, stolen,
destroyed or mutilated Note; provided, however, if any Note
of which a Purchaser whose name is set forth in the Schedule of Purchasers
attached as Schedule 1, its
nominee, or any of its partners is the registered holder is lost, stolen or
destroyed, the affidavit of the President, Treasurer or any Assistant Treasurer
or any other authorized representative of the registered holder setting forth
the circumstances with respect to such loss, theft or destruction will be
accepted as satisfactory evidence thereof, and no indemnification bond or other
security will be required as a condition to the execution and delivery by the
Company of a new Note in replacement of such lost, stolen or destroyed Note
other than the registered holder’s written agreement to indemnify the
Company.

     

    SECTION
1.11.    Cancellation
of PIPE Warrants. The Company and
Purchasers hereto agree that automatically upon the Closing Date, those certain
warrants issued by the Company to Lloyd I. Miller, III and Milfam II L.P.
respectively, to each acquire 462,500 shares of Company common stock at an
initial exercise price of $2.45 pursuant to that certain Purchase Agreement
dated as of July 19, 2007, by and among the Company and certain accredited
investors thereto, including the Purchasers hereto, shall be deemed cancelled
and shall be of no

     

    

    
      
        
           

        

        
          - 4
-

          
            

          

        

        
           

        

      

    

    

    further
force and effect.  Without limiting the cancellation of the warrants
as described in the preceding sentence without the need for any other
documentation or actions, the Purchasers agree to return the original of those
warrants to the Company within five (5) business days after the Closing
Date.

     

    ARTICLE
II

     

    REPRESENTATIONS
AND WARRANTIES OF THE COMPANY

     

    The
Company hereby represents and warrants to the Purchasers as follows (which
representations and warranties are supplemented by the Company’s filings (the
“Exchange Act
Filings”) under the Securities Exchange Act of 1934 (the “Exchange Act”),
copies of which have been provided or made available to the
Purchasers):

     

    SECTION
2.01.    Organization,
Qualifications and Corporate Power.  

     

    (a)           The
Company is a corporation, duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization. The Company has the
corporate power and authority to own and operate its properties and assets, and
to execute and deliver (i) this Agreement, (ii) the Securities to be issued in
connection with this Agreement and (iii) all other agreements related to this
Agreement and the Securities and referred to herein, and to issue and sell the
Securities and to carry out the provisions of this Agreement and the
aforementioned related agreements and to carry on its business as presently
conducted.  The Company is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in all jurisdictions
in which the nature of its activities and of its properties (both owned and
leased) makes such qualification necessary, except where the failure to do so
would not reasonably be expected to cause a Material Adverse
Effect.

     

    (b)           The
Company has no active Subsidiaries with assets of any kind, other than as set
forth on Schedule 2.01(b).  The
Company does not (i) own of record or beneficially, directly or indirectly,
(A) any shares of capital stock or securities convertible into capital
stock of any other active corporation or (B) any participating interest in
any partnership, joint venture or other non-corporate business enterprise or
(ii) control, directly or indirectly, any other entity, other than as set
forth on Schedule 2.01(b).

     

    Each
material direct and indirect Subsidiary of the Company, the direct owner of such
Subsidiary and its percentage ownership thereof, is set forth on Schedule
2.01(b).  For the purpose of this Agreement, a “Subsidiary” of any
person or entity means (i) a corporation or other entity whose shares of stock
or other ownership interests having ordinary voting power (other than stock or
other ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the directors of such corporation, or other
persons or entities performing similar functions for such person or entity, are
owned, directly or indirectly, by such person or entity or (ii) a corporation or
other entity in which such person or entity owns, directly or indirectly, more
than 50% of the equity interests at such time.

     

    SECTION
2.02.     Authorization
of Agreements, Etc.  

     

    (a)           The
execution and delivery by the Company of this Agreement and the other Loan
Documents, and the performance by the Company of its obligations hereunder
and

     

    

    
      
        
           

        

        
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    thereunder,
the issuance, sale and delivery of the Securities have been duly authorized by
all requisite corporate action and will not (i) violate any provision of
law, any order of any court or other agency of government, (ii) violate the
Certificate of Incorporation or the By-laws of the Company or any Subsidiary,
each as amended, (iii) violate any provision of any indenture, agreement or
other instrument to which the Company, any Subsidiary or any of its properties
or assets is bound, or (iv) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument.

     

    (b)           The
Securities have been duly authorized and, when issued in accordance with this
Agreement, will be free and clear of all liens, charges, restrictions, claims
and encumbrances imposed by or through the Company.  The issuance,
sale and delivery of the Securities are not subject to any preemptive right of
shareholders of the Company or any Subsidiary or to any right of first refusal
or other right in favor of any person other than the Purchasers.  When
the Warrants are exercised in accordance with the terms therein, the underlying
common shares issued thereunder will be duly authorized, validly issued, fully
paid and non-assesable.

     

    SECTION
2.03.    Validity.  Each
of this Agreement and the other Loan Documents have been duly executed and
delivered by the Company and constitute the legal, valid and binding obligations
of the Company enforceable in accordance with their terms, except

     

    (a)           as
may be limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors’ rights; and (b) general principles of equity that restrict the
availability of equitable and legal remedies.

     

    SECTION
2.04.    Authorized
Capital Stock.  The authorized capital stock of the Company
consists of 100,000,000 shares of common stock, $0.01 par value per share and
4,500,000 shares of preferred stock, $0.01 par value per share. As of the date of this
Agreement 23,519,069 shares of common stock and zero shares of preferred stock
were validly issued and outstanding, fully paid and
non-assessable.  Except as disclosed in SEC Reports (as defined
below), there are no outstanding options, warrants and convertible securities of
the Company, and any other rights to acquire securities of the
Company.  All outstanding securities of the Company are validly
issued, fully paid and non-assessable.   

     

    SECTION
2.05.    SEC
Filings, Other Filings and Regulatory Compliance.  The Company
has filed all proxy statements, reports and other documents required to be filed
by it under the Exchange Act.  The Company has delivered or made
accessible to the Purchasers true, complete and accurate copies
of:  (a) the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2007, (b) the Company’s Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 2008, (c) the Company’s
definitive proxy statement dated April 11, 2008 relating to its 2008 Annual
Meeting of Stockholders, and (d) all the Company’s Current Reports on Form
8-K filed since December 31, 2007 (collectively, the “SEC
Reports”).  Each SEC Report was, at the time of its filing, in
substantial compliance with the requirements of its respective form and none of
the SEC Reports, nor the financial statements (and the notes thereto) included
in the SEC Reports, as of their respective filing dates, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  The SEC
Reports when filed, complied in all material respects with all
applicable

     

    

    
      
        
           

        

        
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    requirements
of the Exchange Act and the Sarbanes-Oxley Act of 2002, if and to the extent
applicable, and the rules and regulations of the Securities and Exchange
Commission thereunder applicable to the SEC Reports.  Each balance
sheet included in the SEC Reports (including any related notes and schedules)
fairly presents in all material respects the consolidated financial position of
the Company as of its date, and each of the other financial statements included
in the SEC Reports (including any related notes and schedules) fairly presents
in all material respect the consolidated results of operations of the Company
for the periods or as of the dates therein set forth in accordance with
generally accepted accounting principles (“GAAP”).  Such
financial statements included in the SEC Reports were, at the time they were
filed, consistent with the books and records of the Company and its Subsidiaries
in all material respects and complied as to form in all material respects with
then applicable accounting requirements and with the rules and regulations of
the SEC with respect thereto.  The Company keeps accounting records in
which all material assets and liabilities, and all material transactions,
including off-balance sheet transactions, of the Company are recorded in
accordance with GAAP.

