Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”)
is entered into as of August 5, 2005, by and between Keane, Inc., a
Massachusetts corporation with its principal place of business at 100 City
Square, Boston, Massachusetts 02129 (“Keane” or the “Company”), and Richard
Garnick (the “Executive”).  Keane and the
Executive are referred to together herein as the “Parties.”

 

WHEREAS, Keane has offered employment
to the Executive in the position of President, North American Services, and the
Executive has accepted, both Parties desire to set forth in a written agreement
the terms and conditions of the Executive’s employment by and services to the
Company;

 

NOW, THEREFORE, for good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
Company and the Executive agree as follows:

 

1.             Effective
Date. The Effective Date of this Agreement is
September 5, 2005.

 

2.             Executive
Representations.

 

a.             The Executive affirms that he is not
subject to any agreement that restricts his ability to work for Keane in the
role contemplated by this Agreement.

 

b.             The Executive affirms that he has not
taken and will not take, bring onto Keane’s premises, or use on behalf of Keane
any confidential, proprietary and/or trade secret information belonging to any
current or former employer, partner, client, joint venture, investor, or other
third party.

 

c.             The Executive affirms that he has honored
all commitments to former employers, as set forth in any applicable employment
agreements or otherwise, and intends to continue to honor all such commitments.

 

3.             Employment
Period. 
Subject to the benefits described in Section 7, the Company retains the
right to terminate the employment of the Executive at any time, including,
without limitation, with or without notice and with or without Cause.

 

4.             Position
and Duties.

 

a.             During his employment with Keane, the
Executive shall serve as with the duties and responsibilities customarily
assigned to the position of President, North American Services, and such other
duties and responsibilities as the Board of Directors (the “Board”) or the
Chief Executive Officer of the Company shall from time to time assign to the
Executive.  The Executive shall report
directly to the Chief Executive Officer of the Company.

 

 

b.             During his employment with Keane, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive shall devote his full business attention and time to
the business and affairs of Keane and shall use his best efforts to carry out
such responsibilities faithfully and efficiently, and in accordance with Keane
policy and procedures. Subject to Company approval where required by applicable
policy, it shall not be considered a violation of the foregoing for the
Executive to (a) serve on corporate, civic or charitable boards or committees,
(b) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (c) manage personal investments, so long as such activities do
not materially interfere with the performance of the Executive’s
responsibilities as an employee of Keane in accordance with this Agreement.

 

c.             The Executive shall be considered an
officer of the Company.  As such, he
shall be entitled to indemnification and other related protections, as
described in Article VI of the Company’s Restated Articles of Organization,
attached as Exhibit A.  These protections
include, but are not limited to, coverage under Keane’s Directors &
Officers Liability insurance policy, within its current limit of $35,000,000.

 

5.             Compensation
and Benefits

 

a.             Base Salary. As compensation for the Executive’s
services hereunder during the Employment Period, the Company shall pay to the
Executive an annual salary (the “Base Salary”) of not less than $500,000
payable at such times and intervals as the Company pays the base salaries of
its other executive employees. The Base Salary shall be reviewed annually for
possible increase. The Base Salary shall not be reduced after any such
increase, and the term “Base Salary” shall thereafter refer to the Base Salary
as so increased.

 

b.             Annual Bonus.

 

(i)            For each fiscal year, the Executive shall be eligible
for an annual bonus (the “Annual Bonus”). 
The target amount of the Annual Bonus (“Bonus Target”) will be 80% of
the annual Base Salary.  The actual
amount of each year’s Annual Bonus may be less than the Bonus Target or up to
150% of the Bonus Target, depending upon certain performance measures.  The precise amount of the Annual Bonus shall
be determined by the Chief Executive Officer subject to approval by the
Compensation Committee of the Board. The Bonus Target will be reviewed annually
for possible future increase or decrease. 
Annual Bonuses are not earned until the close of business on the last
business day of Keane’s fiscal year, are based on fiscal year performance and
are generally paid in March or April of the following year, subject to the
condition precedent that the Executive is employed on the date the Annual Bonus
is paid.

 

2

 

(ii)           For 2005, the Annual Bonus shall be prorated to
reflect the amount of time the Executive is employed by Keane.  Of that prorated amount, Keane will pay no
less than seventy-five percent (75%), subject to the condition precedent
described in Section 5.b(i).

 

c.             Stock.

 

(i)            2005.  Within thirty
(30) days of the Effective Date, the Executive will be awarded 300,000 Keane
Incentive Stock Options and 10,000 shares of restricted stock, both subject to
the terms and conditions of the applicable stock option plan and incentive
and/or restricted stock agreements, attached as Exhibit B.

 

(ii)           2006 and 2007.  The Executive
will be awarded no less than 100,000 Keane Incentive Stock Options in 2006 and
in 2007, provided the Executive achieves no less than twenty percent (20%)
organic growth in each of these years (measured by both revenue and
contribution) within the area of his responsibility, subject to approval by the
Compensation Committee of the Board.

 

d.             Benefits. During his employment with Keane, the Executive
shall be entitled to receive employee benefits (including without limitation
medical, life insurance and other welfare benefits and benefits under
retirement and savings plans), Company-provided parking and paid vacation, in each
case to the same extent as, and on the same terms and conditions as, other
similarly situated senior executives of the Company from time to time.

 

e.             Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive during his
employment with Keane in carrying out his duties under this Agreement, provided
that the Executive complies with the policies, practices and procedures of the
Company for submission of expense reports, receipts, or similar documentation
of such expenses.

 

6.             Employment
Termination.  The Executive’s employment pursuant to this
Agreement may be terminated as follows:

 

a.             For Cause.  At the
election of Keane, for “Cause”, immediately upon written notice by Keane to the
Executive.  For the purposes of this
Agreement, “Cause” for termination shall mean and shall be limited to:

 

1.             Wrongful misappropriation of the funds or
property of the Company;

 

2.             Use of alcohol or illegal drugs
interfering with the performance of the Executive’s obligations, continuing
after written warning of such actions;

 

3

 

3.             Commission of a felony, or of any crime
involving moral turpitude, dishonesty, theft or unethical conduct;

 

4.             Commission of any willful, intentional or
grossly negligent act which would reasonably be expected to materially injure
the reputation, business or business relationships of the Company or which
would bring the Executive or the Company into disrepute, or the willful
commission of any act which is a breach of the Executive’s fiduciary duties to
the Company;

 

5.             The deliberate or willful failure by the
Executive (other than by reason of the Executive’s physical or mental illness,
incapacity or disability) to substantially perform his duties with the Company
and the continuation of such failure for a period of 30 days after delivery by
the Company to the Executive of Notice specifying the scope and nature of such
failure and the Company’s intention to terminate the Executive for Cause;

 

6.             Commission of any act which constitutes a
material breach of the policies of the Company, including but not limited to
the disclosure of any confidential information or trade secrets pertaining to
the Company or any of its clients; or

 

7.             Commission of any dishonest act
or the making of any dishonest or intentionally misleading statement relating
to the business of the Company.

 

b.             For Good Reason. 
At the Executive’s initiative, for “Good Reason” if:

 

1.             The Executive’s title, duties, status, reporting
relationship, authority or responsibilities have been materially and adversely
affected; or

 

2.             The Executive’s compensation, including Base Salary and Bonus Target, has been
reduced by 10% or greater; or

 

3.             The Executive’s principal place of employment is
relocated to a location more than 60 miles from such place of employment.

 

4.             In the context of a Change in Control, as described in
Section 7.b, “Good Reason” shall also be deemed to exist if the Executive’s
principal place of employment immediately prior to the Change in Control is
relocated to a location more than 25 miles from such place of employment.

 

The Executive shall give
the Company Notice of termination specifying which of the foregoing provisions
is applicable and the factual basis therefor, and if the

 

4

 

Company fails to remedy
such material failure, the Executive’s last day of actual employment with Keane
shall be the 30th business day after such Notice is given or such other date as
the Company and the Executive shall agree.

 

c.             In the Event of Death or Disability. 
As used in this Agreement, the term “disability” shall mean the
inability of the Executive, due to a physical or mental disability, for a
period of 180 days, whether or not consecutive, during any 360-day period to
perform the services contemplated under this Agreement.  A determination of disability shall be made
by a physician satisfactory to both the Executive and Keane, provided that if
the Executive and Keane do not agree on a physician, the Executive and Keane
shall each select a physician and these two together shall select a third
physician, whose determination as to disability shall be binding on all
parties;

 

d.             At the election of Keane without Cause, upon not less than 90 days’ prior
written notice of termination; or

 

e.             At the election of the Executive, other than for Good Reason, upon not
less than 90 days’ prior written notice of termination.

 

7.             Effect
of Employment Termination

 

a.             For Cause.  If the
Executive’s employment is terminated by Keane for Cause pursuant to Section
6.a, Keane shall pay to the Executive the compensation and benefits otherwise
payable to him through the last day of his actual employment by Keane.  

 

b.             Following a Change in Control. 
If the Executive’s employment is terminated by the Company without Cause
(as defined in Section 6.a) or by the Executive for Good Reason (as defined in
Section 6.b) within one year following a Change in Control, as defined in
Exhibit C to this Agreement, the effective date of any such termination being
hereinafter referred to as the “CIC Termination Date”) the Executive shall be
entitled to the following severance benefits (and no others):

 

(i)            For a period of twenty-four (24) months following the
CIC Termination Date (the “Salary Continuation Period”), the Company shall
continue to pay the Executive the base salary and targeted annual bonus
(monthly on a pro rata basis), both at the rate in effect immediately before
the CIC Termination Date, except that
in the case of a termination by the Executive for Good Reason, disregarding any
reduction thereof that was the basis for such termination.

 

5

 

(ii)           Upon the CIC Termination Date, all stock options,
restricted stock and other equity awards previously granted to the Executive
shall become vested immediately and shall be exercisable in full in accordance
with the applicable stock option, restricted stock or other form of equity
agreement and the terms of any applicable stock or equity plan.

 

(iii)          The CIC Termination Date shall be treated as a
qualifying event under the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”).  Under COBRA, if the Executive is covered by
the group medical and/or dental plan offered by Keane, the Executive and his or
her spouse and dependents are entitled to elect a temporary extension of health
and/or dental coverage at group rates in certain instances where coverage under
the plan would otherwise end (“Continuation Coverage”).  If the Executive elects Continuation Coverage
under COBRA, during the period of such Continuation Coverage, the Executive
will be responsible for any contribution required from active employees of the
Company under the applicable group medical and/or dental plan.  If and to the extent this Section 7.b(iii)
does not apply, as where the Executive is not resident in or of the United
States, the Executive shall receive a monthly stipend to offset medical and/or
dental benefits lost following the CIC Termination Date.

 

(iv)          During the Salary Continuation Period, the Executive
shall be entitled to continue participation in the executive financial planning
benefit in effect as of the CIC Termination Date.

 

c.             In the Event of Death or Disability. 
If the Executive’s employment is terminated by death or because of
disability pursuant to Section 6.c, Keane shall pay to the estate of the
Executive or to the Executive, as the case may be, the compensation which would
otherwise be payable to the Executive up to the end of the month in which the
termination of his employment because of death or disability occurs. 

 

d.             At the Election of Keane without Cause or
At the Initiative of the Executive for Good Reason. 
If the Executive’s employment is terminated by Keane without Cause (as
defined in Section 6.a) pursuant to Section 6.d or at the initiative of the
Executive for Good Reason, pursuant to Section 6.b:

 

(i)            Keane shall continue to pay the Executive his Base
Salary, for twelve (12) months, plus, in the case of termination by Keane without
Cause, any portion of the 90-day notice period described in Section 6.d that is
not provided to the Executive; and

 

(ii)           The last day of the Executive’s actual employment with
Keane shall be treated as a qualifying event under the Consolidated Omnibus
Reconciliation Act of 1985 (“COBRA”), and the Executive will receive COBRA
information under separate cover.  If the
Executive elects

 

6

 

continuation coverage under COBRA, during the period
the Executive is receiving base salary continuation payments under this
paragraph 7.d, he will be responsible for any contribution required from active
employees of the Company under said health insurance program.

 

e.             Receipt of severance benefits is
conditioned on Executive’s execution and delivery of a separation agreement
including a general release of claims, in a form acceptable to the Company, and
on Executive’s strict compliance with the provisions of any agreement between
the Executive and Keane pertaining to trade secrets, confidential information,
works made for hire and inventions, competition, solicitation, hiring, and the
return of Company property.

 

f.              At the Election of the Executive Other
than for Good Reason.  If the Executive elects to terminate his employment
other than for Good Reason, in accordance with Section 6.e, Keane shall pay to
the Executive the compensation and benefits otherwise payable to him through
the last day of his actual employment by Keane.

 

8.             Limitations
on Payment of Benefits.

 

a.             Neither the Executive nor Keane shall
have the right to accelerate or to defer the delivery of the payments to be
made under this Agreement; provided, however, that if the
Executive is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of
the Internal Revenue Code of 1986, as amended (the “Code”), and any of the
payments to be made to the Executive under this Agreement constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Code, then the
commencement of the delivery of any such payments will be delayed to the date
that is six months after the last day of the Executive’s actual employment with
Keane.

 

b.             Gross-Up Payment.

 

(i)            Anything in this or any other Agreement to the
contrary notwithstanding, in the event an Executive becomes entitled to any
benefits or payments under this Agreement or under any other agreement, plan or
arrangement to which the Company and the Executive are parties, including any
non-cash benefit or deferred payment or benefit (the “Total Benefits”), which
will be subject to a tax imposed by Section 4999 of the Code (the “Excise Tax”)
due to classification as an excess parachute payment in accordance with Section
280G of the Code, the Company shall pay to him an additional amount (the “Gross-Up
Payment”) such that the net amount retained by him, after reduction of any
Excise Tax on the Total Benefits and any federal, state and local income tax,
Excise Tax and FICA and Medicare withholding taxes upon the payment provided
for by this Section, shall be equal to the Total Benefits.  For purposes of this Gross-Up Payment, the
amount of the Excise Tax (if any) imposed on any non-cash benefits or any
deferred payment or benefit shall be reasonably

 

7

 

determined by the Company, after consultation with its
legal and tax advisors.

 

(ii)           For purposes of determining the amount of the Gross-Up
Payment, an Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of his residence on
the Termination Date, net of the reduction in federal income taxes which could
be obtained from deduction of such state and local taxes (calculated by
assuming that any reduction under Section 68 of the Code in the amount of
itemized deductions allowable to him applies first to reduce the amount of such
state and local income taxes that would otherwise be deductible by him).

 

(iii)          In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account for purposes of
calculating the Gross-Up Payment, the Executive shall promptly repay to the
Company the portion of the Gross-Up Payment attributable to such reduction
(plus that portion of the Gross-Up Payment attributable to the Excise Tax,
federal, state and local income taxes and FICA and Medicare withholding taxes
imposed on the portion of the Gross-Up Payment being repaid by him to the
extent that such repayment results in a reduction in Excise Tax, FICA and
Medicare withholding taxes and/or federal, state or local income taxes) plus
interest on the amount of such repayment at the rate provided in Section

1274(b)(2)(B) of the Code.

 

(iv)          In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder, the Company shall make an
additional Gross-Up Payment to him in respect of such excess (plus any
interest, penalties or additions payable by him with respect to such excess) at
the time that the amount of such excess is finally determined.

