Document:

Exhibit 10.27

Compensation of
Non-Employee Directors

Directors who are not officers of SEACOR Holdings Inc.
(the “Company”) receive an annual retainer of $52,000 and $2,000 for every
regular and special Board and Committee meeting they attend via telephone and
$4,000 for every regular and special Board and Committee meeting they attend in
person.

Each member of the Board who is not an employee of the
Company is also granted options and Common Stock pursuant to the SEACOR 2003
Non-Employee Director Share Incentive Plan (Exhibit 10.17 to the Company’s
Form 10-K for the fiscal year ended December 31, 2006).EXHIBIT
10.1

UNIT PURCHASE AGREEMENT

February 14, 2007

MCMAHAN SECURITIES CO.
L.P.

500 West Putnam Avenue

Greenwich, CT 06830

Ladies and Gentlemen:

Chary Holding Company,
Inc., a Delaware corporation (the “Company”),
hereby confirms its agreement with you (“you” or the “Initial Purchaser”), as set forth below.

1.             The Transactions.

(a)           Subject to the
terms and conditions herein contained, the Company proposes to issue and sell
to the Initial Purchaser 175,000 units (“Firm Units”)
of the Company, each Unit consisting of $1,000 principal amount of its 8.75%
Senior Convertible Notes due 2012 (the “Notes”), a
warrant to purchase shares of the Company’s common stock, par value $0.001 per
share (the “Common Stock”), at an initial
exercise price of $4.00 per share (“$4 Warrants”),
and a warrant to purchase shares of the Common Stock at an initial exercise
price of $5.00 per share (“$5 Warrants” and,
together with the $4 Warrants, the “Warrants”).  In addition, the Company has granted to the
Initial Purchaser an option to purchase up to 26,250 additional Units (the “Optional Units” and, together with the Firm Units, the “Units”).  The Company’s
obligations under the Notes will be guaranteed by certain of its subsidiaries
(the “Guarantors”).  The Notes (including the guarantees of the
Guarantors endorsed thereon (the “Guarantees”))
will be issued pursuant to the provisions of the Indenture (the “Indenture”), to be dated February 16, 2007, between the
Company and Bank of New York Corporate Trust Company, N.A., as trustee (the “Trustee”), and the Warrants will be issued pursuant to the
provisions of the Warrant Agent Agreement (the “Warrant
Agreement”), to be dated February 16, 2007, between the Company and
Bank of New York Corporate Trust Company, N.A., as warrant agent (the “Warrant Agent”).  The
Units, the Notes, the Warrants, the shares of Common Stock issuable upon
conversion of the Notes (the “Note Shares”)
and the shares of Common Stock issuable upon exercise of the Warrants (the “Warrant Shares” and, together with the Note Shares, the “Underlying Shares”) are collectively referred to as the “Securities.”

(b)           The sale of the
Units to the Initial Purchaser (the “Offering”)
will be made without registration of the Securities under the Securities Act of
1933, as amended (together with the rules and regulations of the Securities and
Exchange Commission (the “Commission”)
promulgated thereunder, the “Securities Act”),
in reliance upon the exemption therefrom provided by Section 4(2) of the
Securities Act.

(c)           In connection with
the sale of the Units, the Company has prepared a preliminary offering
memorandum, dated February 14, 2007 (the “Preliminary Offering
Memorandum”), and has or will prepare an offering memorandum, dated
as of the date hereof, in form and substance satisfactory to you (as the same
may be amended and supplemented, the “Offering Memorandum”),
setting forth information regarding the Company, the Securities and the terms
of the Offering, and the transactions contemplated by the Offering Documents
(as defined below).  The Preliminary
Offering Memorandum and Offering Memorandum will attach as exhibits thereto and
incorporate by reference the Company’s: Annual Report on Form 10-KSB for its
fiscal year ended April 30, 2006; Quarterly Report on Form 10-QSB for the
quarter ended October 31, 2006; and Current Reports on Form 8-K (and amendments
on Form 8-K/A) filed with the Commission on November 17, 2006, November 29,
2006, December 7, 2006, December 14, 2006, January 5, 2007, January 17, 2007
and February 6, 2007 (all such documents collectively, the “Attached
and Incorporated Documents”). 
References to the Preliminary Offering Memorandum and the Offering
Memorandum will be deemed to include, in each case, all amendments and
supplements thereto and the Attached and Incorporated Documents and any
amendments thereto made prior to the completion of the Offering.  The Offering Memorandum and the Attached and
Incorporated Documents are collectively referred to as the “Offering
Materials”.   The Company
hereby confirms that it has authorized the use of the Preliminary Offering
Memorandum and the Offering Materials in connection with the offering and
resale of the Units by the Initial Purchaser.

(d)           The Company
understands that the Initial Purchaser proposes to make an offering of the
Units only on the terms and in the manner set forth in the Offering Memorandum
and Sections 3 and 4 hereof as soon as the Initial Purchaser deems advisable
after this Agreement has been executed and delivered, to persons whom the
Initial Purchaser reasonably believes to be qualified institutional buyers (“QIBs”) as defined in Rule 144A under the Securities Act, as
such rule may be amended from time to time (“Rule 144A”),
in transactions under Rule 144A.

(e)           The Initial
Purchaser and its direct and indirect transferees of the Units will be entitled
to the benefits of the Registration Rights Agreement to be dated as of the
Closing Date (as hereinafter defined), by and between the parties hereto (the “Registration Rights Agreement”) pursuant to which the
Company will agree, among other things, to file (and cause the Guarantors to
file) (i) a registration statement (the “Registration Statement”)
on the appropriate form with the Commission registering the resale of the
Securities under the Securities Act, and (ii) to use its best efforts (and
cause the Guarantors to use their respective best efforts) to cause any such
Registration Statement to be declared effective.

This Agreement, the Securities (including the
Guarantees endorsed upon the Notes), the Registration Rights Agreement, the
Indenture and the Warrant Agreement are collectively referred to as the “Offering Documents.”

2.             Representations and Warranties of
the Company.  The
Company represents and warrants to and agrees with the Initial Purchaser that:

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(a)           The Preliminary
Offering Memorandum and the Offering Memorandum, as of the respective dates set
forth on the front covers thereof, as of the Closing Date and as of the
Additional Closing Date, if any (each as defined in Section 3 hereof), does not
and will not, and any supplement or amendment thereto will not, contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that
the Company makes no representation or warranty as to the information contained
in or omitted from the Preliminary Offering Memorandum or the Offering
Memorandum, in reliance upon or in conformity with information furnished in
writing to the Company by the Initial Purchaser expressly for inclusion therein
pursuant to Section 15 hereof. The Offering Documents conform in all material
respects to the descriptions thereof contained in the Preliminary Offering
Memorandum and the Offering Memorandum.

(b)           Subsequent to the
respective dates as of which information is given in the Offering Memorandum
(or, if the Offering Memorandum is not finalized and dated as of the date
hereof, the most recent Preliminary Offering Memorandum), except as disclosed
in the Offering Memorandum (or, if the Offering Memorandum is not finalized and
dated as of the date hereof, the most recent Preliminary Offering Memorandum),
the Company has not declared, paid or made any dividends or other distributions
of any kind on or in respect of its capital stock and there has been no material adverse change or any development involving
a prospective material adverse change, whether or not arising from transactions
in the ordinary course of business, in or affecting (i) the business, condition
(financial or otherwise), results of operations, stockholders’ equity,
properties or prospects of the Company and the subsidiaries of the Company
listed on Schedule 2(b)(i) hereto (each a “Subsidiary” and
collectively, the “Subsidiaries”), individually or taken as a whole; (ii) the
long-term debt or capital stock of the Company or the Subsidiaries; or (iii)
the ability of the Company to consummate the Offering or any of the other
transactions contemplated by the Offering Documents (any such change or
development being a “Material Adverse Effect”).  Since the date of the latest balance sheet
included or incorporated by reference in the Offering Memorandum (or, if the
Offering Memorandum is not finalized and dated as of the date hereof, the most
recent Preliminary Offering Memorandum), neither the Company nor any Subsidiary
has incurred or undertaken any liabilities or obligations, whether direct or
indirect, liquidated or contingent, matured or unmatured, or entered into any
transactions, including any acquisition or disposition of any business or
asset, which are material to the Company and the Subsidiaries, individually or
taken as a whole, except for (A) liabilities, obligations and transactions
which are disclosed in the Offering Memorandum (or, if the Offering Memorandum
is not finalized and dated as of the date hereof, the most recent Preliminary
Offering Memorandum), and (B) any such liabilities or obligations incurred in
the ordinary course of the Company’s business or operations consistent in
nature and amount with past practice. 
Identified on Schedule 2(b)(ii)
hereto are all items of Designated Secured Indebtedness and Permitted
Indebtedness (as such terms are defined and used in the Indenture).

(c)           The authorized, issued
and outstanding capital stock of the Company as of February 16, 2007 is as set
forth in the Offering Memorandum (or, if the 

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Offering Memorandum is not finalized and dated as of
the date hereof, the most recent Preliminary Offering Memorandum) under the
caption “Capitalization” and, after giving effect to the Offering, will be as
set forth in the Offering Memorandum. 
Except as disclosed in the Offering Memorandum, all of the issued and
outstanding shares of capital stock of the Company are fully paid and
non-assessable and have been duly and validly authorized and issued, in
compliance with all applicable federal, state and foreign securities laws and
are not in violation of or subject to any preemptive or similar right that does
or will entitle any person, upon the issuance or sale of any security, to
acquire from the Company or any Subsidiary any Common Stock or other security
of the Company or any Subsidiary or any security convertible into, or
exercisable or exchangeable for, Common Stock or any other such security (any “Relevant Security”).

(d)           The Underlying
Shares have been duly authorized and reserved, and if and when issued upon
conversion of the Notes or exercise of the Warrants in accordance with their
respective terms and the terms of the Indenture or Warrant Agreement, as
applicable, will be validly issued, fully paid and non-assessable, free of any
preemptive or similar rights; will have been issued in compliance with all
applicable federal, state and foreign securities laws; will not have been
issued subject to any right that does or will entitle any person to acquire any
Relevant Security from the Company or any Subsidiary upon issuance or sale of
the Securities; and will not be subject to any restriction upon the voting or,
except as disclosed in the Offering Memorandum (or, if the Offering Memorandum
is not finalized and dated as of the date hereof, the most recent Preliminary
Offering Memorandum), transfer thereof pursuant to applicable law or the
Company’s certificate of incorporation, bylaws or governing documents or any
agreement to which the Company or any Subsidiary is a party or by which any of
them may be bound.

(e)           The Securities
conform to the descriptions thereof contained in the Offering Memorandum (or,
if the Offering Memorandum is not finalized and dated as of the date hereof,
the most recent Preliminary Offering Memorandum).  Except as disclosed in the Offering
Memorandum (or, if the Offering Memorandum is not finalized and dated as of the
date hereof, the most recent Preliminary Offering Memorandum), neither the
Company nor any Subsidiary has outstanding warrants, options to purchase, or
any preemptive rights or other rights to subscribe for or to purchase, or any
contracts or commitments to issue or sell, any Relevant Security.  Except as disclosed in the Offering
Memorandum (or, if the Offering Memorandum is not finalized and dated as of the
date hereof, the most recent Preliminary Offering Memorandum), there are no
outstanding subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or rights related to or entitling any person to
purchase or otherwise to acquire any shares of, or any security convertible
into or exchangeable or exercisable for, the capital stock of, or other
ownership interest in, the Company or any Subsidiary.

(f)            The Subsidiaries
are the only “significant subsidiaries” of the Company within the meaning of
Regulation S-X promulgated under the Securities Act.  Except as disclosed in the Offering
Memorandum (or, if the Offering Memorandum is not finalized and dated as of the
date hereof, the most recent Preliminary Offering Memorandum), all of the
issued shares of capital stock of or other ownership interests in 

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the Subsidiaries directly or indirectly owned by the
Company have been duly and validly authorized and issued and are fully paid and
non-assessable and the shares of capital stock or other ownership interests in
the Subsidiaries directly or indirectly owned by the Company are owned by the
Company free and clear of any lien, charge, mortgage, pledge, security
interest, claim, equity, trust or other encumbrance, preferential arrangement,
defect or restriction of any kind whatsoever (any “Lien”).

