Document:

Asset Purchase Agreement dated 12/31/2003

 EXHIBIT 10.1 
  
 ASSET PURCHASE AGREEMENT 
  
 BY AND AMONG 
  
 GATEWAY.REALTY.NEW JERSEY.LLC, 
  
 FIBERNET TELECOM GROUP, INC. 
  
 AND 
  
 LOCAL FIBER, LLC 
  
 December 31, 2003 

 ASSET PURCHASE AGREEMENT 
  
 This Asset Purchase Agreement (the “Agreement”) is entered into as of December 31, 2003 by and among
gateway.realty.new jersey.llc, a New Jersey limited liability company (the “Seller”), FiberNet Telecom Group, Inc., a Delaware corporation (the “Parent”), and Local Fiber, LLC, a New York limited liability
company and wholly owned subsidiary of Parent (the “Purchaser”). 
  
 WHEREAS, the Seller is engaged in the business of providing colocation services at its carrier point facility located at 165 Halsey Street, Newark, New Jersey 07102 (the “Business”); and 
  
 WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, substantially all of the assets of the Seller used in the Business, and the Purchaser is willing to assume certain liabilities of the Seller relating to the Business, all upon the terms and conditions set forth
herein. 
  
 NOW, THEREFORE, in consideration of the premises and
the mutual covenants, representations and warranties herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereto hereby agree as follows: 
  
 ARTICLE I 
  
 DEFINITIONS 
  
 In addition to terms defined elsewhere in this Agreement, the following terms when used in this Agreement shall have the respective meanings set forth
below: 
  
 “Action” means any claim, demand,
action, cause of action, chose in action, right of recovery, right of set-off, suit, arbitration, inquiry, proceeding or investigation by or before any Court or Governmental Authority. 
  
 “Affiliate” means, with respect to a specified Person, any other Person which, directly or indirectly
through one or more intermediaries, controls, is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes, with respect to the specified Person: (a) any other Person which beneficially
owns or holds, directly or indirectly, 5% or more of the outstanding voting securities or other securities convertible into voting securities of such Person, (b) any other Person of which the specified Person beneficially owns or holds, directly or
indirectly, 5% or more of the outstanding voting securities or other securities convertible into voting securities, or (c) any member, manager or director of such Person. For purposes of this Agreement, beneficial ownership has the meaning in
accordance with Rule 13d-3 under the Exchange Act. 
  
 “Agreement” has the meaning set forth in the introductory paragraph to this Agreement. 
  
 “Ancillary Agreements” means the Bill of Sale and the Assumption Agreement. 

 “Assumed Liabilities” has the meaning set forth in Section 2.2. 
  
 “Assumption Agreement” has the meaning set forth in Section
2.2. 
  
 “Bill of Sale” has the meaning set forth
in Section 2.1. 
  
 “Business” has the meaning
set forth in the recitals to this Agreement. 
  
 “Business
Day” means any day other than a Saturday, Sunday or other day on which banks are required or authorized to be closed in New York City. 
  
 “Closing” has the meaning set forth in Section 2.3. 
  
 “Closing Date” has the meaning set forth in Section 2.3. 
  
 “Closing Price” shall mean, with respect to a Trading Day,
the closing price of the Parent Common Stock on such Trading Day. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported on the Nasdaq SmallCap Market on which the shares of Parent Common Stock are admitted to trading or, if the shares of Parent Common Stock are not admitted to trading on the Nasdaq SmallCap Market, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices on either the Nasdaq National Market, any national securities exchange or in the over-the-counter market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System or such other system then in use, or, if on any such date the shares of Parent Common stock are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Parent Common Stock selected by the Board of Directors of the Parent. 
  
 “Code” shall mean the Internal Revenue Code of 1986, as amended. 
  
 “Consents” has the meaning set forth in Section 4.6(c). 
  
 “Contract” means any binding contract, plan, undertaking,
understanding, agreement, license, lease, note, mortgage or other binding commitment, whether written or oral. 
  
 “Court” means any court or arbitration tribunal of the United States, any domestic state, or any foreign country, and any political
subdivision thereof. 
  
 “Copyrights” mean all
copyrights (registered or otherwise) and registrations and applications for registration thereof, and all rights therein provided by multinational treaties or conventions. 
  
 “Damages” has the meaning set forth in Section 8.2. 
  
 “Database” means all data and other information recorded,
stored, transmitted and retrieved in electronic form. 
  

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 “Disclosure Schedule” has the meaning set forth in Article IV. 
  
 “Documents” means this Agreement together with the Ancillary
Agreements, the Schedules and Exhibits hereto and thereto, the Disclosure Schedule and the other agreements, documents and instruments executed in connection herewith. 
  
 “Environmental Laws” shall mean any federal, state or local or foreign Law or judgment relating to
releases, discharges, emissions or disposals to air, water, land or groundwater of Hazardous Materials; to the use, handling or disposal of polychlorinated biphenyls, asbestos or urea formaldehyde or any other Hazardous Material; to the treatment,
storage, disposal or management of Hazardous Materials; to exposure to toxic, hazardous or other controlled, prohibited or regulated substances; and to the transportation, release or any other use of Hazardous Materials, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601, et seq. (“CERCLA”), the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq. (“RCRA”), the Toxic
Substances Control Act, 15 U.S.C. 2601, et seq. (“TSCA”), the Clean Air Act, 42 U.S.C. 7401, et seq., the Federal Water Pollution Control Act, 33 U.S.C. 1251, et seq., the Safe Drinking Water Act, 42 U.S.C. 300f, et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. 1802, et seq. (“HMTA”), and the Emergency Planning and Community Right to Know Act, 42 U.S.C. 11001, et seq. (“EPCRA”), and other comparable federal, state, local
and foreign Laws and all rules, regulations and guidance documents promulgated pursuant thereto or published thereunder. 
  
 “Environmental Permits” means all Permits required under any Environmental Law. 
  
 “Excluded Assets” has the meaning set forth in Section
2.1(b). 
  
 “Excluded Liabilities” has the
meaning set forth in Section 2.2. 
  
 “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended. 
  
 “Financial Statements” has the meaning set forth in Section 4.14. 
  
 “GAAP” means United States generally accepted accounting principles and practices in effect from time to time. 
  