 

(v)           The Gross Up Payment shall be made within two and a
half months after the last day of the Executive’s actual employment with Keane;
provided, however, that if the Executive is a “specified employee”
as defined in Section 409A(a)(2)(B)(i) of Code and any of the payments to be
made to the Executive under this Section 4 constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the Code, then the
commencement of the delivery of any such payments will be delayed by six
months.

 

(vi)          The intent of this Section 8 is to make the Executive
whole, to the extent allowed under applicable laws and regulations, such that
he is not detrimentally impacted by the imposition of a tax over and above the
marginal rate applicable to his Keane-related earnings as a result of a

 

8

 

Change In Control. 
To the extent the Executive is subject to income tax laws of a country
other than the United States, the Company shall use its best efforts to
implement the intent of this Section 8 in accordance with applicable laws and
regulations.

 

9.             Obligations
and Restrictive Covenants.

 

a.             The Executive agrees to execute an
Agreement pertaining to, without limitation, confidentiality, non-disclosure,
non-solicitation and non-competition, in the form attached as Exhibit D.

 

b.             All obligations and restrictive covenants
as set forth in any existing or future employment agreements, stock option
agreements, codes of conduct, or the like, shall remain in full force and
effect notwithstanding this Agreement, including but not limited to, provisions
and/or restrictions relating to trade secrets, confidential information, works
made for hire and inventions, competition, solicitation, hiring, Company
property, et cetera, except that any and all such obligations and restrictive
covenants shall remain in full force and effect for the entire Salary Continuation
Period notwithstanding any shorter period set forth therein.

 

10.           Notices.

 

a.             Each notice, demand, consent or
communication (hereinafter “Notice”) which is or may be required to be given by
any party to the other party in connection with this Agreement shall be in
writing and given by facsimile, personal delivery, receipted delivery services,
or by certified mail, return receipt requested, prepaid and properly addressed
to the other party as shown below.

 

b.             Notices shall be effective on the date
sent via facsimile, the date delivered personally or by receipted delivery
service, or three (3) days after the date mailed:

 

(i)            To the Company:

 

Legal Department

Attn:
Corporate Counsel

Keane, Inc.

100 City Square

Charlestown, MA  02129

 

(ii)           To the Executive:

 

At the residence address
most recently filed with the Company.

 

9

 

11.           Succession
and Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and permitted assigns.  No
Party may assign either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of the other Party;
provided, that Keane may assign its rights, interests or obligations hereunder
to: (a) a subsidiary, subdivision or affiliate, provided that Keane shall
remain responsible to the Executive for such obligations in the event they are
not met by such assignee; or (b) to a person, corporation, organization or other
entity that acquires (whether by stock purchase or merger or otherwise) all or
substantially all of the business or assets of Keane.

 

12.           Miscellaneous.

 

a.             This Agreement may be amended or modified
only by a written instrument executed by Keane and the Executive.  Notwithstanding anything herein to the
contrary, to the extent that the Executive or Keane reasonably believe that
Section 409A of the Code will result in adverse tax consequences to the
Executive as a result of this Agreement, then the Executive and Keane shall
renegotiate this Agreement in good faith in order to minimize or eliminate such
tax consequences and retain the basic after-tax economics of this Agreement for
the Executive to the extent possible.

 

b.             This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws of conflicts)
of the Commonwealth of Massachusetts.

 

c.             Except in the case of Section 11 above,
the term “Keane” or the “Company” shall include Keane, Inc. and any of its
subsidiaries, subdivisions and affiliates. 
The captions of the sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or substance of
any section of this Agreement.

 

d.             This Agreement may be executed in
counterparts, each of which shall be deemed to be an original but both of which
together shall constitute one and the same instrument.

 

e.             The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement. If any provision of this Agreement shall
be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law.

 

f.              The Executive’s or the Company’s failure
to insist upon strict compliance with any provision of, or to assert any right
under, this Agreement shall not be deemed to be a waiver of such provision or
right or of any other provision of or right under this Agreement.

 

10

 

g.             Keane shall have the right to withhold
all applicable income and employment taxes due with respect to any payment made
to the Executive under this Agreement.

 

Executed this 5th day of August, 2005.

 

 

	
   

  	
  By:

  	
  /s/ Richard Garnick

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Richard Garnick

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Keane, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Russell J. Campanello

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Russell J. Campanello, Sr. Vice President,

  
	
   

  	
   

  	
  Human Resources

  
					

 

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EXHIBIT A

 

Restated Articles of Organization

(General Laws Chapter 156D, Section 10.07;
950 CMR 113.35)

 

Keane, Inc.
(the “Corporation”), having a registered office at 100 City Square, Boston, MA
02129, certifies as follows:

 

FIRST,
the Restated Articles were duly adopted and approved on February 10, 2005
by the board of directors without shareholder approval in the manner required
by General Laws, Chapter 156D and the Articles of Organization of the
Corporation, as amended to date, and shareholder approval was not required.

 

SECOND,
the following is all the information required to be in the original Articles of
Organization, except that the supplemental information provided for in Article VIII
of the Articles of Organization is not included:

 

ARTICLE I.  The exact name of the corporation is Keane, Inc.

 

ARTICLE II.
The purposes for which the corporation is formed are as follows:

 

To
engage in the business of providing consulting and advisory services relating
to the use of data processing and data communication equipment and equipment
associated therewith; and to engage in the business of providing systems design
and computer programming services.

 

ARTICLE III.  The total number of shares of each class of
stock that the corporation is authorized to issue is as follows:

 

	
  TYPE

  	
   

  	
  NUMBER OF SHARES

  AUTHORIZED

  	
   

  	
  PAR VALUE

  	
   

  
	
  Common

  	
   

  	
  200,000,000

  	
   

  	
  $

  	
  .10

  	
   

  
	
  Class B Common

  	
   

  	
  503,797

  	
   

  	
  $

  	
  .10

  	
   

  
	
  Preferred

  	
   

  	
  2,000,000

  	
   

  	
  $

  	
  .01

  	
   

  

 

ARTICLE IV. 
If more than one class or series of shares is authorized, the
preferences, limitations and relative rights of each class or series are as
follows:

 

PART I.                                                     COMMON
STOCK. 

 

A.                                               Dividends,
Combinations and Subdivisions.

 

1.                                       Holders
of Common Stock and Class B Common Stock shall be entitled to receive such
dividends, payable in cash or other as may be declared thereon by the Board of
Directors from time to time out of the assets or funds of the corporation
legally available 

 

 

therefor, provided that no regular cash quarterly dividend may be
declared and paid to holders of Class B Common Stock unless at the same
time the Board of Directors shall also declare and pay to the holders of Common
Stock a per share dividend which is $.05 per share greater than the per share
dividend declared and paid to holders of Class B Common Stock.  Otherwise, no dividends may be declared or
paid to holders of Class B Common Stock unless equal dividend is declared
and paid to holders of Common Stock.  In
addition, the Board of Directors may declare and pay dividends to the holders
of Common Stock without declaring and paying dividends to the holders of Class B
Common Stock.

 

2.                                       If
the outstanding shares of either the Common Stock or the Class B Common
Stock are changed into, exchanged for or reclassified into a different number,
class or kind of shares of the Corporation or any other corporation or entity
which does not result in the receipt by the Corporation of any new
consideration (other than a transfer of surplus of the Corporation) without
such action being taken on a proportionate basis with respect to the other
class of common stock, whether such change, exchange or reclassification occurs
through a reorganization, recapitalization, stock split or otherwise, then the
requirement that a greater per share dividend be declared and paid with respect
to the Common Stock shall be appropriately and equitably adjusted to reflect
such action.

 

3.                                       The
requirement that a greater per share dividend be declared and paid with respect
to the Common Stock shall not apply (a) to a dividend paid in partial or
complete liquidation of the Corporation, (b) to a special dividend payable
in cash or capital stock or (c) in the event of a dividend payable in any
shares of an existing, or a newly created, class of the Corporation’s capital
stock.  If a dividend payable in any
class of the capital stock of the Corporation is declared on the Common Stock,
the Board of Directors shall also declare a dividend on the Class B Common
Stock payable in shares of the same capital stock of the Corporation equal, on
a per share basis, to the number of shares of capital stock of the Corporation
which are paid to holders of Common Stock. 
If a dividend payable in any class of the capital stock of the
Corporation is declared on the Class B Common Stock, the board shall also
declare a dividend on the Common Stock payable in shares of the same capital
stock of the Corporation, equal, on a per share basis, to the number of shares
of capital stock of the Corporation which are paid to holders of Class B
Common Stock.

 

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B.                                                 Voting.

 

1.                                       Except
as expressly provided herein, at every meeting of stockholders of the
Corporation, every holder of Common Stock shall be entitled to one vote in
person or by proxy for each share of Common Stock standing in his name on the
transfer books of the Corporation and every holder of Class B Common Stock
shall be entitled to ten votes in person or by proxy for each share of Class B
Common Stock standing in his name on the transfer books of the Corporation.

 

2.                                       Except
as may otherwise be required by law or by this Article 4, the holders of
Common Stock and Class B Common Stock shall vote together as a single
class.

 

C.                                                 Conversion.

 

1.                                       Each
share of Class B Common Stock may at any time be converted into one fully
paid and nonassessable share of Common Stock. 
Such right of conversion shall be exercised by the surrender of the
certificate representing such share of Class B Common Stock to be
converted to the Corporation at any time during normal business hours at the
principal executive offices of the Corporation, or if an agent for the
registration of transfer of shares of Class B Common Stock is then duly
appointed and acting (said agent being hereinafter called the “Transfer Agent”)
then at the office of the Transfer Agent, accompanied by a written notice of
the election by the holder thereof to convert and (if so required by the
Corporation or the Transfer Agent) by instruments of transfer, in form
satisfactory to the Corporation and to the Transfer Agent, duly executed by
such holder or his duly authorized attorney, and transfer tax stamps or funds
therefor, if required pursuant to subparagraph (5) below.

 

2.                                       As
promptly as practicable after the surrender for conversion of a certificate
representing shares of Class B Common Stock in the manner provided in
subparagraph (1) above and the payment in cash of any amount required by
the provisions of subparagraphs (1) and (5), the Corporation will deliver
or cause to be delivered at the office of the Transfer Agent to, or upon the
written order of, the holder of such certificate a certificate or certificates
representing the number of full shares of Common Stock issuable upon such
conversion, issued in such name or names as such holder may direct.  Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of the 

 

3

 

surrender of the certificate representing shares of Class B Common
Stock, and all rights of the holder of such shares as such holder shall cease
at such time and the person or persons in whose name or names the certificate
or certificates representing the shares of Common Stock are to be issued shall
be treated for all purposes as having become the record holder or holders of
such shares of Common Stock at such time; provided, however, that any such
surrender and payment on any date when the stock transfer books of the
Corporation shall be closed shall constitute the person or persons in whose
name or names the certificate or certificates representing shares of Common
Stock are to be issued as the record holder or holders thereof for all purposes
immediately prior to the close of business on the next succeeding day on which
such stock transfer books are open.

 

3.                                       No
adjustments in respect of dividends shall be made upon the conversion of any
share of Class B Common Stock, provided, however, that if a share shall be
converted after the record date for the payment of a dividend or other
distribution on shares of Class B Common Stock but before such payment,
the registered holder of such share at the close of business on such record
date shall be entitled to receive the dividend or other distribution payable on
such share on the date set for payment of such dividend or other distribution
notwithstanding the conversion of such share or the Corporation’s default in
payment of the dividend due on such date.

 

4.                                       The
Corporation covenants that it will at all times reserve and keep available,
solely for the purpose of issuance upon conversion of the outstanding shares of
Class B Common Stock, such number or shares of Common Stock as shall be
issuable upon the conversion of all such outstanding shares, provided that
nothing contained in these Articles shall be construed to preclude the
Corporation from satisfying its obligations in respect of the conversion of the
outstanding shares of Class B Common Stock by delivery of purchased shares
of Common Stock which are held in the treasury of the Corporation.  The Corporation covenants that if any shares
of Common Stock required to be reserved for purposes of conversion hereunder
require registration with or approval of any government authority under any
federal or state law before such shares of Common Stock may be issued upon
conversion, the Corporation will cause such shares to be duly registered or
approved, as the case may be.  The
Corporation covenants that all shares of Common Stock which shall be issued
upon conversion of the shares of Class B Common Stock will, upon issue, be
fully paid and nonassessable and not subject to any preemptive rights.

 

4

 

5.                                       The
issuance of certificates for shares of Common Stock upon conversion of shares
of Class B Common Stock shall be made without charge for any stamp or other
similar tax in respect of such issuance. 
However, if any such certificate is to be issued in a name other than
that of the holder of the share or shares of Class B Common Stock
converted, the person or persons requesting the issuance thereof shall pay to
the Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of
the Corporation that such tax has been paid.

 

6.                                       At
any time while there are shares of Class B Common Stock issued and
outstanding, the Board of Directors of the Corporation may, in its sole
discretion, by a majority vote of the Directors then in office convert all
outstanding shares of Class B Common Stock into Common Stock on a share
for share basis.  Notice of automatic
conversion of Class B Common Stock specifying the date fixed for said
conversion shall be mailed, postage prepaid, at least 20 days but not more
than 30 days prior to said conversion date to the holders of record of the Class B
Common Stock at their respective addresses as the same shall appear on the
books of the Corporation.  Following the
expiration of such notice period, each outstanding share of Class B Common
Stock shall be deemed to be a share of Common Stock for all purposes.

 

D.                                                Distribution
of Assets.

 

1.                                       If
the Corporation shall be liquidated, dissolved or wound up, whether voluntarily
or involuntarily, the holders of the Class B Common Stock shall be
entitled to share ratably with the holders of the Common Stock of the Corporation
as a single class in the net assets of the Corporation; that is, an equal
amount of net assets for each share of Common Stock and Class B Common
Stock.  A merger or consolidation of the
Corporation with or into any other corporation or sale or conveyance of all or
any part of the assets of the Corporation (which shall not in fact result in
the liquidation of the Corporation and the distribution of assets to
stockholders) shall not be deemed to be a voluntary or involuntary liquidation
or dissolution or winding up of the Corporation within the meaning of this
subparagraph (D).

 

5

 

E.                                                  Authorized
Shares; Fractional Shares.

 

1.                                       The
number of authorized shares of Class B Common Stock may not be increased
unless approved by the holders of a majority of the then outstanding shares of
Common Stock.

 

2.                                       No
fractional shares of Common Stock shall be issued upon conversion of shares of Class B
Common Stock.  In lieu of fractional
shares, the Transfer Agent shall pay an amount in cash equal to the closing
market price of the shares of Common Stock on the conversion date multiplied by
the fraction of a share of Common Stock that would otherwise be issuable.

 

PART II.                                                 PREFERRED
STOCK. 

 

Preferred Stock may be issued from time to time in one or more series,
each of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided.  Any shares of any series of Preferred Stock
which may be redeemed, purchased or acquired by the Corporation may be reissued
as shares of the same series or as shares of one or more other series of
Preferred Stock except as otherwise provided by law.  Different series of Preferred Stock shall not
be construed to constitute different classes of shares for the purposes of
voting by classes unless expressly provided.

 

Authority is hereby expressly granted to the Board of Directors from
time to time to issue the Preferred Stock in one or more series, and in
connection with the creation of any such series, by resolution or resolutions
providing for the issue of the shares thereof, to determine and fix such voting
powers, full or limited, or no voting powers, and such designations,
preferences and relative participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, including without
limitation dividend rights, conversion rights, redemption privileges and
liquidation preferences, as shall be stated and expressed in such resolutions,
all to the full extent now or hereafter permitted by the Massachusetts Business
Corporation Law.  Without limiting the
generality of the foregoing, the resolutions providing for issuance of any
series of Preferred Stock may provide that such series shall be superior or
rank equally or be junior to the Preferred Stock of any other series to the
extent permitted by law.

