Document:

Purchase Agreement

    Exhibit
      10.1

     

      
        

      

    

     

    PURCHASE
      AGREEMENT

     

    Between

     

    MTM
      TECHNOLOGIES, INC.

     

    and

     

    PEQUOT
      PRIVATE EQUITY FUND III, L.P.

     

    and

     

    PEQUOT
      OFFSHORE PRIVATE EQUITY PARTNERS III, L.P.

     

    and

     

    CONSTELLATION
      VENTURE CAPITAL II, L.P.

     

    and

     

    CONSTELLATION
      VENTURE CAPITAL OFFSHORE II, L.P.

     

    and

     

    THE
      BSC EMPLOYEE FUND VI, L.P.

     

    and

     

    CVC
      II PARTNERS, LLC

     

    Dated
      March 29, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Table
      of Contents

     

    Page

     

    
      	
              1.

            	
              Purchase
                and Sale of the Series A-6 Purchased Shares and Warrants

            	
              2

            
	 	 	 	 
	 	
              1.1

            	
              Authorization
                of Issuance of the Series A-6 Purchased Shares and
                Warrants

            	
              2

            
	 	
              1.2

            	
              Purchase
                and Sale of Series A-6 Purchased Shares and Warrants

            	
              2

            
	 	
              1.3

            	
              Use
                of Proceeds

            	
              2

            
	 	
              1.4

            	
              Closing

            	
              2

            
	 	 	 	 
	
              2.

            	Representations
              and Warranties of the Company	
              3

            
	 	 	 	 
	 	
              2.1

            	
              Organization
                and Qualification

            	
              3

            
	 	
              2.2

            	
              Certificate
                of Incorporation and Bylaws

            	
              3

            
	 	
              2.3

            	
              Corporate
                Power and Authority

            	
              3

            
	 	
              2.4

            	
              Capitalization

            	
              3

            
	 	
              2.5

            	
              Authorization

            	
              5

            
	 	
              2.6

            	
              Consents

            	
              6

            
	 	
              2.7

            	
              Brokers
                or Finders

            	
              6

            
	 	
              2.8

            	
              Offering
                Exemption

            	
              6

            
	 	
              2.9

            	
              Offering
                of Purchased Shares and Warrants

            	
              6

            
	 	
              2.10

            	
              SEC
                Reports

            	
              6

            
	 	
              2.11

            	
              Financial
                Statements

            	
              7

            
	 	
              2.12

            	
              Absence
                of Conflicts

            	
              7

            
	 	 	 	 
	
              3.

            	Representations
              and Warranties of the Purchasers	
              8

            
	 	 	 	 
	 	
              3.1

            	
              Organization
                and Qualification

            	
              8

            
	 	
              3.2

            	
              Power
                and Authority

            	
              8

            
	 	
              3.3

            	
              Authorization

            	
              8

            
	 	
              3.4

            	
              Purchase
                Entirely for Own Account

            	
              8

            
	 	
              3.5

            	
              Disclosure
                of Information

            	
              9

            
	 	
              3.6

            	
              Investment
                Experience

            	
              9

            
	 	
              3.7

            	
              Accredited
                Investor

            	
              9

            
	 	
              3.8

            	
              Restricted
                Securities; Legends

            	
              9

            
	 	
              3.9

            	
              No
                General Solicitation

            	
              10

            
	 	
              3.10

            	
              Absence
                of Conflicts

            	
              10

            
	 	
              3.11

            	
              Brokers
                or Finders

            	
              10

            
	 	 	 	 
	
              4.

            	Conditions
              of the Parties	
              11

            
	 	 	 	 
	 	
              4.1

            	
              Conditions
                of Purchasers’ Obligations at the Closing

            	
              11

            
	 	
              4.2

            	
              Conditions
                of Company’s Obligations at the Closing

            	
              12

            
	 	 	 	 
	
              5.

            	Covenants	
              13

            
	 	 	 	 
	 	
              5.1

            	
              Financial
                Statements

            	
              13

            

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      	 	
              5.2

            	
              Certain
                Other Reports and Information

            	
              14

            
	 	
              5.3

            	
              Further
                Information; Further Assurances

            	
              14

            
	 	
              5.4

            	
              Notice
                of Certain Events

            	
              14

            
	 	
              5.5

            	
              Visitation;
                Verification

            	
              15

            
	 	
              5.6

            	
              Insurance

            	
              15

            
	 	
              5.7

            	
              Payment
                of Taxes and Other Potential Charges and Priority Claims

            	
              16

            
	 	
              5.8

            	
              Preservation
                of Corporate Status

            	
              16

            
	 	
              5.9

            	
              Governmental
                Approvals and Filings

            	
              16

            
	 	
              5.10

            	
              Financial
                Accounting Practices

            	
              16

            
	 	 	 	 
	
              6.

            	Indemnification	
              17

            
	 	 	 	 
	 	
              6.1

            	
              General
                Indemnification

            	
              17

            
	 	
              6.2

            	
              Indemnification
                Principles

            	
              17

            
	 	
              6.3

            	
              Claim
                Notice; Right to Defend

            	
              17

            
	 	 	 	 
	
              7.

            	Certain
              Definitions	
              18

            
	 	 	 	 
	
              8.

            	Miscellaneous	
              22

            
	 	 	 	 
	 	
              8.1

            	
              Survival
                of Representations and Warranties

            	
              22

            
	 	
              8.2

            	
              Successors
                and Assigns

            	
              22

            
	 	
              8.3

            	
              Governing
                Law

            	
              23

            
	 	
              8.4

            	
              Counterparts

            	
              23

            
	 	
              8.5

            	
              Titles
                and Subtitles

            	
              23

            
	 	
              8.6

            	
              Notices

            	
              23

            
	 	
              8.7

            	
              Expenses

            	
              23

            
	 	
              8.8

            	
              Consents,
                Amendments and Waivers

            	
              24

            
	 	
              8.9

            	
              Severability

            	
              24

            
	 	
              8.10

            	
              Entire
                Agreement

            	
              24

            
	 	
              8.11

            	
              Delays
                or Omissions

            	
              24

            
	 	
              8.12

            	
              Facsimile
                Signatures

            	
              24

            
	 	
              8.13

            	
              Other
                Remedies

            	
              25

            
	 	
              8.14

            	
              Further
                Assurances

            	
              25

            
	 	
              8.15

            	
              Exchanges;
                Lost, Stolen or Mutilated Stock Certificates and Warrants

            	
              25

            
	 	
              8.16

            	
              Certain
                Waivers

            	
              25

            
	 	
              8.17

            	
              Nasdaq
                Compliance

            	
              26

            
	 	
              8.18

            	
              Further
                Assurances

            	
              26

            

    

    

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    Exhibit
      & Schedules List

    

      
        	
                Exhibit
                  A

              	
                -

              	
                Form
                  of Registration Rights Agreement Amendment

              
	
                Exhibit
                  B

              	
                -

              	
                Form
                  of Certificate of Amendment

              
	
                Exhibit
                  C

              	
                -

              	
                Form
                  of Warrant

              
	
                Exhibit
                  D

              	
                -

              	
                Form
                  of Subordination Agreement

              
	
                Exhibit
                  E

              	
                -

              	
                Pro-Forma
                  Capitalization Table

              
	 	 	 
	
                Schedule
                  I

              	
                -

              	
                Names
                  and Addresses of Purchasers

              
	
                Schedule
                  II

              	
                -

              	
                Schedule
                  of Securities Purchased

              

      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    MTM
      TECHNOLOGIES, INC.

     

    PURCHASE
      AGREEMENT

     

    THIS
      PURCHASE AGREEMENT (this “Agreement”)
      is
      made on the 29th day of March, 2007, by and among MTM Technologies, Inc., a
      New
      York corporation (the “Company”),
      and
      the purchasers listed on Schedule
      I
      hereto,
      each of which is herein referred to as a “Purchaser”,
      and
      collectively, as the “Purchasers”.