     

    SECTION
2.06.    Listing.  The
Company’s common stock is listed for trading on the NASDAQ Capital Market and,
except as disclosed in the SEC Reports, satisfies all requirements for the
continuation of such listing.  Except as disclosed in SEC Reports, the
Company has not received any currently effective notice that its common stock
will be delisted from NASDAQ Capital Market or that its common stock does not
meet all requirements for listing.

     

    SECTION
2.07.    Governmental
Approvals.  Subject to the accuracy of the representations and
warranties of the Purchasers set forth herein, no registration or filing with,
or consent or approval of or other action by, any federal, state or other
governmental agency or instrumentality, including, without limitation, the SEC
or NASDAQ, is or will be necessary for the valid execution, delivery and
performance by the Company of this Agreement, the issuance, sale and delivery of
the Securities, other than filing a Form D with the SEC and filings pursuant to
state securities laws (all of which filings have been made by the Company, other
than those which are required or permitted to be made after the Closing and
which will be duly made on a timely basis) in connection with the sale of the
Securities.

     

    SECTION
2.08.    Offering
of the Securities.  Assuming the accuracy of the
representations and warranties of the Purchasers contained in this Agreement,
the offer, sale and issuance of the Securities will be exempt from the
registration requirements of the Securities Act, and will have been registered
or qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable federal and
state securities laws.

     

    SECTION
2.09.    No
Integrated Offering.  The Company, nor
any Subsidiary, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offering of the
Securities pursuant to this Agreement or any related agreements to be integrated
with prior offerings by the Company for purposes of the Securities Act which
would prevent the Company from selling the Securities pursuant to Rule 506 under
the Securities Act, or any applicable exchange-related stockholder approval
provisions, nor will the Company nor any Subsidiary take any action or steps
that would cause the offering of the Securities to be integrated with other
offerings.

     

    

    
      
        
           

        

        
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    SECTION
2.10.    Material
Changes.  Except as set forth in Schedule 2.10,
since December 31, 2007, there has not been (i) any change in the business,
assets, liabilities, condition (financial or otherwise), properties, operations
or prospects of the Company or any Subsidiaries, which individually or in the
aggregate has had, or could reasonably be expected to have a material adverse
effect on the business, assets, liabilities, condition (financial or otherwise),
properties, operations or prospects of the Company or any Subsidiary, taken as a
whole (a “Material
Adverse Effect”); (ii) any resignation or termination of any officer, key
employee or group of employees of the Company or any Subsidiary; (iii) any
material change, except in the ordinary course of business, in the contingent
obligations of the Company by way of guaranty, endorsement, indemnity, warranty
or otherwise; (iv) any damage, destruction or loss, whether or not covered by
insurance, which has had, or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect; (v) any waiver by the Company or
any Subsidiary of a valuable right or of a material debt owed to it; (vi) any
direct or indirect loans made by the Company to any stockholder, employee,
officer or director of the Company, other than advances made in the ordinary
course of business; (vii) any material change in any compensation arrangement or
agreement with any employee, officer, or director of the Company; (viii) any
declaration or payment of any dividend or other distribution of the assets of
the Company; (ix) any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business; (x) any sale,
assignment or transfer of any patents, trademarks, copyrights, trade secrets or
other intangible assets owned by the Company or any Subsidiary; (xi) any change
in any material agreement to which the Company or any Subsidiary is a party or
by which it is bound which either individually or in the aggregate has had, or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; or (xii) any other event or condition of any character
that, either individually or in the aggregate, has had, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.

     

    SECTION
2.11.    Litigation.  Except
as disclosed in Schedule 2.11
attached hereto, there is no action, suit, proceeding or investigation pending
or, to the Company’s knowledge, currently threatened against the Company or any
Subsidiary that questions the validity of this Agreement or the right of the
Company to enter into it, or to consummate the transactions contemplated hereby,
or that could reasonably be expected to result, either individually or in the
aggregate, in a Material Adverse Effect on the Company.  The foregoing
includes, without limitation, actions pending or, to the Company’s knowledge,
threatened involving the prior employment of any of the Company’s employees or
their use in connection with the Company’s business of any information or
techniques allegedly proprietary to any of their former
employers.  Neither the Company nor any of its Subsidiaries is a party
to or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or governmental authority.  Except as disclosed in
Schedule 2.11
attached hereto, there is no action, suit, proceeding or investigation by the
Company or any Subsidiary currently pending or which the Company or any of its
Subsidiaries currently intends to initiate, which could reasonably be expected
to have a Material Adverse Effect.

     

    SECTION
2.12.    Ownership
of Property; Liens.  Except as set forth on Schedule 2.12
attached hereto, the Company and each of its Subsidiaries has good and
marketable title to its properties and assets, and good title to its leasehold
estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance
or charge, other than:  (a) those resulting from taxes which
have

     

    

    
      
        
           

        

        
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    not yet
become delinquent; (b) minor liens and encumbrances which it is to the Company’s
belief do not materially detract from the value of the property subject thereto
or materially impair the operations of the Company or any of its Subsidiaries;
and (c) those that have otherwise arisen in the ordinary course of
business.  All facilities, machinery, equipment, fixtures, vehicles
and other properties owned, leased or used by the Company and its Subsidiaries
are in good operating condition and repair and are reasonably fit and usable for
the purposes for which they are being used.  Except as set forth on
Schedule 2.12
attached hereto, the Company and its Subsidiaries are in compliance with all
material terms of each lease to which it is a party or is otherwise
bound.

     

    SECTION
2.13.    Intellectual
Property Rights.  The Company and its Subsidiaries owns or
possesses the licenses or rights to use all patents, patent applications, patent
rights, inventions, know-how, trade secrets, trademarks, trademark applications,
service marks, service names, trade names and copyrights necessary to enable it
to conduct its business as now operated (the “Intellectual
Property”).  Except as set forth in Schedule 2.13
attached hereto, there are no material outstanding options, licenses or
agreements relating to the Intellectual Property, nor is the Company or its
Subsidiaries bound by or a party to any material options, licenses or agreements
relating to the patents, patent applications, patent rights, inventions,
know-how, trade secrets, trademarks, trademark applications, service marks,
service names, trade names or copyrights of any other person or
entity.  Except as set forth in Schedule 2.13
attached hereto, there is no claim or action or proceeding pending or, to the
Company’s knowledge, threatened that challenges the right of the Company or its
Subsidiaries with respect to any Intellectual Property.  Except as set
forth in Schedule 2.13
attached hereto, to the knowledge of the Company, the Company’s and its
Subsidiaries’ Intellectual Property does not infringe upon any intellectual
property rights of any other person which, if the subject of an unfavorable
decision, ruling or finding would have a Material Adverse Effect.

     

    SECTION
2.14.    Insurance.  The
Company and its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management
of the Company and its Subsidiaries believe to be prudent and customary in the
businesses in which the Company and its Subsidiaries are engaged.

     

    SECTION
2.15.    Compliance
with Other Instruments.  Neither the Company nor any of its
Subsidiaries is in violation or default of (x) any term of its Charter or
Bylaws, or (y) of any provision of any indebtedness, mortgage, indenture,
contract, agreement or instrument to which it is party or by which it is bound
or of any judgment, decree, order or writ, which violation or default, in the
case of this clause (y), has had, or could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse
Effect.  The execution, delivery and performance of and compliance
with the Loan Documents by the Company to which it is a party, and the issuance
and sale of the Securities will not, with or without the passage of time or
giving of notice, result in any such material violation, or be in conflict with
or constitute a default under any such term or provision or result in the
suspension, revocation, impairment, forfeiture or nonrenawal of any permit,
license, authorization or approval applicable to the Company or its
Subsidiaries, its businesses or operations or any of its assets or
properties.