 “Governmental Authority” means any governmental, or
legislative agency or authority (other than a Court) of the United States, any domestic state, or any foreign country, and any political subdivision or agency thereof, and includes any authority having governmental or quasi-governmental powers,
including any administrative agency or commission. 
  
 “Gross Revenues” shall mean the monthly recurring revenues from the colocation operations of the Business in accordance with GAAP, as in effect on the Closing Date, pursuant to the revenue codes identified on Schedule
A, or successors thereto. 
  
 “Hardware”
means all mainframes, midrange computers, personal computers, notebooks, servers, switches, printers, modems, drives, peripherals and any component of any of the foregoing. 
  

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 “Hazardous Substance” means any Hazardous Substance, as defined in CERCLA, and any other
chemical, compound, product, solid, gas, liquid, pollutant, contaminant or material which is regulated under any Environmental Law, and includes, without limitation, asbestos or any substance containing asbestos, polychlorinated biphenyls and
petroleum (including crude oil or any fraction thereof). 
  
 “Indebtedness” means, with respect to any Person, (a) all indebtedness of such Person, whether or not contingent, for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or
services, (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired
by such Person (even though the rights and remedies of the Seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been
or should be, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities, (g) all obligations of such Person to purchase, redeem, retire,
decease or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock, valued, in the case of redeemable preferred stock, at the liquidation preference, without duplication, plus
accrued and unpaid dividends, (h) all Indebtedness of others referred to in clauses (a) through (f) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an
agreement (1) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or
services irrespective of whether such property is received or such services are rendered), or (4) otherwise to assure a creditor against loss and all Indebtedness referred to in clauses (a) through (f) above secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for
the payment of such Indebtedness. 
  
 “Information
System” means any combination of Hardware, Software and/or Database(s) employed primarily for the creation, manipulation, storage, retrieval, display and use of information in electronic form or media. 
  
 “Intellectual Property” means (a) inventions, whether or not
patentable, whether or not reduced to practice or whether or not yet made the subject of a pending Patent application or applications, (b) ideas and conceptions of potentially patentable subject matter, including, without limitation, any patent
disclosures, whether or not reduced to practice and whether or not yet made the subject of a pending Patent application or applications, (c) Patents, (d) Trademarks, (e) Copyrights, (f) Software, (g) trade secrets and confidential, technical or
business information (including ideas, formulas, compositions, inventions, and conceptions of inventions whether patentable or unpatentable and whether or not reduced to practice), (h) whether or not confidential, technology (including know-how and
show-how), manufacturing and production 
  

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 processes and techniques, research and development information, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information, (i) copies and tangible embodiments of all the foregoing, in
whatever form or medium, (j) all rights to obtain and rights to apply for Patents, and to register Trademarks and Copyrights, (k) all rights under the License Agreements and any licenses, registered user agreements, technology or materials transfer
agreements, and other agreements or instruments with respect to items in (a) to (k) above; and (l) all rights to sue and recover and retain damages and costs and attorneys’ fees for present and past infringement of any of the Intellectual
Property rights hereinabove set out. 
  
 “Interim
Financial Statements “ has the meaning set forth in Section 4.14. 
  
 “Interim Financial Statement Date” has the meaning set forth in Section 4.14. 
  
 “IRS” shall mean the United States Internal Revenue Service. 
  
 “Law” means all laws, statutes, ordinances and Regulations of any Governmental Authority, including all
decisions of Courts having the effect of law in each such jurisdiction. 
  
 “Leased Real Property” means the real property leased by the Seller as tenant, together with, to the extent leased by the Seller, all buildings and other structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of personal property of the Seller attached or appurtenant thereto, and all easements, licenses, rights and appurtenances relating to the foregoing. 
  
 “Liabilities” means any and all debts, liabilities, charges,
assessments and obligations of every kind or nature whatsoever, whether accrued or fixed, absolute or contingent, matured or unmatured, known or unknown or determined or determinable, including, without limitation, those arising under any Law
(including, without limitation, any Environmental Law), Action or Order, Liabilities for Taxes and those Liabilities arising under any Contract. 
  
 “License Agreements” has the meaning set forth in Section 4.26(b). 
  
 “Liens” means any mortgage, pledge, security interest, attachment, encumbrance, lien (statutory or
otherwise), option, conditional sale agreement, right of first refusal, first offer, termination, participation or purchase, or charge of any kind (including any agreement to give any of the foregoing). 
  
 “Litigation” means any suit, action, arbitration, cause of
action, claim, complaint, criminal prosecution, investigation, inquiry, demand letter, governmental or other administrative proceeding, whether at law or at equity, before or by any Court, Governmental Authority, arbitrator or other tribunal.

  
 “Material Adverse Effect” means any
circumstance, change in, or effect on, the Business or the Seller that, individually or in the aggregate with any other circumstances, changes in, or effects on, the Seller or the Business (a) is, or could reasonably be expected to be, materially
adverse to the business, operations, assets or liabilities (including, without limitation, contingent 
  

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 liabilities), results of operations or the condition (financial or otherwise) of the Business, or (b) could reasonably be
expected to materially adversely affect the ability of the Purchaser to operate or conduct the Business in the manner in which it is currently operated or conducted by the Seller; provided, however, that in determining whether a Material
Adverse Effect has occurred, any circumstance, change or effect, which occurs subsequent to the date hereof, to the extent it is attributable to (i) any adverse change in financial or securities markets or in economic or regulatory conditions,
including acts of war (whether or not declared), armed hostilities and terrorism, (ii) matters affecting companies in the same or similar industries to the Business, provided the Business is not disproportionately and adversely affected, or (iii)
the execution, public announcement, closing or existence of this Agreement, shall not be considered in determining whether a Material Adverse Effect has occurred. 
  
 “Material Contract” shall have the meaning given to it in Section 4.6(a). 
  
 “Order” shall mean any judgment, order, writ, injunction,
ruling, stipulation, determination, award or decree of or by, or any settlement under the jurisdiction of, any Court or Governmental Authority. 
  
 “Parent” has the meaning set forth in the introductory paragraph to this Agreement. 
  
 “Parent Common Stock” means the common stock, par value
$.001 per share, of the Parent. 
  
 “Patents”
mean all national (including the United States) and multinational statutory invention registrations, patents, patent registrations and patent applications, including all reissues, divisions, continuations, continuations-in-part, extensions and
reexaminations, and all rights therein provided by multinational treaties or conventions and all improvements to the inventions disclosed in each such registration, patent or application. 
  