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      subject to the terms and conditions set forth herein, the Company desires to
      issue and sell to the Purchasers on the Closing Date (i) 2,020,202 shares of
      Series A-6 Preferred Stock (the “Series
      A-6 Purchased Shares”)
      and
      detachable warrants to purchase up to 610,000 shares (as such amount may be
      adjusted in accordance with the terms thereof) of Common Stock (each, a
“Warrant”
and,
      collectively, the “Warrants”),
      and
      the Purchasers shall purchase the Series A-6 Purchased Shares and Warrants
      from
      the Company on the terms and conditions set forth herein;

     

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

     

    WHEREAS,
      subject to the terms and conditions set forth herein, the Company desires to
      grant certain registration rights to the Purchasers with respect to the shares
      of Common Stock issuable from time to time upon conversion of the Series A-6
      Purchased Shares purchased by the Purchasers and the exercise of the Warrants
      and, on or prior to the Closing Date, the Company will cause that certain
      Registration Rights Agreement, dated December 10, 2004, as amended, among the
      Company, the Purchasers and certain individuals named therein, to be amended
      by
      an amendment in substantially the form attached hereto as Exhibit
      A
      (the
“Registration
      Rights Agreement Amendment”),
      to
      grant the Purchasers such registration rights;

     

    WHEREAS,
      the Independent Committee of the Board of Directors has approved the execution
      and delivery of this Agreement and the transactions contemplated hereby,
      including without limitation, the issuance of the Certificate of Amendment
      with
      respect to the Series A-6 Preferred Stock attached hereto as Exhibit
      B
      (the
“Certificate
      of Amendment”),
      the
      issuance of Series A-6 Purchased Shares and the Warrants and the issuance of
      any
      Common Stock issuable upon conversion or exercise of the foregoing, all on
      the
      terms and conditions set forth below;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    1.    
Purchase
      and Sale of the Series A-6 Purchased Shares and Warrants.

     

    1.1    Authorization
      of Issuance of the Series A-6 Purchased Shares and Warrants. 
      Subject to the terms and conditions of this Agreement, on or prior to the
      Closing Date, the Company shall have authorized the issuance and sale to the
      Purchasers of (i) the Series A-6 Purchased Shares and (i) the Warrants,
      substantially in the form attached hereto as Exhibit C.

     

    1.2    Purchase
      and Sale of Series A-6 Purchased Shares and Warrants. 
      Subject to the terms and conditions of this Agreement, each Purchaser, severally
      and not jointly, agrees to purchase at the Closing, and the Company agrees
      to
      issue and sell to each such Purchaser at the Closing (i) the number of Series
      A-6 Purchased Shares set forth opposite such Purchaser’s name under the heading
“Number
      of Series A-6 Purchased Shares”
on
      Schedule
      II
      and (ii)
      Warrants for the number of shares of Common Stock set forth opposite such
      Purchaser’s name under the heading “Number
      of Warrant Shares”
on
      Schedule
      II
      hereto,
      in exchange for the amount set forth opposite such Purchaser’s name under the
      heading “Series
      A-6 Shares Purchase Price”
and
      “Warrant
      Purchase Price”
on
      Schedule
      II
      hereto.

     

    1.3    Use
      of
      Proceeds. 
      The Company agrees to use the net proceeds from the sale and issuance of the
      Series A-6 Purchased Shares and the Warrants (together, the “Purchased
      Securities”)
      pursuant to this Agreement for working capital and other general corporate
      purposes.

     

    1.4    Closing. 
      The purchase and sale of the Purchased Securities shall take place at the
      offices of Thelen Reid Brown Raysman & Steiner LLP, 875 Third Avenue, New
      York, New York 10022, promptly upon the satisfaction or waiver of the closing
      conditions set forth in Section 4.1 and 4.2 hereto, but not later than April
      3,
      2007, or on such other date and at such other time as the Company and Purchasers
      mutually agree in writing (which time and place are designated as the
“Closing”).
      The
      date of the Closing is referred to herein as the “Closing
      Date.”
At
      the
      Closing, the Company shall deliver to each Purchaser (i) shares of Series A-6
      Purchased Shares in the amount set forth opposite such Purchaser’s name under
      the heading “Number
      of Series A-6 Purchased Shares”
on
      Schedule
      II
      hereto
      and (ii) Warrants entitling such Purchaser to purchase the number of shares
      of
      Common Stock set forth opposite such Purchaser’s name under the heading
“Number
      of Warrant Shares”
on
      Schedule
      II
      hereto,
      all against payment in the amounts set forth opposite such Purchaser’s name
      under the heading “Series
      A-6 Shares and Warrant Purchase Price”
on
      Schedule
      II
      hereto,
      by wire transfer of immediately available funds to such account as the Company
      designates. The Closing shall not occur, and the Company shall have no
      obligation to make such deliveries, unless the Purchasers purchase and pay
      for
      the aggregate number of Series A-6 Purchased Shares and the Warrants set forth
      on Schedule
      II
      hereto.
      The Company shall pay any documentary stamp or similar issue or transfer taxes
      due as a result of the issuance and sale of the Series A-6 Purchased Shares
      and
      the Warrants. 

     

    1.5   Additional
      Issuance.
      

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (a)   Subject
      to the terms and conditions of this Agreement, the Company agrees to issue
      and
      sell and each of (a) Pequot Private Equity Fund III, L.P. and Pequot Offshore
      Private Equity Partners III, L.P. (together, the “Pequot Purchasers”) and (b)
      Constellation Venture Capital II, L.P., Constellation Venture Capital Offshore
      II, L.P., The BSC Employee Fund VI, L.P. and CVC II Partners, LLC (together,
      the
“Constellation Purchasers”) shall have the right, on or prior to April 10, 2007,
      to purchase, additional shares of Series A-6 Preferred Stock and detachable
      warrants to purchase shares of Common Stock on the same terms and conditions
      as
      set forth herein with respect to the Series A-6 Purchased Shares and the
      Warrants (the “Additional
      Series A-6 Purchased Shares and Additional Warrants”).
      

     

    (b)   The
      Pequot Purchasers may allocate up to $1,000,000 Additional Series A-6 Purchased
      Shares and Additional Warrants among themselves in such manner as the Pequot
      Purchasers may agree. The Constellation Purchasers may allocate up to $1,000,000
      Additional Series A-6 Purchased Shares and Additional Warrants among themselves
      in such manner as the Constellation Purchasers may agree. If either the Pequot
      Purchasers or the Constellation Purchasers do not purchase all of the Additional
      Series A-6 Purchased Shares and Additional Warrants that they are entitled
      to
      purchase, the other Purchasers may purchase such Additional Series A-6 Purchased
      Shares and Additional Warrants in such amounts as such Purchasers may agree.
      

     

    (c)   The
      Purchasers may exercise the right to purchase Additional Series A-6 Purchased
      Shares and Additional Warrants by giving notice to the Company, at least two
      business days prior to the date of such purchase which date shall be set forth
      in such notice. Such date of purchase shall be a Closing Date and the time
      and
      place of such purchase shall be a Closing for purposes of this Agreement. The
      Additional Series A-6 Purchased Shares and Additional Warrants purchased at
      such
      Closing shall be deemed to be Series A-6 Purchased Shares and Warrants for
      all
      purposes of this Agreement. The obligations of each of the Purchasers and the
      Company at such Closing shall be subject to satisfaction of the respective
      conditions of the Purchasers’ obligations and the Company’s obligations, as set
      forth in Section 4 hereof.

     

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

     

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

     

    2.2   Certificate
      of Incorporation and Bylaws. 
      The Company has delivered to the Purchasers true, correct, and complete copies
      of the Company’s certificate of incorporation

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    as
      in
      effect on the date hereof (the “Existing
      Certificate”)
      and
      the Company’s bylaws as in effect on the date hereof (the “Bylaws”).

     

    2.3   Corporate
      Power and Authority. 
      The Company has all requisite corporate power and authority to execute and
      deliver the Transaction Documents to which it is a party. The Company has all
      requisite corporate power and authority to issue and sell the Series A-6
      Purchased Shares and the Warrants to the Purchasers hereunder. The Company
      has
      all requisite corporate power and authority to carry out and perform its
      obligations under the terms of the Transaction Documents. The Company has all
      requisite corporate power and authority to sell and issue the Common Stock
      issuable upon conversion of the Series A-6 Preferred Stock and the exercise
      of
      the Warrants (together, the “Conversion
      Shares”).
      The
      Conversion Shares have been duly reserved for issuance and when issued will
      be
      duly and validly issued, fully paid and nonassessable.