(g)           Each of the Company
and each Subsidiary has been duly organized and validly exists as a
corporation, limited partnership or limited liability company in good standing
under the laws of its jurisdiction of organization.  Each of the Company and each Subsidiary has
all power and authority to carry on its business as it is currently being
conducted and as described in the Offering Memorandum (or, if the Offering
Memorandum is not finalized and dated as of the date hereof, the most recent
Preliminary Offering Memorandum), and to own, lease and operate its respective
properties.  Each of the Company and each
Subsidiary is duly qualified to do business as a foreign corporation, limited
partnership or limited liability company in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary, except for those failures to be so qualified
which (individually and in the
aggregate) could not reasonably be expected to have a Material Adverse
Effect.

(h)           The Company has the
corporate power and authority to execute, deliver and perform its obligations
under the Notes and the Warrants.  The
Notes and Warrants have been duly and validly authorized by the Company for
issuance and, when executed by the Company and authenticated by the Trustee or
Warrant Agent, as applicable, in accordance with the provisions of the
Indenture or Warrant Agreement, as applicable, and when delivered to and paid
for by the Initial Purchaser in accordance with the terms hereof, will have
been duly executed, issued and delivered and will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the Indenture
or Warrant Agreement, as applicable, and enforceable against the Company in
accordance with their respective terms except that the enforcement thereof may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting creditors’
rights generally, and (ii) general principles of equity (regardless of whether
such enforcement is considered in a proceeding at law or in equity) ((i) and
(ii) collectively, the “Enforceability Exceptions”)
and will be convertible into the Underlying Shares in accordance with their
respective terms.  At the Closing Date,
the Notes will be in the form contemplated by the Indenture and the Warrants
will be in the form contemplated by the Warrant Agreement.

(i)            The Company has
the corporate power and authority to execute, deliver and perform its
obligations under the Indenture.  The
Indenture has been duly and validly authorized by the Company and meets the
requirements for qualification under the Trust Indenture Act of 1939, as
amended (the “TIA”), and, when executed and
delivered by the Company (assuming the due authorization, execution and
delivery by the Trustee), will constitute a valid and legally binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except that the enforcement thereof may be limited by the Enforceability Exceptions.

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(j)            The Company has
the corporate power and authority to execute, deliver and perform its
obligations under the Warrant Agreement. 
The Warrant Agreement has been duly and validly authorized by the
Company and, when executed and delivered by the Company (assuming the due
authorization, execution and delivery by the Warrant Agent), will constitute a
valid and legally binding agreement of the Company, enforceable against the
Company in accordance with its terms, except that the enforcement thereof may be
limited by the Enforceability Exceptions

(k)           The Company has the
corporate power and authority to execute, deliver and perform its obligations
under the Registration Rights Agreement. 
The Registration Rights Agreement has been duly and validly authorized
by the Company and when executed and delivered by the Company (assuming the due
authorization, execution and delivery by the Initial Purchaser), will
constitute a valid and legally binding agreement of the Company, enforceable
against the Company in accordance with its terms, except that the enforcement
thereof may be limited by the Enforceability Exceptions.

(l)            The Company has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement.  This
Agreement has been duly and validly authorized by the Company and when executed
and delivered by the Company (assuming the due authorization, execution and
delivery by the Initial Purchaser), will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except that the enforcement thereof may be limited by the
Enforceability Exceptions.

(m)          Each Guarantor has
the corporate, limited partnership or limited liability company power and
authority to execute, deliver and perform its obligations under the
Guarantees.  The Guarantees have been
duly and validly authorized by each Guarantor and when executed and delivered
by each of them will have been duly executed, issued and delivered by each
Guarantor and will constitute valid and legally binding obligations of each
Guarantor enforceable against each Guarantor in accordance with its terms
except that the enforcement thereof may be limited by the Enforceability
Exceptions.

(n)           There exists as of
the date hereof (after giving effect to the transactions contemplated by each
of the Offering Documents) no event or condition that would constitute a
default or an event of default (in each case as defined in each of the Offering
Documents) under any of the Offering Documents.

(o)           Except as set forth
in Schedule 2.2(o)(i), the execution,
delivery, and performance by the Company of this Agreement, the Indenture, the
Warrant Agreement and the Registration Rights Agreement, and the execution,
delivery and performance by each Guarantor of the Guarantees, and the
consummation of the transactions contemplated by the Offering Documents do not
and will not conflict with, require Consent (as defined below) under or result
in a breach of any of the terms and provisions of, or constitute a default (or
an event which with notice or lapse of time, or both, would constitute a
default) under, violate or result in the creation or imposition of 

 6
 

any Lien upon any property or assets of the Company or
any Subsidiary (including, without limitation, any Guarantor) pursuant to, (i)
any indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant, instrument,
franchise, license or permit to which the Company or any Subsidiary is a party
or by which the Company or any Subsidiary or their respective properties,
operations or assets may be bound; (ii) any provision of the certificate or
articles of incorporation, bylaws or other organizational documents of the
Company or any Subsidiary; or (iii) any law, rule, regulation, ordinance,
directive, judgment, decree or order of any judicial, regulatory or other legal
or governmental agency or body, domestic or foreign, having jurisdiction over
the Company, any Subsidiary or any of its or their properties; except, in the
case of clauses (i) and (iii) above, as could not reasonably be expected to
have a Material Adverse Effect.  Further,
except as set forth in Schedule 2.2(o)(ii),
the execution, delivery, and performance by the Company of this Agreement, the
Indenture, the Warrant Agreement and the Registration Rights Agreement, and the
execution, delivery and performance by each Guarantor of the Guarantees, and
the consummation of the transactions contemplated by the Offering Documents, are
not subject to preemptive or similar rights, and do not require the Consent or
waiver, of any holder of Relevant Securities. 
The items identified on Schedule 2.2(o)(i)
and Schedule 2.2(o)(ii), if any, are
collectively referred to as “Required Consents and
Waivers.”

(p)           Each of the Company
and each Subsidiary has all necessary consents, approvals, authorizations,
orders, registrations, qualifications, licenses, filings and permits of, with
and from all judicial, regulatory and other legal or governmental agencies and
bodies and all third parties, foreign and domestic (collectively, the “Consents”), to own, lease and operate its properties and
conduct its business as it is now being conducted and as it is contemplated to
be conducted, in each case as disclosed in the Offering Memorandum (or, if the
Offering Memorandum is not finalized and dated as of the date hereof, the most
recent Preliminary Offering Memorandum), except for Consents the failure of
which to obtain could not reasonably be expected to have a Material Adverse
Effect, and each such Consent is valid and in full force and effect, and except
as disclosed in the Offering Memorandum (or, if the Offering Memorandum is not
finalized and dated as of the date hereof, the most recent Preliminary Offering
Memorandum), neither the Company nor any Subsidiary has received notice of any
investigation or proceedings which results in or, if decided adversely to the
Company or any Subsidiary, could reasonably be expected to result in, the
revocation of, or imposition of a materially burdensome restriction on, any
Consent.  Each of the Company and each
Subsidiary is in compliance with all applicable laws, rules, regulations,
ordinances, directives, judgments, decrees and orders, foreign and domestic,
except as disclosed in the Offering Memorandum (or, if the Offering Memorandum
is not finalized and dated as of the date hereof, the most recent Preliminary
Offering Memorandum) or where failure to be in compliance could not reasonably
be expected to have a Material Adverse Effect. 
No Consent contains a materially burdensome restriction not adequately
disclosed in the Offering Memorandum (or, if the Offering Memorandum is not
finalized and dated as of the date hereof, the most recent Preliminary Offering
Memorandum).

(q)           No Consent of, with
or from any judicial, regulatory or other legal or governmental agency or body
or any third party, foreign or domestic, is required by (i) 

 7
 

the Company for the execution, delivery and
performance of this Agreement, the Indenture, the Warrant Agreement or the
Registration Rights Agreement, (ii) any Guarantor for the execution, delivery
and performance of the Guarantees, or (iii) the Company or any Guarantor for
consummation of the Offering and the other transactions contemplated by the
Offering Documents, including the issuance, sale and delivery of the Securities
(including, the issuance of the Underlying Shares upon conversion of the Notes
and upon exercise of the Warrants), except such Consents as may be required
under state securities or “blue sky” laws and, in the case of the transactions
contemplated by the Registration Rights Agreement, such as will be obtained
under the Securities Act and applicable state securities or “blue sky”
laws.  No consent, approval or
authorization of the stockholders of the Company is required in connection with
the issuance of the Securities, except as may be described in the Offering
Memorandum.

(r)           Except as disclosed
in the Offering Memorandum (or, if the Offering Memorandum is not finalized and
dated as of the date hereof, the most recent Preliminary Offering Memorandum),
there is no judicial, regulatory, arbitral or other legal or governmental
proceeding or other litigation or arbitration, domestic or foreign, pending to
which the Company or any Subsidiary is a party or of which any property,
operations or assets of the Company or any Subsidiary is the subject which,
individually or in the aggregate, if determined adversely to the Company or any
Subsidiary, could reasonably be expected to have a Material Adverse Effect, and
to the best of the Company’s knowledge, no such proceeding, litigation or
arbitration is threatened or contemplated.

(s)           The financial
statements, including the notes thereto, included in the Offering Memorandum
(or, if the Offering Memorandum is not finalized and dated as of the date
hereof, the most recent Preliminary Offering Memorandum) present fairly, as of
the dates and for the periods specified, the financial position, cash flows and
results of operations of the Company and its consolidated subsidiaries; such
financial statements have been prepared in conformity with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein); and the
selected consolidated financial data set forth under the caption “Summary
Consolidated Financial Data” and “ProForma Financial Statements” in the
Offering Memorandum present fairly, as of the dates and for the periods
specified, on the basis stated in the Offering Memorandum, the information
included therein.  No other financial
statements are required to be included in the Offering Memorandum (or, if the
Offering Memorandum is not finalized and dated as of the date hereof, the most
recent Preliminary Offering Memorandum) if the Offering Memorandum were
included in a registration statement filed pursuant to the Securities Act.  The other financial and statistical
information included in the Offering Memorandum (or, if the Offering Memorandum
is not finalized and dated as of the date hereof, the most recent Preliminary
Offering Memorandum) presents fairly the information included therein and, if
so required, has been prepared on a basis consistent with that of the financial
statements that are included in the Offering Memorandum (or, if the Offering
Memorandum is not finalized and dated as of the date hereof, the most recent
Preliminary Offering Memorandum) and is derived from the books and records of
the respective entities presented therein and, to the extent such information
is a range, projection or estimate, is 

 8
 

based on the good faith
belief and estimates of the management of the Company.  The financial information included in the
Attached and Incorporated Documents has been derived from the Company’s consolidated
financial statements included in the Attached and Incorporated Documents or
from the Company’s accounting books and records generally.

(t)            Miller Ray Houser
& Steward, LLP, which has examined certain of such financial statements as
set forth in its reports included in the Offering Memorandum (or, if the
Offering Memorandum is not finalized and dated as of the date hereof, the most
recent Preliminary Offering Memorandum), is an independent registered public
accounting firm as required by the Securities Act and the Securities Exchange
Act of 1934, as amended (together with the rules and regulations of the
Commission promulgated thereunder, the “Exchange Act”).

(u)           The Company is
subject to and in full compliance with the reporting requirements of Section 13
or 15(d) of the Exchange Act and files reports with the Commission on the EDGAR
System.  The Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and the outstanding shares of
Common Stock are listed for quotation on the Over-the-Counter Bulletin Board
(the “OTC”), and the Company has taken no
action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or de-listing the
Common Stock from the OTC, nor has the Company received any notification that
the Commission or the OTC is contemplating terminating such registration or
listing.