 

ARTICLE V.  The restrictions
imposed by the Articles of Organization upon the transfer of shares of any
class or series of stock are as follows:

 

A.                                   No
person holding shares of Class B Common Stock (a “Class B Holder”)
may transfer, except by gift, devise or bequest, a transfer to the estate of a
stockholder upon the death of such stockholder or a transfer of shares held in
a trust to the grantor of such trust or to any person to whom or for whose
benefit the principal of such trust may be distributed, and the Corporation and
the Transfer Agent shall not register the transfer of such shares of Class B
Common Stock, whether by sale, assignment, appointment or otherwise.  Any purported transfer of shares of

 

6

 

Class B Common Stock, other than a transfer of the type described
above, shall be null and void and of no effect and the purported transfer by a Class B
Holder will result in the immediate and automatic conversion of the shares of Class B
Common Stock held by such Class B Holder into shares of Common Stock.  The purported transferee shall have no rights
as a stockholder of the Corporation and no other rights against, or with
respect to, the Corporation except the right to receive shares of Common Stock
upon the immediate and automatic conversion of his shares of Class B
Common Stock into shares of Common Stock. 
The estate of any deceased stockholder, a transferee upon the
distribution of the assets of such an estate, any transferee of the Class B
Common Stock by gift, devise or bequest or a transferee from a trust of which
such transferee was the grantor or a principal beneficiary shall hold the
transferred shares of Class B Common Stock subject to the same
restrictions on transferability as apply to all Class B Holders under this
Article V.

 

B.                                     Shares
of Class B Common Stock shall be registered in the name(s) of the
beneficial owner(s) thereof (as hereafter defined) and not in “street” or “nominee”
names; provided, however, certificates representing shares of Class B
Common Stock issued as a stock dividend on the Corporation’s then outstanding
Common Stock may be registered in the same name and manner as the certificates
representing the shares of Common Stock with respect to which the shares of Class B
Common Stock are issued.  For the
purposes of this paragraph (B) the term “beneficial owner(s)” of any
shares of Class B Common Stock shall mean the person or persons who
possess the power to dispose, or to direct the deposition, of such shares.  Any shares of Class B Common Stock
registered in “street” or “nominee” name may be transferred to the beneficial
owner of such shares on the record date for such stock dividend, upon proof
satisfactory to the Corporation and the Transfer Agent that such person was in
fact the beneficial owner of such shares on the record date for such stock dividend.

 

C.                                     Notwithstanding
anything to the contrary in this Article V, any Class B Holder may
pledge such holder’s shares of Class B Common Stock to a pledgee pursuant
to a bona fide pledge of such shares as collateral security for indebtedness
due to the pledge, provided that such shares shall not be transferred to, or
registered in the name of, the pledgee and shall remain subject to the
provisions of this subparagraph (C) of Article V.  In the event of foreclosure or other similar
action by the pledgee, such pledged shares of Class B Common Stock may not
be transferred to the pledgee and may only be converted into shares of Common
Stock.

 

D.                                    The
Corporation shall note on the certificates representing the shares of Class B
Common Stock the restrictions on transfer and registration of transfer imposed
by this Article V.

 

7

 

E.                                      For
purposes of this Article V:

 

(i)                                     Each
joint owner of shares of Class B Common Stock shall be considered a Class B
Holder of such shares.

 

(ii)                                  A
minor for whom shares of Class B Common Stock are held pursuant to a
Uniform Gifts to Minors Act or similar law shall be considered a Class B
Holder of such shares.

 

(iii)                               Unless
otherwise specified, the term “person” includes a natural person, corporation,
partnership, unincorporated association, firm, joint venture, trust or other
entity.

 

(iv)                              Persons
participating in a Thrift or Employee Stock Ownership Plan of the Corporation
(or any similar or successor plans) shall be deemed to be the Class B
Holders of the shares of Class B Common Stock allocated to their accounts
pursuant to such plans.

 

ARTICLE VI. 
Other lawful provisions:

 

A.                                   Limitation
of Liability of Directors for Monetary Damages. To the fullest extent
permitted by Chapter 156D of the General Laws of Massachusetts (“Chapter 156D”),
as it exists or may be amended, a director of this Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, notwithstanding any provision of
law imposing such liability. No amendment to, or repeal of, this provision
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.

 

B.                                     Indemnification.

 

1.                                       Actions,
Suits and Proceedings.  The
Corporation shall indemnify each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was, or has agreed to become, a director or officer
of the Corporation, or is or was serving, or has agreed to serve, at the request
of the Corporation, as a director or officer of, or in a similar capacity with,
another organization or in any capacity with respect to any employee benefit
plan of the Corporation (all such persons being referred to hereafter as an “Indemnitee”),
or by reason of any action alleged to have been taken or omitted in such
capacity, against all expenses (including attorneys’ fees), judgments and fines
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom, unless the Indemnitee shall be finally
adjudicated in such action, suit or proceeding not to have acted in good faith
in the reasonable belief that his action was in the best interests of the
Corporation or, to the extent such matter relates to service with respect to an
employee benefit plan, in the best interests of 

 

8

 

the participants or beneficiaries of such employee benefit plan.  Notwithstanding anything to the contrary in
this Article, except as set forth in Section 5 below, the Corporation
shall not indemnify an Indemnitee seeking indemnification in connection with a
proceeding (or part thereof) initiated by the Indemnitee unless the initiation
thereof was approved by the Board of Directors of the Corporation.

 

2.                                       Settlements.  The right to indemnification conferred in
this Article shall include the right to be paid by the Corporation for
amounts paid in settlement of any such action, suit or proceeding and any
appeal therefrom, and all expenses (including attorneys’ fees) incurred in
connection with such settlement, pursuant to a consent decree or otherwise,
unless and to the extent it is determined pursuant to Section 5 below that
the Indemnitee did not act in good faith in the reasonable belief that his
action was in the best interests of the Corporation or, to the extent such
matter relates to service with respect to an employee benefit plan, in the best
interests of the participants or beneficiaries of such employee benefit plan.

 

3.                                       Notification
and Defense of Claim.  As a condition
precedent to his right to be indemnified, the Indemnitee must notify the
Corporation in writing as soon as practicable of any action, suit, proceeding
or investigation involving him for which indemnity will or could be
sought.  With respect to any action,
suit, proceeding or investigation of which the Corporation is so notified, the
Corporation will be entitled to participate therein at its own expense and/or
to assume the defense thereof at its own expense, with legal counsel reasonably
acceptable to the Indemnitee.  After
notice from the Corporation to the Indemnitee of its election so to assume such
defense, the Corporation shall not be liable to the Indemnitee for any legal or
other expenses subsequently incurred by the Indemnitee in connection with such
claim, other than as provided below in this Section 3.  The Indemnitee shall have the right to employ
his own counsel in connection with such claim, but the fees and expenses of
such counsel incurred after notice from the Corporation of its assumption of
the defense thereof shall be at the expense of the Indemnitee unless (i) the
employment of counsel by the Indemnitee has been authorized by the Corporation,
(ii) counsel to the Indemnitee shall have reasonably concluded that there
may be a conflict of interest or position on any significant issue between the
Corporation and the Indemnitee in the conduct of the defense of such action or (iii) the
Corporation shall not in fact have employed counsel to assume the defense of
such action, in each of which cases the fees and expenses of counsel for the
Indemnitee shall be at the expense of the Corporation, except as otherwise
expressly provided by this Article.  The
Corporation shall not be entitled to assume the defense of any claim brought by
or in the right of the Corporation, or as to which counsel for the Indemnitee
shall have reasonably made the conclusion provided for in clause (ii) above.

 

9

 

4.                                       Advance
of Expenses.  Subject to the
provisions of Section 5 below, in the event that the Corporation does not
assume the defense pursuant to Section 3 of this Article of any
action, suit, proceeding or investigation of which the Corporation receives
notice under this Article, any expenses (including attorneys’ fees) incurred by
an Indemnitee in defending a civil or criminal action, suit, proceeding or
investigation or any appeal therefrom shall be paid by the Corporation in
advance of the final disposition of such matter, provided, however,
that the payment of such expenses incurred by an Indemnitee in advance of the
final disposition of such matter shall be made only upon receipt of an
undertaking by or on behalf of the Indemnitee to repay all amounts so advanced
in the event that it shall ultimately be determined that the Indemnitee is not
entitled to be indemnified by the Corporation as authorized in this
Article.  Such undertaking may be
accepted without reference to the financial ability of the Indemnitee to make
such repayment.

 

5.                                       Procedure
for Indemnification.  In order to
obtain indemnification or advancement of expenses pursuant to Section 1, 2
or 4 of this Article, the Indemnitee shall submit to the Corporation a written
request, including in such request such documentation and information as is
reasonably available to the Indemnitee and is reasonably necessary to determine
whether and to what extent the Indemnitee is entitled to indemnification or
advancement of expenses.  Any such indemnification
or advancement of expenses shall be made promptly, and in any event within 60
days after receipt by the Corporation of the written request of the Indemnitee,
unless the Corporation determines, by clear and convincing evidence, within
such 60-day period that the Indemnitee did not meet the applicable standard of
conduct set forth in Section 1 or 2, as the case may be.  Such determination shall be made in each
instance by (a) a majority vote of a quorum of the directors of the
Corporation, (b) a majority vote of a quorum of the outstanding shares of
stock of all classes entitled to vote for directors, voting as a single class,
which quorum shall consist of stockholders who are not at that time parties to
the action, suit or proceeding in question, (c) independent legal counsel
(who may be regular legal counsel to the Corporation), or (d) a court of
competent jurisdiction.

 

6.                                       Remedies.  The right to indemnification or advances as
granted by this Article shall be enforceable by the Indemnitee in any
court of competent jurisdiction if the Corporation denies such request, in
whole or in part, or if no disposition thereof is made within the 60-day period
referred to above in Section 5. 
Unless otherwise provided by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advancement of expenses under
this Article shall be on the Corporation. 
Neither the failure of the Corporation to have made a determination
prior to the commencement of such action that indemnification is proper in the
circumstances because the Indemnitee has met the applicable standard of
conduct, nor an actual determination by the Corporation pursuant to

 

10

 

Section 5 that the Indemnitee has not met such applicable standard
of conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct.  The Indemnitee’s expenses (including
attorneys’ fees) incurred in connection with successfully establishing his
right to indemnification, in whole or in part, in any such proceeding shall
also be indemnified by the Corporation.

 

7.                                       Subsequent
Amendment.  No amendment, termination
or repeal of this Article or of the relevant provisions of Chapter 156D or
any other applicable laws shall affect or diminish in any way the rights of any
Indemnitee to indemnification under the provisions hereof with respect to
action, suit, proceeding or investigation arising out of or relating to any
actions, transactions or facts occurring prior to the final adoption of such
amendment, termination or repeal.

 

8.                                       Other
Rights.  The indemnification and
advancement of expenses provided by this Article shall not be deemed
exclusive of any other rights to which an Indemnitee seeking indemnification or
advancement of expenses may be entitled under any law (common or statutory),
agreement or vote of stockholders or directors or otherwise, both as to action
in his official capacity and as to action in any other capacity while holding
office for the Corporation, and shall continue as to an Indemnitee who has
ceased to be a Director or officer, and shall inure to the benefit of the
estate, heirs, executors and administrators of the Indemnitee.  Nothing contained in this Article shall
be deemed to prohibit, and the Corporation is specifically authorized to enter
into, agreements with officers and directors providing indemnification rights
and procedures different from those set forth in this Article.  In addition, the Corporation may, to the
extent authorized from time to time by its Board of Directors, grant
indemnification rights to other employees or agents of the Corporation or other
persons serving the Corporation and such rights may be equivalent to, or
greater or less than, those set forth in this Article.

 

9.                                       Partial
Indemnification.  If an Indemnitee is
entitled under any provision of this Article to indemnification by the
Corporation for some or a portion of the expenses (including attorneys’ fees),
judgments, fines or amounts paid in settlement actually and reasonably incurred
by him or on his behalf in connection with any action, suit, proceeding or
investigation and any appeal therefrom but not, however, for the total amount
thereof, the Corporation shall nevertheless indemnify the Indemnitee for the
portion of such expenses (including attorneys’ fees), judgments, fines or
amounts paid in settlement to which the Indemnitee is entitled.

 

10.                                 Insurance.  The Corporation may purchase and maintain
insurance, at its expense, to protect itself and any director, officer, employee
or agent of the Corporation or another organization or employee benefit plan
against any expense, liability or loss incurred by him in any such capacity, or

 

11

 

arising out of his status as such, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under Chapter 156D.

 

11.                                 Merger
or Consolidation.  If the Corporation
is merged into or consolidated with another corporation and the Corporation is
not the surviving corporation, the surviving corporation shall assume the
obligations of the Corporation under this Article with respect to any
action, suit, proceeding or investigation arising out of or relating to any
actions, transactions or facts occurring prior to the date of such merger or
consolidation.

 

12.                                 Savings
Clause.  If this Article or any
portion hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee
as to any expenses (including attorneys’ fees), judgments, fines and amounts
paid in settlement in connection with any action, suit, proceeding or
investigation, whether civil, criminal or administrative, including an action
by or in the right of the Corporation, to the fullest extent permitted by any
applicable portion of this Article that shall not have been invalidated
and to the fullest extent permitted by applicable law.

 

13.                                 Subsequent
Legislation.  If the Massachusetts
General Laws are amended after adoption of this Article to expand further
the indemnification permitted to Indemnitees, then the Corporation shall
indemnify such persons to the fullest extent permitted by the Massachusetts
General Laws, as so amended.

 

14.                                 Amendments
to Articles.  Notwithstanding any
other provisions of law, these Articles of Organization or the By-Laws of the
Corporation, and notwithstanding the fact that a lesser percentage may be
specified by law, the affirmative vote of at least sixty-six and two-thirds
percent (66 2/3%) of the votes which all the stockholders would be
entitled to cast at any annual election of directors or class or directors
shall be required to amend or repeal, or to adopt any provision inconsistent
with, this Article 6B.

 

C.                                     Authorization
of Directors to Make, Amend or Repeal Bylaws. The directors may make, amend
or repeal the bylaws in whole or in part, except with respect to any provision
thereof which by law or the bylaws of the corporation requires action by the
stockholders.

 

ARTICLE VII. 
The effective date of this restatement of the Articles of Organization
is the date and time these Restated Articles were received for filing.

 

12

 

THIRD, No Articles of the Articles of Organization of
the corporation are being amended by these Restated Articles.

 

 

	
  Signed by

  	
  /s/ C. Whitney Pedersen

  	
   

  	
   

  	
   

  	
   

  
	
  (signature of
  authorized individual)

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  (Please check appropriate box)

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Chairman of the Board of Directors

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
  ý

  	
   

  	
  Other Officer

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Court-appointed fiduciary,

  

 

Signed on this 10th
day of May 2005.