     

    2.4   Capitalization. 
      (a)  Immediately prior to the Closing, the authorized capital stock of the
      Company consists of 120,000,000, of which (i) 80,000,000 are designated as
      Common Stock; and (ii) 40,000,000 are designated as Preferred Stock, of which
      (A) 31,000,000 are designated as “Series A Preferred Stock” as follows:
      4,200,000 are designated Series A-1 Preferred Stock of which 3,353487 are issued
      and outstanding, 2,600,000 of which are designated Series A-2 Preferred Stock
      of
      which 2,059,999 are issued and outstanding, 7,200,000 of which are designated
      Series A-3 Preferred Stock of which 3,961,536 are issued and outstanding,
      9,000,000 of which are designated Series A-4 Preferred Stock of which 8,081,315
      are issued and outstanding and 8,000,000 of which are designated Series A-5
      Preferred Stock of which 3,169,227 are issued and outstanding Shares of the
      authorized Common Stock have been reserved as follows: (i) 250,000 shares of
      the
      authorized Common Stock have been reserved for issuance pursuant to the exercise
      of stock options granted or to be granted after the date hereof under the 1993
      Stock Option Plan of the Company, (ii) 350,000 shares of the authorized Common
      Stock have been reserved for issuance pursuant to the exercise of stock options
      granted or to be granted after the date hereof under the 1996 Stock Option
      Plan
      of the Company, (iii) 250,000 shares of the authorized Common Stock have been
      reserved for issuance pursuant to the exercise of stock options granted or
      to be
      granted after the date hereof under the 1998 Stock Option Plan of the Company,
      (iv) 350,000 shares of the authorized Common Stock have been reserved for
      issuance pursuant to the exercise of stock options granted or to be granted
      after the date hereof under the 2000 Long-Term Performance Plan of the Company,
      (v) 250,000 shares of the authorized Common Stock have been reserved for
      issuance pursuant to the exercise of stock options granted or to be granted
      after the date hereof under the 2002 Long-Term Performance Plan of the Company,
      (vi) 4,000,000 shares of the authorized Common Stock have been reserved for
      issuance pursuant to the exercise of stock options granted or to be granted
      after the date hereof under the 2004 Equity Incentive Plan of the Company (the
      stock options described in clauses (i) through (vi), collectively, the
“Options”), (vii) 4,200,000 shares of the authorized Common Stock have been
      reserved for issuance upon conversion of the Series A-1 Preferred Stock, (viii)
      2,600,000 shares of the authorized Common Stock have been reserved for issuance
      upon conversion of the Series A-2 Preferred Stock, (ix) 7,200,000 shares of
      the
      authorized Common Stock have been reserved for issuance upon conversion of
      the
      Series A-3 Preferred Stock, (x) 9,000,000 shares of the authorized Common Stock
      have been reserved for issuance upon conversion of the Series A-4 Preferred
      Stock, (xi) 8,000,000 shares of the authorized Common Stock have been reserved
      for issuance upon conversion of the Series A-5 Preferred

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Stock,
      (xii) 500,000 shares of the Common Stock have been reserved for issuance
      pursuant to the exercise of the Series A-1 Warrants, (xiii) 400,000 shares
      of
      the authorized Common Stock have been reserved for issuance pursuant to the
      exercise of the Series A-2 Warrants, (xiv) 769,232 shares of the authorized
      Common Stock have been reserved for issuance pursuant to the exercise of the
      Series A-3 Warrants, (xv) 1,538,461 shares of the authorized Common Stock have
      been reserved for issuance pursuant to the exercise of the Series A-4 Warrants,
      (xvi) 450,000 shares of the authorized Common Stock have been reserved for
      issuance pursuant to the exercise of the Series A-5 Warrants, (xvii) 700,000
      shares of the authorized Common Stock have been reserved for issuance pursuant
      to the exercise of warrants issued to Columbia Partners, Investment Management,
      (xviii) 846,513 shares of Series A-1 Preferred Stock have been reserved for
      issuance as dividends with respect to the Series A-1 Preferred Stock, (xix)
      540,001 shares of Series A-2 Preferred Stock have been reserved for issuance
      as
      dividends with respect to the Series A-2 Preferred Stock, (xxv) 3,238,464 shares
      of Series A-3 Preferred Stock have been reserved for issuance as dividends
      with
      respect to the Series A-3 Preferred Stock, (xxi) 918,685 shares of Series A-4
      Preferred Stock have been reserved for issuance as dividends with respect to
      the
      Series A-4 Preferred Stock, (xxii) 4,830,773 shares of Series A-5 Preferred
      Stock have been reserved for issuance as dividends with respect to the Series
      A-5 Preferred Stock (xxiii) 250,000 shares of authorized Common Stock have
      been
      reserved for issuance in connection with the Company’s acquisition of Nexl Inc.
      The rights, privileges and preferences of the Series A-1 Preferred Stock, Series
      A-2 Preferred Stock, Series A-3 Preferred Stock, Series A-4 Preferred Stock
      and
      Series A-5 Preferred Stock are as stated in the Existing Certificate. As of
      the
      date hereof, all issued and outstanding shares of the Company’s capital stock
      are duly authorized and validly issued, are fully paid and nonassessable. Except
      with respect to (i) 3,246,370 options to purchase shares of Common Stock and
      385,800 restricted stock units representing the right to acquire shares of
      Common Stock, in each case issued pursuant to the Company’s equity incentive
      plans, (ii) 3,657,693 warrants to purchase shares of Common Stock issued to
      the
      Purchasers in connection with the original issuance and sale of the Series
      A-1
      Preferred Stock, Series A-2 Preferred Stock, Series A-3 Preferred Stock, Series
      A-4 Preferred Stock and Series A-5 Preferred Stock, and (iii) 700,000 warrants
      to purchase shares of Common Stock issued to Columbia Partners Investment
      Management there are no options, warrants, conversion privileges, or preemptive
      or other rights or agreements presently outstanding to purchase or otherwise
      acquire from the Company any shares of the capital stock or other securities
      of
      the Company. Except for the Voting Agreement and the Shareholders Agreement,
      the
      Company has not entered into any agreements with any of its shareholders with
      respect to the voting of capital shares of the Company and to the Knowledge
      of
      the Company none of its shareholders are parties to such agreements. Except
      as
      aforesaid and as contemplated in the Transaction Documents, the Company is
      not a
      party to any agreement or understanding, and to its Knowledge, no shareholders
      are a party to such an agreement or understanding, that affects or relates
      to
      the voting or giving of written consents with respect to any security, or the
      voting by a director, of the Company. Except as aforesaid, to the Company’s
      Knowledge, no shareholder has granted options or other rights to any entity
      (other than the Company) to purchase any shares of Common Stock or other equity
      securities of the Company from such shareholder. The Company is not subject
      to
      any obligation (contingent or otherwise) to repurchase or otherwise to acquire
      or retire any shares of its capital stock. Except with respect to the issuance
      of 600,732 shares of Series A Preferred Stock on November 11, 2006 in
      satisfaction of the dividend obligations under the terms of the Series A
      Preferred Stock, the Company has not declared or

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    paid
      any
      dividend or made any other distribution of cash, stock or other property to
      its
      shareholders. 

     

    (b)   Upon
      acceptance of the Certificate of Amendment by the Secretary of State of the
      State of New York the Series A-6 Preferred Stock shall be designated and shall
      have all such rights, including, without limitation, voting rights as set forth
      in the Certificate of Amendment.

     

    2.5   Authorization. 
      The execution, delivery and performance by the Company of the Transaction
      Documents, the sale, issuance and delivery of the Purchased Securities and
      the
      performance of all of the obligations of the Company under each of the
      Transaction Documents have been authorized by the Board of Directors (or a
      duly
      authorized committee thereof), and, other than approvals required by the Nasdaq
      Stock Market (“Nasdaq”),
      no
      other corporate action on the part of the Company or any Subsidiary and no
      other
      corporate or other approval or authorization is required on the part of the
      Company, or any Person by Law or otherwise in order to make the Transaction
      Documents the valid, binding and enforceable obligations (subject to (i) laws
      of
      general application relating to bankruptcy, insolvency, and the relief of
      debtors, and (ii) rules of law governing specific performance, injunctive
      relief, or other equitable remedies) of the Company. Each of the Transaction
      Documents, when executed and delivered by the Company, will constitute a valid
      and legally binding obligation of the Company, enforceable against the Company
      in accordance with its respective terms, subject to (i) laws of general
      application relating to bankruptcy, insolvency, and the relief of debtors,
      and
      (ii) rules of law governing specific performance, injunctive relief, or other
      equitable remedies. 

     

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

     

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

     

    2.8   Offering
      Exemption. 
      Assuming the truth and accuracy of the representations and warranties contained
      in Section 3, the offer and sale of the Purchased Securities as contemplated
      hereby and the issuance and delivery to the Purchasers of the Purchased
      Securities and the Conversion Shares, are exempt from registration under
      the

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Securities
      Act of 1933, as amended (the “Securities
      Act”),
      and
      will be registered or qualified (or exempt from registration or qualification)
      under applicable state securities and “blue sky” laws, as currently in
      effect.