(v)            Except as
disclosed in the Offering Memorandum (or, if the Offering Memorandum is not
finalized and dated as of the date hereof, the most recent Preliminary Offering
Memorandum), since February 27, 2004, the Company has filed in a timely manner
each document or report required to be filed by it pursuant to the Exchange
Act, including, without limitation, the Attached and Incorporated Documents;
each such document or report (including any financial statements) and any
amendment thereto at the time it was filed, conformed to the requirements of
the Exchange Act; and none of such documents or reports on the date of its
filing contained an untrue statement of any material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.

(w)           There are no agreements, contracts, indentures, leases or
other instruments (including, without limitation, any voting agreement),
which are required to be filed as exhibits to
the Attached and Incorporated Documents, which are not so filed as required.

(x)           The Company and
each Subsidiary maintain a system of internal accounting and other controls
sufficient to provide reasonable assurances 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 United States generally accepted accounting
principles and to maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded 

 9
 

accounting for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.

(y)           Neither the Company
nor any of its affiliates (within the meaning of Rule 144 under the Securities
Act) has taken, directly or indirectly, any action that constitutes or is
designed to cause or result in, or which could reasonably be expected to
constitute, cause or result in, the stabilization or manipulation of the price
of any security to facilitate the sale or resale of the Securities.

(z)           Neither the Company
nor any of its affiliates (within the meaning of Rule 144 under the Securities
Act) directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of any “security” (as defined
in the Securities Act) which is or could be integrated with the sale of the
Securities in a manner that would require the registration under the Securities
Act of the Securities, or (ii) engaged in any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) in connection with the offering of the Securities or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act.  The offer and sale of
the Units to the Initial Purchaser and the Initial Purchaser’s resale of the
Units in the manner contemplated by this Agreement and the Offering Memorandum
does not require registration under the Securities Act and the Indenture does
not require qualification under the TIA.

(aa)         Except as described
in the Offering Memorandum (or, if the Offering Memorandum is not finalized and
dated as of the date hereof, the most recent Preliminary Offering Memorandum),
no holder of any Relevant Security has any rights to require registration of
any Relevant Security as part or on account of, or otherwise in connection with
the Offering and any of the other transactions contemplated by the Offering
Documents, and any such rights so disclosed have been effectively waived by the
holders thereof, and any such waivers remain in full force and effect.

(bb)         Neither the Company
nor any Subsidiary is now and, immediately after the sale of the Units as
contemplated hereunder and application of the net proceeds of such sale as
described in the Offering Memorandum (or, if the Offering Memorandum is not
finalized and dated as of the date hereof, the most recent Preliminary Offering
Memorandum) under the caption “Use of Proceeds,” will be an “investment company”
or be controlled by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

(cc)         No relationship,
direct or indirect, exists between or among the Company or any affiliate of the
Company, on the one hand, and any director, officer, stockholder, customer or
supplier of the Company or any affiliate of the Company, on the other hand,
which is required by the Exchange Act to be described in the Company’s annual
and/or quarterly reports on Forms 10-K and 10-Q, as applicable, which is not so
described as required in such reports. 
There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the executive
officers or directors of the Company or any of their respective family members.

 

 10

(dd)         The Company and each
Subsidiary owns or leases all such properties as are necessary for the conduct
of its business as presently operated and as proposed to be operated as
described in the Offering Memorandum (or, if the Offering Memorandum is not finalized
and dated as of the date hereof, the most recent Preliminary Offering
Memorandum).  The Company and each
Subsidiary has good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by it, in each case
free and clear of all Liens except such as are described in the Offering
Memorandum (or, if the Offering Memorandum is not finalized and dated as of the
date hereof, the most recent Preliminary Offering Memorandum) or as could not
reasonably be expected to have a Material Adverse Effect; and any real property
held under lease or sublease by the Company or any Subsidiary is held under a
valid, subsisting and enforceable lease or sublease with such exceptions as are
not material to, and do not interfere with, the use made and proposed to be
made of such property by the Company or such Subsidiary.  Neither the Company nor any Subsidiary has
received any notice of any claim adverse to its ownership of any real or
personal property or of any claim against the continued possession of any real
property, whether owned or held under lease or sublease by the Company or any
Subsidiary.

(ee)         The Company and each
Subsidiary (i) owns or possesses adequate rights to use Company and Subsidiary
patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses, formulae,
customer lists, and know-how and other intellectual property (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures, “Intellectual Property”)
necessary for the conduct of its business as being conducted and as proposed to
be conducted as described in the Offering Memorandum (or, if the Offering Memorandum
is not finalized and dated as of the date hereof, the most recent Preliminary
Offering Memorandum), and (ii) owns or possesses adequate rights to use third
party patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights, licenses,
formulae, customer lists, and know-how and other intellectual property
(including trade secrets and other unpatented and/or unpatentable proprietary
or confidential information, systems or procedures, “Third Party
Intellectual Property”) necessary for the conduct of its business as
being conducted and as proposed to be conducted as described in the Offering
Memorandum (or, if the Offering Memorandum is not finalized and dated as of the
date hereof, the most recent Preliminary Offering Memorandum).

(ff)           The Company and
each Subsidiary maintains insurance in such amounts and covering such risks as
the Company considers adequate for the conduct of the Company’s business and
the business of each Subsidiary and for the value of the Company’s properties
and the properties of each Subsidiary, all of which insurance is in full force
and effect.  There are no claims by the
Company or any Subsidiary under any such policy or instrument as to which any
insurance company has indicated that it intends to deny liability or to provide
defense under a reservation of rights clause. 
The Company believes that it will be able to renew its and each
Subsidiary’s existing insurance as and when such coverage expires or will be able
to obtain replacement insurance (with the 

 11
 

same or greater coverage) at a cost that could not
reasonably be expected to have a Material Adverse Effect.

(gg)         The Company has in
effect insurance covering the Company and its directors and officers for liabilities
or losses arising in connection with this Offering, including, without
limitation, liabilities or losses arising under the Securities Act, the
Exchange Act and applicable state and foreign securities laws.

(hh)         The Company and each
Subsidiary has prepared and timely filed all federal, state, local, foreign and
other tax returns that are required to be filed by it and has paid or made
provision for the payment of all taxes, assessments, governmental or other
similar charges, including, without limitation, all sales and use taxes and all
taxes which the Company or the Subsidiary is obligated to withhold from amounts
owing to employees, creditors and third parties, with respect to the periods
covered by such tax returns (whether or not such amounts are shown as due on
any tax return).  No deficiency
assessment with respect to a proposed adjustment of the Company’s or any
Subsidiary’s federal, state, local or foreign taxes is pending or, to the
Company’s knowledge, threatened.  The
accruals and reserves on the books and records of the Company and the
Subsidiaries in respect of tax liabilities for any taxable period not finally
determined are adequate to meet any assessments and related liabilities for any
such period.  Neither the Company nor any
Subsidiary has incurred any liability for taxes other than in the ordinary
course of its business.  There is no tax
Lien, whether imposed by any federal, state, local, foreign or other taxing
authority, outstanding against the assets, properties or business of the
Company or any Subsidiary.

(ii)           No collective
bargaining agreement covering any employee of the Company or any Subsidiary
exists that is binding on either the Company or any Subsidiary, and, to the
Company’s knowledge, no petition has been filed or proceeding instituted by an
employee or group of employees of either the Company or any Subsidiary with the
National Labor Relations Board seeking recognition of a bargaining
representative.  To the Company’s
knowledge, no organizational effort currently is being made or threatened by or
on behalf of any labor union to organize any employees of either the Company or
any Subsidiary, and there currently is no labor strike or organized work
stoppage in effect by the employees of either the Company or any Subsidiary.

(jj)           No non-exempt “prohibited
transaction” (as defined in either Section 406 of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder (“ERISA”), or
Section 4975 of the Internal Revenue Code of 1986, as amended from time to time
(the “Code”)), “accumulated funding
deficiency” (as defined in Section 302 of ERISA) or other event of the kind
described in Section 4043(c) of ERISA (other than events with respect to which
the 30-day notice requirement under Section 4043 of ERISA has been waived) has
occurred with respect to any employee benefit plan (as defined in
Section 3(3) of ERISA) established or maintained by the Company or any
Subsidiary for which the Company or any Subsidiary has incurred or expects to
incur any material liability; each employee benefit plan (as defined in
Section 3(3) of ERISA) established or maintained by Company or any
Subsidiary is in compliance in all material respects with 

 12
 

applicable law, including, without limitation, ERISA
and the Code; the Company has not incurred and does not expect to incur
material liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any “pension plan” (as defined in Section 3(2)) of ERISA
established or maintained by the Company; and each pension plan (as defined in
Section 3(2) of ERISA) established or maintained by the Company or any
Subsidiary that is intended to be qualified under Section 401(a) of the Code is
so qualified and, to the Company’s knowledge, nothing has occurred, whether by
action or by failure to act, which could cause the loss of such qualification.
For purposes of this Section 2(ii), the terms “Company” and “Subsidiary”
include any employer, trade, business or corporation related to or under common
control with the Company and any Subsidiary under Section 414 of the Code,
including, without limitation, Sections 414(b), 414(c), 414(m) and 414(o) of
the Code.

(kk)        There has been no
storage, generation, transportation, handling, treatment, disposal, discharge,
emission or other release of any kind of toxic or hazardous substances or
wastes regulated under Environmental Laws (“Hazardous Substances”)
by the Company or any Subsidiary (or, to the Company’s knowledge, any other
entity for whose acts or omissions the Company or any Subsidiary is liable)
upon any property now or previously owned or leased by the Company or any
Subsidiary or, to the Company’s knowledge, upon any other property, in
violation of any applicable law, rule, regulation, order, judgment, decree or
permit relating to pollution or protection of human health and the environment
(“Environmental Law”).  There has been no disposal, discharge,
emission or other release of any kind onto such property of any Hazardous Substances
in violation of Environmental Laws. 
Neither the Company nor any Subsidiary has agreed to assume, undertake
or provide indemnification for any liability of any other person under any
Environmental Law, including any obligation for cleanup or remedial
action.  There is no pending or, to the
Company’s knowledge, threatened administrative, regulatory or judicial action,
claim or notice of noncompliance or violation, investigation or proceedings
pursuant to any Environmental Law against the Company or any Subsidiary or, to
the Company’s knowledge, any other party for which the Company or any
Subsidiary may be held liable.

(ll)           Neither the
Company, any Subsidiary, nor to the Company’s knowledge, any of their
respective officers, directors, employees or agents has at any time
(i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or
(ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States.

(mm)       Neither the Company nor
any Subsidiary (i) is in violation of its certificate of incorporation, bylaws,
or other organizational documents, or (ii) is in default under, and no event
has occurred which, with notice or lapse of time or both, would constitute a
default under or result in the creation or imposition of any Lien upon any of
its property or assets pursuant to, any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant, instrument, franchise, license or permit to which it is a
party or by which it is 

 13
 

bound or to which any of its property or assets is
subject, except (in the case of clause (ii) above) defaults or Liens disclosed
in the Offering Memorandum (or, if the Offering Memorandum is not finalized and
dated as of the date hereof, the most recent Preliminary Offering Memorandum).

(nn)         Except as described
in the Offering Memorandum (or, if the Offering Memorandum is not finalized and
dated as of the date hereof, the most recent Preliminary Offering Memorandum),
none of the Company or any Subsidiary is in default under any of the contracts
described in the Offering Memorandum (or, if the Offering Memorandum is not
finalized and dated as of the date hereof, the most recent Preliminary Offering
Memorandum) or has received a notice or claim of any such default or has
knowledge of any breach of such contracts by the other party or parties
thereto.