     

    SECTION
2.16.    Tax
Returns and Payments.  The Company and its Subsidiaries have
timely filed all tax returns (federal, state and local) required to be filed by
it.  All taxes shown to

     

    

    
      
        
           

        

        
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    be due
and payable on such returns, any assessments imposed, and all other taxes due
and payable by the Company and its Subsidiaries on or before the Closing, have
been paid or will be paid prior to the time they become
delinquent.  Neither the Company nor any of its Subsidiaries has been
advised: (a) that any of its returns, federal, state or other, have been or are
being audited as of the date hereof; or (b) of any deficiency in assessment or
proposed judgment to its federal, state or other taxes.  Neither the
Company nor any of its Subsidiaries has knowledge of any liability of any tax to
be imposed upon its properties or assets as of the date of this Agreement that
is not adequately provided for.  The statements in this Section 2.16 are
qualified by Schedule
2.16.

     

    SECTION
2.17.    Environmental
and Safety Laws.  Neither the Company nor any of its
Subsidiaries is in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, which violation
has had, or could reasonably be expected to have, either individually or in the
aggregate with all other such violations, a Material Adverse Effect and to its
knowledge, no material expenditures are or will be required in order to comply
with any such existing statute, law or regulation.

     

    SECTION
2.18.    ERISA.  Based upon the
Employee Retirement Income Security Act of 1974 (“ERISA”), and the
regulations and published interpretations thereunder:  (i) neither the
Company nor any of its Subsidiaries has engaged in any Prohibited Transactions
(as defined in Section 406 of ERISA and Section 4975 of the Internal Revenue
Code of 1986, as amended (the “Code”)); (ii) the
Company and its Subsidiaries have met all applicable minimum funding
requirements under Section 302 of ERISA in respect of its plans; (iii) neither
the Company nor any of its Subsidiaries has any knowledge of any event or
occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any employee benefit
plan(s); (iv) neither the Company nor any of its Subsidiaries has any fiduciary
responsibility for investments with respect to any plan existing for the benefit
of persons other than the Company’s or such Subsidiary’s employees; and (v)
neither the Company nor any of its Subsidiaries has withdrawn, completely or
partially, from any multi-employer pension plan so as to incur liability under
the Multiemployer Pension Plan Amendments Act of 1980.

     

    SECTION
2.19.    Brokers.  The Company and
its Subsidiaries have not employed, and are not subject to the valid claim of,
any broker, finder, consultant or other intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee or commission
from the Company or its Subsidiaries in connection with such
transactions.

     

    SECTION
2.20.    Labor
Relations.  No labor or employment dispute exists or, to the
knowledge of the Company, is imminent or threatened, with respect to any of the
employees or consultants of the Company or any Subsidiary that has, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

     

    SECTION
2.21.    Customers.  Neither the Company nor any
Subsidiary has received any actual notice that any of its top ten (10) customers
has ceased, or intends to cease, to use its services, or has substantially
reduced, or intends to substantially reduce, the use of such services at any
time except as set forth on Schedule
2.21.

     

    

    
      
        
           

        

        
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    SECTION
2.22.    Solvency.  Based
on the financial condition of the Company as of the date hereof and after the
transactions contemplated by this Agreement, (i) the fair saleable value of the
Company assets exceeds the amount that will be required to be paid on or in
respect of the Company’s existing debts and other liabilities (including known
and contingent liabilities) as they mature; (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted, including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debts when such amounts
are required to be paid.

     

    SECTION
2.23.    Representations
Complete.  The representations and warranties made by the
Company in this Agreement, and the statements made in any certificates furnished
by the Company pursuant to this Agreement, taken as a whole, do not contain and
will not contain, as of their respective dates and as of the Closing, any untrue
statement of a material fact or omit to state any material fact necessary in
order to make such statements, taken as a whole, in light of the circumstances
under which they were made, not misleading.

     

    ARTICLE
III

     

    REPRESENTATIONS
AND WARRANTIES OF THE PURCHASERS

     

    Each
Purchaser severally, and not jointly, represents and warrants to the Company
that:

     

    SECTION
3.01.    Requisite
Power and Authority.  The Purchaser has
all necessary power and authority under all applicable provisions of law to
execute and deliver this Agreement and to carry out their
provisions.  All action on Purchaser’s part required for the lawful
execution and delivery of this Agreement have been or will be effectively taken
prior to the Closing.   Upon their execution and delivery, this
Agreement will be valid and binding obligations of Purchaser, enforceable in
accordance with their terms, except

     

     

    (a)           as
limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors’ rights;
and (b) general principles of equity that restrict the availability of equitable
and legal remedies.

     

    SECTION
3.02.    Investment
Representations.  Purchaser understands that the Securities are
being offered and sold pursuant to an exemption from registration contained in
the Securities Act based in part upon Purchaser’s representations contained in
the Agreement. The Purchaser confirms that it has received or has had full
access to all the information it considers necessary or appropriate to make an
informed investment decision with respect to the Securities to be purchased by
it under this Agreement. The Purchaser further confirms that it has had an
opportunity to ask questions and receive answers from the Company regarding the
Company and its Subsidiaries’ business, management and financial affairs and the
terms and conditions of the offering, and the Securities and to obtain
additional information necessary to verify any information furnished to the
Purchaser or to which the Purchaser had access.

     

    

    
      
        
           

        

        
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    SECTION
3.03.    Purchaser
Bears Economic Risk.  The Purchaser has substantial experience
in evaluating and investing in private placement transactions of securities in
companies similar to the Company and its Subsidiaries so that it is capable of
evaluating the merits and risks of its investment in the Company and its
Subsidiaries and has the capacity to protect its own interests. The Purchaser
must bear the economic risk of this investment until the Securities are sold
pursuant to: (i) an effective registration statement under the Securities Act;
or (ii) an exemption from registration with respect to such sale.

     

    SECTION
3.04.    Acquisition
for Own Account.  The Purchaser is acquiring the Securities for
the Purchaser’s own account for investment only, and not with a view towards or
for resale in connection with their distribution in violation of the Securities
Act.

     

    SECTION
3.05.    Purchaser
Can Protect Its Interest.  The Purchaser represents that by
reason of its, or of its management’s, business and financial experience, the
Purchaser has the capacity to evaluate the merits and risks of its investment in
the Securities and to protect its own interests in connection with the
transactions contemplated in this Agreement.  Purchaser is aware of no
publication or any advertisement in connection with the transactions
contemplated in the Agreement.  Purchaser has obtained counsel and
advice from its own legal, tax, and other advisers in connection with the
transactions contemplated by the Loan Documents and is not relying on any such
counsel or advice from the Company or any of its representatives.

     

    SECTION
3.06.     Accredited
Investor.  Purchaser represents that it is an “accredited
investor” within the meaning of Regulation D under the Securities
Act.

     

    SECTION
3.07.     Legends.

     

    (a)           The
Notes shall bear substantially the following legend:

     

    “THE
SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.  ANY TRANSFER OF SUCH SECURITIES WILL BE INVALID UNLESS A
REGISTRATION STATEMENT UNDER THE ACT AND AS REQUIRED BY BLUE SKY LAWS IS IN
EFFECT AS TO SUCH TRANSFER OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.  THE SECURITIES REPRESENTED BY THIS NOTE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF THAT CERTAIN SUBORDINATION AGREEMENT, DATED AS OF JULY
25, 2008, BY AND BETWEEN COMERICA BANK AND THE HOLDER HEREOF (AS AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME) (THE “SUBORDINATION
AGREEMENT”).  IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE
SUBORDINATION AGREEMENT AND THIS PROMISSORY NOTE, THE TERMS OF THE SUBORDINATION
AGREEMENT SHALL GOVERN AND CONTROL.”