     

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

     

    2.10   SEC
      Reports. 
      (a)  The Company has filed all required forms, reports and documents with
      the Securities and Exchange Commission (the “SEC”)
      since
      April 1, 2001, each of which has complied in all material respects with all
      applicable requirements of the Securities and the Securities Exchange Act of
      1934, as amended (the “Exchange
      Act”),
      and
      the rules and regulations promulgated thereunder, each as in effect on the
      date
      such forms, reports and documents were filed. 

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    3.4   Purchase
      Entirely for Own Account. 
      The Purchased Securities and the Conversion Shares (collectively, the
“New
      Securities”)
      will
      be acquired for investment for such Purchaser’s own account, not as a nominee or
      agent, and not with a view to the resale or distribution of any part thereof.
      Such Purchaser’s principal office is listed on Exhibit
      I
      attached

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    hereto.
      Such Purchaser is aware that the Company is issuing the New Securities pursuant
      to Section 4(2) of the Securities Act and Regulation D promulgated thereunder
      without complying with the registration provisions of the Securities Act or
      other applicable federal or state securities laws. Such Purchaser is also aware
      that the Company is relying upon, among other things, the representations and
      warranties of the Purchasers contained in this Agreement for purposes of
      complying with Regulation D. 

     

    3.5   Disclosure
      of Information. 
      Such Purchaser has received and carefully reviewed all the information it
      considers necessary or appropriate for deciding whether to purchase the New
      Securities. Such Purchaser further represents that the Company has made
      available to such Purchaser, at a reasonable time prior to the date of this
      Agreement, an opportunity to (a) ask questions and receive answers from the
      Company regarding the terms and conditions of the offering of the New Securities
      and the business, properties and financial condition of the Company, all of
      which questions (if any) have been answered to the reasonable satisfaction
      of
      such Purchaser, and (b) obtain additional information, all of which was
      furnished by the Company to the reasonable satisfaction of such Purchaser.
      The
      foregoing, however, does not limit or modify the representations and warranties
      of the Company in Section 2 of this Agreement or the right of the Purchasers
      to
      rely thereon.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    REGISTRATION
      UNDER APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM UNDER THE
      ACT
      AND THE RULES AND REGULATIONS THEREUNDER AND SUCH APPLICABLE STATE SECURITIES
      LAWS.

     

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

     

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

     

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

     

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

     

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

     

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

     

    4.    
Conditions
      of the Parties.

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    (j)   Series
      A-6 Purchased Shares. 
      The Company shall deliver to each Purchaser its respective Series A-6 Purchased
      Shares.

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    (h)   Subordination
      Agreement. 
      The Subordination Agreement substantially in the form attached hereto as Exhibit
      D shall have been executed by the Purchasers. 

     

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

     

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

     

    5.2   Certain
      Other Reports and Information. 
      The Company shall deliver to the Purchasers, within 30 days of issuance, all
      accountants’ management letters pertaining to, all other reports submitted by
      accountants in connection with any audit of, and all other reports from outside
      accountants with respect to, the Company and its Subsidiaries (and, in any
      event, any

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    independent
      auditors’ annual management letters, if issued, will be delivered to the
      Purchasers concurrently with the financial statements referred to in Section
      5.1).

     

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

     

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

     

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

     

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

     

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

     

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

     

    5.5   Visitation;
      Verification. 
      The Company shall permit such Persons as the Purchasers may designate from
      time
      to time to visit and inspect any of the properties of the Company to examine
      their respective assets, properties, offices and other facilities, and books
      and
      records and take copies and extracts therefrom, and access to the outside
      auditors of the Company and their work papers relating thereto, in each case,
      as
      the Purchasers may from time to time reasonably request, and to discuss their
      affairs with their directors, officers, employees and independent accountants
      at
      such times and as often as the Purchasers may reasonably

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    request;
      provided
      that (i)
      any such Person shall provide at least two days’ prior advance notice to the
      Company of its intention to visit or inspect any of the properties of the
      Company; and (ii) all such visits or inspections shall be conducted during
      the
      normal business hours of the Company and without undue interference with the
      conduct of the Company’s business. The Company shall reimburse the Purchasers
      for reasonable out-of-pocket costs and expenses of for all inspections in any
      calendar year; for all other times all such visits or inspections shall be
      at
      the sole cost and expense of the Purchasers. The parties hereto agree that
      no
      investigation by the Purchasers or their representatives shall affect or limit
      the scope of the representations and warranties of the Company contained herein
      or in any Transaction Document delivered pursuant hereto or limit liability
      for
      breach of any such representation or warranty.

     

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

     

    5.6   Insurance.

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    6.    Indemnification.

     

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

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    breach
      of
      any of the representations, warranties, covenants or agreements made by such
      Purchaser in this Agreement or any of the other Transaction Documents, except
      to
      the extent that such Losses are a result of the gross negligence, willful
      misconduct or fraud of such Company Entity. 

     

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

     

    6.3   Claim
      Notice; Right to Defend. 
A
      party seeking indemnification (the “Indemnified
      Party”)
      under
      this Section 6 shall promptly upon becoming aware of the facts indicating that
      a
      claim for indemnification may be warranted, give to the Indemnifying Party
      a
      claim notice relating to such Loss (a “Claim
      Notice”).
      Each
      Claim Notice shall specify the nature of the claim, the applicable provision(s)
      of this Agreement or other instrument under which the claim for indemnity
      arises, and, if possible, the amount or the estimated amount thereof. No failure
      or delay in giving a Claim Notice (so long as the same is given prior to
      expiration of the representation or warranty upon which the claim is based)
      and
      no failure to include any specific information relating to the claim (such
      as
      the amount or estimated amount thereof) or any reference to any provision of
      this Agreement or other instrument under which the claim arises shall affect
      the
      obligation of the Indemnifying Party unless such failure materially and
      adversely prejudices the Indemnifying Party. If such Loss relates to the
      commencement of any action or proceeding by a third person, the Indemnified
      Party shall give a Claim Notice to the Indemnifying Party regarding such action
      or proceeding and the Indemnifying Party shall be entitled to participate
      therein to assume the defense thereof with counsel reasonably satisfactory
      to
      the Indemnified Party. After the delivery of notice from the Indemnifying Party
      to the Indemnified Party of its election to assume the defense of such action
      or
      proceeding, the Indemnifying Party shall not be liable (except to the extent
      the
      proviso to this sentence is applicable, in which event it will be so liable)
      to
      the Indemnified Party under this Section 8 for any legal or other expenses
      subsequently incurred by the Indemnified Party in connection with the defense
      thereof other than reasonable costs of investigation, provided
      that
      each Indemnified Party shall have the right to employ separate counsel to
      represent it and assume its defense (in which case, the Indemnifying Party
      shall
      not represent it) if (i) upon the advice of counsel, the representation of
      both
      parties by the same counsel would be inappropriate due to actual or potential
      differing interests between them, (ii) in the event the Indemnifying Party
      has
      not assumed the defense thereof within 10 days of receipt of notice of such
      claim or commencement of action, and in which case the fees and expenses of
      one
      such separate counsel shall be paid by the Indemnifying Party or (iii) if such
      Indemnified Party who is a defendant in any action or proceeding which is also
      brought against the Indemnifying Party reasonably shall have concluded that
      there may be one or more legal defenses available to such Indemnified
      Party

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    which
      are
      not available to the Indemnifying Party. If any Indemnified Party employs such
      separate counsel it will not enter into any settlement agreement which is not
      approved by the Indemnifying Party, such approval not to be unreasonably
      withheld. If the Indemnifying Party so assumes the defense thereof, it may
      not
      agree to any settlement of any such claim or action as the result of which
      any
      remedy or relief, other than monetary damages for which the Indemnifying Party
      shall be responsible hereunder, shall be applied to or against the Indemnified
      Party, without the prior written consent of the Indemnified Party. In any action
      hereunder as to which the Indemnifying Party has assumed the defense thereof
      with counsel reasonably satisfactory to the Indemnified Party, the Indemnified
      Party shall continue to be entitled to participate in the defense thereof,
      with
      counsel of its own choice, but, except as set forth above, the Indemnifying
      Party shall not be obligated hereunder to reimburse the Indemnified Party for
      the costs thereof.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    “Environmental
      Claim”
shall
      mean, with respect to any Person, any action, suit, proceeding, notice, claim,
      complaint, demand, request for information or other communication (written
      or
      oral) against, of or to such Person by or from any other Person (including
      any
      Governmental Authority, citizens’ group or present or former employee of such
      Person) alleging, asserting or claiming any actual or potential (a) violation
      of
      or liability under any applicable environmental Law or regulation or (b)
      liability for investigatory costs, cleanup costs, governmental response costs,
      natural resources damages, personal injuries, fines or penalties arising out
      of,
      based on or resulting from the presence, or release into the environment, of
      any
      Hazardous Materials at any location, whether or not owned by such
      Person.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Series
      A-6 Preferred Stock”
shall
      mean the Series A-6 Preferred Stock, $0.001 par value per share, of the
      Company.