 “Permits” means any licenses, permits, pending applications, consents, certificates, registrations,
approvals and authorizations. 
  
 “Permitted
Liens” means (a) Liens for unpaid taxes that are not yet delinquent, (b) the interests of lessors under operating leases, (c) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers
or suppliers, incurred in the ordinary course of business and which Liens are for sums not yet delinquent, and (d) Liens arising from deposits made in connection with obtaining worker’s compensation or other unemployment insurance. 

 
 “Person” means any natural person, corporation, limited
liability company, unincorporated organization, partnership, association, joint stock company, joint venture, trust or any other entity. 
  
 “Purchase Price” has the meaning set forth in Section 3.1. 
  
 “Purchased Assets” has the meaning set forth in Section 2.1. 
  
 “Purchaser” has the meaning set forth in the introductory
paragraph to this Agreement. 
  

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 “Purchaser Indemnified Persons” has the meaning set forth in Section 7.2. 
  
 “Receivables” means any and all accounts receivable, notes,
book debts and other amounts due or accruing due to the Seller in connection with the Business, whether or not in the ordinary course, together with any unpaid financing charges accrued thereon and the benefit of all security for such accounts,
notes, debts and other amounts. 
  
 “Registration Rights
Agreement” has the meaning set forth in Section 6.2(j). 
  
 “Regulation” shall mean any rule or regulation of any Governmental Authority. 
  
 “SEC” shall mean the Securities and Exchange Commission. 
  
 “Securities Act” means the Securities Act of 1933, as amended. 
  
 “Seller” has the meaning set forth in the introductory
paragraph to this Agreement. 
  
 “Seller Indemnified
Persons” has the meaning set forth in Section 7.3. 
  
 “Shares” has the meaning set forth in Section 3.2(b). 
  
 “Software” means any and all (a) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, (b) databases and
compilations, including any and all data and collections of data, whether machine readable or otherwise, (c) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, (d) the technology
supporting any Internet site(s) operated by or on behalf of Seller, and (e) all documentation, including user manuals and training materials, relating to any of the foregoing. 
  
 “Subsidiary” or “Subsidiaries” of a specified Person means any other Person in which such Person
owns beneficially, directly or indirectly, more than 50% of the outstanding voting securities or other securities convertible into voting securities, or which may effectively be controlled, directly or indirectly, by such Person. 
  
 “Survival Date” has the meaning set forth in Section 7.1.

  
 “Tangible Personal Property” has the meaning
set forth in Section 4.21(a). 
  
 “Tax” or
“Taxes” means any and all federal, state, local, or foreign taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any Governmental Authority or other taxing authority, including, without limitation: taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, disability, social security, workers’ compensation, unemployment compensation or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains
taxes; license, registration and documentation fees; and customs’ duties, tariffs and similar charges, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, whether disputed or 
  

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 not, and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

  
 “Tax Returns” means returns, reports and
information statements, including any schedule or attachment thereto, with respect to Taxes required to be filed with the IRS or any other Governmental Authority or other taxing authority or agency, domestic or foreign, including consolidated,
combined and unitary tax returns. 
  
 “Third Party
Claim” has the meaning set forth in Section 7.6. 
  
 “Trading Day” means a day on which the Nasdaq SmallCap Market on which shares of Parent Common Stock are admitted to trading is open for the transaction of business or, if the shares of Parent Common Stock are not admitted
to trading on the Nasdaq SmallCap Market, a day on which the trades on the Nasdaq National Market, any national securities exchange or the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or such other system then in use, are reported or, if on any such date the shares of Parent Common stock are not quoted by any such organization, the last Business Day on which trades occurred. 
  
 “Trademarks” mean all trademarks, service marks, trade
dress, logos, trade names and corporate names, whether or not registered, including all common law rights, and registrations and applications for registration thereof, including, but not limited to, all marks registered in the United States Patent
and Trademark Office, the Trademark Offices of the States and Territories of the United States of America, and the Trademark Offices of other nations throughout the world, and all rights therein provided by multinational treaties or conventions.

  
 ARTICLE II 
  
 PURCHASE AND SALE 
  
 2.1 Assets. 
  
 (a) Purchased Assets. Effective upon the Closing, the
Purchaser agrees to purchase, acquire and accept, and the Seller agrees to sell, assign, transfer, convey and deliver, upon the terms herein and subject and pursuant to the covenants, conditions, representations and warranties contained in this
Agreement, all of the Seller’s right, title and interest in, to and under those assets, properties, rights, contracts, Actions and interests of the Seller that exist as of the Closing that are used in the Business, including, without
limitation, those specifically identified on Schedule 2.1(a) to this Agreement, other than the Excluded Assets (as hereinafter defined) (the assets being purchased hereunder being referred to herein as the “Purchased Assets”). On
the Closing Date, the Seller shall deliver to the Purchaser the bill of sale, substantially in the form of Exhibit A attached hereto (the “Bill of Sale”), and such other deeds, endorsements, assignment and assumption agreements, and
other good and sufficient instruments of conveyance and transfer as the Purchaser may reasonably request, to vest in the Purchaser all the right, title and interest of the Seller in, to and under any or all of the Purchased Assets, free and clear of
all Liens, except Liens relating solely and directly to one or more of the Assumed Liabilities. 
  

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 (b) Excluded Assets. Notwithstanding anything contained in Section 2.1(a) to the
contrary, the Seller is not selling, and the Purchaser is not purchasing, any assets, properties, rights, contracts, Actions or interests expressly listed on Schedule 2.1(b) hereof (all such excluded assets, properties, rights, contracts,
Actions and interests, the “Excluded Assets”), all of which Excluded Assets are being retained by the Seller. 
  
 2.2 Liabilities. Effective upon the Closing, subject to the terms and conditions hereof, the Purchaser will assume and become responsible for only
those liabilities and obligations of the Seller set forth on Schedule 2.2 hereof (the “Assumed Liabilities”). Other than the Assumed Liabilities, the Purchased Assets shall be conveyed to the Purchaser free and clear of, and the
Purchaser shall not assume or become liable to pay, perform or discharge, any Liabilities of the Seller (the “Excluded Liabilities”). The parties hereto acknowledge and agree that it is not intended that either the Purchaser or the Parent
is or will be deemed to be a successor-in-interest to the Seller. On the Closing Date, the Purchaser and the Seller shall execute and deliver the assignment and assumption agreement, substantially in the form of Exhibit B attached hereto (the
“Assumption Agreement”). 
  