     

    (b)           The
Warrants shall bear substantially the following legend:

     

    

    
      
        
           

        

        
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    “THE
SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES
HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED
OR (II) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL (IF REQUIRED BY THE
COMPANY) REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS.”

     

    ARTICLE
IV

     

    CONDITIONS
TO THE OBLIGATIONS OF THE PURCHASERS

     

    The
obligation of each Purchaser to purchase and pay for the Securities being
purchased by it on the Closing Date is, at its option, subject to the
satisfaction, on or before the Closing Date of the following
conditions:

     

    SECTION
4.01.     Agreement.  This Agreement
shall have been duly executed by the Company and each other
Purchaser.

     

    SECTION
4.02.     Notes.  The Notes shall
have each duly issued, executed and delivered by the Company to each
Purchaser.

     

    SECTION
4.03.     Warrants.  The Warrants
shall have each duly issued, executed and delivered by the Company to each
Purchaser.

     

    SECTION
4.04.    Subordination
Agreement.  That certain
Subordination Agreement, dated as of the date hereof, by and between, Comerica
Bank (“Comerica”) and the
other Purchaser hereto (as amended, supplemented or otherwise modified from time
to time) (the “Subordination
Agreement”) shall have been duly executed and delivered by Comerica and
the Purchasers.  A copy of the Subordination Agreement is attached
hereto as Exhibit
C.

     

    SECTION
4.05.   Comerica
Consent.  The Purchasers
will have received a consent duly executed by an authorized signatory on behalf
of Comerica, whereby Comerica consents to the transactions contemplated by the
Loan Documents and waives any limitation or restriction set forth in that
certain Loan and Security Agreement, entered into as of March 28, 2008, by and
between Comerica and the Company (as amended, supplemented or otherwise modified
from time to time) (the “Comerica Loan
Agreement”) to the Company issuing the Securities hereunder and the
Purchasers extending the loans contemplated hereby (the “Comerica
Consent”).  A copy of the Comerica Consent is attached hereto
as Exhibit
D.

     

    SECTION
4.06.    Legal
Opinion.  The Purchasers will have received an opinion of the
Company’s counsel, dated as the Closing Date, with respect to legal matters
customary for transactions of this type, in a form reasonably acceptable to the
Purchasers.

     

    SECTION
4.07.    Representations
and Warranties to be True and Correct.  The representations and
warranties contained in Article II will be true, complete and correct on
and as

     

    

    
      
        
           

        

        
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    of the
Closing with the same effect as though such representations and warranties had
been made on and as of such date (except to the extent that the representation
or warranty speaks to a specific date), and the Chief Executive Officer or the
Chief Financial Officer of the Company will have certified to such effect to the
Purchasers in writing.

     

    SECTION
4.08.    Performance.  The
Company will have performed and complied in all material respects with all
covenants and agreements contained herein required to be performed or complied
with by it prior to or at the Closing Date and the Chief Executive Officer or
the Chief Financial Officer of the Company will have certified to the Purchasers
in writing to such effect and to the further effect that all of the conditions
set forth in this Article IV have been satisfied.

     

    SECTION
4.09.   All
Proceedings to be Satisfactory».  All
corporate and other proceedings to be taken by the Company and its Subsidiaries
in connection with the transactions contemplated hereby and all documents
incident thereto will be satisfactory in form and substance to the Purchasers
and their counsel, and the Purchasers and their counsel will have received all
such counterpart originals or certified or other copies of such documents as
they reasonably may request.

     

    SECTION
4.10.    Supporting
Documents.  The Purchasers and their counsel will have received
copies of the following documents:

     

    (i)           (A) the
Certificate of Incorporation of the Company, as amended, certified as of a
recent date by the Secretary of State of the State of Delaware, and (B) a
certificate of said Secretary dated as of a recent date as to the due
incorporation and good standing of the Company, the payment of all excise taxes
by the Company and listing all documents of the Company on file with said
Secretary;

     

    (ii)           a
certificate of the Secretary or an Assistant Secretary of the Company dated as
of the Closing Date and certifying:  (A) that attached thereto is
a true and complete copy of the Bylaws of the Company as in effect on the date
of such certification; (B) that attached thereto is a true and complete
copy of all resolutions adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement and the
other Loan Documents, the issuance, sale and delivery of the Securities, and
that all such resolutions are in full force and effect and are all the
resolutions adopted in connection with the transactions contemplated by this
Agreement; (C) that the Certificate of Incorporation of the Company has not
been amended since the date of the last amendment referred to in the certificate
delivered pursuant to clause (i)(A) and (i)(B) above; and (D) to the
incumbency and specimen signature of each officer of the Company executing this
Agreement, any of the Securities, or any other related ancillary document
thereto and any certificate or instrument furnished pursuant hereto, and a
certification by another officer of the Company as to the incumbency and
signature of the officer signing the certificate referred to in this clause
(ii); and

     

    (iii)           such
additional supporting documents and other information with respect to the
operations and affairs of the Company as the Purchasers or their counsel
reasonably may request.

     

    

    
      
        
           

        

        
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    ARTICLE
V

     

    COVENANTS
OF THE COMPANY

     

    The
Company agree that, so long as any Notes are outstanding, except to the extent
compliance in any case or cases is waived in writing by the Required
Holders:

     

    SECTION
5.01.     Financial
Statements, Reports, Notices, Etc.  The Company will
furnish to each Purchaser:

     

    (a)           within
ninety (90) days after the end of each fiscal year of the Company a
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such fiscal year and the related consolidated statements of income for the
fiscal year then ended, prepared in accordance with GAAP and audited or
certified by a firm of independent public accountants selected by the Audit
Committee of the Board of Directors of the Company;

     

    (b)           within
sixty (60) days after the end of each fiscal quarter in each fiscal year a
consolidated balance sheet of the Company and its Subsidiaries and the related
consolidated statements of income unaudited but prepared in accordance with
generally accepted accounting principles and certified by the Chief Financial
Officer of the Company, such consolidated balance sheet to be as of the end of
such fiscal quarter and such consolidated statements of income to be for such
fiscal quarter and for the period from the beginning of the fiscal year to the
end of such fiscal quarter;

     

    (c)           promptly
upon sending, making available or filing the same, all press releases, reports
and financial statements that the Company sends or makes available to its
stockholders or files with the SEC;

     

    (d)           promptly
after the commencement thereof, notice of all actions, suits, claims,
proceedings, investigations and inquiries of the type described in Section 2.11 of this
Agreement that could materially adversely affect the Company or any of its
Subsidiaries (subject to the Purchasers receiving the information signing an
acceptable non-disclosure agreement before the Company discloses any material
non-public or competitively sensitive information (the foregoing requirement
only applicable if prior to the disclosure of such information the Company
requests the execution of such document by the applicable
Purchasers));

     

    (e)           promptly
give notice to the Purchasers of the occurrence of any Event of Default under
this Agreement;

     

    (f)           promptly
give notice to the Purchasers of any event having a Material Adverse Effect
(subject to the Purchasers receiving the information signing an acceptable
non-disclosure agreement before the Company discloses any material non-public or
competitively sensitive information (the foregoing requirement only applicable
if prior to the disclosure of such information the Company requests the
execution of such document by the applicable Purchasers));

     

    (g)           promptly,
from time to time, such other information regarding the business, prospects,
financial condition, operations, property or affairs of the Company and
its

     

    

    
      
        
           

        

        
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    Subsidiaries
as the Required Holders may reasonably request (subject to the Purchasers
receiving the information signing an acceptable non-disclosure agreement before
the Company discloses any material non-public or competitively sensitive
information (the foregoing requirement only applicable if prior to the
disclosure of such information the Company requests the execution of such
document by the applicable Purchasers));

     

    Notwithstanding
this Section 5.01, so
long as the Company is required to make filings pursuant to the Exchange Act and
makes such filings in a timely manner, the Company will be deemed to have
furnished to the Purchasers the financial statements and other reports required
by this Section 5.01;
provided, however, that the
foregoing shall not apply to clauses (d), (e) and (f) above.