     

    “Series
      A-6 Purchased Shares”
shall
      have the meaning ascribed to it in the recitals.

     

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

     

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

     

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

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      Unless
        otherwise specified to the contrary herein, Subsidiary(ies) shall refer to
        the
        Company’s Subsidiary(ies).

       

    

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

     

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

     

    8.    Miscellaneous.

     

    8.1   Survival
      of Representations and Warranties. 
      The representations and warranties of the Company and Purchasers contained
      in or
      made pursuant to this Agreement shall survive the execution and delivery of
      this
      Agreement and the other Transaction Documents until the date that is three
      months following the end of the second fiscal year of the Company ending after
      the Closing Date.

     

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

     

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

     

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

     

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

     

    8.6   Notices. 
      All notices and other communications required or permitted hereunder shall
      be in
      writing. Notices shall be delivered personally, via recognized overnight courier
      (such as Federal Express, DHL or Airborne Express) or via certified or
      registered mail. Notices may be delivered via facsimile or e-mail, provided
      that
      by no later than two days

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    thereafter
      such notice is confirmed in writing and sent via one of the methods described
      in
      the previous sentence. Notices shall be addressed as follows:

     

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

     

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

     

    All
      notices shall be effective upon receipt.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    8.13   Other
      Remedies. 
      In addition to those remedies specifically set forth herein and in the
      Transaction Documents, if any, each party may proceed to protect and enforce
      its
      rights under this Agreement and the Transaction Documents either by suit in
      equity and/or by action at law, including, but not limited to, an action for
      damages as a result of any such breach and/or an action for specific performance
      of any such covenant or agreement contained in this Agreement or in the
      Transaction Documents. No right or remedy conferred upon or reserved to any
      party under this Agreement or the Transaction Documents is intended to be
      exclusive of any other right or remedy, and every right and remedy shall be
      cumulative and in addition to every other right and remedy given under this
      Agreement and the Transaction Documents or now and hereafter existing under
      applicable law. 

     

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

     

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

     

    8.16   Certain
      Waivers. To
      the
      extent that any Purchaser has or holds preemptive rights, such Purchaser hereby
      waives any and all preemptive rights that it may have with respect to the
      Purchased Securities and the issuance of any Common Stock issuable upon
      conversion or exercise of the Purchased Securities pursuant to this Agreement.
      

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    8.17   Nasdaq
      Compliance. 
      Article FOURTH (B)(4)(a)(v) of the Existing Certificate provides for certain
      adjustments to be made to the Series A Conversion Price (as defined therein)
      upon the occurrence of certain events listed therein. The Company shall not
      issues any Series A-6 Preferred Shares or Warrants or common stock of the
      Company pursuant to such provision without compliance with Rule 4350 of the
      Nasdaq Rules, specifically, obtaining shareholder approval prior to such
      issuance, if so required.

     

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

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	
              The
                Company:

               

              MTM
                TECHNOLOGIES, INC.

               

               

            
	 	
              By:

            	 
	 	 	
              Name: 
                Francis
                J. Alfano

              Title:   
                Chief
                Executive Officer

            

    

    

    
      
        
        

      

      
        Signature
          Page to Purchase Agreement

        
          

        

      

      
        
        

    

     

    
      	 	
              The
                Purchasers:

               

              PEQUOT
                PRIVATE EQUITY FUND III, L.P.

               

              By:  Pequot
                Capital Management, Inc.,

                  its
                Investment Manager

               

               

            
	 	 	
              By:

            	 
	 	 	 	
              Name:

              Title:

            
	 	 	 	 
	 	
              PEQUOT
                OFFSHORE PRIVATE EQUITY

              PARTNERS
                III, L.P.

               

              By:  Pequot
                Capital Management, Inc.,

                  its
                Investment Manager

               

               

            
	 	 	
              By:

            	 
	 	 	 	
              Name:

              Title:

            

    

    

    
      
        
        

      

      
        Signature
          Page to Purchase Agreement

        
          

        

      

      
        
        

      

    

     

    
      	 	
              The
                Purchasers:

               

              CONSTELLATION
                VENTURE CAPITAL II, L.P.

               

              By:  Constellation
                Ventures Management II, LLC

                  Its
                General Partner

               

               

            
	 	 	
              By:

            	 
	 	 	 	
              Name:

              Title:

            
	 	 	 	 
	 	
              CONSTELLATION
                VENTURE CAPITAL OFFSHORE II, L.P.

               

              By:  Constellation
                Ventures Management II, LLC

                  Its
                General Partner

               

               

            
	 	 	
              By:

            	 
	 	 	 	
              Name:

              Title:

            
	 	 	 	 
	 	
              THE
                BSC EMPLOYEE FUND VI, L.P.

               

              By:  Constellation
                Ventures Management II, LLC

                  Its
                General Partner

               

               

            
	 	 	
              By:

            	 
	 	 	 	
              Name:

              Title:

            
	 	 	 	 
	 	
              CVC
                II PARTNERS, LLC

               

              By:  The
                Bear Stearns Companies Inc.

                  Its
                Managing Member

               

               

            
	 	 	
              By:

            	 
	 	 	 	
              Name:

              Title:

            

    

    

    
      
        
        

      

      
        Signature
          Page to Purchase Agreement

        
          

        

      

      
        
        

      

    

     

    Schedule
      I

     

    Names
      and Addresses of Purchasers

     

    Pequot
      Private Equity Fund III, L.P.

    c/o
      Pequot Capital Management, Inc.

    500
      Nyala
      Farm Road

    Westport,
      Connecticut 06880

    Attention:
      Carlos Rodrigues

    Fax:
      (203) 429-2420

     

    with
      a
      copy to:

     

    Aryeh
      Davis

    c/o
      Pequot Capital Management, Inc.

    153
      East
      53rd Street

    New
      York,
      New York 10022

    Fax:
      (212) 651-3481

     

    Pequot
      Offshore Private Equity Partners III, L.P.

    c/o
      Pequot Capital Management, Inc.

    500
      Nyala
      Farm Road

    Westport,
      Connecticut 06880

    Attention:
      Carlos Rodrigues

    Fax:
      (203) 429-2420

     

    with
      a
      copy to:

     

    Aryeh
      Davis

    c/o
      Pequot Capital Management, Inc.

    153
      East
      53rd Street

    New
      York,
      New York 10022

    Fax:
      (212) 651-3481

     

    Constellation
      Venture Capital II, L.P.

    c/o
      Constellation Ventures

    383
      Madison Avenue

    28th
      Floor

    New
      York,
      New York 10179

     

    with
      a
      copy to:

     

    
      
        
        

      

      
        Schedule
          I
– Page
          1

        
          

        

      

      
        
        

      

    

     

    Heather
      M. Stone, Esq.

    Edwards
      Angell Palmer & Dodge LLP

    111
      Huntington Avenue

    Boston,
      MA 02199-7613 USA

    Fax:
      888.325.9712

     

    Constellation
      Venture Capital Offshore II, L.P.

    c/o
      Constellation Ventures

    383
      Madison Avenue

    28th
      Floor

    New
      York,
      New York 10179

     

    The
      BSC
      Employee Fund VI, L.P.

    c/o
      Constellation Ventures

    383
      Madison Avenue

    28th
      Floor

    New
      York,
      New York 10179

     

    CVC
      Partners II, LLC

    c/o
      Constellation Ventures

    383
      Madison Avenue

    28th
      Floor

    New
      York,
      New York 10179

     

    
      
        
        

      

      
        Schedule
          I
– Page
          2

        
          

        

      

      
        
        

      

    

     

    Schedule
      II

     

    Schedule
      of Securities Purchased

     

    
      	
              NAME
                OF PURCHASER

            	
              NUMBER
                OF SERIES A-6 PURCHASED SHARES

            	
              NUMBER
                OF WARRANT SHARES

            	
              SERIES
                A-6 SHARES AND WARRANT PURCHASE PRICE

            
	
              Pequot
                Private Equity Fund III, L.P.