 2.3 Closing. The
closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Chrysler Center, 666 Third Avenue, New York, New York at 10:00 A.M., on the
second Business Day after all of the conditions set forth in Section 7.1 and 7.2 herein shall have been fulfilled or waived (other than conditions that can be satisfied only by the delivery of certificates, opinions or other documents at the
Closing), or at such other time and place or on such other date as the Purchaser and Seller may agree upon (such date on which the Closing occurs, the “Closing Date”). 
  
 2.4 Consent of Third Parties. (a) This Agreement shall not constitute an agreement to transfer, convey or assign any
Purchased Asset, if a transfer, conveyance or assignment, or an attempt to make a transfer, conveyance or assignment, without the consent or approval of a third party would constitute a breach or violation thereof or in any way adversely affect the
rights of the transferee, conveyee or assignee thereof until such consent is obtained. 
  
 (b) Seller and Purchaser shall cooperate with each other to effect any commercially reasonable arrangement designed to provide Purchaser the economic benefit of, and to permit it to assume the liabilities and
obligations under, any Purchased Asset, for which the consent to such transfer hereunder is not obtained prior to the Closing. 
  
 (c) Schedule 2.4(c) sets forth all consents or approvals necessary for the sale, conveyance, assignment, transfer and delivery of the Purchased
Assets which shall be obtained by the Seller as a condition precedent to the Closing pursuant to Section 7.1 hereof. Seller shall be responsible for any and all expenses relating to obtaining such consents. 
  

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 ARTICLE III 
  
 PURCHASE PRICE 
  
 3.1 Purchase Price. As consideration for the purchase of the Purchased Assets (the “Purchase Price”), upon the terms and subject to the
conditions set forth in this Agreement, the Purchaser will (i) deliver to the Seller, or cause the delivery of, cash and Parent Common Stock with an aggregate value of $3,805,000.00 (the “Purchase Price”) in accordance with Section 3.2
below and subject to adjustment in accordance with the terms and conditions of this Agreement; and (ii) assume the Assumed Liabilities. 
  
 3.2 Payment of Purchase Price. At the Closing, the Purchaser shall pay the Seller the Purchase Price as follows: 
  
 (a) Delivery of $170,000.00 in immediately available funds
by wire transfer, bank check or certified check; 
  
 (b) Delivery of 2,908,000 shares of Parent Common Stock (the “Shares”), of which 1,000,000 Shares shall be delivered to the Escrow Agent to be held in escrow pursuant to the terms of the Escrow Agreement as provided in Section 8.4
hereof; and 
  
 (c) Delivery of the Assumption
Agreement. 
  
 3.3 Purchase Price Adjustment. The Purchase
Price shall be subject to adjustment after the Closing as follows: 
  
 (a) The Seller may be entitled to receive additional shares of Parent Common Stock (the “Additional Shares”) as additional consideration (the “Additional Consideration”) in accordance with the
provisions of this Section 3.3 based upon the Gross Revenues, on an annualized basis, of a particular month during the twenty-four-month period immediately following the Closing Date (the “Earn-Out Period”), as follows: 
  
 (i) Within ten business days after the delivery of the
quarterly profit and loss statement pursuant to Section 7.4(d), if the Seller desires to designate a particular month of the quarterly period covered by such statement, then the Seller shall so notify Parent in writing (the “Revenue
Notice”) of such month (the “Revenue Month”). If Seller fails to notify Parent in writing within the ten business day period pursuant to this Section 3.3(a)(i), then Seller’s right to designate the Revenue Month shall be
forfeited with respect to such quarterly period. Seller shall not be entitled to designate any month that has been previously forfeited.  
  
 (ii) Within two weeks of receipt of Seller’s written notice designating the Revenue Month, Parent shall present the Seller with a
certification (the “Revenue Certification”) signed by the Chief Financial Officer of the Parent with respect thereto and with respect to the amount equal to the product of (i) twelve and (ii) the Gross Revenues for the Revenue Month (the
“Annualized 
  

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 Revenues”). Such certification shall be accompanied by a detailed statement setting forth the
relevant information upon which the calculation of such Gross Revenues is based, including, without limitation, the names of each licensee and the licensee fees and other revenues paid or payable, including any bad debt reserve established in
respect of any applicable receivables, by such licensee in respect of the applicable month. 
  
 (iii) In the event Parent does not receive a Revenue Notice with respect to the last calendar quarter of the Earn-Out Period, the Parent
shall determine the Gross Revenues for the final month of the Earn-Out Period for purposes of determining the Annualized Revenues pursuant to Section 3.3(a)(ii). 
  
 (b) In the event the Annualized Revenues as reflected on the Revenue Certification are equal to or less than
$2,076,000, then the Purchaser shall be under no obligation to pay, and the Seller shall not have a right to receive, any Additional Consideration. 
  
 (c) In the event the Annualized Revenues as reflected on the Revenue Certification are greater than $2,076,000 (the amount by which such
Annualized Revenues exceed $2,076,000 being herein referred to as the “Increased Revenues”), then the Purchaser shall be obligated to pay, and the Seller shall have a right to receive Additional Consideration in the amount equal to two and
one-fifth (2.2) times the Increased Revenues. 
  
 (d) The Additional Consideration shall be paid by delivery to the Seller of a number of Additional Shares determined by dividing the amount of Additional Consideration to which the Seller is entitled as determined in accordance with Section
3.3(c) hereof by the average Closing Price of a share of Parent Common Stock for the 10 Trading Day period immediately preceding the commencement of the month following the Revenue Month (the “Undisputed 10 Day Average”), if the Revenue
Certification is not disputed by the Seller. Such Additional Shares shall be issued as soon as reasonably practicable and the Parent shall submit written instructions to its transfer agent to issue such shares no later than two (2) Business Days
after the final determination of the Additional Consideration, if any, to which the Seller is entitled. 
  