 

13

 

COMMONWEALTH OF MASSACHUSETTS

 

William Francis Galvin

Secretary of the Commonwealth

One Ashburton Place, Boston, Massachusetts 02108-1512

 

Restated Articles of Organization

(General Laws, Chapter 156D, Section 10.07)

 

I
hereby certify that upon examination of these Restated Articles of
Organization, duly submitted to me, it appears that the provisions of the
General Laws relative to the organization of corporations have been complied
with, and I hereby approve said articles; and the filing fee in the amount of $
200 having been paid, said articles are deemed to have been filed with me this
16th  day of May, 2005 at 3:44 p.m.

                   time

 

	
  Effective date:

  	
   

  
	
   

  	
  (must be within 90 days of date
  submitted)

  

 

	
  WILLIAM FRANCIS GALVIN

  
	
  Secretary of the Commonwealth

  
	
   

  
	
   

  	
  /s/ William Francis Galvin

  	
   

  

 

Contact information to be filled in by corporation:

 

C. Whitney Pedersen

100 City Square, Boston, MA 02129

Telephone:  (617) 241-9200

Email:  charles_w_pedersen@keane.com

 

 

 

EXHIBIT B

 

 

Keane, Inc.

 

 

Incentive
Stock Option Agreement

Granted
Under 1998 Stock Incentive Plan

 

1.                                       Grant
of Option.

 

This agreement evidences the grant by Keane, Inc.,
a Massachusetts corporation (the “Company”), on
            ,
     (the “Grant Date”) to
                    
(the “Participant”), an employee of the Company or one of its wholly-owned
subsidiaries, as defined in Section 424(f) of the Internal Revenue
Code of 1986, as amended and any regulations promulgated thereunder (the “Code”),
of an option to purchase, in whole or in part, on the terms provided herein and
in the Company’s 1998 Stock Incentive Plan (the “Plan”), a total of        shares of
common stock, $.10 par value per share, of the Company (“Common Stock”) (the “Shares”)
at $      per Share. 
Unless earlier terminated, this option shall expire on, and cannot be
exercised on or after, the tenth anniversary of the Grant Date (the “Expiration
Date”).

 

It is intended that the option evidenced by
this agreement shall be an incentive stock option as defined in Section 422
of the Code.  For so long as the Code
shall so provide, options granted to any employee which are intended to
constitute incentive stock options shall not constitute incentive stock options
to the extent that such options, in the aggregate, become exercisable for the
first time in any one calendar year for shares of Common Stock with an
aggregate fair market value (determined as of the respective date or dates of
grant) of more than $100,000.  Any shares
granted above the $100,000 limit are considered non-qualified stock
options.  Except as otherwise indicated
by the context, the term “Participant”, as used in this option, shall be deemed
to include any person who acquires the right to exercise this option validly
under its terms.

 

2.             Vesting
Schedule.

 

 Except
as otherwise provided in this Agreement, this option shall become fully
exercisable as to all of the Shares on the fifth anniversary of the Grant Date
(the “Fifth Anniversary Date”). 
Notwithstanding the foregoing, if prior to the Fifth Anniversary Date
the Company shall file with the Securities and Exchange Commission an Annual
Report on Form 10-K cash EPS for any fiscal year following year 2000 greater
than or equal to any of the cash EPS targets set forth below,

 

1

 

then this option shall, upon
filing of such Form 10-K, immediately become exercisable as to not more than
the number of shares set forth opposite such EPS target in the table below.

 

	
  Cash EPS Target

  	
   

  	
  Number of

  Shares as to which

  Option is Exercisable

  	
   

  
	
  EPS = $1.00

  	
   

  	
  34% of total number of Shares

  	
   

  
	
  EPS = $1.50

  	
   

  	
  67% of total number of Shares

  	
   

  
	
  EPS = $2.00

  	
   

  	
  100% of total number of Shares

  	
   

  

 

The right of exercise shall be cumulative so
that to the extent the option is not exercised at any time to the maximum
extent permissible it shall continue to be exercisable, in whole or in part,
with respect to all Shares for which it is vested until the earlier of the
Expiration Date or the termination of this option under Section 3 hereof
or the Plan.

 

3.             Exercise
of Option.

 

(a)           Form of
Exercise.  Each election to exercise
this option shall be in writing specifying the number of Shares to be
exercised, the option exercise price per Share and delivery instructions for
the Shares, signed by the Participant, and received by the Company at its
principal office, accompanied by payment in full as follows:

 

(i)                                     in
cash or by check, payable to the order of the Company; or

 

(ii)                                  by delivery of cash or a check equal to
the exercise price of the options by a creditworthy broker;

 

(iii)                               by delivery of shares of Common Stock owned by the
Participant valued at their fair market value as determined by (or in a manner
approved by) the Board in good faith, with written proof that the Common Stock
was owned by the Participant at least twelve months prior to such delivery; or

 

(iv)                              by
any combination of the above permitted forms of payment.

The Participant may
purchase less than the number of shares covered hereby, provided that no
partial exercise of this option may be for any fractional share or for fewer
than ten whole shares.

 

(b)           No Special
Employment Rights; Agreement Not To Compete.  Nothing contained in the Plan shall be
construed or deemed by any person under any circumstances to bind the Company
to continue the employment of the Participant for the period within which this
option

 

2

 

may be
exercised.  The Company expressly
reserves the right at any time to dismiss or otherwise terminate its
relationship with a Participant free from any claim under the Plan.  In consideration of the benefits herein
conferred, the Participant hereby agrees and covenants with the Company that
for a period of one (1) year following any termination of his or her
employment with the Company he or she (i) will not hire, attempt to hire,
solicit, or attempt to solicit to hire, or assist another or participate in any
manner in the hiring or soliciting for hire, of any person employed by Keane
within the one (1) year prior to the termination of his or her employment;
and (ii) will not “compete” with Keane. 
For purposes of the Agreement, “competing” is defined as soliciting or
doing business with, directly or indirectly, any present or past customer of
Keane, or any prospective customer of Keane, with whom he or she has had
contact in connection with any business activity. 

 

(c)           Continuous
Relationship with the Company Required. 
Except as otherwise provided in this Section 3, this option may not
be exercised unless the Participant, at the time he or she exercises this
option, is, and has been at all times since the date of grant of this option,
an employee, officer or director of, or consultant or advisor to, the Company
or any parent or subsidiary of the Company as defined in Section 424(e) or
(f) of the Code (an “Eligible Participant”).

 

(d)           No Rights As
Stockholder.  No Participant shall
have any rights as a stockholder with respect to any shares of Common Stock to
be distributed with respect to this option (including, without limitation, any
rights to dividends or distributions) until becoming the record holder of such
shares.  Notwithstanding the foregoing,
in the event the Company effects a split of the Common Stock by means of a
stock dividend and the exercise price of and the number of shares subject to
this option are adjusted as of the date of the distribution of the dividend
(rather than as of the record date for such dividend), then if the Participant
exercises this option between the close of business on the record date for such
stock dividend and the close of business on the distribution date for such
stock dividend, he or she shall be entitled to receive, on the distribution
date, the stock dividend with respect to the shares of Common Stock acquired
upon such option exercise, notwithstanding the fact that such shares were not
outstanding as of the close of business on the record date for such stock
dividend.

 

(e)           Termination of
Relationship with the Company.  If
the Participant ceases to be an Eligible Participant for any reason, then,
except as provided in paragraphs (f) and (g) below, the right to
exercise this option shall terminate forty-five (45) days after such cessation
(but in no event after the Expiration Date), provided  that this
option shall be exercisable only to the extent that the Participant was
entitled to exercise this option on the date of such cessation.  Notwithstanding the foregoing, if the
Participant, prior to the Expiration Date, violates the non-competition or
confidentiality provisions of any employment contract, confidentiality and
nondisclosure agreement or other agreement between the Participant and the
Company, the right to exercise this option shall terminate immediately upon
written notice to the Participant from the Company describing such violation.

 

3

 

(f)            Exercise Period
Upon Death or Disability.  If the
Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as
specified in paragraph (g) below, this option shall be exercisable, within
the period of one year following the date of death or disability of the Participant
by the Participant, provided  that this option shall be
exercisable only to the extent that this option was exercisable by the
Participant on the date of his or her death or disability, and further provided
that this option shall not be exercisable after the Expiration Date.

 

(g)           Discharge for Cause.  If the Participant, prior to the Expiration
Date, is discharged by the Company for “cause” (as defined below), the right to
exercise this option shall terminate immediately upon the effective date of
such discharge. “Cause” shall mean misconduct by the Participant or willful
failure by the Participant to perform his or her responsibilities to the
Company in the best interests of the Company (including, but not limited to,
breach by the Participant of any provision of any employment, consulting,
advisory, nondisclosure, non-competition or other similar agreement between the
Participant and the Company), as determined by the Company, which determination
shall be conclusive.  The Participant
shall be considered to have been discharged for “Cause” if the Company
determines, within 30 days after the Participant’s resignation, that discharge
for cause was warranted.

 

(h)           Changes in
Capitalization.  In the event of any
stock split, reverse stock split, stock dividend, recapitalization, combination
of shares, reclassification of shares, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, in each case other than an Acquisition Event (as
defined in the Plan), the number and class of securities and exercise price per
share subject to this option shall be appropriately adjusted by the Company to
the extent the Board shall determine, in good faith, that such an adjustment
(or substitution) is necessary and appropriate.

 

4.             Withholding.  No Shares will be issued pursuant to the
exercise of this option unless and until the Participant pays to the Company,
or makes provision satisfactory to the Company for payment of, any federal, state
or local withholding taxes required by law to be withheld in respect of this
option.

 

5.             Nontransferability
of Option.  This option may not be
sold, assigned, transferred, pledged or otherwise encumbered by the
Participant, either voluntarily or by operation of law, except by will or the
laws of descent and distribution, and, during the lifetime of the Participant,
this option shall be exercisable only by the Participant.

 

6.             Disqualifying
Disposition.  If the Participant
disposes of Shares acquired upon exercise of this option within two years from
the date of grant of the option or one year after such Shares were acquired
pursuant to exercise of this option, the Participant shall notify the Company
in writing of such disposition within 30 days of such disposition.

 

4

 

7.             Provisions
of the Plan.   This option is subject
to the provisions of the Plan, a copy of which is furnished to the Participant
with this option.

 

IN WITNESS WHEREOF, the Company has caused
this option to be executed under its corporate seal by its duly authorized
officer.  This option shall take effect
as a sealed instrument.

 

 

	
   

  	
  KEANE, INC.

  
	
   

  	
   

  
	
   

  	
  s/s Brian T. Keane

  	
   

  

 

5

 

PARTICIPANT’S
ACCEPTANCE

 

The undersigned hereby accepts the foregoing
option and agrees to the terms and conditions thereof.  The undersigned hereby acknowledges receipt
of a copy of the Company’s 1998 Stock Incentive Plan.

 

 

	
   

  	
  PARTICIPANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name (please print):

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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I have read the terms and conditions of the
foregoing option and choose NOT TO ACCEPT the option agreement.

 

	
   

  	
  PARTICIPANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name (please print):

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

6

 

EXHIBIT C

DEFINITION OF “CHANGE IN CONTROL”

 

“Change
in Control” shall mean any of the following:

 

(a)                                    any “person,” as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the “Act”) (other than the
Company, any of its subsidiaries, or any trustee, fiduciary or other person or
entity holding securities under any employee benefit plan or trust of the
Company or any of its subsidiaries), together with all “affiliates” and “associates”
(as such terms are defined in Rule 12b-2 under the Act) of such person,
shall become the “beneficial owner” (as such term is defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of either (A) the combined voting
power of the Company’s then outstanding securities having the right to vote in
an election of the Company’s Board (“Voting Securities”) or (B) the then
outstanding shares of Company’s common stock (“Common Stock”) (other than as a
result of an acquisition of securities directly from the Company); or

 

(b)                                   During any period of two years or less, persons who at the beginning of
such period (the “Commencement Date”) constitute the Company’s Board (the “Incumbent
Directors”) cease for any reason, including, without limitation, as a result of
a tender offer, proxy contest, merger or similar transaction, to constitute at
least a majority of the Board, provided that any person becoming a director of
the Company subsequent to the Commencement Date shall be considered an
Incumbent Director if such person’s election was approved by or such person was
nominated for election by a vote of at least a majority of the Incumbent
Directors; but provided further, that any such person whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of members of the Board or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board, including by reason of agreement intended to avoid or settle any such
actual or threatened contest or solicitation, shall not be considered an
Incumbent Director; or

 

(c)                                    the stockholders of the Company shall approve (A) any
consolidation or merger of the Company where the stockholders of the Company,
immediately prior to the consolidation or merger, would not, immediately after
the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3
under the Act), directly or indirectly, shares representing in the aggregate
fifty percent (50%) or more of the voting shares of the Company issuing cash or
securities in the consolidation or merger (or of its ultimate parent
corporation, if any), (B) any sale, lease, exchange or other transfer (in
one transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of the
Company or (C) any plan or proposal for the liquidation or dissolution of
the Company.

 

 

Notwithstanding the foregoing, a “Change of Control”
shall not be deemed to have occurred for purposes of the foregoing clause (a) solely
as the result of an acquisition of securities by the Company which, by reducing
the number of shares of Common Stock or other Voting Securities outstanding,
increases the proportionate number of shares beneficially owned by any person
to fifty percent (50%) or more of either (A) the combined voting power of
all of the then outstanding Voting Securities or (B) Common Stock; provided,
however, that if any person referred to in this sentence shall thereafter
become the beneficial owner of any additional shares of Voting Securities or
Common Stock (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company) and immediately thereafter beneficially owns fifty percent (50%) or
more of either (A) the combined voting power of all of the then
outstanding Voting Securities or (B) Common Stock, then a “Change of
Control” shall be deemed to have occurred for purposes of the foregoing clause
(a).

 

 

Exhibit D

AGREEMENT

 

This Agreement (“Agreement”) is by
and between Keane, Inc. (“Keane”) and the employee named below and is
effective on the date of execution by both parties.

 

I understand that Keane is involved
in an extremely competitive industry in which information and knowledge are
valuable assets that must be protected.

 

I also understand that this
Agreement seeks to protect these assets, as well as other legitimate business
interests, by addressing the issues of non-disclosure of confidential and/or
proprietary information and trade secrets; rights in inventions; and employee
obligations and restrictive covenants.

 

I understand the meaning and effect
of the terms of this Agreement, and understand that agreement to the terms set
forth herein is a condition of my employment or continued employment with
Keane.

 

NOW, THEREFORE, in
consideration of the covenants herein and for other good and valuable consideration,
I hereby agree with Keane as follows:

 

Employment with Keane

 

1.     I
understand and agree that any subsequent change or changes in my employment,
including but not limited to change or changes to my title, duties,
responsibilities, compensation, benefits, reporting relationships and/or term
of my employment, shall not in any way affect the validity of this Agreement,
which shall be and remain in full force and effect.

 

Trade Secrets, Confidential Information and
Keane Property.

 

2.     I
acknowledge that my employment with Keane has given or will give me access to
certain trade secrets and confidential and/or proprietary information belonging
to Keane including, but not limited to, non-public information pertaining to
current or former employees, information pertaining to hires, prospective hires
or potential hires, reports, customer lists, customer prospect material, price
lists, rate structures, responses to requests for proposals, presentations,
methodologies and software owned either by Keane, or developed by Keane for any
of its clients, whether electronically and/or in hard copy (all referred to as “Company
Confidential Information”).

 

3.     I
understand that I may use Company Confidential Information described in
paragraph 4 only in the ordinary course of my employment with Keane.  I also understand that I may disclose Company
Confidential Information described in paragraph 4 to others only when
authorized to do so and only when access to this Company Confidential Information
is necessary in the ordinary course of employment by, on behalf of or in
partnership with Keane.