            	
              1,317,019

            	
              397,674

            	
              $1,955,773.22

            
	
              Pequot
                Offshore Private Equity Partners III, L.P.

            	
              185,657

            	
              56,059

            	
              $275,700.65

            
	
              Constellation
                Venture Capital II, L.P.

            	
              258,367

            	
              78,014

            	
              $383,675.00

            
	
              Constellation
                Venture Capital Offshore II, L.P.

            	
              137,491

            	
              41,515

            	
              $204,174.14

            
	
              The
                BSC Employee Fund VI, L.P.

            	
              115,216

            	
              34,790

            	
              $171,095.76

            
	
              CVC
                Partners II, LLC

            	
              6,452

            	
              1,948

            	
              $9,581.22

            
	
              Totals

            	
              2,020,202

            	
              610,000

            	
              $3,000,000

            

    

    

    
      
        
        

      

      
        Schedule
          II– Page
          1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    Form
      of Registration Rights Agreement Amendment

     

     

    
      
        
        

      

      
        Exhibit
          A
– Page
          1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

    Certificate
      of Amendment

     

    

    
      
        
        

      

      
        Exhibit
          B
– Page
          1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      C

     

    Form
      of Warrant

     

    

    
      
        
        

      

      
        Exhibit
          C
– Page
          1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      D

     

    Form
      of Subordination Agreement

     

    

    
      
        
        

      

      
        Exhibit
          D
– Page
          1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      E

     

    Pro
      Forma Capitalization Table

     

     

    
      
        
        

      

      
        Exhibit
          E
– Page
          1Form of A-6 Warrant

     

    Exhibit
      10.2

     

    THIS
      WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED PURSUANT TO THE
      EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF
      1933, AS AMENDED (THE “ACT”), AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
      TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR
      AN
      EXEMPTION THEREFROM UNDER THE ACT AND THE RULES AND REGULATIONS
      THEREUNDER.

     

    THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT
      TO
      THE TERMS AND CONDITIONS OF A PURCHASE AGREEMENT DATED MARCH __, 2007, AS
      AMENDED, BY AND AMONG THE COMPANY AND THE PURCHASERS NAMED THEREIN. A COPY
      OF
      SUCH AGREEMENT WILL BE FURNISHED TO THE RECORD HOLDER OF THIS WARRANT WITHOUT
      CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF
      BUSINESS.

     

    THE
      SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO THE TERMS AND CONDITIONS OF
      AN
      AMENDED AND RESTATED SHAREHOLDERS AGREEMENT WHICH MAY PLACE CERTAIN RESTRICTIONS
      ON THE VOTING OF SUCH SECURITIES (INCLUDING THE GRANT OF AN IRREVOCABLE PROXY
      RELATIVE TO VOTING MATTERS). A COPY OF SUCH AGREEMENT WILL BE FURNISHED TO
      THE
      RECORD HOLDER OF THIS SECURITY WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
      COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

      
        	
                No.
                  W-A6-

              	
                Void
                  After Expiration Date

                (as
                  defined below)

              

      

       

    

    WARRANT

    

    TO
      PURCHASE COMMON STOCK OF

    

    MTM
      TECHNOLOGIES, INC.

    

    Dated
      March __, 2007

    

    

    THIS
      WARRANT CERTIFIES THAT, for value received, ______________________, or its
      permitted transferees (the “Holder”)
      is
      entitled to purchase from MTM TECHNOLOGIES, INC., a New York corporation (the
      “Company”),
      up to
      the number of fully paid and nonassessable shares (the “Shares”)
      of
      Common Stock, $.001 par value per share, of the Company, as further described
      and defined below. Capitalized terms used herein and not otherwise defined
      shall
      have the meanings ascribed to such terms in that certain Purchase Agreement,
      dated March __, 2007, as amended, by and among the Company, the Holder and
      the
      purchasers named therein (the “Purchase
      Agreement”).

     

     Section  1.  Number
      of Shares.
      The
      maximum number of shares of Common Stock which may be purchased upon the
      exercise of this Warrant is __________.

    

     Section  2.  Exercise
      Price.
      The
      price per share at which the Holder may purchase the Common Stock shall be
      $______ per share (the “Exercise
      Price”),
      as
      adjusted from time to time in accordance with Section 6 hereof.

    

    Section  3.  Expiration
      Date.
      This
      Warrant shall expire at 5:00 p.m. New York Time on March __, 2011 (the
“Expiration
      Date”).
      On
      the Expiration Date, all rights of the Holder to purchase Common Stock pursuant
      to this Warrant shall immediately terminate. 

    

    Section  4.  Exercise
      and Payment.

     

    Section  4.1  Exercise.
      The
      purchase rights represented by this Warrant may be exercised by the Holder,
      in
      whole or in part at any time, by the surrender of this Warrant (together with
      a
      duly executed notice of exercise in the form attached hereto as Exhibit
      A-1)
      at the
      principal office of the Company, and by the payment to the Company, by wire
      transfer of immediately available funds, of an amount equal to the aggregate
      Exercise Price of the Shares being purchased. 

    

    Section  4.2  Net
      Issue Election.
      The
      Holder may elect to receive, without the payment by the Holder of any additional
      consideration, shares equal to the value of this Warrant or any portion hereof
      by the surrender of this Warrant or such portion (together with a duly executed
      notice of exercise in the form attached hereto as Exhibit A-2)
      at the

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    principal
      office of the Company. Thereupon, the Company shall issue to the Holder such
      number of shares of Common Stock as is computed using the following
      formula:

    

    X
      =
Y
      (A-B)

    A

    Where

    

    
      	 	
              X
                =

            	
              the
                number of shares of Common Stock to be issued to the Holder pursuant
                to
                this Section  4.2.

            

    

     

    
      	 	
              Y
                =

            	
              the
                number of shares of Common Stock covered by this Warrant in respect
                of
                which the net issue election is made pursuant to this Section  4.2.

            

    

    

    
      	 	
              A
                =

            	
              the
                Fair Market Value of one share of Common Stock, as determined in
                accordance with Section  7
                herein, as at the time the net issue election is made pursuant to
                this
                Section  4.2.
                

            

    

    

    
      	 	
              B
                =

            	
              the
                Exercise Price in effect under this Warrant at the time the net issue
                election is made pursuant to this Section  4.2.

            

    

    

    Section  4.3  Stock
      Certificates.
      In the
      event of the exercise of all or any portion of this Warrant, certificates for
      the shares of Common Stock so purchased shall be delivered to the Holder by
      the
      Company at the Company's own expense (including the payment by the Company
      of
      any applicable issue taxes or governmental charges imposed in connection with
      the issuance or delivery of the Common Stock) within a reasonable time, which
      shall in no event be later than ten (10) days thereafter and, unless this
      Warrant has been fully exercised or has expired, a new Warrant representing
      the
      Shares with respect to which this Warrant shall not have been exercised shall
      also be issued to the Holder within such time.

     

    If
      this
      Warrant shall be surrendered for exercise within any period during which the
      transfer books for shares of the Common Stock or other securities purchasable
      upon the exercise of this Warrant are closed for any purpose, the Company shall
      not be required to make delivery of certificates for the securities purchasable
      upon such exercise until the date of the reopening of said transfer
      books.

    

    Section  5.  Stock
      Fully Paid; Reservation of Shares.
      All of
      the Shares issuable upon the exercise of this Warrant will, upon issuance and
      receipt of the Exercise Price therefor, be duly authorized, validly issued,
      fully paid and nonassessable with no personal liability attaching to the
      ownership thereof, and free and clear of all taxes, liens, encumbrances and
      charges with respect to the issue thereof. During the period within which this
      Warrant may be exercised, the Company shall at all times have authorized and
      reserved for issuance sufficient shares of its Common Stock to provide for
      the
      exercise of this Warrant.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
       

    

    Section  6.  Adjustment
      of Exercise Price and Number of Shares.
      The
      number and kind of securities purchasable upon the exercise of this Warrant
      and
      the Exercise Price therefor shall be subject to adjustment from time to time
      upon the occurrence of certain events, as follows:

    

    Section  6.1  Adjustments
      for Subdivisions of Common Stock.
      If the
      number of shares of Common Stock outstanding at any time is increased by a
      stock
      dividend payable in shares of Common Stock or by a subdivision or split up
      of
      stock, then the Exercise Price then in effect shall, concurrently with the
      effectiveness of such dividend, subdivision or split up, be proportionately
      decreased and the number of shares of Common Stock issuable upon exercise of
      this Warrant shall be increased in proportion to such increase of outstanding
      shares of Common Stock.