     

    SECTION
5.02.    Corporate
Existence; Maintenance of Business.  The Company will preserve
and maintain its existence.  The Company will cause each of its
Subsidiaries to preserve and maintain its existence where the failure to do so
could reasonably be expected to have a Material Adverse Effect.  The
Company will, and will cause each of its Subsidiaries to, preserve and keep in
force and effect all licenses, permits, franchises, approvals, patents,
trademarks, trade names, trade styles, copyrights, and other proprietary rights
necessary to the conduct of its business where the failure to do so could
reasonably be expected to have a Material Adverse Effect.

     

    SECTION
5.03.    Properties,
Insurance.  The Company and its Subsidiaries will maintain as
to its properties and business, with financially sound and reputable insurers,
insurance against such casualties and contingencies and of such types and in
such amounts as is customary for companies similarly situated.

     

    SECTION
5.04.     Use of
Proceeds.  The Company will use the proceeds from the sale of
the Securities as set forth on Schedule 5.04
attached hereto.  

     

    SECTION
5.05.    Compliance
with Laws.  The Company and its Subsidiaries will comply with
all applicable laws, rules, regulations and orders, noncompliance with which
could materially adversely affect its business or condition, financial or
otherwise.

     

    SECTION
5.06.    Keeping
of Records and Books of Account.  The Company and its
Subsidiaries will keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting principles
consistently applied, reflecting all financial transactions of the Company and
its Subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business will be made.

     

    SECTION
5.07.    Dividends
and Certain Other Restricted Payments.  The Company will not,
nor will it permit any of its Subsidiaries to directly or indirectly declare or
pay any dividends, other than (i) dividends paid to the Company or any of its
wholly-owned Subsidiaries or (ii) dividends paid in connection with preferred
stock currently issued and outstanding by the Company.

     

    SECTION
5.08.    Capital
Expenditures.  The Company will not, nor will it permit any of
its Subsidiaries to, incur any Capital Expenditures other than in the ordinary
course consistent

     

    

    
      
        
           

        

        
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    with past
practice or otherwise not in an amount to exceed $250,000 in any twelve-month
period.  For purposes of this Agreement, “Capital Expenditures”
means, with respect to any person or entity for any period, the aggregate amount
of all expenditures (whether paid in cash or accrued as a liability) by such
person or entity during that period for the acquisition or leasing (pursuant to
a capital lease) of fixed or capital assets or additions to property, plant, or
equipment (including replacements, capitalized repairs, and improvements) which
should be capitalized on the balance sheet of such person or entity in
accordance with GAAP.

     

    SECTION
5.09.    Mergers,
Consolidations and Asset Sales.  The Company will not, nor will
it permit any of its Subsidiaries to, be a party to any merger or consolidation,
or sell, transfer, lease or otherwise dispose of all or any substantial part of
its capital stock or assets.  Provided that no Event of Default has
occurred, nothing contained in this Section 5.09 shall be
deemed to prohibit the Company and its Subsidiaries from (i) the sale of
inventory in the ordinary course of business or excess or obsolete inventory in
an aggregate maximum amount not to exceed $250,000 in any fiscal year, (ii)
licenses and similar arrangements for the use of the property of Company or its
Subsidiaries in the ordinary course of business; (iii) sales or other
dispositions of worn-out or obsolete equipment; (iv) sales or other dispositions
of other assets of Company or its Subsidiaries that do not in the aggregate
exceed $250,000 during any fiscal year; or (v) engaging in the transactions
described on Schedule
5.09.

     

    SECTION
5.10.    Acquisitions.  The
Company will not, nor will it permit any of its Subsidiaries to, directly or
indirectly, acquire all or any substantial part of the assets or business of any
other entity or division thereof.

     

    SECTION
5.11.    Prepayment
of Indebtedness.  The Company will not, nor will it permit any
of its Subsidiaries, to prepay any indebtedness for borrowed money; provided, however, that this
Section 5.11
will not prohibit the Company from prepaying the Notes pursuant to the terms of
this Agreement or paying the amounts owed to Comerica pursuant to the Comerica
Loan Agreement.

     

    SECTION
5.12.    Incurrence
of Indebtedness.  The Company will not create, incur, assume,
guarantee, suffer to exist or be or remain liable with respect to any
Indebtedness, or permit any Subsidiary so to do, whether secured or unsecured,
or assume, guarantee, endorse or otherwise become directly or contingently
liable in connection with any obligations of any other person or entity other
than (i) Indebtedness of the Company in favor of the Purchasers arising under
this Agreement or any other Loan Document; (ii) Indebtedness of the Company in
favor of Comerica arising under the Comerica Loan Agreement, (iii) Indebtedness
set forth on the Company’s consolidated unaudited balance sheets as of March 31,
2008 as disclosed by the Company on Form 10-Q filed with the SEC on May 15,
2008, (iv) Indebtedness as  disclosed on Schedule 5.12, (v)
unsecured trade debt in the ordinary course of business; (vi) Indebtedness
incurred to finance the purchase of equipment and/or inventory in the ordinary
course of business not to exceed $250,000 in the aggregate in any fiscal year of
the Company; (vii) any unsecured debt that is subordinated in writing to the
debt owing by the Company to the Purchasers on terms reasonably acceptable to
the Purchasers (and identified as being such by the Company and the Purchasers);
and (viii) refinancing and renewals of any the items set forth above, provided
that the principal amount is not increased or the terms modified to impose more
burdensome terms upon the Company or its Subsidiary, as the case may
be.  For purposes of this Section 5.12
and

     

    

    
      
        
           

        

        
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    as
otherwise used in this Agreement “Indebtedness” means
(a) all indebtedness for borrowed money or the deferred purchase price of
property or services, including without limitation reimbursement and other
obligations with respect to surety bonds and letters of credit, (b) all
obligations evidenced by notes, bonds, debentures or similar instruments, (c)
all capital lease obligations that are property classified as a liability on a
balance sheet in conformity with generally accepted accounting principles, (d)
all obligations, contingent or otherwise, to purchase, redeem, retire or
otherwise acquire any capital stock of the Company, (e) all Contingent
Obligations, (f) all obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar
agreement, or other agreement or arrangement designated to protect an entity or
person against fluctuation in interest rates, currency exchange rates or
commodity prices, and (g) all obligations arising under the Credit Card Services
Sublimit and Foreign Exchange Sublimit.  For purposes of the
immediately preceding sentence, “Contingent
Obligations” means, as applied to any entity or person, any direct or
indirect liability, contingent or otherwise, of that entity or person with
respect to (a) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that entity or person, or in respect of which that entity or person
is otherwise directly or indirectly liable; (b) any obligations with
respect to undrawn letters of credit, corporate credit cards or merchant
services issued for the account of that entity or person; and (c) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect an entity or person against
fluctuation in interest rates, currency exchange rates or commodity prices;
provided, however, that the
term “Contingent
Obligation” shall not include endorsements for collection or deposit in
the ordinary course of business.  The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determined
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such entity or person in good
faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.  For purposes of this
Section 5.12,
the terms Credit Card Services Sublimit and Foreign Exchange Sublimit shall have
the meaning as set forth in the Comerica Loan Agreement as in effect on the date
hereof.