 

4.     I
understand that securities laws strictly prohibit the disclosure of non-public
information and the trading in a stock or other security by a person in
possession of material, non-public information concerning that security.

 

1

 

5.     I
understand that Keane retains exclusive rights in Company Confidential
Information described in paragraph 4.  I
understand that I have no right to edit, copy, remove, distribute, create
derivative works or publish any such Company Confidential Information in any
form and medium, whether electronically or in hard copy and whether alone or as
part of a collective work, except as necessary in the ordinary course of my
employment with Keane.

 

6.     At
the termination of employment I will not, without the express written
authorization of an officer (Senior Vice President or higher) of Keane, take
with me the original or any copy (in any form or medium, whether electronically
or in hard copy) of any Company Confidential Information and/or other Keane
information not readily available to the public in any form as defined under
paragraph 4.  I will promptly deliver to
Keane all of such material held by me.

 

7.     At
the termination of employment I will also return to Keane all property and/or
other equipment provided to me during the course of my employment.

 

Works Made for Hire and Inventions.

 

8.     I
understand and agree that all inventions, computer programs and the like created
or conceived by me during the course of my employment (whether solely or
jointly with others) either for use by Keane or which could be used by Keane in
furtherance of its business activity, are “Works Made for Hire”, belong solely
to Keane, and are entitled to the same protections as Company Confidential
Information.

 

9.     I
agree to sign all papers, to execute all oaths and to do everything necessary
and proper to protect Keane’s title to Works Made for Hire and to enable Keane
to apply for and obtain, maintain and enforce US and foreign patents or
copyrights thereof, but without expense to me.

 

Employee Obligations and Restrictive
Covenants.

 

10.   I
affirm that I am not subject to any agreement that restricts my ability to work
for Keane or on assignments at Keane’s clients.

 

11.   I
will, during the period of my employment by Keane, devote my full time and best
efforts to Keane’s business and will not, without the express written
permission of Keane, engage in any business activities that would conflict with
my duties. Keane agrees that such permission will not be unreasonably withheld
so long as the requested activity is not similar to or does not conflict with
the primary business of Keane. 
Furthermore, I expressly agree that during said period, I will not,
directly or indirectly, work for or assist in any way any competitor of Keane.

 

12.   I
agree that after my employment with Keane ends, for a period of twelve (12)
months immediately thereafter, I will not hire, attempt to hire, solicit, or
attempt to solicit to hire, or assist another or participate in any manner in
the hiring or soliciting for hire, of any person employed by Keane within the
one (1) year prior to the termination of my employment.

 

13.   I
agree that after my employment with Keane ends, for a period of twelve (12)
months, I will not “compete” with Keane. 
For purposes of this Agreement, “competing” is 

 

2

 

defined as soliciting or doing business with, directly or indirectly,
any past (within the two years prior to the termination of my employment),
present or prospective customer of Keane, with whom I, or anyone reporting to
me, have had contact in connection with any business activity, but is limited
to the type of services provided by Keane to any of its customers during the
term of my employment.

 

Miscellaneous.

 

14.   Upon
termination Keane is authorized to deduct from my compensation (net pay) or
other amounts owed to me, to the extent allowed by law, any debts or financial
obligations I have incurred and owe to Keane. In the event that the amounts
owed to me do not fully repay the obligation, I agree to pay Keane such excess
amount on or before my termination date.

 

15.   I
understand that any breach of the above terms would cause irreparable harm to
Keane.  Therefore, in the event of any
such breach, Keane shall have the right to appropriate equitable relief,
including but not limited to, injunctive relief or specific performance, as
well as any and all other appropriate remedies of law.

 

16.   Any
amendment to or modification of this Agreement, and any waiver of any provision
hereof, shall be in writing.  Any waiver
by Keane of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach hereof.

 

17.   I
agree that each provision herein shall be treated as a separate and independent
clause, and the unenforceability of any one clause shall in no way impair the
enforceability of any of the other clauses herein.  Moreover, if one or more of the provisions
contained in this Agreement shall for any reason by held to be excessively
broad as to scope, activity or subject so as to be unenforceable at law, such
provision or provisions shall be construed by the appropriate judicial body by
limiting and reducing it or them, so as to be enforceable to the maximum extent
compatible with the applicable law as it shall then appear.  Upon termination of my employment for any
reason I agree that the terms and conditions of this Agreement shall continue
to be of full force and effect.

 

18.   This
Agreement shall be governed by and construed in accordance with the internal
laws (and not the laws of conflicts) of the Commonwealth of Massachusetts.

 

3

 

19.   The
term “Keane” shall include Keane, Inc. and any of its subsidiaries,
subdivisions and affiliates.  Keane shall
have the right to assign this Agreement to its successors and assigns, and all
covenants and agreement hereunder shall inure to the benefit of and be
enforceable by said successors or assigns.

 

 

I have read and agree to the above terms and conditions.

 

 

	
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4Exhibit 10.1

 

COMMON
STOCK AND WARRANT PURCHASE AGREEMENT

 

THIS COMMON STOCK AND
WARRANT PURCHASE AGREEMENT (the “Agreement”) is entered into as of August 18,
2005, by and among CREATIVE COMPUTER
APPLICATIONS, INC., a California corporation (the “Company”),
with headquarters located at 26115-A Mureau Road, Calabasas, California
91302, and the purchasers (collectively, the “Purchasers” and each a “Purchaser”)
set forth on Schedule 1
hereof, with regard to the following:

 

RECITALS

 

A.                                   The Company and
Purchasers are executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by the provisions of
Regulation D (“Regulation D”), as promulgated by the United
States Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “Securities Act”).

 

B.                                     The Purchasers
desire to (a) purchase, upon the terms and conditions stated in this
Agreement, shares of the Company’s Common Stock, no par value per share (the “Common
Stock”) and (b) purchase, upon the terms and conditions stated in this
Agreement, the Stock Purchase Warrants (the “Warrants”) to purchase
shares of Common Stock, in the form attached hereto as Exhibit A.  The shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants are referred to herein as “Warrant
Shares.”  The shares of Common Stock
issued to the Purchasers hereunder (exclusive of the Warrant Shares) are
referred to herein as the “Common Shares.”  The Common Shares, the Warrants and the Warrant
Shares are collectively referred to herein as the “Securities”.

 

C.                                     Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement in the form attached
hereto as Exhibit B
(the “Registration Rights Agreement,” and collectively with this
Agreement, the Warrants and any other documents or agreements executed in
connection with the transactions contemplated hereunder, the “Transaction
Documents”), pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act, the rules and regulations
promulgated thereunder and applicable state securities laws.

 

D.                                    Contemporaneously
with the Closing of this transaction, the Company contemplates a merger of
equals between itself and StorCOMM, Inc.,
a privately held Delaware corporation (“StorCOMM”) (the “CCA-StorCOMM
Merger”).

 

AGREEMENTS

 

NOW, THEREFORE, in
consideration of their respective promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Purchasers hereby agree as follows:

 

 

ARTICLE I

PURCHASE AND SALE OF COMMON STOCK AND WARRANTS

 

1.1                                 Purchase of
Common Stock and Warrants. 
Subject to the terms and conditions of this Agreement, the issuance,
sale and purchase of the Common Shares and Warrants shall be consummated in a “Closing.”  The purchase price (the “Purchase Price”)
shall be TWO DOLLARS ($2.00) per
Unit, for up to ONE MILLION FIVE HUNDRED
THOUSAND (1,500,000) Units. 
Each “Unit” will consist of (a) one (1) share of
Common Stock, and (b) one-fifth (1/5th) of a Warrant for the purchase of
one (1) Warrant Share at an exercise price of THREE DOLLARS ($3.00) per share, with a
term of two (2) years.  On the date
of the Closing, subject to the satisfaction or waiver of the conditions set
forth in ARTICLES VI
and VII hereof, the Company
shall issue and sell to each Purchaser, and each Purchaser severally agrees to
purchase from the Company, the number of Common Shares and a Warrant to
purchase the number of Warrant Shares set forth on Schedule 1 hereto.  Each Purchaser’s obligation to purchase
Common Shares and Warrants hereunder is distinct and separate from each other
Purchaser’s obligation to purchase, and no Purchaser shall be required to
purchase hereunder more than the number of Common Shares and a Warrant to
purchase the number of Warrant Shares set forth on Schedule 1 hereto.  The obligations of the Company with respect
to each Purchaser shall be separate from the obligations of each other
Purchaser and shall not be conditioned as to any Purchaser upon the performance
of obligations of any other Purchaser.

 

1.2                                 Form of
Payment.  Each Purchaser shall pay the
aggregate Purchase Price for the Units being purchased by such Purchaser as set
forth on Schedule 1
hereto, by wire transfer to the account designated by the Company at the escrow
account (the “Escrow”) described below. 
At that time, the Company will deliver the Common Stock and Warrants
into the Escrow.  The Closing of this
transaction will occur simultaneously with the closing of the CCA-StorCOMM
Merger, and the aggregate Purchase Price will be deposited by the Purchasers
into an Escrow to be established with U.S.
BANK (the “Escrow Agent”). 
The form of Escrow Agreement is attached hereto as Exhibit C. The Escrow will be
closed upon delivery by the Company to the Escrow Agent of a Certificate issued
by the State of Delaware showing that the CCA-StorCOMM Merger has
occurred.  The funds will be delivered to
the Company and the Transfer Agent will deliver the certificates representing
the Common Shares and the Warrants to the Purchasers.

 

1.3                                 Closing Fee.  At the Closing, the Company will direct the
Escrow Agent to pay to GREAT AMERICAN
INVESTORS, INC. (the “Placement Agent”) five percent (5%) of
the aggregate Purchase Price deposited in the Escrow as a placement fee.  The Company hereby agrees to indemnify and
hold harmless the Placement Agent and its officers, directors, employees, agents
and shareholders, individually and collectively (“Placement Agent
Indemnified Person(s)”) from and against any and all claims, liabilities,
losses, damages, costs and reasonable expenses incurred by any Placement Agent
Indemnified Person (including reasonable fees and disbursements of counsel)
which are related to or arising out of: (i) any untrue statement of any
material fact made by the Company; or (ii) any omission of material
fact  necessary to make any statement not
misleading, made by the Company.  The
Company will not however, be responsible for any claims, liabilities, losses,
damages, or expenses, which resulted directly or indirectly from the Placement
Agent’s negligence or willful misconduct.

 

 

1.4                                 Closing Date.  Subject to the satisfaction (or waiver) of the
conditions set forth in ARTICLES VI
and VII below, the date and
time of the issuance, sale and purchase of the Common Shares and Warrants
pursuant to this Agreement shall be at 10:00 a.m. California time, on August 18,
2005.

 

ARTICLE II

PURCHASER’S REPRESENTATIONS AND

WARRANTIES

 

Each Purchaser represents
and warrants to the Company, as of the date hereof and as of the Closing,
severally and not jointly with respect to itself and its purchase hereunder and
not with respect to any other Purchaser or the purchase hereunder by any other
Purchaser, that the following statements are true and correct:

 

2.1                                 Investment
Purpose.  Purchaser is purchasing the
Common Shares and the Warrants for Purchaser’s own account for investment only
and not with a view toward or in connection with the public sale or
distribution thereof. Purchaser will not, directly or indirectly, offer, sell,
pledge or otherwise transfer its Common Shares, Warrants or any interest
therein except pursuant to transactions that are exempt from the registration
requirements of the Securities Act and/or sales registered under the Securities
Act.  Purchaser understands that
Purchaser must bear the economic risk of this investment indefinitely, unless
the Securities are registered pursuant to the Securities Act and any applicable
state securities laws or an exemption from such registration is available, and
that the Company has no present intention of registering any such Securities
other than as contemplated by the Registration Rights Agreement.

 

2.2                                 Accredited
Investor Status.  Purchaser
is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D.

 

2.3                                 Reliance on
Exemptions.  Purchaser
understands that the Common Shares and Warrants are being offered and sold to
Purchaser in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and Purchaser’s compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of Purchaser to acquire the
Common Shares and Warrants.

 

2.4                                 Information.  The Company has made available all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been specifically
requested by Purchaser, including without limitation the documents publicly
filed by the Company with the SEC (such documents collectively, the “SEC
Documents”).  Purchaser has been
afforded the opportunity to ask questions of the Company, was permitted to meet
with the Company’s officers and has received what the Purchaser believes to be
complete and satisfactory answers to any such inquiries.  Neither such inquiries nor any other due
diligence investigation conducted by Purchaser or any of its representations
shall modify, amend or affect Purchaser’s right to rely on the Company’s
representations and warranties contained in ARTICLE III. 
Purchaser understands that

 

 

Purchaser’s investment in the Securities involves a high degree of
risk, including without limitation the risks and uncertainties disclosed in the
SEC Documents.

 

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

 

2.6                                 Transfer or
Resale.  Purchaser understands that (i) except
as provided in the Registration Rights Agreement, the Securities have not been
and are not being registered under the Securities Act or any state securities
laws, and may not be offered, sold, pledged or otherwise transferred unless
subsequently registered thereunder or an exemption from such registration is
available (which exemption the Company expressly agrees may be established as
contemplated in clauses (b) and (c) of Section 5.1 hereof);
(ii) any sale of such Securities made in reliance on Rule 144 under
the Securities Act (or a successor rule) (“Rule 144”)  may be made only in accordance with the terms
of Rule 144 and further, if Rule 144 is not applicable, any resale of
such Securities without registration under the Securities Act under circumstances
in which the seller may be deemed to be an underwriter (as that term is defined
in the Securities Act) may require compliance with some other exemption under
the Securities Act or the rules and regulations of the SEC thereunder in
order for such resale to be allowed, (iii) the Company is under no
obligation to register such Securities under the Securities Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder (in each case, other than pursuant to this Agreement or the
Registration Rights Agreement) and (iv) the Company has agreed to register
the Common Shares and Warrant Shares as provided in the Registration Rights
Agreement.

 

2.7                                 Legends.  Purchaser understands that, subject to ARTICLE V hereof, the certificates
for the Warrants and, until such time as the Warrant Shares and Common Shares
have been registered under the Securities Act as contemplated by the
Registration Rights Agreement or otherwise may be sold by Purchaser pursuant to
Rule 144 (subject to and in accordance with the procedures specified in ARTICLE V hereof), the
certificates for the Common Shares and the Warrant Shares will bear a
restrictive legend (the “Legend”), which will include language in
substantially the following form:

 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.

 

 

2.8                                 Authorization;
Enforcement.  This
Agreement and the Registration Rights Agreement have been duly and validly
authorized, executed and delivered on behalf of Purchaser and are valid and
binding agreements of Purchaser enforceable in accordance with their respective
terms, except to the extent that such validity or enforceability may be subject
to or affected by any bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights or remedies of creditors generally, or by other equitable
principles of general application.

 

2.9                                 Residency.  Purchaser is a resident of the jurisdiction
set forth under Purchaser’s name on the signature page hereto executed by
Purchaser.

 

2.10                           Hedging
Transactions.  Purchaser
does not have an existing short position with respect to the Company’s Common
Stock.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and
warrants to each Purchaser as of the date hereof and as of the Closing (without
giving effect to the CCA-StorCOMM Merger) that the following statements are
true and correct, except as set forth on the disclosure schedules attached
hereto as Schedule 3
(the “Company Disclosure Schedules”) and accept as disclosed in the SEC
Documents.  Notwithstanding the foregoing
or anything else contained herein, none of the representations and warranties
by the Company contained herein shall relate to or take into account the
effects of the CCA-StorCOMM Merger.