 (e) In the event the Seller disputes or disagrees with the calculation as presented in the Revenue Certification, then the determination
of Gross Revenues shall be calculated by an independent auditor chosen by the Seller and approved by Parent, such approval shall not be unreasonably withheld. In the event the Revenue Certification is disputed by the Seller, and (i) the calculation
of Gross Revenues by the independent auditor is less than 101% of the amount of the Gross Revenues contained in the Revenue Certification, the Additional Consideration to be paid shall be a number of Additional Shares as determined by dividing the
amount of Additional Consideration to which the Seller is entitled to as determined in accordance with Section 3.3(c) hereof by the greater of (A) the Undisputed 10 Day Average and (B) the 10 Trading Day period immediately preceding the date the
calculation of Gross Revenues is presented by the independent 
  

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 auditor pursuant to this Section 3.3(e) (the “Disputed 10 Day Average”) and in either case, the
cost of such determination by such independent auditor shall be borne by the Seller, or (ii) the calculation of Gross Revenues by the independent auditor is greater than or equal to 101% and less than or equal to 110% of the amount of the Gross
Revenues contained in the Revenue Certification, the Additional Consideration to be paid shall be a number of Additional Shares as determined by dividing the amount of Additional Consideration to which the Seller is entitled to as determined in
accordance with Section 3.3(c) hereof by the Undisputed 10 Day Average and the cost of such determination by such independent auditor shall be borne equally by the Seller and the Purchaser or (iii) the calculation of Gross Revenues by the
independent auditor pursuant to this Section 3.3(e) hereof is greater than 110% of the amount of the Gross Revenues contained in the Revenue Certification, the Additional Consideration to be paid shall be a number of Additional Shares as determined
by dividing the amount of Additional Consideration to which the Seller is entitled to as determined in accordance with Section 3.3(c) hereof by the lesser of (X) the Undisputed 10 Day Average and (Y) the Disputed 10 Day Average and in either case
the cost of such determination by such independent auditor shall be borne by the Purchaser. In either event, such Additional Shares shall be issued as soon as reasonably practicable and the Parent shall submit written instructions to its transfer
agent to issue such shares no later than two (2) Business Days after the final determination of the Additional Consideration, if any, to which the Seller is entitled. The determination of Gross Revenues by such independent auditor pursuant to this
Section 3.3(e) shall be binding upon the parties. 
  
 (f) The issuance of the Additional Shares, if any, pursuant to Section 3.3(d) or 3.3(e) shall be subject to the Parent’s right of set-off as contained in Section 8.5 hereof. 
  
 (g) Notwithstanding any other provision herein, the Parent
shall not be obligated to issue Additional Shares, pursuant to Section 3.3(d) or 3.3(e), to the extent that the issuance of such Additional Shares would exceed that number of shares of Parent Common Stock which the Parent may issue in connection
with the acquisition of the Purchased Assets (the “Exchange Cap”) without breaching the Parent’s obligations to receive stockholder approval prior to such issuance under the rules or regulations of The Nasdaq Stock Market, Inc.,
except that such limitation shall not apply in the event that the Parent (a) obtains the approval of its stockholders as required by applicable rules of The Nasdaq Stock Market, Inc. for issuances of Parent Common Stock in excess of such amount (the
“Shareholder Approval”) or (b) obtains a written opinion from outside counsel to the Parent that such approval is not required, which opinion shall be reasonably satisfactory to the Seller; provided, however, that
notwithstanding anything herein to the contrary, the Parent, will issue such number of shares of Parent Common Stock pursuant to Section 3.3(b) and, if applicable, Section 3.3(d) or Section 3.3(e) up to the Exchange Cap. In addition, if applicable,
Parent shall use its reasonable commercial efforts to include and recommend for approval such proposal for the Shareholder Approval in its next annual proxy statement filed after the determination is made that such Shareholder Approval is necessary.

  

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 3.4 Purchase Price Allocation. The Purchase Price shall be allocated among the Purchased Assets as
set forth on Schedule 3.4 hereto (the “Allocation Schedule”). The Purchaser and the Seller each agree (a) to reflect the Purchased Assets on their respective books for tax reporting purposes in accordance with the Allocation
Schedule, (b) to file all Tax Returns and determine all Taxes (including, without limitation, for purposes of Section 1060 of the Code) in accordance with and based upon the Allocation Schedule, and (c) not to take any position inconsistent with
such Allocation Schedule in any audit or judicial or administrative proceeding or otherwise.  
  
 ARTICLE IV 
  
 REPRESENTATIONS AND WARRANTIES OF THE SELLER 
  
 Except as set forth in the Disclosure Schedule delivered to the Purchaser simultaneously with the execution hereof with specific reference to the Section or Subsection of this Agreement to which the information stated in such disclosure
relates (the “Disclosure Schedule”) (provided that any Section of the Disclosure Schedule or any Subsection thereof shall each be deemed to include all disclosures set forth in other Sections or Subsections of the Disclosure
Schedule as and to the extent the context of such disclosures makes it reasonably clear, if read in the context of such other Section or Subsection, that such disclosures are applicable to such other Sections or Subsections), the Seller, represents
and warrants to each of the Purchaser and Parent as follows: 
  
 4.1 Organization and Qualification. The Seller is (i) a limited liability company duly formed, validly existing and in good standing under the laws of the State of New Jersey, and (ii) duly licensed or qualified to transact business
as a foreign limited liability company and in good standing in those jurisdictions where its failure to be so qualified would have a Material Adverse Effect. 
  
 4.2 Subsidiaries. The Seller has no Subsidiaries and does not own, directly or indirectly, any equity or other ownership interests of any Person.

  
 4.3 Organizational Documents and Corporate Records.
True, correct and complete copies of each of (a) the Articles of Organization of the Seller, as amended and in effect on the date hereof, (b) all letters, understandings, arrangements or other correspondence relating to or concerning the ownership
and organization of the Seller or management of the operations of the Business by any Persons and (c) the minute books of the Seller have been previously delivered to the Purchaser. Such minute books contain accurate records of all meetings and
written consents to actions of the members and managers of the Seller from the date of its formation to the date hereof. The Seller is in compliance with, and not in default or violation of, its Articles of Organization. The Seller does not have an
operating agreement pursuant to which it operates. Set forth on Schedule 4.3 is the identity of all of the members of the Seller, and their respective membership interests, and that except as otherwise identified on Schedule 4.3, there are no
other members of the Seller, or any other individual or entity that has any membership, capital account profit and loss or other equity interest in the Seller. 
  