(oo)         Neither the Company
nor any Subsidiary has taken or will take any action that would cause this
Agreement or the issuance or sale of the Securities to violate Regulation T, U
or X of the Board of Governors of the Federal Reserve System, in each case as
in effect or as the same may hereafter be in effect, on the Closing Date (and,
if any Optional Units are purchased, as of the Additional Closing Date).

(pp)         No securities of the
Company or of any Subsidiary are (i) of the same class (within the meaning of
Rule 144A under the Securities Act) as the Units or as the Notes or Warrants
comprising the Units, and (ii) listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S. automated
interdealer quotation system.

(qq)         The statistical,
industry-related and market-related data included in the Offering Memorandum
(or, if the Offering Memorandum is not finalized and dated as of the date
hereof, the most recent Preliminary Offering Memorandum) are based on or
derived from sources which the Company reasonably and in good faith believes
are reliable and accurate, and such data agree with the sources from which they
are derived.

(rr)         The Company has not
distributed and, prior to the later to occur of the (i) Closing Date,
(ii) if any Optional Units are purchased, the Additional Closing Date, and
(iii) completion of the distribution of the Units, will not distribute any
offering material in connection with the offer and sale of the Units other than
the Preliminary Offering Memorandum and the Offering Memorandum

(ss)         The certificates for
the shares of Common Stock (including the Underlying Shares) conform to the
requirements of Delaware General Corporation Law.

(tt)           The Company is in
compliance with applicable provisions of the Sarbanes-Oxley Act of 2002.

(uu)         The Company has
implemented the “disclosure controls and procedures” (as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act) required in order for the Chief
Executive Officer and Chief Financial Officer of the Company to engage in the
review and evaluation process mandated by the Exchange Act.  The Company’s “disclosure controls and
procedures” are reasonably designed to ensure that 

 14
 

all information (both financial and non-financial)
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the specified time periods, and that all such information is accumulated and
communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure and to make the certifications of the
Chief Executive Officer and Chief Financial Officer of the Company required
under the Exchange Act with respect to such reports.

(vv)          Since February 27,
2004, the Company has not informed its auditors or the audit committee of the
board of directors of the Company (or persons fulfilling the equivalent
function) of (i) any significant deficiencies in the design or operation of
internal controls over financial reporting which are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report
financial data nor any material weaknesses in internal controls over financial
reporting, or (ii) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company’s internal
controls.

(ww)        Except as disclosed in
the Offering Memorandum (or, if the Offering Memorandum is not finalized and
dated as of the date hereof, the most recent Preliminary Offering Memorandum),
there are no outstanding guarantees or other known contingent obligations of
the Company or any Subsidiary.

3.             Purchase, Sale and Delivery of the
Units.

(a)           On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Company, 156,900 of the Firm Units at 94% of their principal
amount, and 18,100 of the Firm Units at 97% of their principal amount.

(b)           In addition, on the
basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Initial Purchaser to purchase up to some or any
of the Optional Units at 94% of their principal amount. The option granted
hereunder may be exercised at any time, on or before the 45th day following the date of the Offering
Memorandum (the “Option Exercise Period”) upon
written notice by the Initial Purchaser to the Company, which notice may be
given from time to time on one or more occasions.  Such notice shall set forth (i) the amount of
Optional Units as to which the Initial Purchaser is exercising the option, and
(ii) the time, date and place at which such Optional Units will be delivered
(which time and date may be simultaneous with, but not earlier than, the Closing
Date and, in such case, the term “Closing Date”
shall refer to the time and date of delivery of the Firm Units and the Optional
Units).  Such time and date of delivery,
if subsequent to the Closing Date, is called the “Additional
Closing Date.”  The Additional
Closing Date shall be determined by the Initial Purchaser but, unless it is the
Closing Date, shall be no earlier than three and no later than eight full
business days after the date the Initial Purchaser exercises the option.  The Initial 

 15
 

Purchaser may cancel the option at any time prior to
its expiration by giving written notice of such cancellation to the Company.

(c)           Delivery of and
payment for the Firm Units shall be made at the offices of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., 666 Third Avenue, 25th Floor, New York, New York, 10017, at 9:00
a.m., New York time, on February 16, 2007, or at such other date as the Initial
Purchaser and the Company may agree upon, such time and date being herein
referred to as the “Closing Date.”  The Firm Units shall be delivered on the
Closing Date against payment of the purchase price therefore by wire transfer
of immediately available funds to an account specified in writing to the
Initial Purchaser by the Company.  If
requested by the Initial Purchaser, one or more global securities representing
the Firm Units shall be registered by the Trustee in the name of Cede &
Co., the nominee of The Depository Trust Company (“DTC”),
and credited to such accounts as the Initial Purchaser shall request, upon notice
to the Company at least 48 hours prior to the Closing Date.

(d)           Delivery to the
Initial Purchaser of and payment for the Optional Units shall be made on the
Additional Closing Date in the same manner and in the same office as payment
for the Firm Units.

(e)           On or before the
Closing Date, the Company will deposit with the Paying Agent, in immediately
available funds, an amount sufficient to satisfy payment in full of Interest on
the Notes due and payable on each of the first two scheduled interest payment
dates following the Closing Date (assuming, for purposes of such calculation,
(i) the issuance and sale of all Optional Units, and (ii) the maximum amount of
Additional Interest that would be payable on all Notes in the event that the
Company failed to register any Registrable Securities for reasons other than a
415 Reduction, Section 2.1(d) of the Registration Rights Agreement or a
suspension of registration permitted under Section 3(b) of the Registration
Rights Agreement.  For purposes of this
Section 3(e), the terms “Paying Agent”
and “Interest” shall have the meanings
ascribed to such terms in the Indenture and the terms “Additional
Interest,” “Registrable Securities” and “415
Reduction” shall have the meanings ascribed to such terms in the
Registration Rights Agreement.

4.             Offering by the Initial
Purchaser.  The Initial
Purchaser proposes to make an offering of the Units at the price and upon the
terms set forth in the Offering Memorandum as soon as practicable after this
Agreement is entered into and as in the judgment of the Initial Purchaser is
advisable.  The Initial Purchaser may
from time to time thereafter change the price and other selling terms.

5.             Certain Covenants.  For purposes of this
Section 5, “Closing Date” shall refer to the
Closing Date for the Firm Units and any Additional Closing Date for the
Optional Units.  The Company covenants
and agrees with the Initial Purchaser that:

(a)           The Company will
not amend or supplement the Preliminary Offering Memorandum or the Offering
Memorandum or any amendment or supplement thereto of which the Initial
Purchaser shall not previously have been advised and 

 16
 

furnished a copy for a reasonable period of time prior
to the proposed amendment or supplement and as to which the Initial Purchaser
shall not have given its consent, other than by filing documents under the
Exchange Act that are incorporated by reference therein, without the consent of
the Initial Purchaser (which consent shall not be unreasonably withheld).  The Company will promptly, upon the
reasonable request of the Initial Purchaser or counsel to the Initial
Purchaser, make any amendments or supplements to the Offering Memorandum that
may be reasonably necessary or advisable in connection with the resale of the
Units by the Initial Purchaser.

(b)           The Company will
(and will cause each Guarantor to) cooperate with the Initial Purchaser in
arranging for the qualification or exemption of the Securities for offer and
sale under the securities or “blue sky” laws of such jurisdictions as the Initial
Purchaser may designate and will continue any such qualifications or exemptions
in effect for as long as may be necessary to complete the distribution of the
Units by the Initial Purchaser; provided,
however, that in connection therewith neither the Company nor any
Guarantor shall be required to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or to take any other
action that would subject it to general service of process or to taxation in
respect of doing business in any jurisdiction in which it is not otherwise
subject.

(c)           If, at any time
prior to the completion of the resale by the Initial Purchaser of the Units,
any event shall occur as a result of which it is necessary, in the opinion of
counsel for the Initial Purchaser, to amend or supplement the Offering
Memorandum in order to make such Offering Memorandum not misleading in the
light of the circumstances existing at the time it is delivered to a purchaser,
or if for any other reason it shall be necessary to amend or supplement the
Offering Memorandum in order to comply with applicable laws, rules or
regulations, the Company shall notify the Initial Purchaser of any such event
and (subject to Section 5(a)) forthwith amend or supplement such Offering
Memorandum at its own expense so that, as so amended or supplemented, such
Offering Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading and will comply with all applicable laws, rules or regulations.

(d)           The Company will,
without charge, provide to the Initial Purchaser and to counsel to the Initial
Purchaser as many copies of each of the Preliminary Offering Memorandum, the
Offering Memorandum or any amendment or supplement thereto as the Initial
Purchaser or its counsel may reasonably request.

(e)           During the period
of three years from the Closing Date, the Company will furnish to the Initial
Purchaser (i) as soon as practicable after mailing, a copy of each report and
other communication (financial or otherwise) of the Company mailed to the
Trustee, the Warrant Agent, the holders of the Notes or Warrants, the
stockholders of the Company or any Trading Market, other than materials filed
with the Commission via EDGAR, and (ii) from time to time, subject to
compliance with applicable securities laws, such other information concerning
the Company and any Subsidiary as the Initial Purchaser may reasonably
request.  As used herein, “Trading 

 17
 

Market” means
whichever of the New York Stock Exchange, the American Stock Exchange, the
Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital
Market or the Over-the-Counter Bulletin Board upon which the Common Stock is
listed or quoted on for trading on the date in question.

(f)            The Company will
apply the net proceeds from the sale of the Units as set forth under “Use of
Proceeds” in the Offering Memorandum.

(g)           None of the Company
or any of its respective affiliates (as defined in Rule 144(a) under the
Securities Act) will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any “security” (as defined in the Securities Act) which
could be integrated with the sale of the Units (or the Notes and Warrants
comprising the Units) in a manner which would require the registration under
the Securities Act of the Units (or the Notes and Warrants comprising the
Units).

(h)           For so long as the
Securities constitute “restricted” securities within the meaning of Rule
144(a)(3) under the Securities Act, the Company will not, and will not permit
any Subsidiary to, solicit any offer to buy or offer to sell the Securities (or
any of them) by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act.

(i)            For so long as any
of the Securities remain outstanding and are “restricted securities” within the
meaning of Rule 144(a)(3) under the Securities Act and not able to be sold in
their entirety by a seller under Rule 144 under the Securities Act (or any
successor provision), the Company will make available, upon request, to any
such seller of Securities the information specified in Rule 144A(d)(4) under
the Securities Act, unless the Company is then subject to Section 13 or 15(d)
of the Exchange Act.

(j)            During the period
from the Closing Date until two years after the Closing Date, without the prior
written consent of the Initial Purchaser, the Company will not, and will not
permit any of its “affiliates” (as defined in Rule 144(a) under the
Securities Act) to, resell any of the Securities which constitute “restricted
securities” under Rule 144 that have been reacquired by any of them.

(k)           The Company will
not take any action prohibited by Regulation M under the Exchange Act in
connection with the distribution of the Securities contemplated hereby.

(l)            The Company will
(i) permit the Notes and Warrants to be included for quotation on the PORTAL
Market, and (ii) permit the Notes and Warrants to be eligible for clearance and
settlement through DTC.

(m)          The Company will use
its best efforts to list the Underlying Shares on the principal Trading Market
upon which the Common stock is listed for trading or quotation as promptly as practicable but in no event
later than the time that a Registration Statement is declared effective with
respect to the resale of such Underlying Shares in accordance with the
Registration Rights Agreement.

 18
 

(n)           The Company will,
at all times, reserve and keep available, free of preemptive rights, enough
shares of Common Stock for the purpose of enabling the Company to satisfy its
obligations to issue the Underlying Shares upon conversion of the Notes and
exercise of the Warrants.