 

3.1                                 Organization
and Qualification.  Each of the
Company and its subsidiaries is a corporation duly organized and existing in
good standing under the laws of the jurisdiction in which it is incorporated,
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company and each of its subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction where the failure so to qualify or be in good standing
could reasonably be expected to have a Material Adverse Effect. “Material
Adverse Effect” means any effect which, individually or in the aggregate
with all other effects, reasonably would be expected to be materially adverse
to the business, operations, properties, financial condition, operating results
or prospects of the Company and its subsidiaries, taken as a whole on a
consolidated basis or on the transactions contemplated hereby.

 

3.2                                 Authorization;
Enforcement.  (a) The
Company has the requisite corporate power and authority to enter into and
perform under the Transaction Documents, and to issue, sell and perform its
obligations with respect to the Securities in accordance with the terms hereof
and thereof and in accordance with the terms and conditions of the Securities; (b) the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Common Shares and the
Warrants, and the reservation for issuance of the Warrant Shares) have been
duly authorized by all necessary corporate action and no further consent or
authorization of the Company, its board of directors, or its stockholders or
any other Person is required with respect to any of the transactions
contemplated hereby or thereby; (c)

 

 

this Agreement, the Registration Rights Agreement, the Common Shares,
and the Warrants have been duly executed and delivered by the Company; and (d) this
Agreement, the Registration Rights Agreement, the Common Shares, and the
Warrants constitute legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except (i) to the extent that such validity or enforceability may be subject
to or affected by any bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights or remedies of creditors generally, or by other equitable
principles of general application, and (ii) as rights to indemnity and
contribution under the Registration Rights Agreement may be limited by federal
or state securities laws. “Person” means any individual, sole
proprietorship, partnership, limited liability company, joint venture, trust,
unincorporated association, corporation, entity or government (whether federal,
state, county, city or otherwise, including, without limitation, any
instrumentality, division, agency or department thereof).

 

3.3                                 Capitalization.  The capitalization of the Company as of March 31,
2005, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares reserved for issuance pursuant to the Company’s
stock option plans, the number of shares reserved for issuance pursuant to
securities (other than the Warrants) exercisable for, or convertible into or
exchangeable for, any shares of Common Stock and the number of shares to be
reserved for issuance upon exercise of the Warrants is set forth on Schedule 3.3 hereof. All of such
outstanding shares of capital stock have been, or upon issuance will be,
validly issued, fully paid and nonassessable. 
No shares of capital stock of the Company (including the Common Shares
and the Warrant Shares) are subject to preemptive rights or any other similar
rights of the stockholders of the Company or any liens or encumbrances.  Except as disclosed in Schedule 3.3 hereof, as of the
date of this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exercisable
or exchangeable for, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by
which the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries, (ii) issuance
of the Securities will not trigger anti-dilution rights for any other
outstanding or authorized securities of the Company, and (iii) there are
no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of its or their
securities under the Securities Act (except the Registration Rights
Agreement).  The Company has made
available to Purchaser true and correct copies of the Company’s Articles of
Incorporation as in effect on the date hereof (“Articles of Incorporation”),
and the Company’s By-laws as in effect on the date hereof (the “By-laws”).  The Company has set forth on Schedule 3.3 hereof all
instruments and agreements (other than the Articles of Incorporation and
By-laws) governing securities convertible into or exercisable or exchangeable
for Common Stock of the Company (and the Company shall provide to Purchaser
copies thereof upon the request of Purchaser).

 

3.4                                 No Conflicts.  The execution, delivery and performance of
the Transaction Documents by the Company, and the consummation by the Company
of transactions contemplated hereby and thereby (including, without limitation,
the issuance and reservation for issuance, as applicable, of the Securities) do
not and will not (a) result in a violation of the Articles of
Incorporation or By-laws or (b) conflict with, or constitute a default (or
an event which, with notice or lapse of time or both, would become a default)
under, or give to others any

 

 

rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including U.S. federal and state securities laws)
applicable to the Company or any of its subsidiaries, or by which any property
or asset of the Company or any of its subsidiaries, is bound or affected
(except for such possible conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in
the aggregate, have a Material Adverse Effect). 
Neither the Company nor any of its subsidiaries is in violation of its
Articles of Incorporation or other organizational documents. Neither the
Company nor any of its subsidiaries, is in default (and no event has occurred
which has not been waived which, with notice or lapse of time or both, could
reasonably be expected to put the Company or any of its subsidiaries in
default) under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, except for possible violations, defaults or
rights as would not, individually or in the aggregate, have a Material Adverse
Effect.  The businesses of the Company
and its subsidiaries are not being conducted, and shall not be conducted so
long as a Purchaser owns any of the Securities, in violation of any law, ordinance
or regulation of any governmental entity, except for possible violations the
sanctions for which either individually or in the aggregate would not have a
Material Adverse Effect.  Except as (A) such
as may be required under the Securities Act in connection with the performance
of the Company’s obligations under the Registration Rights Agreement, (B) filing
of a Form D with the SEC, and (C) compliance with the state
securities or Blue Sky laws of applicable jurisdictions, the Company is not
required to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of
its obligations under this Agreement or the Registration Rights Agreement or to
perform its obligations in accordance with the terms hereof or thereof.

 

3.5                                 Consents.  The execution, delivery and performance by
the Company of the Transaction Documents and the offer, issuance and sale of
the Securities require no consent of, action by or in respect of, or filing
with, any Person, governmental body, agency, or official other than (i) filings
that have been made pursuant to applicable state securities laws, (ii) post-sale
filings pursuant to applicable state and federal securities laws, and (iii) any
consent, action or filing that either individually or in the aggregate would
not have a Material Adverse Effect. 
Subject to the accuracy of the representations and warranties of each
Purchaser set forth in ARTICLE II
hereof, the Company has taken all action necessary to exempt (i) the
issuance and sale of the Common Shares, (ii) the issuance of the Common
Shares, (iii) the issuance of the Warrants, and (iv) the issuance of
the Warrant Shares, from the provisions of any stockholder rights plan or other
“poison pill” arrangement, any anti-takeover, business combination or control
share law or statute binding on the Company or to which the Company or any of
its assets and properties may be subject and any provision of the Company’s
Articles of Incorporation or By-laws that is or could reasonably be expected to
become applicable to the Purchasers as a result of the transactions
contemplated hereby, including without limitation, the issuance of the
Securities and the ownership, disposition or voting of the Securities by the
Purchasers or the exercise of any right granted to the Purchaser pursuant to
this Agreement or the other Transaction Documents.

 

 

3.6                                 SEC Documents;
Financial Statements.  Since December 31,
2004, the Company has timely filed the SEC Documents required to be filed by it
with the SEC pursuant to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).  The Company has made available to each
Purchaser true and complete copies of the SEC Documents.  As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.  None of the statements made in any such SEC
Documents which is required to be updated or amended under applicable law has
not been so updated or amended.  The
consolidated financial statements of the Company included in the SEC Documents
have been prepared in accordance with U.S. generally accepted accounting
principles, consistently applied, and the rules and regulations of the SEC
during the periods involved (except (i) as may be otherwise indicated in
such consolidated financial statements or the notes thereto, or (ii) in
the case of unaudited interim statements, to the extent they do not include
footnotes or are condensed or summary statements) and present accurately and
completely the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).  Except as set forth in a manner clearly
evident to a sophisticated institutional investor in the consolidated financial
statements or the notes thereto of the Company included in the SEC Documents,
the Company has no liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business consistent with past practice
subsequent to the date of such financial statements and (ii) obligations
under contracts and commitments incurred in the ordinary course of business
consistent with past practice and not required under generally accepted
accounting principles to be reflected in such financial statements.  To the extent required by the rules of
the SEC applicable thereto, the SEC Documents contain a complete and accurate
list of all material undischarged written or oral contracts, agreements, leases
or other instruments to which the Company or any subsidiary is a party or by
which the Company or any subsidiary is bound or to which any of the properties
or assets of the Company or any subsidiary is subject (each a “Contract”).  None of the Company, its subsidiaries or, to
the Company’s Knowledge, any of the other parties thereto, is in breach or
violation of any Contract, which breach or violation would have a Material
Adverse Effect.  No event, occurrence or
condition exists which, with the lapse of time, the giving of notice, or both,
could become a default by the Company or its subsidiaries thereunder which
could reasonably be expected to have a Material Adverse Effect.  For purposes of this Agreement, “Company’s
Knowledge” means the actual knowledge of the executive officers (as defined
in Rule 405 under the Securities Act) of the Company, after due inquiry.

 

3.7                                 Absence of
Certain Changes.  Since March 31,
2005, there has been no material adverse change and no material adverse
development in the business, properties, operations, financial condition,
results of operations or prospects of the Company, or clearly evident to a
sophisticated institutional investor from the 
SEC Documents, including, without limitation:

 

 

(i)                  any change in the
consolidated assets, liabilities, financial condition or operating results of
the Company from that reflected in the financial statements included in the
Company’s Quarterly Report on Form 10-QSB for the quarter ended March 31,
2005, except for changes in the ordinary course of business which have not and
could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate;

 

(ii)               any declaration or payment
of any dividend, or any authorization or payment of any distribution, on any of
the capital stock of the Company, or any redemption or repurchase of any
securities of the Company;

 

(iii)            any material damage,
destruction or loss, whether or not covered by insurance to any assets or
properties of the Company or its subsidiaries;

 

(iv)           any waiver, not in the
ordinary course of business, by the Company or any subsidiary of a material
right or of a material debt owed to it;

 

(v)              any satisfaction or
discharge of any lien, claim or encumbrance or payment of any obligation by the
Company or a subsidiary, except in the ordinary course of business and which is
not material to the assets, properties, financial condition, operating results
or business of the Company and its subsidiaries taken as a whole (as such
business is presently conducted and as it is proposed to be conducted);

 

(vi)           any change or amendment to
the Company’s Articles of Incorporation or By-laws, or material change to any
material contract or arrangement by which the Company or any subsidiary is
bound or to which any of their respective assets or properties is subject;

 

(vii)        any material labor
difficulties or labor union organizing activities with respect to employees of
the Company or any subsidiary;

 

(viii)     any material transaction
entered into by the Company or a subsidiary other than in the ordinary course
of business;

 

(ix)             the loss of the services of
any key employee, or material change in the composition or duties of the senior
management of the Company or any subsidiary;

 

(x)                the loss or threatened loss
of any customer which has had or could reasonably be expected to have a
Material Adverse Effect; or

 

(xi)             any other event or condition
of any character that has had or could reasonably be expected to have a
Material Adverse Effect.

 

3.8                                 Absence of
Litigation.  There is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, or self-regulatory

 

 

organization or body pending or, to the Company’s Knowledge or any of
its subsidiaries, threatened against or affecting the Company, any of its
subsidiaries, or any of their respective directors or officers in their
capacities as such.  There are no facts
known to the Company which, if known by a potential claimant or governmental
authority, could reasonably be expected to give rise to a claim or proceeding
which, if asserted or conducted with results unfavorable to the Company or any
of its subsidiaries, could reasonably be expected to have a Material Adverse Effect.

 

3.9                                 Tax Matters.  The Company and each subsidiary has timely
prepared and filed all tax returns required to have been filed by the Company
or such subsidiary with all appropriate governmental agencies and timely paid
all taxes shown thereon or otherwise owed by it.  The charges, accruals and reserves on the
books of the Company in respect of taxes for all fiscal periods are adequate in
all material respects, and there are no material unpaid assessments against the
Company or any subsidiary nor, to the Company’s Knowledge, any basis for the
assessment of any additional taxes, penalties or interest for any fiscal period
or audits by any federal, state or local taxing authority except for any
assessment which is not material to the Company and its subsidiaries, taken as
a whole.  All taxes and other assessments
and levies that the Company or any subsidiary is required to withhold or to
collect for payment have been duly withheld and collected and paid to the
proper governmental entity or third party when due.  There are no tax liens or claims pending or,
to the Company’s Knowledge, threatened against the Company or any subsidiary or
any of their respective assets or property. 
There are no outstanding tax sharing agreements or other such
arrangements between the Company and any subsidiary or other corporation or
entity.

 

3.10                           Transactions
with Affiliates.  Except as
disclosed in the SEC Documents, none of the officers or directors of the
Company and, to the Company’s Knowledge, none of the employees of the Company
is presently a party to any transaction with the Company or any subsidiary
(other than as holders of stock options and/or warrants, and for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the Company’s
Knowledge, any entity in which any officer, director, or any such employee has
a substantial interest or is an officer, director, trustee or partner.

 

3.11                           Internal
Controls.  The Company
and the subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any difference.  The Company maintains and will continue to
maintain a standard system of accounting established and administered in
accordance with GAAP and the applicable requirements of the Exchange Act. The
Company’s officers certified to the Company’s internal controls as of the
filing of the Company’s Form 10-QSB for the quarter ending March 31,
2005 and since that date, that there have been no significant changes in the
Company’s internal controls (as such term is defined in Section 307(b)

 

 

of Regulation S-K) or, to the Company’s Knowledge, any other facts that
would significantly affect the Company’s internal controls.  The Company is not required at this date to
certify its internal controls under Section 404 of the Sarbanes-Oxley Act
of 2002 and has not taken any steps necessary to evaluate its internal controls
to determine whether it will be able to take such a certification.

 

3.12                           Disclosure.  No information relating to or concerning the
Company set forth in this Agreement contains an untrue statement of a material
fact.  No information relating to or
concerning the Company set forth in any of the SEC Documents contains a
statement of material fact that was untrue as of the date such SEC Document was
filed with the SEC.  The Company has not
omitted to state a material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made,
not misleading.  Except for the execution
and performance of this Agreement, no material fact (within the meaning of the
federal securities laws of the United States and of applicable state securities
laws) exists with respect to the Company which has not been publicly disclosed.

 

3.13                           Acknowledgment
Regarding Purchaser’s Purchase of the Securities.  The Company acknowledges and agrees that
Purchaser is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to this Agreement or the transactions
contemplated hereby, that this Agreement and the transaction contemplated
hereby, and the relationship between each Purchaser and the Company, are “arms-length,”
and that any statement made by Purchaser (except as set forth in ARTICLE II), or any of its
representatives or agents, in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation, is merely
incidental to Purchaser’s purchase of the Securities and has not been relied
upon as such in any way by the Company, its officers or directors.  The Company further represents to Purchaser
that the Company’s decision to enter into this Agreement and the transactions
contemplated hereby has been based solely on an independent evaluation by the
Company and its representatives.

 

3.14                           No General
Solicitation.  Neither the
Company nor any distributor participating on the Company’s behalf in the
transactions contemplated hereby (if any) nor any person acting for the
Company, or any such distributor, has conducted any “general solicitation,” as
described in Rule 502(c) under Regulation D, with respect to any
of the Securities being offered hereby.

 

3.15                           No Integrated
Offering.  Neither the
Company, nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would prevent
the parties hereto from consummating the transactions contemplated hereby
pursuant to an exemption from the registration under the Securities Act
pursuant to the provisions of Regulation D.  The transactions contemplated hereby are
exempt from the registration requirements of the Securities Act, assuming the
accuracy of the representations and warranties herein contained of each Purchaser.