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 4.4 Authorization; Enforceability. The Seller has the limited liability company power and
authority to own, hold, lease and operate its properties and assets and to carry on the Business as currently conducted. The Seller has the limited liability company power and authority to execute, deliver and perform this Agreement and the other
Documents. The execution, delivery and performance of this Agreement and the other Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by the Seller, and no other action on the
part of the Seller is necessary in order to give effect to such authorization or approval. This Agreement and each of the other Documents to be executed and delivered by the Seller have been (or, when executed and delivered by the Seller, will be)
duly executed and delivered by, and constitute the legal, valid and binding obligations of, the Seller, enforceable against the Seller, in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought. 
  
 4.5 No Violation or Conflict. The execution and delivery by the Seller
of this Agreement and the other Documents to be executed and delivered by the Seller, the consummation by the Seller of the transactions contemplated by this Agreement and the other Documents, or the performance by the Seller of this Agreement and
the other Documents required by this Agreement to be executed and delivered by the Seller at the Closing, will not (a) conflict with or violate the Articles of Organization of the Seller, (b) conflict with or violate any Law, Order or Permit
applicable to the Seller or by which the Purchased Assets are bound or affected, or (c) result in any breach or violation of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair the
Seller’s rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Lien on any of the Purchased Assets pursuant
to any Contract to which the Seller is a party or by which the Seller or any of the Purchased Assets are bound or affected. 
  
 4.6 Contracts. 
  
 (a) Schedule 4.6(a) lists each of the Material Contracts to which the Seller is a party or by which it or any of its properties or assets may be
bound which is or would reasonably be expected to become material to the Business, any of the Purchased Assets or any of the Assumed Liabilities. For purposes hereof the term “Material Contract” means: 
  
 (i) each Contract, invoice, or purchase order for the
purchase or lease of materials or personal property from any supplier or for the furnishing of services to the Business under the terms of which the Seller: (A) is likely to pay or otherwise give consideration of more than $5,000 in the aggregate
during the calendar year ended December 31, 2003, (B) is likely to pay or otherwise give consideration of more than $5,000 in the aggregate over the remaining term of such Contract, or (C) was not entered into in the ordinary course of business;

  
 (ii) each Contract, invoice, or sales order
for the sale of personal property or for the furnishing of services by the Business which: (A) is likely to involve consideration of more than $5,000 in the aggregate during the calendar year ended December 31, 2003, (B) is likely to involve
consideration of more than $5,000 in the aggregate over the remaining term of such Contract, or (C) was not entered into in the ordinary course of business; 
  
  

 14 

 (iii) all broker, distributor, dealer, manufacturer’s representative, franchise,
agency, sales promotion, market research, marketing, consulting and advertising Contracts to which the Seller is a party; 
  
 (iv) all management and employment Contracts and Contracts with independent contractors or consultants (or similar arrangements), or any
other Contract with any present or former member, manager, officer or employee of the Seller, to which the Seller is a party; 
  
 (v) each Contract relating to Indebtedness of the Seller, including, without limitation, any Contracts relating to the guarantee, support,
indemnification, assumption, endorsement of, or any other similar commitment with respect to, the obligations, liabilities (whether accrued, absolute, contingent or otherwise) or Indebtedness of any other Person; 
  
 (vi) all Contracts with any Governmental Authority to which
the Seller is a party; 
  
 (vii) all Contracts
that limit the ability of the Seller to compete in any line of business or with any Person or in any geographic area or during any period of time, and all Contracts involving confidentiality, secrecy or non-disclosure (whether the Seller is an
obligor or beneficiary thereunder); 
  
 (viii)
all Contracts between the Seller and any Affiliate of the Seller; 
  
 (ix) all leases of real property; 
  
 (x) all Contracts of the Seller which relate, in whole or in part, to any Intellectual Property other than Contracts relating to shrink wrap Software; 
  
 (xi) all Contracts of the Seller which relate to partnership, joint venture or other similar arrangement;
and 
  
 (xii) all other Contracts, whether or not
made in the ordinary course of the Business, the absence of which would be reasonably likely to have a Material Adverse Effect. 
  
 (b) The Seller has delivered or made available to the Purchaser true, correct and complete copies of all Material Contracts which are in writing, and
Schedule 4.6(a) contains an accurate summary of all Material Contracts which are not in writing. The Seller has paid in full or set aside reserves or accruals in accordance with GAAP consistently applied for all amounts due as of the date
hereof under each Material Contract and as of the Closing Date will have satisfied in full all of its liabilities and obligations required to be satisfied in respect of periods ending on or before the Closing Date, except for such amounts as the
Seller may in good faith dispute, which amounts are identified on Schedule 4.6(a). 
  

 15 

 (c) The Material Contracts are in full force and effect and are the valid and binding obligations of the
Seller and, to the knowledge of the Seller, the other parties thereto, enforceable in accordance with their respective terms, subject only to bankruptcy, insolvency or similar laws affecting the rights of creditors generally and to general equitable
principles. Except as set forth on Schedule 4.6(c), each Material Contract is freely and fully assignable to the Purchaser without penalty or other adverse consequences and no consent of or notice to any third party (the “Consents”)
is required in order to validly assign and transfer the Material Contracts to Purchaser. The Seller has not received written notice or, to the Seller’s knowledge, oral notice of default by the Seller under any of the Material Contracts and no
event has occurred which, with the passage of time or the giving of notice or both, would constitute a default by the Seller thereunder. To the Seller’s knowledge, none of the other parties to any of the Material Contracts is in default
thereunder, nor has an event occurred which, with the passage of time or the giving of notice or both would constitute a default by such other party thereunder. The Seller has not received written notice or, to the Seller’s knowledge, oral
notice of the pending or threatened cancellation, revocation or termination of any of the Material Contracts, nor does it have knowledge of any facts or circumstances that could reasonably be expected to lead to any such cancellation, revocation or
termination. There are no negotiations of, attempts to renegotiate or outstanding rights to renegotiate any amounts paid or payable to the Seller under any Material Contract or any terms of any Material Contract. 
  