     

    SECTION
5.13.    Change in
the Nature of Business.  The Company will not, nor will it
permit any of its Subsidiaries to, engage in any business or activity other than
the general nature of the business engaged in by it as of the Closing Date or
discontinue its engagement in any business or activity engaged in by it as of
the Closing Date except within the reasonable business judgment of the Board of
Directors of the Company.  

     

    SECTION
5.14.    Encumbrances.  The Company will
not create, incur, assume or allow any mortgage, lien, deed of trust, charge,
pledge, security interest, or other encumbrance (the foregoing collectively
referred to herein as “Liens”) with respect
to its property, including its Intellectual Property, or assign or otherwise
convey any right to receive income, including the sale of any accounts, or
permit any of its Subsidiaries so to do, except for (i) any Liens existing on
the Closing Date and disclosed on Schedule 5.14; (ii)
Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings and for which the Company maintains adequate reserves; (iii) Liens
not

     

    

    
      
        
           

        

        
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    to exceed
$250,000 in the aggregate (A) upon or in any equipment acquired or held by
Company or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition or lease of such equipment, or (B) existing on such equipment at the
time of its acquisition, provided that the Lien is confined solely to the
property so acquired and improvements thereon, and the proceeds of such
Equipment; (iv) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in the
first three clauses immediately above, provided that any extension, renewal or
replacement shall be limited to the property encumbered by the existing Lien
(including the effect of any after-acquired property clause) and the principal
amount of the indebtedness being extended, renewed or refinanced does not
increase; (v) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under this Agreement; (vi)
non-exclusive licenses to the Company’s Intellectual Property granted in the
ordinary course of business, and (vii) Liens in favor of financial institutions
arising in connection with Company’s deposit accounts held at such institutions
to secure standard fees for deposit services charged by such financial
institutions.

     

    SECTION
5.15.    Access to
Facilities.  As long as any principal, interest and fees with
respect to the Notes remain outstanding, each of the Company and each of its
Subsidiaries will permit any representatives designated by the Purchasers (or
any successor of the Purchasers), upon reasonable advance notice and during
normal business hours reasonably convenient to the Company, its Subsidiaries
and/or representatives of the Company and/or any of its Subsidiaries that are
responsible for the maintenance of such records at such person’s expense and
accompanied by a representative of the Company and/or the applicable Subsidiary,
to (a) visit and inspect any of the properties of the Company or any of its
Subsidiaries, (b) examine the corporate and financial records of the Company or
any of its Subsidiaries (unless such examination is not permitted by federal,
state or local law or by contract) and make copies thereof or extracts
therefrom, and (c) discuss the affairs, finances and accounts of the Company or
any of its Subsidiaries with the directors, officers and independent accountants
of the Company or any of its Subsidiaries.  Notwithstanding the
foregoing, neither the Company nor any of its Subsidiaries will provide any
competitively sensitive or material, non-public information to the Purchasers
unless the Purchasers sign a confidentiality agreement and otherwise complies
with Regulation FD, under the federal securities laws.

     

    SECTION
5.16.    Intellectual
Property Rights.  The Company shall register or cause to be
registered (to the extent not already registered) with the United States Patent
and Trademark Office or the United States Copyright Office, as the case may be,
those registrable intellectual property rights now owned or hereafter developed
or acquired by Company, to the extent that the Company, in its sole reasonable
business judgment, deems it appropriate to so protect such intellectual
property.  Company shall (i) protect, defend and maintain the validity
and enforceability of its Intellectual Property, to the extent it deems it
appropriate in its reasonable business judgment, (ii) use commercially
reasonable efforts to detect infringements in its Intellectual Property to the
extent it deems it appropriate in its reasonable business judgment, and (iii)
not allow any material trademarks, patents or copyrights to be abandoned,
forfeited or dedicated to the public.

     

    SECTION
5.17.    Taxes.  The
Company and its Subsidiaries will promptly pay and discharge, or cause to be
paid and discharged, when due and payable, all lawful taxes,

     

    

    
      
        
           

        

        
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    assessments
and governmental charges or levies imposed upon the income, profits, property or
business of the Company and its Subsidiaries; provided, however, that any
such tax, assessment, charge or levy need not be paid if the validity thereof
shall currently be contested in good faith by appropriate proceedings and if the
Company and/or such Subsidiary shall have set aside on its books adequate
reserves with respect thereto, and provided, further, that the
Company and its Subsidiaries will pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefor.

     

    ARTICLE
VI

     

    EVENT
OF DEFAULT

     

    If any of
the following events (each an “Event of Default”)
shall occur and be continuing:

     

    (a)           The
Company will fail to pay any installment of principal due on any Note on the
date such installment is due;

     

    (b)           The
Company will fail to pay any interest due on any Note within
five (5) calendar days of the date such payment is due;

     

    (c)           Any
representation or warranty made by the Company in this Agreement, or by the
Company (or any officers of the Company) in any certificate, instrument or
written statement contemplated by or made or delivered pursuant to or in
connection with this Agreement will prove to have been incorrect when made in
any material respect;

     

    (d)           the
Company fails to perform or observe any other term, covenant or agreement
contained in this Agreement, the Notes, the Warrants or any other document,
instrument or agreement entered into in connection with this Agreement (the
foregoing documents each as amended, supplemented or otherwise modified from
time to time collectively  referred to herein as the “Loan Documents”) to
which it is a party and any such failure remains unremedied for
ten (10) calendar days after written notice thereof will have been
given to the Company by the holders of more than 50% of the sum of the aggregate
unpaid principal amount of the Notes (referred to herein as the “Required
Holders”);

     

    (e)           The
Company will fail to pay any Indebtedness in excess of an aggregate of $250,000
for borrowed money (other than as evidenced by the Notes) owing by the Company
or any interest or premium thereon, when due (or, if permitted by the terms of
the relevant document, within any applicable grace period), whether such
Indebtedness will become due by scheduled maturity, by required prepayment, by
acceleration, by demand or otherwise, or will fail to perform (with such failure
not being waived) any term, covenant or agreement on its part to be performed
under any agreement or instrument evidencing or securing or relating to any
Indebtedness in excess of an aggregate of $250,000 owing by the Company when
required to be performed (or, if permitted by the terms of the relevant
document, within any applicable grace period), if the effect of such failure to
pay or perform is to accelerate, or to permit the holder or holders of such
Indebtedness, or the trustee or trustees under any such agreement or instrument
to accelerate, the maturity of such Indebtedness;

     

    

    
      
        
           

        

        
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    (f)           The
Company will be involved in financial difficulties as evidenced (i) by its
admitting in writing its inability to pay its debts generally as they become
due; (ii) by its commencement of a voluntary case under Title 11 of the
United States Code as from time to time in effect, or by its authorizing, by
appropriate proceedings of its Board of Directors or other governing body, the
commencement of such a voluntary case which is not dismissed within fifteen (15)
days; (iii) by its filing an answer or other pleading admitting or failing
to deny the material allegations of a petition filed against it commencing an
involuntary case under said Title 11, or seeking, consenting to or acquiescing
in the relief therein provided, or by its failing to controvert timely the
material allegations of any such petition; (iv) by the entry of an order
for relief in any involuntary case commenced under said Title 11; (v) by
its seeking relief as a debtor under any applicable law, other than said Title
11, of any jurisdiction relating to the liquidation or reorganization of debtors
or to the modification or alteration of the rights of creditors, or by its
consenting to or acquiescing in such relief; (vi) by the entry of an order
by a court of competent jurisdiction (a) finding it to be bankrupt or
insolvent, (b) ordering or approving its liquidation, reorganization or any
modification or alteration of the rights of its creditors, or (c) assuming
custody of, or appointing a receiver or other custodian for, all or a
substantial part of its property; or (vii) by its making an assignment for
the benefit of, or entering into a composition with, its creditors, or
appointing or consenting to the appointment of a receiver or other custodian for
all or a substantial part of its property;