(o)           During the period
of 90 days from the date of the Offering Memorandum, without the prior written
consent of the Initial Purchaser, the Company will not (and will not permit any
Subsidiary to) (i) directly or indirectly, issue, offer, sell, agree to issue,
offer or sell, solicit offers to purchase, grant any call option, warrant or other right to purchase, purchase
any put option or other right to sell, pledge, borrow or otherwise dispose of
any Relevant Security, or make any announcement of any of the foregoing, (ii)
establish or increase any “put equivalent position” or liquidate or decrease
any “call equivalent position” (in each case within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated thereunder) with
respect to any Relevant Security, and (iii) otherwise enter into any swap,
derivative or other transaction or arrangement that transfers to another, in
whole or in part, any economic consequence of ownership of a Relevant Security,
whether or not such transaction is to be settled by delivery of Relevant
Securities, other securities, cash or other consideration, other than (A) the
sale of Units as contemplated by this Agreement; (B) the issuance of the
Underlying Shares; (C) the Company’s issuance of Common Stock upon the
conversion or exchange of convertible or exchangeable securities outstanding on
the date hereof; (D) the Company’s issuance of Common Stock upon the exercise
of currently outstanding options and warrants; and (E) the grant of options,
the issuance and sale of shares upon exercise of options granted, or the
issuance and sale of restricted stock pursuant to the Company’s 2006 Employee
Stock Incentive Plan or the Company’s 2006 Non-Employee Consultants Retainer
Stock Plan, in each case, as in effect on the date hereof.  The Company will not file a registration
statement under the Securities Act during such 90 day period in connection with
any transaction by the Company or any person that is prohibited pursuant to the
foregoing, except for (x) the Company’s filing of registration statements
pursuant to the Registration Rights Agreement, (y) registration statements on
Form S-8 relating to employee benefit plans, and (z) the Company’s filing of
registration statements pursuant to registration obligations outstanding on the
date hereof.

(p)           The Company will do
and perform (and will cause each Guarantor to do and perform) all things
required to be done and performed by it under this Agreement and the other
Offering Documents prior to or after the Closing Date and will use its best
efforts (and cause each Guarantor to use its best efforts) to satisfy all
conditions on its part to the obligations of the Initial Purchaser to purchase
and accept delivery of the Units.

6.             Expenses.  Whether or not the Offering is consummated or
this Agreement is terminated (pursuant to Section 11 or otherwise), the Company
agrees to pay the following costs and expenses and all other costs and expenses
incident to the performance by the Company of its obligations hereunder: (a)
the negotiation, preparation, printing, typing, reproduction, execution and
delivery of this Agreement and of the other Offering Documents, any amendment
or supplement to or modification of any of the foregoing and any and all other
documents furnished pursuant hereto or thereto 

 19
 

or in connection herewith or therewith; (b) the
preparation, printing or reproduction of each Preliminary Offering Memorandum,
the Offering Memorandum and each amendment or supplement to it; (c) the
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of each Preliminary Offering Memorandum, the Offering
Memorandum and all amendments or supplements to any of them as may be requested
for use in connection with the offer and sale of the Units; (d) the
preparation, printing, authentication, issuance and delivery of certificates
for the Securities, including any stamp taxes in connection with the original
issuance and sale of the Securities; (e) the reproduction and delivery of this
Agreement and the other Offering Documents, the preliminary and supplemental “blue
sky” memoranda and all other agreements or documents reproduced and delivered
in connection with the offering of the Securities; (f) the exemption from, or
registration or qualification of the Securities for offer and sale under the
securities or “blue sky” laws of the several states (including filing fees and
the reasonable fees, expenses and disbursements of counsel to the Initial
Purchaser relating to such registration and qualification); (g) the reasonable
travel and out-of-pocket expenses and due diligence and other related expenses
incurred by the Initial Purchaser (other than the fees and disbursements of its
counsel, which fees and disbursements are covered by clause (f) above with
respect to the matters referred to therein and clause (h) below in all other
respects); (h) the reasonable fees and disbursements of counsel to the Initial
Purchaser in connection with the Offering Documents and the transactions
contemplated thereby, including the Offering; (i) the transportation and other
expenses incurred by or on behalf of Company representatives in connection with
presentations to and related communications with prospective purchasers of the
Units; (j) the fees and expenses of the Company’s accountants and the fees and
expenses of counsel (including local and special counsel, if any) for the
Company; (k) fees and expenses of the Trustee and the Warrant Agent, including
fees and expenses of their respective counsel; (l) all expenses and listing
fees incurred in connection with the application for quotation of the Notes and
Warrants on the PORTAL Market; (m) all expenses and listing fees incurred in
connection with the application for listing for quotation of the Underlying
Shares on the principal Trading Market upon which the Common Stock is listed
for trading or quotation; and (n) all expenses incurred in connection with the
performance of the Company’s obligations under the Registration Rights
Agreement, as set forth therein.

7.             Conditions of the Initial Purchaser’s
Obligations.  For
purposes of this Section 7, “Closing Date”
shall refer to the Closing Date for the Firm Units and any Additional Closing
Date for the Optional Units.  The
obligations of the Initial Purchaser to purchase and pay for the Units are
subject to the absence from any certificates, opinions, written statements or
letters furnished to the Initial Purchaser pursuant to this Section 7 of any
misstatement or omission and to the following additional conditions unless
waived in writing by the Initial Purchaser.

(a)           The Initial
Purchaser shall have received an opinion in form and substance reasonably
satisfactory to the Initial Purchaser, dated the Closing Date, of Morris,
Manning & Martin, LLP, counsel to the Company, covering the matters set
forth on Exhibit A hereto.

 

 20

(b)           The Initial
Purchaser shall have received an opinion of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C. (“Mintz Levin”), counsel to the
Initial Purchaser, dated the Closing Date, with respect to the sufficiency of
certain legal matters relating to this Agreement and such other related matters
as the Initial Purchaser may require.

(c)           The Initial
Purchaser shall have received from Miller Ray Houser & Stewart LLP,
independent public registered accounting firm for the Company, on each of the
date hereof and the Closing Date, in form and substance reasonably satisfactory
to the Initial Purchaser and Mintz Levin, letters dated the date hereof and the
Closing Date confirming that Miller Ray Houser & Stewart LLP is an
independent public registered accounting firm within the meaning of the
Exchange Act and the applicable published rules and regulations thereunder and
containing such other statements and information as is ordinarily included in
accountants’ “comfort letters” to underwriters with respect to the audited
financial statements for the fiscal years ended April 30, 2005 and 2006 and
certain financial and statistical information contained in the Offering
Memorandum.

(d)           The Initial
Purchaser shall have received from each of the officers and directors listed on
Schedule 7(d) hereto an executed
Lock-Up Agreement in substantially the form of Exhibit B
hereto.

(e)           The representations
and warranties of the Company contained in this Agreement shall be true and
correct on and as of the Closing Date, and the Company shall have complied in
all material respects with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing Date.

(f)            None of the
issuance and sale of the Securities pursuant to this Agreement or any of the
transactions contemplated by this Agreement or any of the other Offering
Documents shall be enjoined (temporarily or permanently) and no restraining
order or other injunctive order shall have been issued; and there shall not
have been any legal action, statute, order, decree or other administrative
proceeding enacted, instituted or overtly threatened against the Company or
against the Initial Purchaser relating to the issuance of the Securities or the
Initial Purchaser’s activities in connection therewith or any other
transactions contemplated by this Agreement or the Offering Memorandum or the
other Offering Documents.

(g)           Subsequent to the
date of this Agreement and since the date of the most recent financial
statements in the Offering Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), there shall not have occurred (i) any change,
or any development involving a prospective change in, or affecting the
business, condition (financial or other), properties or results of operations
of, the Company or any Subsidiary not disclosed in the Offering Memorandum that
is, in the judgment of the Initial Purchaser (in its sole discretion), so
material and adverse as to make it impracticable or inadvisable to proceed with
the Offering on the terms and in the manner contemplated by the Offering
Memorandum, or (ii) any event or development relating to or involving the
Company or any Subsidiary or any of their respective officers 

 21
 

or directors that makes any statement of a material
fact made in the Offering Memorandum untrue or that, in the opinion of the
Company and its counsel or the Initial Purchaser and its counsel, requires the
making of any addition to or change in the Offering Memorandum in order to
state a material fact necessary in order to make the statements made therein
not misleading.

(h)           The Initial
Purchaser shall have received a certificate, dated the Closing Date and signed
by the President and the Chief Executive Officer of the Company, to the effect
that:

(i)            All of the
representations and warranties of the Company set forth in this Agreement are
true and correct as if made on and as of the Closing Date and, as of the
Closing Date, all agreements, conditions and obligations of the Company to be
performed, satisfied or complied with hereunder on or prior the Closing Date
have been duly performed, satisfied or complied with.

(ii)           The issuance and
sale of the Units pursuant to this Agreement and the Offering Memorandum and
the consummation of the transactions contemplated by the Offering Documents
have not been enjoined (temporarily or permanently) and no restraining order or
other injunctive order has been issued and there has not been any legal action,
order, decree or other administrative proceeding instituted or, to such
officers’ knowledge, threatened against the Company relating to the issuance of
the Securities or the Initial Purchaser’s activities in connection therewith or
in connection with any other transactions contemplated by this Agreement or the
Offering Memorandum or the other Offering Documents.

(iii)         Subsequent to the
date of this Agreement and since the date of the most recent financial
statements in the Offering Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), there has not occurred (A) any change, or any
development involving a prospective change, in or affecting the business,
condition (financial or other), properties or results of operations of the
Company or any Subsidiary, not contemplated by the Offering Memorandum, or (B)
any event or development relating to or involving the Company or any Subsidiary
or any of their respective officers or directors that makes any statement of a
material fact made in the Offering Memorandum untrue or that requires the making
of any addition to or change in the Offering Memorandum in order to state a
material fact necessary in order to make the statements made therein not
misleading.

(iv)          At the Closing Date
and after giving effect to the consummation of the transactions contemplated by
the Offering Memorandum, there shall exist no Default or Event of Default (as
defined in the Indenture).

(i)            Each of the
Offering Documents and each other agreement or instrument executed in
connection with the transactions contemplated thereby shall be satisfactory in
form and substance to the Initial Purchaser and shall have been executed and
delivered by all the respective parties thereto (other than the Initial
Purchaser) and 

 22
 

shall be in full force and effect, and there shall
have been no amendments, alterations, modifications or waivers of any provision
thereof since the date of this Agreement.

(j)            All proceedings
taken in connection with the issuance of the Units and the transactions
contemplated by this Agreement, the other Offering Documents and all documents
and papers relating thereto shall be satisfactory to the Initial Purchaser and
counsel to the Initial Purchaser.  The
Initial Purchaser and counsel to the Initial Purchaser shall have received
copies of such papers and documents as they may reasonably request in
connection therewith, all in form and substance reasonably satisfactory to
them.

(k)           The Notes and
Warrants shall have been approved for trading on PORTAL.

(l)            On or before the
Closing Date, the Initial Purchaser shall have received the Registration Rights
Agreement executed by the Company, and such agreement shall be in full force
and effect.

(m)          The Company shall
have furnished or caused to be furnished to the Initial Purchaser all Required
Consents and Waivers (in form and substance satisfactory to the Initial
Purchaser and its counsel) and such further certificates and documents as the
Initial Purchaser shall have reasonably requested.

(n)           At the Closing
Date, the Company and the Trustee shall have entered into the Indenture and the
Initial Purchaser shall have received counterparts, conformed as executed,
thereof and the Notes and the Guarantors endorsed thereon shall have been duly
executed and delivered by the Company and the Guarantors, respectively, and the
same shall have been duly authenticated by the Trustee.

(o)           At the Closing
Date, the Company and the Warrant Agent shall have entered into the Warrant
Agreement and the Initial Purchaser shall have received counterparts, conformed
as executed, thereof and the Warrants shall have been duly executed and
delivered by the Company and duly authenticated by the Warrant Agent.