 4.7 Litigation. There is no Litigation or, to Seller’s knowledge,
investigation pending or, to the Seller’s knowledge, threatened against, or otherwise adversely affecting, the Business or the Purchased Assets or rights of Seller relating thereto, before any Court or Governmental Authority, nor does there
exist any reasonable basis for any such Litigation. The Seller is not subject to any outstanding Litigation or Orders, which, individually or in the aggregate, would prevent, hinder or delay the Seller from consummating the transactions contemplated
by this Agreement or any of the other Documents. There is no Litigation pending or, to the Seller’s knowledge, threatened that would be reasonably likely to call into question the validity of this Agreement or any of the other Documents or any
action taken or to be taken pursuant hereto or thereto, nor does there exist, to the Seller’s knowledge, any reasonable basis for any such Litigation. There is no Action by the Seller pending or threatened against any third party with respect
to the Business or any of the Purchased Assets. Any Litigation, including, but not limited to, the Litigation identified on Schedule 4.7, shall be deemed Excluded Liabilities. 
  
 4.8 Brokers. The Seller has not employed any financial advisor, broker or finder, and Seller has not incurred and
will not incur any broker’s, finder’s, investment banking or similar fees, commissions or expenses in connection with the transactions contemplated by this Agreement or any of the other Documents.  
  
 4.9 Compliance with Law. The Seller has conducted and continues to
conduct the Business, in compliance with all Laws, Orders and other requirements of Governmental Authorities, and is not in default or violation of any Law, Order, Regulation or other requirement of any Governmental Authority applicable to the
Business or the Purchased Assets. The Seller is not subject to any Orders that materially adversely affect, individually or in the aggregate, the Business, or the Purchased Assets. The Seller has not received at any time any notice or other
communication (whether written or, to the Seller’s knowledge, oral) from any Governmental Authority or other Person regarding any actual or alleged violation of or non-compliance with 
  

 16 

 any Law, Order, Regulation or other requirement to which the Business or any of the Purchased Assets is or has been
subject. There is no existing Law, Order, Regulation or other requirement of any Governmental Authority, and the Seller is not aware of any proposed Law, Order, Regulation or other such requirement which would prohibit or materially restrict the
Purchaser from, or otherwise materially adversely affect the Purchaser in, conducting the Business in the manner it is currently being conducted by the Seller in any jurisdiction in which such business is now conducted. No representation or warranty
is made in this Section 4.9 with respect to Laws, Orders and other requirements of Governmental Authorities relating to (i) Tax, which is treated in Section 4.25, (ii) Intellectual Property, which is treated in Section 4.26, (iii) Labor which is
treated in Section 4.27 or (iv) Environmental Laws which is treated in Section 4.28. 
  
 4.10 Certain Practices. Neither the Seller, nor any of its members, managers, or, to the Seller’s knowledge, any of its officers, employees or agents has, directly or indirectly, given or agreed to give
any material rebate, gift or similar benefit to any supplier, customer, governmental employee or other Person who was, is, or may be in a position to help or hinder the Seller (or assist in connection with any actual or proposed transaction by the
Seller). 
  
 4.11 Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement and the other Documents by the Seller, and the consummation of the transactions contemplated hereby or thereby, do not and will not require any consent, approval, authorization, Permit or Order
of, action by, filing with or notification to, any Governmental Authority except for any such matters that arise out of the status, or obligations under this Agreement, of Parent or the Purchaser. 
  
 4.12 No Other Agreements to Purchase. No person other than the
Purchaser has any written or oral agreement or option or any right or privilege (whether by Law, pre-emptive right or contract) capable of becoming an agreement or option for the purchase or acquisition from the Seller of any of the Purchased
Assets. 
  
 4.13 Receivables. Schedule 4.13 contains
an aged list of the Receivables as of the Interim Financial Statement Date. Except as reserved against on the Interim Financial Statements, all such Receivables constitute or will constitute, as the case may be, only valid, undisputed claims of the
Seller, that, to Seller’s knowledge, are not subject to valid claims of set-off or other defenses or counterclaims. All Receivables reflected on the Interim Financial Statements or arising from the date thereof until the Closing (subject to the
reserve for bad debts, if any, reflected on the Interim Financial Statements or otherwise accrued in accordance with the historical practices of the Seller) are, or will be, owned by Seller free and clear of any Liens, other than Permitted Liens,
and, to the Seller’s knowledge, are or will be good and have been collected or will be collectible in the aggregate face amounts thereof, without resort to litigation or extraordinary collection activity, within 90 days of the Closing
Date. 
  
 4.14 Financial Statements. The Seller has
previously furnished to the Purchaser, and attached hereto as Schedule 4.14 are (i) the financial statements compiled on a cash basis and consistently applied for the ten month period ended October 31, 2003 (the “Interim Financial
Statements”), and (ii) the unaudited balance sheet of the Seller as at December 31, 2002 and the related statements of income and cash flow and notes thereto for the fiscal years ended December 31, 2002 and December 31, 2001 (collectively, the
“Financial Statements”). All such 
  

 17 

 Financial Statements identified in clause (ii) above have been prepared in accordance with GAAP consistently applied
(with the exception, in the case of unaudited Financial Statements, the lack of notes thereto and normally recurring year-end audit adjustments that are not material either individually or in the aggregate). The Financial Statements fairly present
the financial position of the Business as of the dates thereof, and the results of its operations and cash flows for the periods ended on the dates thereof. Since October 31, 2003 (the “Interim Financial Statement Date”), (a) there has
been no material adverse change in the assets, liabilities or financial condition of the Business, and (b) none of the business, financial condition, operations or property of the Business has been materially adversely affected by any occurrence or
development, individually or in the aggregate, whether or not insured against. 
  
 4.15 Absence of Undisclosed Liabilities. The Seller is not engaged in any business other than the Business and there are no Liabilities of the Seller relating to the Business other than Liabilities (a)
reflected or reserved against on the Interim Financial Statements, (b) disclosed in Schedule 4.15, (c) Liabilities of the Seller incurred on or prior to the Interim Financial Statement Date that are not required by GAAP to be reflected on the
Interim Financial Statements, (d) Liabilities contemplated by this Agreement or incurred in connection with the negotiation, execution and delivery of this Agreement or (e) Liabilities of the Seller incurred since the Interim Financial Statement
Date in the ordinary course of business, consistent with past practice. 
  