 

3.16                           No Brokers.  The Company has taken no action which would
give rise to any claim by any person for brokerage commissions, finder’s fees
or similar payments by Purchaser relating to this Agreement or the transactions
contemplated hereby.

 

 

3.17                           Intellectual
Property.

 

(i)                  To the Company’s Knowledge,
all Intellectual Property of the Company and its subsidiaries is currently in
compliance with all legal requirements (including timely filings, proofs and
payments of fees) and is valid and enforceable, except where the failure to be
in compliance or to be valid and enforceable has not and could not reasonably
be expected to have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole.  No
Intellectual Property of the Company or its subsidiaries which is necessary for
the conduct of Company’s and each of its subsidiaries’ respective businesses as
currently conducted or as currently proposed to be conducted has been or is now
involved in any cancellation, dispute or litigation, and, to the Company’s
Knowledge, no such action is threatened. 
No patent of the Company or its subsidiaries has been or is now involved
in any interference, reissue, re-examination or opposition proceeding.  “Intellectual Property” means all of
the following: (a) patents, patent applications, patent disclosures and
inventions (whether or not patentable and whether or not reduced to practice); (b) trademarks,
service marks, trade dress, trade names, corporate names, logos, slogans and
Internet domain names, together with all goodwill associated with each of the
foregoing; (c) copyrights and copyrightable works; (d) registrations,
applications and renewals for any of the foregoing; and (e) proprietary
computer software (including but not limited to data, data bases and
documentation).

 

(ii)               All of the licenses and
sublicenses and consent, royalty or other agreements concerning Intellectual
Property which are necessary for the conduct of the Company’s and each of its
subsidiaries’ respective businesses as currently conducted or as currently
proposed to be conducted to which the Company or any subsidiary is a party or
by which any of their assets are bound (other than  generally commercially available, non custom,
off the shelf software application programs having a retail acquisition price
of less than $10,000 per license) (collectively, “License Agreements”)
are valid and binding obligations of the Company or its subsidiaries that are
parties thereto and, to the Company’s Knowledge, the other parties thereto, enforceable
in accordance with their terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors’ rights generally, and there exists no event or condition which will
result in a material violation or breach of or constitute (with or without due
notice or lapse of time or both) a default by the Company or any of its
subsidiaries under any such License Agreement.

 

(iii)            The Company and its
subsidiaries own or have the valid right to use all of the Intellectual
Property that is necessary for the conduct of the Company’s and each of its
subsidiaries’ respective businesses as currently conducted or as currently
proposed to be conducted and for the ownership, maintenance and operation of
the Company’s and its subsidiaries’ properties and assets, free and clear of
all liens, encumbrances, adverse claims or obligations to license all such
owned Intellectual Property, other than licenses entered into in the

 

 

ordinary course of the Company’s and its
subsidiaries’ businesses.  The Company
and its subsidiaries have a valid and enforceable right to use all third party
Intellectual Property and confidential information used or held for use in the
respective businesses of the Company and its subsidiaries.

 

(iv)           To the Company’s Knowledge,
the conduct of the Company’s and its subsidiaries’ businesses as currently
conducted does not infringe or otherwise impair or conflict with (collectively,
“Infringe”) any Intellectual Property rights of any third party or any
confidentiality obligation owed to a third party, and, to the Company’s
Knowledge, the Intellectual Property and confidential information of the
Company and its subsidiaries which are necessary for the conduct of Company’s
and each of its subsidiaries’ respective businesses as currently conducted or
as currently proposed to be conducted are not being Infringed by any third
party.  There is no litigation or order
pending or outstanding or, to the Company’s Knowledge, threatened or imminent,
that seeks to limit or challenge or that concerns the ownership, use, validity
or enforceability of any Intellectual Property or confidential information of
the Company and its subsidiaries and the Company’s and its subsidiaries’ use of
any Intellectual Property or confidential information owned by a third party,
and, to the Company’s Knowledge, there is no valid basis for the same.

 

(v)              The consummation of the
transactions contemplated hereby will not result in the alteration, loss,
impairment of or restriction on the Company’s or any of its subsidiaries’
ownership or right to use any of the Intellectual Property or confidential
information which is necessary for the conduct of Company’s and each of its
subsidiaries’ respective businesses as currently conducted or as currently
proposed to be conducted.

 

(vi)           The Company and its
subsidiaries have taken reasonable steps to protect the Company’s and its
subsidiaries’ rights in their Intellectual Property.  Each employee, consultant and contractor who
has had access to confidential information which is necessary for the conduct
of Company’s and each of its subsidiaries’ respective businesses as currently
conducted or as currently proposed to be conducted has executed an agreement to
maintain the confidentiality of such confidential information and has executed
appropriate agreements that are substantially consistent with the Company’s
standard forms thereof.  Except under
confidentiality obligations, there has been no material disclosure of any of
the Company’s or its subsidiaries’ confidential information to any third party.

 

3.18                           Environmental
Matters.  Neither the Company nor any
subsidiary is in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court, domestic or foreign, relating
to the use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to hazardous
or toxic substances (collectively, “Environmental Laws”), owns or
operates any real property contaminated with any substance that is subject to
any Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, or is subject to

 

 

any claim relating to any Environmental Laws; and there is no pending
or, to the Company’s Knowledge, threatened investigation that might lead to
such a claim.

 

3.19                           Certificates,
Authorities and Permits.  The
Company and each subsidiary possess adequate certificates, authorities or
permits issued by appropriate governmental agencies or bodies necessary to
conduct the business now operated by it, and neither the Company nor any
subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if determined
adversely to the Company or such subsidiary, could reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate.

 

3.20                           Key Employees.  No Key Employee, to the Company’s Knowledge,
is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each Key Employee does
not subject the Company or any of its subsidiaries to any liability with
respect to any of the foregoing matters. 
No Key Employee has, to the Company’s Knowledge, any intention to
terminate his employment with, or services to, the Company or any of its
subsidiaries. “Key Employee” means STEVEN
M. BESBECK, the President and Chief Executive Officer.

 

3.21                           Labor Matters.

 

(i)                  The Company is not a party
to or bound by any collective bargaining agreements or other agreements with
labor organizations.  The Company has not
violated in any material respect any laws, regulations, orders or contract
terms, affecting the collective bargaining rights of employees, labor organizations
or any laws, regulations or orders affecting employment discrimination, equal
opportunity employment, or employees’ health, safety, welfare, wages and hours.

 

(ii)               (A) There are no labor
disputes existing, or to the Company’s Knowledge, threatened, involving
strikes, slow-downs, work stoppages, job actions, disputes, lockouts or any
other disruptions of or by the Company’s employees, (B) there are no
unfair labor practices or petitions for election pending or, to the Company’s
Knowledge, threatened before the National Labor Relations Board or any other
federal, state or local labor commission relating to the Company’s employees, (C) no
demand for recognition or certification heretofore made by any labor
organization or group of employees is pending with respect to the Company and (D) to
the Company’s Knowledge, the Company enjoys good labor and employee relations
with its employees and labor organizations.

 

(iii)            To the Company’s Knowledge,
the Company is, and at all times has been, in full compliance in all material
respects with all applicable laws respecting employment (including laws
relating to classification of employees and independent contractors) and
employment practices, terms and conditions of

 

 

employment, wages and hours, and immigration and
naturalization.  There are no claims
pending against the Company before the Equal Employment Opportunity Commission
or any other administrative body or in any court asserting any violation of
Title VII of the Civil Rights Act of 1964, the Age Discrimination Act of 1967,
42 U.S.C. §§ 1981 or 1983 or any other federal, state or local law,
statute or ordinance barring discrimination in employment.

 

(iv)           The Company is not a party
to, or bound by, any employment or other contract or agreement that contains
any severance, termination pay or change of control liability or obligation,
including, without limitation, any “excess parachute payment,” as defined in Section 2806(b) of
the Internal Revenue Code.

 

ARTICLE IV

COVENANTS

 

4.1                                 Reasonable
Efforts.  The parties shall use their
commercially reasonable efforts to timely satisfy each of the conditions
described in ARTICLES VI
and VII of this Agreement
and to seek its Board of Directors’ approval of this Agreement.

 

4.2                                 Securities
Laws; Disclosure; Press Release.  The Company agrees to file a Form D with
respect to the Securities with the SEC as required under Regulation D.  The Company shall, on or prior to the date of
Closing, take such action as is necessary to sell the Securities to each
Purchaser under applicable securities laws of the states of the United
States.  The Company agrees to file a Form 8-K
disclosing this Agreement and the transactions contemplated hereby with the SEC
within four (4) business days following the date of Closing.  The Company and each Purchaser shall consult
with each other in connection with the Form 8-K disclosing this
Agreement and the transactions contemplated hereby, and in issuing any other
press releases with respect to the transactions contemplated hereby, and no
Purchaser shall issue any such press release or otherwise make any such public
statement without the prior consent of the Company, which consent shall not
unreasonably be withheld, except if such disclosure is required by law, in
which case the disclosing party shall promptly provide the other party with
prior notice of such public statement or communication.

 

4.3                                 Reporting
Status.  So long as any Purchaser
beneficially owns any of the Securities, the Company shall use commercially
reasonable efforts to timely file all reports required to be filed with the SEC
pursuant to the Exchange Act, and the Company shall not voluntarily terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would permit such
termination.

 

4.4                                 Reservation of
Common Stock. The Company has currently ONE MILLION EIGHT HUNDRED THOUSAND (1,800,000)
shares of Common Stock duly authorized and reserved for issuance of the Common
Shares and the Warrant Shares.  Such
shares, as well as any additional shares of Common Stock subsequently
authorized by the Company’s stockholders and Board of Directors for issuance of
the Common Shares, and, in the case of the Warrant Shares, upon the exercise of
the Warrants in accordance with the terms thereof, as applicable, shall be
reserved by the Company, and the Company shall continue to

 

 

reserve and keep available at all times, free of preemptive rights, a
sufficient number of shares of Common Stock for the purpose of enabling the
Company to issue the Warrant Shares pursuant to any exercise of the Warrants.

 

4.5                                 Listing of
Common Stock.  The Company
hereby agrees to use commercially reasonable efforts to maintain the listing of
the Common Stock on the American Stock Exchange.  The Company further agrees, if, following the
effective date of a registration statement covering the Warrant Shares, the
Company applies to have the Common Stock traded on any other trading market, it
will include in such application all of the Warrant Shares, and will take such
other action as is reasonably necessary to cause all of the Warrant Shares to
be listed on such other trading market as promptly as possible.  The Company will take all action reasonably
necessary to continue the listing and trading of its Common Stock on a trading
market and will use its commercially reasonable efforts to comply in all
respects with the Company’s reporting, filing and other obligations under the
bylaws or rules of the trading market.

 

4.6                                 Right of First
Offer.  Subject to the terms and
conditions specified in this Section 4.6, the Company hereby grants to
each Purchaser a right of first offer with respect to future sales by the
Company of its Shares (as hereinafter defined). Each time the Company proposes
to offer any shares of, or securities convertible into or exercisable or
exchangeable for any shares of, any class of its capital stock (“Shares”),
the Company shall first make an offering of such Shares to each Purchaser in
accordance with the following provisions:

 

(i)                  The Company shall deliver a
notice by certified mail (“Notice”) to the Purchasers stating (i) its bona
fide intention to offer such Shares, (ii) the number of such Shares to be
offered, and (iii) the price and terms, if any, upon which it proposes to
offer such Shares.

 

(ii)               By written notification
received by the Company, within ten (10) business days after receipt of
the Notice, each Purchaser may elect to purchase or obtain, at the price and on
the terms specified in the Notice, up to that portion of such Shares which
equals the proportion that the number of shares of Common Stock issued and
held, or issuable upon exercise of the Warrants then held, by such Purchaser
bears to the total number of shares of Common Stock outstanding as of the date
of the Notice (assuming full conversion and exchange of all the then
outstanding shares of the capital stock of the Company convertible into or
exchangeable for Common Stock) (such proportion hereinafter referred to as such
Purchaser’s “Pro Rata Share”).  If
all of the Shares offered to the Purchasers are not purchased by the
Purchasers, the Company shall reoffer any remaining Shares to the Purchasers
purchasing their full allotment upon the terms set forth in Sections 4.6(i) and
4.6(ii), except that such Purchasers must exercise or decline such additional
purchase rights within ten (10) calendar days after the receipt of such
reoffer.

 

(iii)            If all Shares referred to in
the Notice are not elected to be obtained as provided in Section 4.6(ii) hereof,
the Company may, during the 90 day period following the expiration of the
period provided in subsection 4.6(ii)

 

 

hereof, offer the remaining unsubscribed portion of
such Shares to any person or persons at a price not less than, and upon terms
no more favorable to the offeree than those specified in the Notice.  If the Company does not enter into an
agreement for the sale of the Shares within such period, or if such agreement
is not consummated within 90 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Purchasers in accordance herewith.

 

(iv)           The right of first offer in
this 4.6 shall not be applicable (i) to shares of capital stock (or
options, warrants or other rights to purchase or subscribe for such capital
stock) issuable or issued to (x) employees, consultants, directors or advisors
of the Company pursuant to a stock option plan, restricted stock plan or other
similar arrangement approved by the Company’s Board of Directors, or (y)
vendors, financial institutions, equipment leasing companies, lessors or
customers of the Company pursuant to arrangements approved by the Company’s
Board of Directors, (ii) to the issuance of securities pursuant to the
conversion, exercise or exchange of convertible, exercisable or exchangeable
securities outstanding as of the date of this Agreement, (iii) to the
issuance of securities in connection with a bona fide acquisition by the
Company of any business or assets or any joint venture or strategic allegiance
or similar transaction, the terms of which are approved by the Board of
Directors, (iv) to the issuance of securities in connection with any stock
split, stock dividend, combination or other recapitalization of the Company,
and (v) to the issuance of any securities pursuant to any transactions
approved by the Board of Directors, primarily for the purpose of (a) joint
ventures, licensing or research and development activities, or (b) distribution
or manufacture of this corporation’s products or services.

 

(v)              Notwithstanding any other
provision of this Section 4.6, any Purchaser may waive his, her or its
rights with respect to any particular offer or right given under, or any
provision contained in Section 4.6 by notice in writing to the Company.

 

4.7                                 Corporate
Existence.  So long as
any Purchaser beneficially owns any Securities, the Company shall maintain its
corporate existence, except in the event of a merger, consolidation or sale of
all or substantially all of the Company’s assets, as long as the surviving or
successor entity in such transaction assumes the Company’s obligations
hereunder and under the agreements and instruments entered into in connection
herewith.

 

4.8                                 Hedging
Transactions.  No
Purchaser has an existing short position with respect to the Company’s Common
Stock.  Each Purchaser agrees not to,
directly or indirectly, enter into any short sales with respect to the Common
Stock prior to the date on which such Purchaser is entitled to sell, transfer
the number of shares of Common Stock as to which such Purchaser proposes to
establish a short position.  This Section 4.8
shall not prohibit such Purchaser from at any time entering into options
contracts with respect to the Common Stock, including puts and calls including
delivering Common Stock in satisfaction of any exercised options.

 

 

4.9                                 Election of
Director.  So long as
the Purchasers collectively own not less than SEVEN HUNDRED AND FIFTY THOUSAND
(750,000) shares of Common Stock of the Company, the Purchasers collectively
may, by a vote of a majority of the Common Shares owned by them, appoint one (1) nominee
to the Company’s Board of Directors. 
Such nominee will be entitled to such indemnification and officers’ and
directors’ liability insurance coverage which is applicable to the other
Directors of the Company.