    

    Section  6.2  Adjustments
      for Combinations Common Stock.
      If the
      number of shares of Common Stock outstanding at any time is decreased by a
      combination of the outstanding shares of Common Stock, then the Exercise Price
      then in effect shall, concurrently with the effectiveness of such combination,
      be proportionately increased and the number of shares of Common Stock issuable
      upon exercise of this Warrant shall be decreased in proportion to such decrease
      in outstanding shares of Common Stock.

    

    Section  6.3  Adjustments
      for Reclassification, Exchange and Substitution.
      Upon a
      Notice Event (as defined below), if the Common Stock issuable upon exercise
      of
      this Warrant shall be changed into the same or a different number of shares
      of
      any other class or classes of stock, whether by capital reorganization, merger,
      reclassification or otherwise (other than a subdivision or combination of shares
      provided for above) this Warrant shall thereafter be exercisable into, in lieu
      of the number of shares of Common Stock which the Holder would otherwise have
      been entitled to receive, a number of shares of such other class or classes
      of
      stock equivalent to the number of shares of Common Stock that would have been
      subject to receipt by the Holder upon exercise of this Warrant immediately
      before that change. 

    

    Section  6.4  Notice
      of Certain Events. In
      the
      event (each, a “Notice
      Event”):
      (a) the Company authorizes the issuance to all holders of Common Stock
      rights or warrants to subscribe for or purchase shares of its capital stock,
      or
      any other subscription rights or warrants; (b) the Company authorizes the
      distribution to all holders of Common Stock evidences of indebtedness or assets
      or other securities; (c) of any capital reorganization or reclassification
      of Common Stock, other than a subdivision or combination of the outstanding
      Common Stock and other than a change in par value of the Common Stock;
      (d) of any liquidation or merger to which the Company is a party and for
      which approval of any of the Company's holders of Common Stock is required,
      other than a consolidation or merger in which the Company is the continuing
      corporation and that does not result in any reclassification or change of the
      shares of Common
      Stock
      issuable
      upon the exercise of this Warrant; (e) of the conveyance or transfer of the
      Company's properties and assets, substantially as an entirety; or (f) of the
      Company's voluntary or involuntary dissolution, liquidation or winding-up;
      then,
      in each case, the Company shall cause to be mailed by certified mail to the
      Holder, at least 10 days prior to 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    the
      applicable record or effective date hereinafter specified, a notice stating
      the
      material terms relating to the exercise of the Warrants, the name, title and
      telephone number of a Company representative who shall be available to answer
      any questions relating to such exercise and the dates as of which (i) the
      holders of Common Stock of record will be entitled to receive any such rights,
      warrants or distributions are to be determined, (ii) such Notice Event is
      expected to become effective and (iii) that Holders of record of Warrants
      shall be entitled to exchange or sell their shares of Common
      Stock
      issuable
      upon the exercise of this Warrant for securities or other property, if any,
      deliverable upon such Notice Event. In addition, if the Company receives written
      notice that a purchase, tender or exchange offer has been made to the holders
      of
      more than 50% of the outstanding Common
      Stock,
      the
      Company shall give the Holder reasonable notice (but will not be required to
      give not more than 10 days notice) thereof.

    

    Section  7.  Fractional
      Shares.
      No
      fractional shares of Common
      Stock
      will be
      issued in connection with any exercise hereunder. In lieu of such fractional
      shares the Company shall make a cash payment therefor based upon the fair market
      value of the Common
      Stock
      on such
      date as determined by the board of directors of the Company
      (the
“Board
      of Directors”).

    

    Section  8.  Preemptive
      Rights.
      

    

    (a)  The
      Holder shall be
      entitled to purchase its pro rata share (calculated by multiplying the number
      of
      securities issued in such equity offering including those issued
      pursuant to this Section 8 by a fraction, the numerator of which is the number
      of shares equal
      to
      the sum of (x) the number of issued and outstanding shares of Common Stock
      then
      held by the Holder, plus (y) the total number of shares of Common Stock issuable
      upon the exercise, conversion or exchange of all warrants or other rights to
      subscribe for or to purchase, or any options for the purchase of, Common Stock
      or any stock or security convertible into or exchangeable for Common Stock
      (such
      warrants, rights or options being called “Options”
and
      such convertible or exchangeable stock or securities being called “Convertible
      Securities”)
      that
      are issued and outstanding at such time that are then held by the Holder (the
      sum of (x) and (y), a “Fully
      Diluted Basis”)
      and
      the denominator of which is the number of shares of Common Stock held by all
      such holders of securities of the Company on a Fully
      Diluted Basis) of
      any
      future private equity offering by the Company. 

    

    (b)  Notwithstanding
      anything
      contained in this Section 8(a) to the contrary, the preemptive rights of the
      Holder shall not apply to (a) shares of Common Stock sold to, or options to
      purchase Common Stock granted by the Company to, employees, consultants,
      officers, or directors of the Company pursuant to any option plan, agreement
      or
      other arrangement duly adopted by the Company and approved by a majority of
      the
      Board of Directors; (b) any shares of Common Stock upon the conversion of shares
      of Series A Preferred Stock; (c) any shares of Common Stock pursuant to which
      the Series A Conversion Price (as such term is defined in the Existing
      Certificate) is adjusted under Section 6; (d) any shares of Common Stock issued
      pursuant to the exchange, conversion or exercise of any Options or Convertible
      Securities that have 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    previously
      been incorporated into computations hereunder on the date when such Options
      or
      Convertible Securities were issued; (e) the issuance and sale of securities
      in
      connection with a strategic investment or similar transaction approved by a
      majority of the Board of Directors; (f) securities issued for consideration
      other than cash pursuant to a merger, consolidation or similar business
      combination or acquisition of assets as approved by a majority of the Board
      of
      Directors; (g) the issuance of shares in connection with a firm commitment
      underwritten public offering of Common Stock with a nationally recognized
      investment banking firm at a price per share offered to the public of at least
      $5.00 per share of Common Stock which results in gross cash proceeds to the
      Company of at least $25,000,000; (h) any shares of Series A Preferred Stock
      issued in the form of a dividend to any holder of Series A Preferred Stock;
      and
      (i) any shares of Common Stock issued on exercise of any warrants issued by
      the
      Company, on or prior to the date of issuance of this Warrant, warrants issued
      in
      connection with the issuance of Series A-6 Preferred Stock and warrants issued
      in connection with subordinated debt of the Company outstanding on the date
      of
      issuance of this Warrant.

    

    Section  9.  Restrictions
      on Transfer.

     

    Section  9.1  Transfer.
      The
      Holder may transfer this Warrant and the shares of Common Stock issuable upon
      exercise of this Warrant, and the rights and obligations attached thereto,
      so
      long as (a) any such transfer(s) comply with applicable securities laws and
      (b)
      unless such securities have been registered in accordance with applicable
      securities laws and transferred pursuant to a non-private, open market
      transaction on the securities exchange on which the Company’s Common Stock is
      listed, if such transferee is not a United States citizen or an entity formed
      under the laws of a U.S. jurisdiction, the Holder obtains the Company’s consent
      for such transfer (which shall not be unreasonably withheld).

    

    Section  9.2  Restrictive
      Legend.
      Unless
      a registration statement is in effect with respect thereto, each certificate
      representing (i) the Shares and (ii) any other securities issued in respect
      of
      the Shares upon any stock split, stock dividend or recapitalization
      (collectively, the “Restricted
      Securities”),
      shall
      be endorsed as follows:

    

    THIS
      SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “ACT”), AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED
      OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
      UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER.

     

    THIS
      SECURITY IS SUBJECT TO THE TERMS AND CONDITIONS OF A PURCHASE AGREEMENT DATED
      MARCH __, 2007, AS AMENDED, BY AND AMONG THE COMPANY AND THE PURCHASERS NAMED
      THEREIN. A COPY OF SUCH AGREEMENT WILL BE FURNISHED TO THE RECORD HOLDER OF
      THIS
      WARRANT WITHOUT 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    CHARGE
      UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF
      BUSINESS.