     

    (g)           Any
judgment, writ, warrant of attachment or execution or similar process will be
issued or levied against the Company or any of their respective property or
other assets for more than $250,000.00 in the aggregate for all such judgments,
writs, or similar process and such judgment, writ, or similar process will not
be released, vacated or fully bonded within forty five (45) days after its issue
or levy; or

     

    (h)           If
there occurs a material adverse change in Company’s business or financial
condition taken as a whole;

     

    then, and
in any such event, the Required Holders may, by notice to the Company, declare
the entire unpaid principal amount of the Notes, all interest accrued and unpaid
thereon and all other amounts payable under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Notes, all such accrued
interest and all such amounts will become and be forthwith due and payable
(unless there will have occurred an Event of Default under clause (f) of this
Article
VI in which case all such amounts will automatically become due and
payable), without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Company.

     

    ARTICLE
VII

     

    MISCELLANEOUS

     

    SECTION
7.01.    Expenses.  Each
party hereto will pay its own expenses in connection with the transactions
contemplated hereby.  Notwithstanding the foregoing, the Company shall
promptly pay upon demand the reasonable fees and disbursements of Purchasers’
counsel incurred in connection with any amendments, modifications, supplements
or waivers in connection with this Agreement or any other Loan
Document.

     

    

    
      
        
           

        

        
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    SECTION
7.02.    Survival
of Agreements.  All covenants, agreements, representations and
warranties made in this Agreement and the other Loan Documents or any
certificate or instrument delivered to the Purchasers pursuant to or in
connection with this Agreement or the other Loan Documents will survive the
execution and delivery of this Agreement, the other Loan Documents, and the
issuance, sale and delivery of the Securities.

     

    SECTION
7.03.    Indemnification.  The Company
agrees to indemnify, hold harmless, reimburse and defend the Purchasers, each of
the Purchasers’ officers, directors, managers, agents, attorneys, affiliates,
employees, control persons, controlling entities and principal shareholders
(collectively the “Purchaser
Indemnitees”), against any claim, cost, expense, liability, obligation,
loss or damage (including reasonable legal fees) of any nature, incurred by or
imposed upon any Purchaser Indemnitee which results, arises out of or is based
upon: (i) any misrepresentation by the Company or breach of any warranty by the
Company in this Agreement or any other Loan Document or in any exhibits or
schedules attached hereto or thereto, in each case, in any material respect; or
(ii) any breach or default in performance by the Company or any of its
Subsidiaries of any covenant or undertaking to be performed by Company or any of
its Subsidiaries under this Agreement or any other Loan Document.

     

    SECTION
7.04.    Parties
in Interest.  All representations, covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto will
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not.  Without limiting the
generality of the foregoing, all representations, covenants and agreements
benefiting the Purchasers will inure to the benefit of any and all subsequent
holders from time to time of the Securities.

     

    SECTION
7.05.    Notices.  All
notices, requests, consents and other communications hereunder will be in
writing and will be delivered in person, mailed by certified or registered mail,
return receipt requested, or sent by facsimile or recognized overnight courier
service, addressed as follows: 

     

    if to the
Company:

    

    Proxim
Wireless Corporation

    1561
Buckeye Drive

    Milpitas,
CA 95035

    Attn:
Pankaj Manglik

    Facsimile:
(408) 383-7680

    

    with a copy to:

    

    David L.
Renauld

    Proxim
Wireless Corporation

    881 North
King Street, Suite 100

    Northampton,
MA 01060

    Facsimile:
(413) 584-1425

    

    
      
        
           

        

        
          - 22
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    If to any
Purchaser:

    

    Lloyd I.
Miller, III

    4550
Gordon Drive

    Naples,
Florida, 34102

    Facsimile:  (239)
262-8025

    

    with
a copy to:

    

    Paul N.
Silverstein, Esq.

    Kenneth
L. Rothenberg, Esq.

    Andrews
Kurth LLP

    450
Lexington Avenue

    New York,
NY 10017

    fax:  (212) 850-2929

    

    SECTION
7.06.   Governing
Law.  THIS AGREEMENT AND EACH LOAN DOCUMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  ANY ACTION BROUGHT BY
EITHER PARTY AGAINST THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT AND EACH LOAN DOCUMENT SHALL BE BROUGHT ONLY IN THE STATE COURTS OF
NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW
YORK.  BOTH PARTIES AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS
AND WAIVE TRIAL BY JURY. 

     

    SECTION
7.07.    Entire
Agreement.  This Agreement, including the schedules and
exhibits hereto and the other Loan Documents, constitutes the sole and entire
agreement of the parties with respect to the subject matter
hereof.  All schedules and exhibits hereto are hereby incorporated
herein by reference.  There are no other agreements of the parties and
no party is relying on any representations of the other not expressly set forth
herein or any ancillary document related hereto or
thereto.  

     

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

     

    SECTION
7.09.   Due
Diligence. The parties hereto
acknowledge and agree that the Purchasers’ due diligence review of any
information related to the transactions contemplated hereby and any information
received by the Purchasers in connection therewith or otherwise in connection
with the transactions contemplated herein shall not in any manner limit the
Purchasers’ right to rely on the representations, warranties, indemnification
obligations and other covenants of the Company set forth herein and in the other
Loan Documents.

     

    SECTION
7.10.    Successors
and Assigns.  Purchasers may sell and assign all or any portion
of its interest in the Notes provided that the Purchasers provide notice to the
Company and such sale complies with applicable law, and all of the other terms
and conditions of this Agreement and the other Loan
Documents.  Purchasers may grant a participation in all or
any

     

    

    
      
        
           

        

        
          - 23
-

          
            

          

        

        
           

        

      

    

    

    portion
of its interest in the Notes without giving notice to the Company provided that
such participation grant complies with applicable law.  The Company
may not delegate its obligations under this Agreement or the other Loan
Documents without the prior written consent of each Purchaser.

     

    SECTION
7.11.    Amendments
and Waivers;
Exercise of Rights.  No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by the Company
and the Required Holders.  No waiver of any provision of this
Agreement, nor consent to any departure by either party from it, shall be
effective unless it is in writing and signed by the affected party or, in the
case of the Purchasers, by the Required Holders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.  No failure on the part of a party to exercise, and
no delay in exercising, any right or remedy under the Loan Documents shall
operate as a waiver by such party, nor shall any single or partial exercise of
any right or remedy under the Loan Documents preclude any other or further
exercise thereof or the exercise of any other right or remedy.  The
rights and remedies of each party provided herein (a) are cumulative and are in
addition to, and are not exclusive of, any rights or remedies provided by law
and (b) are not conditional or contingent on any attempt by such party to
exercise any of its rights or remedies under any other related document or
against the other party or any other entity.

     

    SECTION
7.12.    Severability.  If
any provision of this Agreement will be declared void or unenforceable by any
judicial or administrative authority, the validity of any other provision and of
the entire Agreement will not be affected thereby.

     

    SECTION
7.13.    Titles
and Subtitles.  The titles and subtitles used in this Agreement
are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.

     

    SECTION
7.14.    Jointly
Drafted. This Agreement and the
other Loan Documents shall be deemed to have been jointly drafted by the parties
hereto and thereto and no provision of it shall be interpreted or construed for
or against another party because such party actually or purportedly prepared or
requested such provision, any other provision or the Agreement or Loan Documents
as a whole.