 

4.10                           Use of Proceeds.  The Company will use the proceeds of the sale
of the Securities to complete the CCA-StorCOMM Merger and for working capital
needs consistent with financial budgets approved from time to time by the
Company’s Board of Directors.

 

ARTICLE V

LEGEND REMOVAL, TRANSFER, CERTAIN SALES, ADDITIONAL SHARES

 

5.1                                 Removal of
Legend.  The Legend shall be removed
and the Company shall issue a certificate without such Legend to the holder of any
Security upon which it is stamped, and a certificate for a security shall be
originally issued without the Legend, if, (a) the sale of such Security is
registered under the Securities Act, (b) such holder provides the Company
with an opinion of counsel, in form, substance and scope customary for opinions
of counsel in comparable transactions and reasonably satisfactory to the
Company and its counsel (the reasonable cost of which shall be borne by the
Company if, after one (1) year, neither an effective registration
statement under the Securities Act or Rule 144 is available in connection
with such sale) to the effect that a public sale or transfer of such Security
may be made without registration under the Securities Act pursuant to an
exemption from such registration requirements or (c) such Security can be
sold pursuant to Rule 144 and the holder provides the Company with
reasonable assurances that the Security can be so sold without restriction or (d) such
Security can be sold pursuant to Rule 144(k).  The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section.  Each Purchaser agrees to sell all Securities,
including those represented by a certificate(s) from which the Legend has been
removed, or which were originally issued without the Legend, pursuant to an
effective registration statement, in accordance with the manner of distribution
described in such registration statement and to deliver a prospectus in
connection with such sale, or in compliance with an exemption from the
registration requirements of the Securities Act.  In the event the Legend is removed from any
Security or any Security is issued without the Legend and the Security is to be
disposed of other than pursuant to the registration statement or pursuant to Rule 144,
then prior to, and as a condition to, such disposition such Security shall be
relegended as provided herein in connection with any disposition if the subsequent
transfer thereof would be restricted under the Securities Act.  Also, in the event the Legend is removed from
any Security or any Security is issued without the Legend and thereafter the
effectiveness of a registration statement covering the resale of such Security
is suspended or the Company determines that a supplement or amendment thereto
is required by applicable securities laws, then upon reasonable advance notice
to Purchaser holding such Security, the Company may require that the Legend be
placed on any such Security that cannot then be sold pursuant to an effective
registration statement or Rule 144 or with respect to which the opinion
referred to in clause (b) next above has not been rendered, which Legend
shall be removed when such Security may be sold pursuant to an effective

 

 

registration statement or Rule 144 or such holder provides the
opinion with respect thereto described in clause (b) next above.

 

5.2                                 Transfer Agent
Instructions.  The Company
agrees that following the effective date of the registration statement or at
such time as such legend is no longer required under  Section 5.1, it will, no later
than ten (10)  days following the delivery by a Purchaser to the Company
or the Company’s transfer agent of a certificate representing Warrant Shares
issued with a restrictive legend (such date, the “Legend Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate representing
such Securities that is free from all restrictive and other legends, registered
in the name of each Purchaser or its nominee for the Warrant Shares in such
amounts determined in accordance with the terms of the Warrants.  The Company covenants that no instruction
other than such instructions referred to in this ARTICLE V, and stop transfer instructions to give
effect to Section 2.6 hereof in the case of the Warrant Shares
prior to registration of the Warrant Shares under the Securities Act, will be
given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company.  Nothing in this Section shall affect in
any way each Purchaser’s obligations and agreement set forth in Section 5.1
hereof to resell the Securities pursuant to an effective registration statement
and to deliver a prospectus in connection with such sale or in compliance with
an exemption from the registration requirements of applicable securities
laws.  If (a) a Purchaser provides
the Company with an opinion of counsel, which opinion of counsel shall be in
form, substance and scope customary for opinions of counsel in comparable
transactions and reasonably satisfactory to the Company and its counsel (the
reasonable cost of which shall be borne by the Company if, after one (1) year,
neither an effective registration statement under the Securities Act or Rule 144
is available in connection with such sale), to the effect that the Securities
to be sold or transferred may be sold or transferred pursuant to an exemption
from registration or (b) a Purchaser transfers Securities to an affiliate
which is an accredited investor (within the meaning of Regulation D under
the Securities Act) and which delivers to the Company in written form the same
representations, warranties and covenants made by Purchaser hereunder or pursuant
to Rule 144, the Company shall permit the transfer, and, in the case of
the Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denomination as specified by such
Purchaser.  The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to a
Purchaser by vitiating the intent and purpose of the transaction contemplated
hereby.  Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this ARTICLE V will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the
provisions of this ARTICLE V,
that a Purchaser shall be entitled, in addition to all other available remedies
to an injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond
or other security being required.

 

ARTICLE VI

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL

 

6.1                                 Conditions to
the Company’s Obligation to Sell.  The obligation of the Company hereunder to
issue and sell the Common Shares and Warrants to a Purchaser at the Closing is
subject to the satisfaction, as of the date of the Closing and with respect to
such

 

 

Purchaser, of each of the following conditions thereto, provided that
these conditions are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion:

 

(i)                  Such Purchaser shall have
executed and delivered the signature page to this Agreement and the
Registration Rights Agreement;

 

(ii)               Such Purchaser shall have
wired its aggregate Purchase Price set forth on Schedule 1 hereto to the Escrow;

 

(iii)            The representations and
warranties of such Purchaser shall be true and correct as of the date when made
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 Closing
(except for representations and warranties that speak as of a specific date),
and such Purchaser shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the applicable
Purchaser at or prior to the Closing;

 

(iv)           No statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which restricts or prohibits the
consummation of any of the transactions contemplated by this Agreement;

 

(v)              The Company shall have
obtained all waivers, authorizations, approvals and consents needed to
consummate the transaction contemplated by this Agreement which the Company
agrees to diligently procure;

 

(vi)           Purchaser shall have
delivered an officer’s certificate, in form and substance reasonably acceptable
to the Company, as to the accuracy of such Purchaser’s representations and
warranties pursuant to ARTICLE II;
and

 

(vii)        The CCA-StorCOMM Merger
shall have been completed, which the Company agrees to diligently prosecute.

 

ARTICLE VII

CONDITIONS TO EACH PURCHASER’S OBLIGATION TO PURCHASE

 

7.1                                 The obligation
of each Purchaser hereunder to purchase the Common Shares and Warrants to be
purchased by it on the date of the Closing is subject to the satisfaction of
each of the following conditions, provided that these conditions are for each
Purchaser’s sole benefit and may be waived by such Purchaser at any time in
such Purchaser’s sole discretion:

 

(i)                  The Company shall have
executed and delivered the signature page to this Agreement and the
Registration Rights Agreement;

 

 

(ii)               The Company shall have
delivered to the Escrow duly issued certificates for the Common Shares being so
purchased by Purchaser and Warrants being issued to such Purchaser at the
Closing;

 

(iii)            The representations and
warranties of the Company shall be true and correct in all material respects as
of the date when made 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 Closing (except for representations and warranties that speak as of a
specific date and without taking into account the effects of the CCA-StorCOMM
Merger), and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing;

 

(iv)           No statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the consummation
of any of the transactions contemplated by this Agreement;

 

(v)              The Company shall have
delivered an officer’s certificate, in form and substance reasonably acceptable
to the Purchaser, as to the accuracy of the Company’s representations and
warranties pursuant to ARTICLE III;
and

 

(vi)           The CCA-StorCOMM Merger
shall have been completed.

 

ARTICLE VIII

GOVERNING LAW; MISCELLANEOUS

 

8.1                                 Governing Law:
Jurisdiction.  This
Agreement shall be governed by and construed in accordance with the California
Corporation Law (in respect of matters of corporation law) and the laws of the
State of California (in respect of all other matters) applicable to contracts
made and to be performed in the State of California.  The parties hereto irrevocably consent to the
jurisdiction of the United States federal courts and state courts located in
the County of Los Angeles in the State of California in any suit or proceeding
based on or arising under this Agreement or the transactions contemplated
hereby and irrevocably agree that all claims in respect of such suit or
proceeding may be determined in such courts. 
The Company and each Purchaser irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding in such
forum.  The Company and each Purchaser
further agrees that service of process upon the Company or such Purchaser, as
applicable, mailed by the first class mail in accordance with Section 8.6
shall be deemed in every respect effective service of process upon the Company
or such Purchaser in any suit or proceeding arising hereunder.  Nothing herein shall affect Purchaser’s right
to serve process in any other manner permitted by law.  The parties hereto agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other

 

 

lawful manner.  The parties
hereto irrevocably waive any right to a trial by jury under applicable law.

 

8.2                                 Counterparts.  This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party.  In the event any
signature page is delivered by facsimile transmission, the party using
such means of delivery shall cause additional original executed signature pages to
be delivered to the other parties as soon as practicable thereafter.

 

8.3                                 Headings.  The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

 

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

 

8.5                                 Entire
Agreement; Amendments.  This
Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the maters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor any Purchaser makes any representation, warranty, covenant or
undertaking with respect to such matters. 
No provision of this Agreement may be waived other than by an instrument
in writing signed by the party to be charged with enforcement and no provision
of this Agreement may be amended other than by an instrument in writing signed
by the Company and each Purchaser.

 

8.6                                 Notice.  Any notice herein required or permitted to be
given shall be in writing and may be personally served or delivered by
nationally-recognized overnight courier or by facsimile machine confirmed
telecopy, and shall be deemed delivered at the time and date of receipt (which
shall include telephone line facsimile transmission).  The addresses for such communications shall
be:

 

if to the
Company:

Creative Computer Applications, Inc.

26115-A Mureau Road

Calabasas, CA  91302

Attention:  Steven M. Besbeck

Facsimile: 818-880-4398

 

with copy
to:

Sheppard Mullin Richter & Hampton, LLP

800 Anacapa Street

Santa Barbara, CA 93101

Attention:  Joseph E. Nida, Esq.

Facsimile: (805) 568-1955

 

 

If to the
Purchasers:

 

See Schedule 1

 

with a copy
to:

 

Jay Weil, Esq.

27 Viewpoint Road

Wayne, New Jersey 07470

Attn:  Jay Weil, Esq.

Facsimile:  212-688-7273

 

If to any other Purchaser,
to such address set forth under such Purchaser’s name on the signature page hereto
executed by such Purchaser.  Each party
shall provide notice to the other parties of any change in address.

 

8.7                                 Successors and
Assigns.  This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
assigns.  Neither the Company nor any
Purchaser shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. 
Notwithstanding the foregoing, each Purchaser may assign its rights and
obligations hereunder to any of its “affiliates,” as that term is defined under
the Securities Act, without the consent of the Company so long as such affiliate
is an accredited investor (within the meaning of Regulation D under the
Securities Act) and agrees in writing to be bound by this Agreement.  This provision shall not limit each Purchaser’s
right to transfer the Securities pursuant to the terms of this Agreement or to
assign such Purchaser’s rights hereunder to any such transferee.  In that regard, if Purchaser sells all or
part of its Common Shares to someone that acquires the shares subject to
restrictions on transferability (other than restrictions, if any, arising out
of the transferee’s status as an affiliate of the Company), Purchaser shall be
permitted to assign its rights hereunder, in whole or in part, to such
transferee.

 

8.8                                 Third Party
Beneficiaries.  This
Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person.

 

8.9                                 Survival;
Indemnification.  The
representations and warranties of the Company and the agreements and covenants
shall survive the closing hereunder notwithstanding any due diligence
investigation conducted by or on behalf of Purchaser.  The Company agrees to indemnify and hold
harmless each Purchaser and each of each Purchaser’s officers, directors,
employees, partners, agents and affiliates from and against any and all losses,
claims, damages, liabilities and expenses (including without limitation
reasonable attorneys’ fees and disbursements and other expenses incurred in
connection with investigating, preparing or defending any action, claim or
proceeding, pending or threatened and the costs of enforcement thereof)
(collectively, “Losses”)  arising
as a result of or related to any breach or alleged breach by the Company of any
of its representations or covenants set forth herein, including advancement of
expenses as they are incurred.  The
representations and warranties of the Purchasers shall survive the Closing
hereunder and each Purchaser shall indemnify and hold harmless the Company and
each of its officers, directors, employees, partners, agents and

 

 

affiliates from and against any and all Losses arising as a result of
the breach of such Purchaser’s representations and warranties.

 

8.10                           Further
Assurances.  Each party
shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.

 

8.11                           Remedies.  No provision of this Agreement providing for
any remedy to a Purchaser shall limit any remedy which would otherwise be
available to such Purchaser at law or in equity.  Nothing in this Agreement shall limit any
rights a Purchaser may have with any applicable federal or state securities
laws with respect to the investment contemplated hereby.  The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to a Purchaser.  Accordingly, the Company acknowledges that
the remedy at law for a material breach of its obligations under this Agreement
will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Agreement, that a Purchaser shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate compliance, without the
necessity of showing economic loss and without any bond or other security being
required.

 

8.12                           Final Agreement.  This Agreement, when executed by the parties
hereto, shall constitute the final agreement between the parties and upon such
execution Purchasers and the Company accept the terms hereof and have no cause
of action against each other for prior negotiations preceding the execution of
this Agreement.  This Agreement shall
supersede the Term Sheet For Potential Investment between the parties hereto.

 

8.13                           Termination.  If the CCA-StorCOMM Merger shall not have
been completed by November 30, 2005, then without any further action of
any party hereto being required, unless such date shall be extended by a
written agreement of all of the parties, this Agreement shall be
terminated.  The Escrow Agreement shall
also provide that if the CCA-StorCOMM Merger shall not have been completed by November 30,
2005, all Escrow Property (as such term is defined in the Escrow Agreement)
shall be returned to the party which deposited it with the Escrow Agreement.

 

 

IN WITNESS WHEREOF, the
undersigned Purchasers and the Company have caused this Agreement to be duly
executed as of the date first above written.

 

	
  COMPANY:

  
	
   

  
	
  CREATIVE
  COMPUTER APPLICATIONS, INC.

  
	
   

  
	
  By:

  	
  /s/      Steven
  M. Besbeck

  	
   

  
	
   

  	
  Name:

  	
  Steven M. Besbeck

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  
	
   

  
	
   

  
	
  PURCHASERS:

  
	
   

  
	
  ANN
  KRUEGER and KYLE KRUEGER,

  
	
  joint
  tenants by the entirety

  
	
   

  
	
  By:

  	
      /s/      Ann
  Krueger

  	
   

  
	
   

  	
        ANN
  KRUEGER

  	
   

  
	
   

  
	
  By:

  	
      /s/      Kyle
  Krueger

  	
   

  
	
   

  	
        KYLE
  KRUEGER

  	
   

  
	
   

  
	
   

  
	
  GREGORY
  H. EKIZIAN REVOCABLE TRUST

  
	
   

  
	
  By:

  	
      /s/      Gregory
  H. Ekizian

  	
   

  
	
   

  	
  Name:

  	
  Gregory H. Ekizian

  
	
   

  	
  Title:

  	
  CEO

  
								

 

 

	
  TEBO
  PARTNERS II, LLC,

  
	
  a Kansas limited liability
  company

  
	
   

  
	
  By:

  	
      /s/      Todd
  Tumbleson

  	
   

  
	
   

  	
  Name:

  	
  Todd Tumbleson

  
	
   

  	
  Title:

  	
  CEO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00089-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00089-of-00352.parquet"}]]