(p)           The Company shall
have granted and delivered to the Initial Purchaser or its designated nominees
warrants to purchase a number of shares of Common Stock equal to 4% of the
number of Underlying Shares, such warrants to be exercisable for a period of
three years from the Closing Date at an initial exercise price equal to the
volume weighted average price of the Common Stock during the 20 trading days
ending on and including the trading day that is two trading days prior to the
date of this Agreement.  Such warrants
shall contain provisions, including, without limitation, those pertaining to
cashless exercise, antidilution protection and demand and piggyback
registration rights, customarily contained in warrants received by the Initial
Purchaser in investment banking and financing transactions.

All such opinions, certificates, letters, schedules,
documents or instruments delivered pursuant to this Agreement will comply with
the provisions hereof only if they are satisfactory in all material respects to
the Initial Purchaser and counsel to the Initial Purchaser.  The Company shall furnish to the Initial
Purchaser such conformed 

 23
 

copies of such opinions, certificates, letters,
schedules, documents and instruments in such quantities as the Initial
Purchaser shall reasonably request.

8.             Indemnification.

(a)           The Company shall
indemnify and hold harmless (i) the Initial Purchaser, (ii) each person, if
any, who controls the Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and (iii) the respective
officers, directors, partners, employees, representatives and agents of the
Initial Purchaser or any controlling person, from and against any and all
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including, but not limited to, reasonable attorneys’ fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any investigation or litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon (A) any untrue statement or alleged
untrue statement of a material fact contained in (x) the Preliminary Offering
Memorandum or the Offering Memorandum, or (y) any materials or information
provided to investors by the Company, or with the written approval of the
Company, in connection with the marketing of the Securities, including any road
show or investor presentations made to investors by the Company (whether in
person or electronically) (“Marketing Materials”),
(B) the omission or alleged omission to state in the Preliminary Offering
Memorandum or the Offering Memorandum, or in any Marketing Materials, a
material fact necessary to make the statements therein not misleading, or (C)
any breach of any representation, warranty, covenant or agreement made by the
Company in this Agreement, any of the other Offering Documents or any
certificate, letter, schedule, document or instrument delivered in connection
herewith or therewith; provided, however,
that in the case of clauses (A) and (B) hereof, the Company will not be liable
in any such case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Initial Purchaser expressly for use
therein.  The parties acknowledge and
agree that such information provided by or on behalf of the Initial Purchaser
consists solely of the material identified in Section 15 hereof.  This indemnity agreement will be in addition
to any liability that the Company may otherwise have, including under this
Agreement.

(b)           The Initial
Purchaser shall indemnify and hold harmless (i) the Company, (ii) each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and (iii) the officers,
directors, partners, employees, representatives and agents of the Company, from
and against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including, but not limited to, attorneys’ fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any investigation or litigation, commenced or threatened, or any claim
whatsoever and any and all amounts 

 24
 

paid in settlement of any claim or litigation), joint
or several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum, or arise out of or are based upon the omission or alleged omission
to state in the Preliminary Offering Memorandum or the Offering Memorandum a
material fact necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Initial Purchaser expressly for use therein; provided, however, that
in no case shall the Initial Purchaser be liable or responsible for any amount
in excess of the discounts and commissions received by such Initial Purchaser
in connection with the sale of the Units. 
The parties acknowledge and agree that such information provided by or
on behalf of the Initial Purchaser consists solely of the material identified
in Section 15 hereof.  This indemnity
will be in addition to any liability that the Initial Purchaser may otherwise
have, including under this Agreement.

(c)           Promptly after
receipt by an indemnified party under subsection (a) or (b) above of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under such
subsection, notify each party against whom indemnification is to be sought in
writing of the commencement thereof (but the failure so to notify an
indemnifying party shall not relieve it from any liability which it may have
under this Section 8).  In case any such
action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate, at its own expense in the defense of such action, and
to the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party;
provided, however, that counsel to the
indemnifying party shall not (except with the written consent of the
indemnified party) also be counsel to the indemnified party.  Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to take charge of the defense of such
action within a reasonable time after notice of commencement of the action,
(iii) the indemnifying party does not diligently defend the action after
assumption of the defense, or (iv) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying party or parties shall not
have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses of
one such counsel and any local counsel shall be borne by the indemnifying
parties.  No 

 25
 

indemnifying party shall,
without the prior written consent of the indemnified parties, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened claim, investigation, action or proceeding in
respect of which indemnity or contribution may be or could have been sought by
an indemnified party under this Section 8 or Section 9 hereof (whether or
not the indemnified party is an actual or potential party thereto), unless (A)
such settlement, compromise or judgment (x) includes an unconditional release
of the indemnified party from all liability arising out of such claim,
investigation, action or proceeding and (y) does not include a statement as to
or an admission of fault, culpability or any failure to act, by or on behalf of
the indemnified party, and (B) the indemnifying party confirms in writing its
indemnification obligations hereunder with respect to such settlement,
compromise or judgment.

9.             Contribution.  In order to provide for contribution in
circumstances in which the indemnification provided for in Section 8 is
for any reason held to be unavailable from an indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company, on
the one hand, and the Initial Purchaser, on the other hand, shall contribute to
the aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, liabilities, claims, damages and expenses
suffered by the Company, any contribution received by the Company from persons,
other than the Initial Purchaser, who may also be liable for contribution,
including persons who control the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) to which the Company and
the Initial Purchaser may be subject, in such proportion as is appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
Initial Purchaser, on the other hand, from the offering of the Units or, if
such allocation is not permitted by applicable law in such proportion as is
appropriate to reflect not only the relative benefits referred to above but
also the relative fault of the Company, on the one hand, and the Initial
Purchaser, on the other hand, in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as
well as any other relevant equitable considerations.  The relative benefits received by the
Company, on the one hand, and the Initial Purchaser, on the other hand, shall
be deemed to be in the same proportion as (a) the total proceeds from the
offering of the Units (net of discounts but before deducting expenses) received
by the Company bear to (b) the discounts and commissions received by the
Initial Purchaser, respectively.  The
relative fault of the Company, on the one hand, and of the Initial Purchaser,
on the other hand, shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Initial Purchaser and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.  The Company
and the Initial Purchaser agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Initial Purchaser were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above. 
The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified 

 26
 

party and referred to above
in Section 8 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
judicial, regulatory or other legal or governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.  Notwithstanding the provisions of this
Section 9, (i) in no case shall the Initial Purchaser be required to
contribute any amount in excess of the amount by which the discounts and
commissions received by the Initial Purchaser in respect of the Units resold by
such Initial Purchaser in the initial placement of such Units exceeds the
amount of any damages which the Initial Purchaser has otherwise been required
to pay by reason of any untrue or alleged untrue statement or omission, or
alleged omission, and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.  For purposes of this
Section 9, (A) each person, if any, who controls the Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and (B) the respective officers, directors, partners,
employees, representatives and agents of the Initial Purchaser or any
controlling person shall have the same rights to contribution as such Initial
Purchaser, and (C) each person, if any, who controls any Company within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and (D) the officers, directors, employees, representatives and
agents of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this
Section 9.  Any party entitled to
contribution will, promptly after receipt of notice of commencement of any action,
suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
Section 9, notify such party or parties from whom contribution may be
sought, but the failure to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation
it or they may have under this Section 9 or otherwise.  No party shall be liable for contribution
with respect to any action or claim settled without its prior written consent, provided that such written consent shall not be unreasonably
withheld or delayed.

10.          Survival Clause.  The respective representations, warranties,
agreements, covenants and indemnities of the Company and the Initial Purchaser
set forth in this Agreement shall remain in full force and effect, regardless
of (a) any investigation made by or on behalf of officers, directors, partners,
employees, agents, representatives or controlling persons referred to in
Sections 8 and 9 hereof, and (b) delivery of and payment for the Units, and
shall, subject to Section 13 hereof, be binding upon and shall inure to the
benefit of, any successors, permitted assigns, heirs and legal representatives
of the Company, the Initial Purchaser and the indemnified parties referred to
in Section 8 hereof.  The respective
agreements, covenants and indemnities set forth in Sections 6, 8, 9, 10 and 11
hereof shall remain in full force and effect, regardless of any termination of
this Agreement.

 27
 

11.          Termination.

(a)           This
Agreement may be terminated in the sole discretion of the Initial Purchaser by
notice to the Company given in the event that (i) the Company has failed,
refused or been unable to satisfy all conditions and obligations on its part to
be performed or satisfied hereunder on or prior to the Closing Date, or (ii) if
at or prior to the Closing Date or at or prior to the Additional Closing Date,
as the case may be:

(i)            any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of the Initial Purchaser (in its sole discretion) will in the immediate
future materially disrupt, the market for the Company’s securities or
securities in general;

(ii)           trading on any
Trading Market, shall have been suspended or made subject to material
limitations, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, on the
Trading Market, or by order of the Commission or other regulatory body or governmental
authority having jurisdiction;

(iii)         a banking moratorium
has been declared by any state or federal authority or if any material
disruption in commercial banking or securities settlement or clearance services
shall have occurred; or

(iv)          (A) there shall have
occurred any outbreak or escalation of hostilities or acts of terrorism
involving the United States or there is a declaration of a national emergency
or war by the United States, or (B) there shall have been any other calamity or
crisis or any change in political, financial or economic conditions if the
effect of any such event in (A) or (B), in the judgment of the Initial
Purchaser (in its sole discretion), makes it impracticable or inadvisable to
proceed with the offering, sale and delivery of the Firm Units or the Optional
Units, as the case may be, on the terms and in the manner contemplated by the
Offering Memorandum.

(b)           Subject to
paragraph (c) below, termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided
in Section 10 hereof.

(c)           If this Agreement shall be terminated
pursuant to any of the provisions hereof, or if the sale of the Units provided
for herein is not consummated because any condition to the obligations of the
Initial Purchaser set forth herein is not satisfied or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof, the Company will, subject to demand by the
Initial Purchaser, reimburse the Initial Purchaser for all out-of-pocket
expenses (including the reasonable fees and the expenses of its counsel),
incurred by the Initial Purchaser in connection herewith.

12.          Notices.  All notices and other communications provided
for or permitted hereunder shall be made in writing, shall be delivered by hand
delivery, by telecopier, by courier guaranteeing overnight delivery or by
first-class mail, return receipt requested, 

 28
 

and shall be deemed given (a) when made, if made by hand
delivery, (b) upon confirmation, if made by telecopier (provided notice is also
given by some other means permitted by this Section 12), (c) one Business Day
after being deposited with such courier, if made by overnight courier, or (d)
on the date indicated on the notice of receipt, if made by first-class mail, to
the parties as follows: to the Initial Purchaser c/o McMahan Securities Co.
L.P., 500 W. Putnam Avenue, Greenwich, CT 06830, Attention: Alan Streiter,
Senior Managing Director, facsimile number: (203) 618-3401, and with a copy to
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 666 Third Avenue, 25th Floor, New York, New York 10017, Attention:
Stephen J. Gulotta, Jr., Esq., facsimile number: (212) 983-3115; and if sent to
the Company, to Charys Holding Company, Inc., 1117 Perimeter Center West, Suite
N-415, Atlanta, Georgia 30338, Attention: Billy V. Ray, Jr., President,
facsimile number: (678) 443-2320, and with a copy to Morris, Manning &
Martin, LLP, 1600 Atlanta Financial Center, 3343 Peachtree Road, N.E., Atlanta,
Georgia  30326, Attention: Larry W.
Shackelford, Esq., facsimile number: (404) 365-9532.

13.          Successors.  This Agreement shall inure to the benefit of
and be binding upon the Initial Purchaser and the Company and their respective
successors, permitted assigns and legal representatives, and nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such persons and for the benefit of no other person
except that (a) the indemnities and contribution obligations of the Company
contained in Sections 8 and 9 of this Agreement shall also be for the benefit
of any person or persons who control the Initial Purchaser within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act and the
respective officers, directors, partners, employees, agents and representatives
of the Initial Purchaser and any such person or persons, and (b) the
indemnities and contribution obligations of the Initial Purchaser contained in
Sections 8 and 9 of this Agreement shall also be for the benefit of the
directors, officers, employees, agents and representatives of the Company and
any person or persons who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act.  No purchaser of Units from the Initial
Purchaser will be deemed a successor or an assign because of such
purchase.  Prior to the closing on the
Closing Date, no party may assign this Agreement or any of its rights hereunder
without the prior written consent of the other party or parties.