     

    SECTION
7.15.    Further
Assurances.  Company agrees
and agrees to cause its Subsidiaries to (i) execute and deliver, or cause
to be executed and delivered, all such other and further agreements, documents
and instruments and (ii) take or cause to be taken all such other and
further actions as the Required Holders may reasonably request to effectuate the
intent and purposes, and carry out the terms, of this
Agreement.  

     

    [Signature
page follows]

     

    

    
      
        
           

        

        
          - 24
-

          
            

          

        

        
           

        

      

    

    

    IN
WITNESS WHEREOF, the Company and the Purchasers have executed this Securities
Purchase Agreement as of the day and year first above written.

     

    
      	 
      	
              PROXIM
      WIRELESS CORPORATION, as

              Company

            
	 	 
	 
      	
              By: /s/ David L.
      Renauld

            
	 
      	
              Name:  David
      L. Renauld

            
	 
      	
              Title:
      Vice President

            

    

    

     

    PURCHASERS:

     

    LLOYD
I. MILLER, III

     

    By: /s/ Lloyd I. Miller,
III

    Name:
Lloyd I. Miller, III

    

    

    MILFAM
II L.P.

    

    By:  Milfam
LLC

    Its:  General
Partner

    

    By: /s/ Lloyd I. Miller,
III

    Name:  Lloyd
I. Miller, III

    Title:  Managerex10-2.htm

Exhibit
10.2

    

     

    THE SECURITIES REPRESENTED BY THIS NOTE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS.  ANY TRANSFER OF SUCH SECURITIES
WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT AND AS REQUIRED BY
BLUE SKY LAWS IS IN EFFECT AS TO SUCH TRANSFER OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.  THE SECURITIES REPRESENTED BY THIS NOTE
ARE SUBJECT TO THE TERMS AND CONDITIONS OF THAT CERTAIN SUBORDINATION AGREEMENT,
DATED AS OF JULY 25, 2008, BY AND BETWEEN COMERICA BANK AND THE HOLDER HEREOF
(AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME) (THE
“SUBORDINATION AGREEMENT”).  IN THE EVENT OF ANY CONFLICT BETWEEN THE
TERMS OF THE SUBORDINATION AGREEMENT AND THIS PROMISSORY NOTE, THE TERMS OF THE
SUBORDINATION AGREEMENT SHALL GOVERN AND CONTROL.

     

    Proxim
Wireless Corporation

     

    Promissory
Note

     

    
      	
              Note
      No. 2008-__

            	 
      
	
              $1,500,000.00

            	
              July
      25, 2008

            

    

    

    FOR VALUE
RECEIVED, subject to the terms and conditions of this Promissory Note (the
“Note”), Proxim
Wireless Corporation, a Delaware corporation with its principal offices located
at 1561 Buckeye Drive, Milpitas, CA 95035 (the “Company”), hereby
promises to pay to the order of ________________ or registered assigns (the
“Holder”) with
its principal office located at 4550 Gordon Drive, Naples, Florida, 34102, the
principal sum of ONE MILLION AND FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00)
on the earlier of (x) July 25, 2011 or (y) as otherwise required pursuant to
that certain Securities Purchase Agreement, dated as of July 25, 2008, by and
among, the Company and the purchasers a party thereto, including the Holder
hereof (as amended, supplemented or otherwise modified from time to time (the
“Purchase
Agreement”), including pursuant to a prepayment under Section 1.06 or
upon acceleration pursuant to Article VI of the Purchase Agreement, or if such
day is not a regular Business Day, on the next Business Day thereafter, with all
accrued but unpaid interest (as provided below) to such date (the “Maturity
Date”).  This Note will accrue interest at the rate of sixteen
percent (16%) per annum.  Interest will be due and payable monthly in
arrears on the last day of each calendar month (each, an “Interest Payment
Date”) and shall be computed on the basis of a 360-day year and paid for
the actual number of days elapsed, with the first interest payment due July 31,
2008.  In lieu of paying in cash the interest accrued to any Interest
Payment Date, and at the Company’s sole discretion, the interest may be paid in
kind at the rate of nineteen percent (19%) per

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    annum,
compounding monthly, in which case the accrued interest will be added to the
principal amount of this Note on the applicable Interest Payment Date, and
interest will accrue on such aggregate principal amount.  In the event
any payment under this Note is not timely made when due, interest will accrue on
such late payment at an amount equal to twenty-two percent (22%) per annum from
and including the date such late payment was due to (but excluding) the date
such late payment is paid to the Holder.  All amounts payable under
this Note and hereunder shall be paid in lawful money of the United States
without setoff or withholding of any kind.  As used herein “Business Day” means
any day of the week other than Saturday, Sunday or any other day of the week on
which commercial banks in New York, New York are authorized or required by law
to close.

     

    This Note
is one of the Notes issued pursuant to the Purchase Agreement and the purchasers
named therein and shall be entitled to the benefits thereof.  The
Holder of this Note is also entitled to the rights and obligations under that
certain Subordination Agreement, dated as of July 25, 2008, by and among
Comerica Bank, the Holder and _____________________ (as amended, supplemented or
otherwise modified from time to time) (the “Subordination
Agreement”).

     

    In case
any payment herein provided for shall not be paid when due, the Company promises
to pay all costs of collection, including all reasonable attorneys fees and
expenses.  Company further agrees to pay and hold Holder harmless
against liability for the payment of the reasonable fees and expenses of Holder
(including, without limitation, reasonable attorneys’ fees and expenses and out
of pocket expenses of Holder and its representatives, including, without
limitation, fees and expenses for travel, background investigations and outside
consultants) arising in connection with any refinancing or restructuring of the
credit arrangements provided under this Note in the nature of a “work-out” or
pursuant to any insolvency or bankruptcy proceedings.

     

    No
failure or delay on the part of the Holder hereof in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or
privilege.  All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise
available.

     

    This Note
shall be binding upon the Company and its successors and assigns, and shall
inure to the benefit of the Holder and its successors and assigns, and may be
assigned by the Holder in accordance with the requirements of the Purchase
Agreement.  This Note shall not be assigned and none of the
obligations related hereunder shall be delegated by the Company without the
prior written consent of the Holder.

     

    In no
event shall the amount paid or agreed to be paid to the Holder hereunder exceed
the highest lawful rate permissible under the then applicable usury
laws.  If it is hereafter determined by a court of competent
jurisdiction that the interest

     

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

    payable
hereunder is in excess of the amount which the Holder may legally collect under
the then applicable usury laws, such amount which would be excessive interest
shall be applied to the payment of the unpaid principal balance due hereunder
and not to the payment of interest or, if all principal shall previously have
been paid, promptly repaid by the Holder to the Company.

     

    The
Company and any endorsers of this Note hereby waive diligence, presentment,
protest, demand and notice of every kind and, to the fullest extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.

     

    This Note
shall be governed by the internal laws (and not the law of conflicts) of the
State of New York.

     

    Every
provision of this Note is intended to be severable. If any term or provision
hereof is declared by a court of competent jurisdiction to be illegal or
invalid, such illegal or invalid term or provision shall not affect the balance
of the terms and provisions hereof, which terms and provisions shall remain
binding and enforceable.

     

    

    [Remainder of Page Intentionally Left
Blank]

    

    

    

    

    
      
         

      

      
        - 3
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    IN
WITNESS WHEREOF, the Company has caused this Promissory Note to be executed as
of the day and year first above written.

     

    
      	 
      	
              PROXIM WIRELESS
      CORPORATION,

            
	 
      	
              a
      Delaware corporation

            
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      

    

     

     

     

     

     

    - 4 -

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