     

    THIS
      SECURITY MAY BE SUBJECT TO THE TERMS AND CONDITIONS OF AN AMENDED AND RESTATED
      SHAREHOLDERS AGREEMENT WHICH MAY PLACE CERTAIN RESTRICTIONS ON THE VOTING OF
      SUCH SECURITIES (INCLUDING THE GRANT OF AN IRREVOCABLE PROXY RELATIVE TO VOTING
      MATTERS). A COPY OF SUCH AGREEMENT WILL BE FURNISHED TO THE RECORD HOLDER OF
      THIS SECURITY WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS
      PRINCIPAL PLACE OF BUSINESS.

     

    Section  10.  No
      Rights of Stockholders.
      This
      Warrant does not entitle the Holder to any voting rights as a stockholder of
      the
      Company prior to the exercise of the Warrant. Nothing in this Warrant shall
      obligate the Holder to exercise this Warrant, it being understood that the
      decision as to whether to exercise the Warrant shall be made exclusively by
      the
      Holder.

    

    Section  11.  No
      Impairment.
      The
      Company will not, by amendment of its Certificate of Incorporation, as amended
      and restated, or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms to
      be
      observed or performed hereunder by the Company, but it will at all times in
      good
      faith assist in the carrying out of all of the provisions of this Warrant and
      in
      the taking of all such action as may be necessary or appropriate in order to
      protect the rights of the holder of this Warrant against
      impairment.

    

    Section  12.  Loss,
      Theft, Destruction or Mutilation of Warrant.
      Upon
      receipt by the Company of evidence reasonably satisfactory to it of the loss,
      theft, destruction or mutilation of this Warrant, and in case of loss, theft
      or
      destruction, of indemnity or security reasonably satisfactory to it, and upon
      surrender and cancellation of this Warrant, if mutilated, the Company will
      make
      and deliver a new Warrant of like tenor and dated as of such cancellation,
      in
      lieu of this Warrant.

    

    Section  13.  Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday or a Sunday or shall be
      a
      legal holiday, then such action may be taken or such right may be exercised
      on
      the next succeeding day not a Saturday or a Sunday or a legal
      holiday.

    

    Section  14.  Miscellaneous.

     

    Section  14.1  Governing
      Law.
      This
      Warrant shall be governed by and construed in all respects in accordance with
      the laws of the State of New York, without giving effect to the conflicts of
      laws provisions thereof.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Section  14.2  Entire
      Agreement; Amendment.
      Each
      party hereby acknowledges that no other party or any other person or entity
      has
      made any promises, warranties, understandings or representations whatsoever,
      express or implied, not contained in the Transaction Documents and acknowledges
      that it has not executed this Warrant in reliance upon any such promises,
      representations, understandings or warranties not contained herein or therein
      and that the Transaction Documents supersede all prior agreements and
      understandings between the parties with respect thereto. There are no promises,
      covenants or undertakings other than those expressly set forth or provided
      for
      in the Transaction Documents. Neither this Warrant nor any term hereof may
      be
      amended, waived, discharged, or terminated other than by a written instrument
      signed by a 63% in Interest Purchasers and the Company. Any amendment, waiver,
      discharge or termination so made or effected shall be binding upon all of the
      Holders.

     

    Section  14.3  Successors
      and Assigns.
      Except
      as otherwise provided herein, the provisions hereof shall inure to the benefit
      of, and be binding upon, the permitted successors and assigns, heirs, executors,
      and administrators of the Company and the Holder.

     

    Section  14.4  Severability.
      Whenever possible, each provision of this Warrant will be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this Warrant is held to be invalid, illegal or unenforceable in any respect
      under any applicable law or rule in any jurisdiction, such invalidity,
      illegality or unenforceability will not affect any other provision or any other
      jurisdiction, but this Warrant will be reformed, construed and enforced in
      such
      jurisdiction to the greatest extent possible to carry out the intentions of
      the
      parties hereto.

     

    Section  14.5  Notices,
      etc.
      All
      notices and other communications required or permitted hereunder shall be in
      writing and shall be mailed by registered or certified mail, postage prepaid,
      by
      overnight courier, or otherwise delivered by hand or by messenger or sent by
      facsimile and confirmed by mail, addressed: 

     

    (i)   if
      to the
      Company, at to MTM Technologies, Inc., 1200 High Ridge Road, Stamford,
      Connecticut 06905, Attention: Chief Executive Officer; and

    

    (ii)   if
      to the
      Holder, at the address of such Holder set forth on the signature page of this
      Warrant.

     

    All
      notices shall be effective upon receipt.

     

    Section  14.6  Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

    

    Section  14.7  Titles
      and Subtitles.
      The
      titles and subtitles used in this Agreement are used for convenience only and
      are not to be considered in construing or interpreting this
      Agreement.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

IN
        WITNESS WHEREOF, the undersigned have executed this Warrant as of the date
        first
        above written.

    

    

    

    MTM
      TECHNOLOGIES, INC.

    

    

    By:____________________________________

    Name: Francis
      J. Alfano

    Title: Chief
      Executive Officer

     

    
      
        
        

      

      
        Signature
          Page to Warrant No. W-A6-1

        
          

        

      

      
        
        

      

    

    

    WARRANT
      HOLDER:

    

    [         ]

    By:
       [        
      ]

    

    By:___________________________

      Name:

      Title:

    

    
      
        
        

      

      
        Signature
          Page to Warrant No. W-A6-1

        
          

        

      

      
        
        
 

    

    THE
      EXERCISE OF THIS WARRANT IS SUBJECT TO THE APPLICABLE

    PROVISIONS
      OF THE HART-SCOTT-RODINO ANTITRUST

    IMPROVEMENTS
      ACT OF 1976, AS AMENDED

    

    EXHIBIT
      A-1

    

    NOTICE
      OF EXERCISE

    

    

    

    TO:  
MTM
      Technologies, Inc.

     1200
      High Ridge Road

     Stamford,
      Connecticut 06905

     Attention:
      Chief Executive Officer

    

    

    1.  The
      undersigned hereby elects to purchase _________ shares of Common Stock, par
      value $.001 per share, of MTM TECHNOLOGIES, INC. pursuant to the terms of this
      Warrant, and tenders herewith payment of the purchase price of such shares
      in
      full.

    

    2.  Please
      issue a certificate or certificates representing said shares of Common Stock
      in
      the name of the undersigned or in such other name as is specified below:

    

    ______________________________

    (Name)

    ______________________________

    

    ______________________________

    (Address)

    

    

    

            ____________________________________

            (Signature)

            Title:_______________________________

    

    ________________________

           (Date)

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

    

    THE
      EXERCISE OF THIS WARRANT IS SUBJECT TO THE APPLICABLE

     PROVISIONS
      OF THE HART-SCOTT-RODINO ANTITRUST

     IMPROVEMENTS
      ACT OF 1976, AS AMENDED

    

    EXHIBIT
      A-2

    

    NET
      ISSUE NOTICE OF EXERCISE

    

    

    TO:  
MTM
      Technologies, Inc.

     1200
      High Ridge Road

     Stamford,
      Connecticut 06905

     Attention:
      Chief Executive Officer

    

    

    

    1.  The
      undersigned hereby
      elects to purchase _________ shares of Common Stock, par value $.001 per share,
      of MTM TECHNOLOGIES, INC. pursuant to the terms of this Warrant, and hereby
      elects under Section 4.2 of this Warrant to surrender the right to purchase
      _______ shares of Common Stock pursuant to this Warrant for a net issue exercise
      with respect to ________ shares of Common Stock.

    

    2.  Please
      issue a
      certificate or certificates representing said shares of Common Stock in the
      name
      of the undersigned or in such other name as is specified below:

    

    ______________________________

    (Name)

    ______________________________

    

    ______________________________

    (Address)

    

    

            ____________________________________

            (Signature)

    

            Title:_______________________________

     

    _______________________

            
      (Date)

    

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    ASSIGNMENT
      FORM

    (To
      be
      signed only upon transfer of Warrant)

    

     

    

    FOR
      VALUE
      RECEIVED, the undersigned hereby sells, assigns and transfers unto
      ______________________________, whose address is _____________________, the
      right represented by the attached Warrant to purchase _________ shares of Common
      Stock of MTM TECHNOLOGIES, INC., to which the attached Warrant
      relates.

     

    Dated:____________________

     

    
 

    ____________________________________

    (Signature
      must conform in all respects to 

    name
      of
      Holder as specified on the face of 

    the
      Warrant)

     

    

    ____________________________________

    (Address)

    

    

    Signed
      in
      the presence of:

    

    

    _____________________________

     

    
      
        
        

      

      
        B-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}]]