14.          No Waiver; Modifications in Writing.  No failure or delay on the part of the Company
or the Initial Purchaser in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy.  The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Initial Purchaser at law or in equity or otherwise.  No waiver of or consent to any departure by
the Company or the Initial Purchaser from any provision of this Agreement shall
be effective unless signed in writing by the party entitled to the benefit
thereof; provided, that notice of any such waiver shall be given to each party
hereto as set forth below.  

 29
 

Except as otherwise provided herein, no amendment,
modification or termination of any provision of this Agreement shall be
effective unless signed in writing by or on behalf of the Company and the
Initial Purchaser.  Any amendment,
supplement or modification of or to any provision of this Agreement, any waiver
of any provision of this Agreement, and any consent to any departure by the
Company or the Initial Purchaser from the terms of any provision of this
Agreement shall be effective only in the specific instance and for the specific
purpose for which made or given.  Except
where notice is specifically required by this Agreement, no notice to or demand
on the Company in any case shall entitle the Company to any other or further
notice or demand in similar or other circumstances.

15.          Information Supplied by the Initial
Purchaser.  The
statements set forth in the fourth paragraph, fourth sentence of the fifth
paragraph, and the seventh and eighth paragraphs in the Offering Memorandum
under the heading “Plan of Distribution” constitute the only information
furnished by the Initial Purchaser to the Company for purposes of Sections
2(a), 8(a) and 8(b) hereof.

16.          Entire Agreement.  This Agreement constitutes
the entire agreement among the parties hereto and supersedes all prior
agreements, representations, warranties, understandings and arrangements, oral
or written, among the parties hereto with respect to the subject matter hereof.

17.          APPLICABLE LAW; CONSENT TO
JURISDICTION; WAIVER OF JURY TRIAL.  THE
VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET
FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO
CONFLICTS OF LAW.  The Company agrees
that any suit, action or proceeding against the Company arising out of or based
upon this Agreement or the transactions contemplated hereby may be instituted
in any state or federal court in The City of New York, New York, and waives any
objection which it may now or hereafter have to the laying of venue of any such
proceeding, and irrevocably submits to the non-exclusive jurisdiction of such
courts in any suit, action or proceeding. 
The Company expressly accepts the non-exclusive jurisdiction of any such
court in respect of any such suit, action or proceeding.  The Company agrees that a final judgment in any
such proceeding brought in any such court shall be conclusive and binding
thereupon and may be enforced in any other court in the jurisdiction to which
the Company is or may be subject by suit upon such judgment.  THE COMPANY HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM,
WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

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

 

 30

[SIGNATURE
PAGE TO PURCHASE AGREEMENT]

If the foregoing correctly sets forth our
understanding, please indicate your acceptance thereof in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement between the Company and the Initial Purchaser.

	
   

  	
  Very truly yours,

  
	
   

  	
  CHARYS HOLDING COMPANY, INC.

  
	
   

  	
  a Delaware corporation

  
	
   

  	
  By:

  	
  /s/ Billy V. Ray, Jr.

  
	
   

  	
   

  	
  Name: Billy V. Ray, Jr.

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  

 

The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.

	
  MCMAHAN SECURITIES CO. L.P.

  	
   

  
	
  By:

  	
  /s/ Alan Streiter

  	
   

  
	
   

  	
  Name: Alan Streiter

  	
   

  
	
   

  	
  Title: Senior Managing Director

  	
   

  

 

SCHEDULE
2(b)(i)

SUBSIDIARIES

Crochet &
Borel Services, Inc.

Cotton Holdings 1,
Inc.

Cotton Commercial
USA, LP

Cotton Restoration
of Central Texas, LP

C&B Holdings,
Inc.

Ayin Holding
Company Inc.

Ayin Tower
Management Services, Inc.

Complete Tower
Sources Inc.

Mitchell Site
Acquisition, Inc.

LFC, Inc.

Aeon Technologies,
Ltd.

Viasys Network
Services, Inc.

Viasys Services,
Inc.

Method IQ, Inc.

Personnel
Resources of Georgia, Inc.

Digital
Communications Services Inc.

Berkshire Wireless

CCI Telecom, Inc.

SCHEDULE
2(b)(ii)

DESIGNATED
SECURED INDEBTEDNESS

$35,000,000 Secured
Revolving Credit Facility, dated August 28, 2006, extended by New Stream
Commercial Finance, LLC to Crochet & Borel Services, Inc. (a
Subsidiary).  The current outstanding
balance under this credit facility is approximately $370,000, which is payable
on August 28, 2007.

$14,000,000
Secured Revolving Credit Facility, dated November 8, 2006, extended by New
Stream to between Ayin Holding Company, Inc. (a Subsidiary).  The current outstanding balance under this
credit facility is approximately $6,400,000, which is payable on November 8,
2008.

4.74% Promissory
Note, in the principal amount of $77,932,514.15, made by the Company in favor
of Troy Crochet and payable on January 31, 2009.  Following the closing of the Units and the
repayment of $19,000,000 of such indebtedness from the proceeds of the sale of
the Units, there will be $58,932,514.15 of unpaid principal amount outstanding
under the Promissory Note.

5% Secured
Promissory Note, in the principal amount of $5,250,000, made by the Company to
Rock Creek Equity Holdings, LLC and J. Alan Shaw, payable January 31,
2007.  The current outstanding balance
under this credit facility is approximately $950,000, which will be repaid from
the proceeds of the sale of the Units.

Secured Promissory
Note, in the principal amount of up to $2,000,000, made by Method IQ, Inc. to
CAPCO Financial Company (“CAPCO”), a division of Greater Bank N.A.

Secured Promissory
Note, in the principal amount of up to $3,000,000, made by CCI Telecom, Inc. to
CAPCO.

Secured
Promissory Note, in the principal amount of up to $5,000,000, made by Complete
Tower Sources Inc. to the Whitney National Bank.

Secured Promissory
Note, in the principal amount of up to $1,000,000, made by Digital
Communications Services, Inc. to Wachovia National Bank.

10% Subordinated
Convertible Debenture, in the principal amount of $1,052,632, made by the
Company to Imperium Partner Group.

SCHEDULE
2(o)(i)

NO
CONFLICTS

Consent under
that certain Loan and Security Agreement dated as of August 28, 2006, by and
between Crochet & Borel Services, Inc. and New Stream Commercial Finance,
LLC and the related agreements and documents.

Consent under
that certain Loan and Security Agreement dated as of November 8, 2006, by and
between Ayin Tower Management Services, Inc. and New Stream Commercial Finance,
LLC and the related agreements and documents.

Consent under
that certain Note and Warrant Purchase Agreement dated as of December 4, 2006,
by and between the Company and various purchasers led by Vision Opportunity Master
Fund, Ltd. and the related agreements and documents.

Consent under
that certain Securities Purchase Agreement dated as of August 30, 2006, by and
between the Company and various purchasers led by Gottbetter Capital Master,
Ltd. and the related agreements and documents.

SCHEDULE
2(o)(ii)

PREEMPTIVE
RIGHTS

Rights under
that certain Stock Purchase Agreement dated as of May 19, 2006, by and among
the Company and the holders of the Company’s Series D Convertible Preferred
Stock, par value $0.001 per share.

SCHEDULE
7(d)

OFFICERS
AND DIRECTORS

Billy V. Ray, Jr.

Raymond Smith

Michael Oyster

John Jordan

H. Alec McLarty

Neil L. Underwood

David S. Gergacz

Gisle Larsen

Dennis C. Hayes

EXHIBIT A

FORM OF
OPINION

1.             Each
of the Company and each Subsidiary has been duly organized and validly exists
as a corporation, limited partnership or limited liability company in good
standing under the laws of its respective jurisdiction of incorporation, with
the requisite power and authority to own its properties and conduct its
businesses as described in the Offering Memorandum.  Each of the Company and each Subsidiary is
duly qualified to do business as a foreign corporation, limited partnership or limited
liability company in the specified jurisdictions set forth on Schedule A
annexed to this opinion letter, which the Company has advised us are the only
jurisdictions in which the Company or such Subsidiary conducts business or owns
property.

2.             The
Company has the authorized capitalization as set forth in the Offering
Memorandum, and all of the authorized shares of capital stock of the Company
conform in all material respects to the descriptions thereof contained in the
Offering Memorandum in the section entitled “Description of Capital Stock”. All
shares of Common Stock and Preferred Stock outstanding on the date of the
Offering Memorandum have been duly and validly authorized and issued, are fully
paid and non-assessable. To such counsel’s knowledge, except as disclosed and
as of the date or dates disclosed in the Offering Memorandum and in the
Purchase Agreement, there are (i) no outstanding securities of the Company
convertible into or evidencing the right to subscribe for any shares of capital
stock of the Company, (ii) no outstanding or authorized options, warrants,
calls, subscriptions, rights, commitments or any other instruments or
agreements of any character obligating the Company to issue any shares of its
capital stock or any securities convertible into or evidencing the right to
subscribe for any shares of such stock, and (iii) no agreements or arrangements
with respect to the voting, sale or transfer of any shares of capital stock of
the Company to which the Company is a party, and, to such counsel’s knowledge,
subsequent to the date or dates disclosed in the Offering Memorandum, no other
securities described in clauses (i) and (ii) were issued or granted, other than
options which were granted or exercised under, or shares of Common Stock which
were issued or sold pursuant to, the Company’s employee and director stock
option plan, which plan is described in the Offering Memorandum.

3.             All
of the outstanding shares of capital stock or other equity securities of each
Subsidiary held by the Company, to such counsel’s knowledge, are held free and
clear of all Liens and limitations on voting rights (other than as described in
the Offering Memorandum) and are duly authorized, validly issued, fully paid
and non-assessable.

4.             The
Company has the requisite corporate power and authority to execute and deliver
the Purchase Agreement, the Registration Rights Agreement, the Warrant
Agreement and the Indenture, to perform its obligations thereunder, to issue
and sell and deliver the Units, consisting of the Notes and the Warrants, to
the Initial Purchaser, to issue and deliver the Note Shares and to issue, sell
and deliver the Warrant Shares.

 A-1
 

5.             Each
Guarantor has the requisite corporate, limited partnership or limited liability
company power and authority to execute, deliver and perform its obligations
under the Guarantees.

6.             The
Registration Rights Agreement has been duly authorized, executed and delivered
by the Company and (assuming that the Registration Rights Agreement is the
valid and legally binding obligation of the Initial Purchaser) constitutes a
valid and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that the enforcement thereof may
be limited by the (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws and court decisions now or hereafter in effect relating to
or affecting creditors’ rights generally; and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding at law or
in equity) (clauses (i) and (ii) together, the “Enforceability Exceptions”);
and (iii) the fact that any rights to indemnity or contribution thereunder may
be limited by federal or state securities laws and public policy
considerations.

the Enforceability Exceptions.

7.             The
Purchase Agreement has been duly authorized, executed and delivered by the
Company and (assuming that the Purchase Agreement is the valid and legally
binding obligation of the Initial Purchaser) constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that the enforcement thereof may be limited by the
Enforceability Exceptions and the fact that any rights to indemnity or
contribution thereunder may be limited by federal or state securities laws and
public policy considerations.

8.             The
Warrant Agreement has been duly authorized, executed and delivered by the
Company and (assuming that the Warrant Agreement is the valid and legally
binding obligation of the Warrant Agent) constitutes a valid and legally
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may be limited
by the Enforceability Exceptions.

9.             The
Indenture has been duly authorized, executed and delivered by the Company and
(assuming that the Indenture is the valid and legally binding obligation of the
Trustee) constitutes a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement thereof may be limited by the Enforceability Exceptions.

10.           The
Notes have been duly authorized, executed and issued by the Company and, when
duly authenticated by the Trustee in accordance with the terms of the Indenture
and delivered to and paid for by the Initial Purchaser in accordance with the
terms of the Purchase Agreement, will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except that the enforcement thereof may be limited by the
Enforceability Exceptions, and will be entitled to the benefits of the
Indenture and the Registration Rights Agreement.

 A-2
 

11.           The
Warrants have been duly authorized, executed and issued by the Company and,
when duly authenticated by the Warrant Agent in accordance with the terms of
the Warrant Agreement and delivered to and paid for by the Initial Purchaser in
accordance with the terms of the Purchase Agreement, will constitute valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their terms, except that the enforcement thereof may be limited
by the Enforceability Exceptions, and will be entitled to the benefits of the
Warrant Agreement and the Registration Rights Agreement.

12.           The
Note Shares have been duly authorized and reserved for issuance upon conversion
of the Notes and, when issued upon conversion of the Notes in accordance with
the terms of the Notes and the Indenture, will be validly issued, fully paid
and non-assessable, and such issuance of the Note Shares will not be subject to
any preemptive rights under (i) the Company’s Certificate of Incorporation or
By-laws, (ii) Delaware General Corporation Law, or (iii) to such counsel’s knowledge,
under the express terms or provisions of any agreement or other instrument to
which the Company is a party.

13.           The
Warrant Shares have been duly authorized and reserved for issuance upon
exercise of the Warrants and, when issued upon exercise of the Warrants in
accordance with the terms of the Warrants and the Warrant Agreement, will be
validly issued, fully paid and non-assessable, and such issuance of the Warrant
Shares will not be subject to any preemptive rights under (i) the Company’s
Certificate of Incorporation or By-laws, (ii) Delaware General Corporation Law,
or (iii) to such counsel’s knowledge, under the express terms or provisions of
any agreement or other instrument to which the Company is a party.

14.           The
execution and delivery by the Company of the Purchase Agreement, the
Registration Rights Agreement, the Warrant Agreement and the Indenture, the
execution and delivery of the Guarantees by the Guarantors, the issuance of the
Units (and the Notes and Warrants comprising the same) and the performance by
the Company and the Guarantors of their respective obligations thereunder do
not and will not (i) conflict with or result in a breach of any of the express
terms and provisions of, or constitute a default (or an event that with notice
or lapse of time, or both, would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries pursuant to, any indenture,
mortgage, deed of trust, loan agreement or any other agreement or instrument
filed or incorporated by reference as an exhibit to the Form 10-K for the year
ended April 30, 2006, the Form 10-Q for the quarter ended July 31, 2006 or the
Form 10-Q for the quarter ended October 31, 2006 or described in the Offering
Memorandum, or any franchise, license or permit known to such counsel to which
the Company or any of the Subsidiaries is a party or by which the Company or
any of the Subsidiaries or their respective properties or assets are otherwise
bound, or (ii) violate or conflict with any provision of the certificate of
incorporation or by-laws of the Company or any of the Subsidiaries or, to such
counsel’s knowledge, any judgment, decree, order, statute, rule or regulation
of any court or any judicial, regulatory or other legal or governmental agency
or body.

 A-3
 

15.           No
consent, approval, authorization or qualification of or with any federal or
state court, governmental agency or body is required for the issue and sale of
the Units (and the Notes and Warrants comprising the same) and the issuance of
the Underlying Shares, the execution and delivery by the Company of the
Purchase Agreement, the Registration Rights Agreement, the Warrant Agreement or
the Indenture, the consummation by the Company of the transactions contemplated
thereby or the performance by the Company of its obligations thereunder, except
such as may be required (i) in connection with the Company registering the
Securities for resale pursuant to the Registration Rights Agreement, (ii) under
applicable state securities or “blue sky” laws in connection with the purchase
and sale of the Securities or in connection with the resale of the Units, the
Notes, the Warrants or the Underlying Shares, or (iii) in connection with the
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended.

16.           To
such counsel’s knowledge, except as set forth in the Offering Memorandum, there
are no judicial, regulatory or other legal or governmental proceedings pending
to which the Company or any of the Subsidiaries is a party or of which any
property of the Company or any of the Subsidiaries is the subject that are
required to be described in the Offering Memorandum and are not so described
and, to such counsel’s knowledge, no such proceedings are threatened by
governmental authorities or others.

17.           Assuming
(i) all of the representations and warranties of the Initial Purchaser and the
Company set forth in the Purchase Agreement are true and correct, (ii)
compliance by the Initial Purchaser and the Company with their respective
covenants set forth in the Purchase Agreement, and (iii) all of the
representations and warranties made in accordance with the Offering Memorandum
by the purchasers to whom the Initial Purchaser initially resells the Units
(and the Notes and Warrants comprising the same) are true and correct, it is
not necessary in connection with the offer, sale and delivery of the Units (and
the Notes and Warrants comprising the same) to the Initial Purchaser pursuant
to the Purchase Agreement or the offer, sale and delivery of the Units (and the
Notes and Warrants comprising the same) by the Initial Purchaser to the initial
purchasers therefrom, in the manner contemplated by the Purchase Agreement and
as described in the Offering Memorandum, to register the Units, the Notes or
the Warrants under the Securities Act of 1933, as amended, or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended.

18.           The
Company is not and, immediately after giving effect to the offering and sale of
the Units and the application of the proceeds thereof as described in the
Offering Memorandum, will not be required to register as an “investment
company,” as defined in the Investment Company Act of 1940, as amended.

19.           When
the Notes and the Warrants are issued and delivered as part of the Units
pursuant to the Purchase Agreement, such Notes and Warrants will not be of the
same class (within the meaning of Rule 144A under the Securities Act) as
securities of the Company that are listed on a national securities exchange
registered under Section 6 of the Exchange Act or that are quoted on a United
States automated inter-dealer quotation system.

 A-4
 

20.           The
statements in the Offering Memorandum under the captions “Description of the
Notes and Warrants” and “Description of Capital Stock,” insofar as such
statements purport to summarize the provisions of the Indenture, the
Registration Rights Agreement, the Warrant Agreement, the Notes, the Warrants,
the Common Stock (including the Underlying Shares) and the Preferred Stock,
fairly summarize such provisions.

21.           The
statements in the Offering Memorandum under the caption “Certain United States
Federal Income Tax Considerations,” insofar as they purport to constitute
summaries of matters of United States federal income and, in the case of
non-resident aliens, estate tax law and regulations or legal conclusions with
respect thereto, constitute accurate summaries of the matters described therein
in all material respects.

22.           Each
document incorporated by reference in the Offering Memorandum (except for the
financial statements and related schedules included therein as to which such
counsel need express no opinion) complied, when filed with the Commission, as
to form, in all material respects with the Exchange Act and the rules and
regulations of the Commission promulgated thereunder.

In addition, such opinion shall also contain a
statement that such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent auditors for
the Company and the Initial Purchaser at which the contents of the Offering
Memorandum (including the documents incorporated by reference therein) and
related matters were discussed and, no facts have come to the attention of such
counsel that causes such counsel to believe that the Offering Memorandum
(including the documents incorporated by reference therein), as of its date (or
any amendment thereof or supplement thereto made prior to the Closing Date as
of the date of such amendment or supplement) and as of the Closing Date,
contained or contains an untrue statement of a material fact or omitted or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading (it being understood that such counsel need express
no belief or opinion with respect to the financial statements, including the
related notes, and schedules and all other financial data included or
incorporated by reference therein).

 A-5

EXHIBIT B

FORM OF LOCK-UP AGREEMENT

February       , 2007

McMahan
Securities Co. L.P.

500 W. Putnam Avenue

Greenwich, CT 06830

 

Charys Holding Company, Inc.

Ladies
and Gentlemen:

This
letter agreement (this “Agreement”) relates to the proposed offering (the “Offering”)
by Charys Holding Company, Inc., a Delaware corporation (the “Company”), of
units of its securities, each unit (a “Unit”) consisting of $1,000 principal
amount of its 8.75% Senior Convertible Notes due 2012 (each a “Note” and
collectively, the “Notes”), a warrant to purchase 333.333 shares of the Company’s
common stock par value $0.001 per share (the “Common Stock”), at an initial
exercise price of $4.00 per share (each, a “$4 warrant” and collectively, the “$4
warrants”), and a warrant to purchase 333.333 shares of Common Stock, at an
initial exercise price of $5.00 per share (each, a “$5 warrant” and
collectively the “$5 Warrants”).

In order to induce you (the “Initial Purchaser”) to
purchase Units in the Offering, the undersigned hereby agrees that, without
your prior written consent, during the period from the date hereof until 180
days from the date of the Offering Memorandum (the “Lock-Up Period”), the
undersigned (a) will not, directly or indirectly, issue, offer, sell,
agree to issue, offer or sell, solicit offers to purchase, grant any call
option, warrant or other right to
purchase, purchase any put option or other right to sell, pledge, borrow
or otherwise dispose of any Relevant
Security (as defined below), and (b) will not establish or increase any “put
equivalent position” or liquidate or decrease any “call equivalent position”
(in each case within the meaning of Section 16 of the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder) with
respect to any Relevant Security, or
otherwise enter into any swap, derivative or other transaction or arrangement
that transfers to another, in whole or in part, any economic consequence of
ownership of a Relevant Security, whether or not such transaction is to be
settled by delivery of Relevant Securities, other securities, cash or other
consideration (such restrictions, the “Lock-Up”).  Notwithstanding the foregoing, the Lock-Up
shall not preclude (i) the transfer of shares of a Relevant Security by the
undersigned as a gift or (ii) the transfer of shares of a Relevant Security by
the undersigned to his or her affiliate (as such term is defined in Rule 405
under the Securities Act of 1933, as amended); provided, that, in either such
case, the transferee of the Relevant Security must (prior to or commensurately
with such transfer) execute and deliver to you an agreement satisfactory
to you certifying that such transferee is bound by the terms of this Agreement 

 B-1
 

and has been in compliance with the terms hereof since
the date first above written as if it had been an original party hereto.  In addition, if and to the extent the undersigned holds stock options granted pursuant
to the Company’s 2006 Employee Stock Incentive Plan or the Company’s
2006 Non-Employee Consultants Retainer Stock Plan which are scheduled to expire
during the Lock-Up Period, the Lock-Up will not preclude the exercise of such
options and sale of common stock upon
such exercise.  As used herein “Relevant
Security” means the Common Stock, any other equity security of the Company or
any of its subsidiaries and any security convertible into, or exercisable or
exchangeable for, any Common Stock or other such equity security.

The undersigned hereby
authorizes the Company during the Lock-Up Period to cause any transfer agent
for the Relevant Securities to decline to transfer, and to note stop transfer
restrictions on the stock register and other records relating to, Relevant
Securities for which the undersigned is the record holder and, in the case of
Relevant Securities for which the undersigned is the beneficial but not the
record holder, agrees during the Lock-Up Period to cause the record holder to
cause the relevant transfer agent to decline to transfer, and to note stop
transfer restrictions on the stock register and other records relating
to, such Relevant Securities.  The
undersigned hereby further agrees that, without your prior written consent,
during the Lock-up Period the undersigned (A) will not file or participate in
the filing with the Securities and Exchange Commission of any registration
statement, or circulate or participate in the circulation of any preliminary or
final prospectus or other disclosure document with respect to any proposed
offering or sale of a Relevant Security, and (B) will not exercise any rights
the undersigned may have to require registration with the Securities and
Exchange Commission of any proposed offering or sale of a Relevant Security.

The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of the undersigned, enforceable in
accordance with its terms.  Upon request,
the undersigned will execute any additional documents necessary in connection
with enforcement hereof.  Any obligations
of the undersigned shall be binding upon the successors and assigns of the
undersigned from the date first above written.

This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.  Delivery of a signed
copy of this letter by facsimile transmission shall be effective as delivery of
the original hereof.

	
  

  	
  Very truly
  yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  
					

 

 B-2

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