 4.16 Conduct in the Ordinary Course; Absence of Changes. Since the Interim Financial Statement Date, the Business has been conducted in the ordinary course of business consistent with past practice, and there has been no change in
the Purchased Assets or the Business which has had, or could reasonably be anticipated to result in, a Material Adverse Effect. As amplification and not limitation of the foregoing, since the Interim Financial Statement Date, except as otherwise
contemplated by this Agreement and the other Documents, the Seller has not: 
  
 (a) permitted or allowed any of the Purchased Assets to be subjected to any Lien other than Permitted Liens, all of which will be discharged or provided for in a manner reasonably satisfactory to Purchaser prior to
Closing; 
  
 (b) except in the ordinary course of business
consistent with past practice, discharged or otherwise obtained the release of any Lien or paid or otherwise discharged any material Liability relating to the Business, other than Liabilities reflected on the Interim Financial Statements and
Liabilities incurred in the ordinary course of business consistent with past practice since the Interim Financial Statement Date; 
  
 (c) written off, written down or written up (or failed to write down or write up in accordance with GAAP consistent with past practice) the value of any
Receivables or revalued any Purchased Assets other than in the ordinary course of business consistent with past practice and in accordance with GAAP; 
  
 (d) made any change in any method of accounting or accounting practice or policy other than such changes required by GAAP; 
  

 18 

 (e) amended, terminated, cancelled or compromised any material claims of the Seller or waived any other
rights of substantial value to the Business; 
  
 (f) sold,
transferred, leased, subleased, licensed or otherwise disposed of any of the assets used in the Business, including the Purchased Assets, other than in the ordinary course of business consistent with past practices; 
  
 (g) suffered any loss of a major customer or cancellation of any material
order or the threat thereof; 
  
 (h) made any material change in
the Business or operations of the Business or in the manner of conducting the Business, or suffered any Material Adverse Effect; 
  
 (i) done any of the following: (i) made any grant of any severance or termination pay to any member, manager, officer, employee or individual providing
services to the Business, (ii) entered into any employment, deferred compensation, change in control or other similar agreement (or any amendment to any such existing agreement) with any member, manager, officer, employee or individual providing
services to the Business, (iii) increased or promised to increase any benefits payable under any existing severance or termination pay policies or employment agreements, or (iv) increased or promised to increase any compensation, bonus or other
benefits payable to members, managers, officers, employees or individuals providing services to the Business; 
  
 (j) made any loan, advance or capital contribution to or investment in, or guaranteed any indebtedness of or otherwise incurred any Indebtedness on behalf
of, any third Person other than advances to employees of the Seller in respect of ordinary and necessary business expenses made in the ordinary course of business consistent with past practice; 
  
 (k) incurred or become subject to any Liabilities, except Liabilities
contemplated by this Agreement or incurred in connection with the negotiation, execution and delivery of this Agreement and Liabilities incurred in the ordinary course of business consistent with past practice; 
  
 (l) instituted or settled any Litigation; 
  
 (m) disclosed any proprietary or confidential information of the Business to
any Person not associated with the Seller other than in the ordinary course of business and pursuant to a binding non-disclosure agreement; 
  
 (n) made any single capital expenditure or commitment therefor in excess of $5,000, or aggregate capital expenditures or commitments therefor in excess of
$5,000; 
  
 (o) entered into any joint venture, partnership or
similar arrangement; 
  
 (p) made or changed any Tax election,
filed any amended Tax Returns, entered into any closing agreement relating to Taxes, settled or consented to any claims with respect to Taxes, surrendered any right to claim a refund of Taxes, settled or compromised any Tax liability or consented to
any extension or waiver of the limitation period applicable to any claims with respect to Taxes; 
  

 19 

 (q) failed to pay any creditor any amount owed to such creditor with respect to the Business when due
(including any grace period), which other than the Excluded Liabilities, will be discharged or addressed prior to the Closing in a manner reasonably satisfactory to the Purchaser; 
  
 (r) entered into any agreement, arrangement or transaction with any of its members, managers, officers, employees or
Affiliates (or with any relative, beneficiary, spouse or Affiliate of any such Person); 
  
 (s) terminated, discontinued, closed or disposed of any plant, facility or other business operation, or laid off any employees or implemented any early retirement, separation or program providing early retirement
benefits or announced or planned any such action or program for the future; 
  
 (t) entered into or committed to enter into any contract or any transaction in connection with the Business except in the ordinary course of business; 
  
 (u) granted any assignment or license of, or otherwise transferred any Intellectual Property or permitted to lapse,
abandoned or otherwise terminated its rights to any Intellectual Property (or any registration or grant therefor or any application relating thereto) in which the Seller has any right, title, interest or license; 
  
 (v) allowed any Permit that was issued to the Seller and relates to the
Business or the Purchased Assets to lapse or terminate; 
  
 (w)
failed to maintain the property and equipment used in the Business in good repair and operating condition in accordance with past practice, ordinary wear and tear excepted; 
  
 (x) suffered any casualty loss or damage with respect to any of the Purchased Assets which in the aggregate have a
replacement cost of more than $5,000, whether or not such losses or damage shall have been covered by insurance; 
  
 (y) amended, modified or consented to the termination of any Contract or the Seller’s rights thereunder; 
  
 (z) amended or restated its Articles of Organization; or 
  
 (aa) agreed, whether in writing or otherwise, to take any of the actions
specified in this Section 4.16 or entered into any commitment to effect any of the actions specified in this Section 4.16, except as expressly contemplated by this Agreement and the other Documents. 
  
 4.17 [Intentionally left blank] 
  

 20 

 4.18 Customers. Listed in Schedule 4.18 are the names and addresses of all of the customers
of the Business for the period commencing January 1, 2003 and ending on October 31, 2003 and the amount which each such customer was invoiced during such period. As of the date of this Agreement, the Seller has not received any written notice or, to
the Seller’s knowledge, oral notice and, except for the expiration of the term of any applicable Contract between the Seller and such customers (provided that if such customer has notified Seller of its intent not to renew, such customer shall
be identified on Schedule 4.18), has no reason to believe that any such customer of the Seller has ceased, or will cease, to use the equipment, goods or services of the Seller or has substantially reduced, or will substantially reduce, the
use of such equipment, goods or services at any time during the term of the Contract relating to such equipment, goods or services. 
  
 4.19 Suppliers. Listed in Schedule 4.19 are the names and addresses of all of the material suppliers of supplies, merchandise and other
goods or services for the Business for the period commencing January 1, 2003 and ending on October 31, 2003 and the amount which each such supplier invoiced the Seller during such period. The Seller has not received any notice and has no reason to
believe that any such supplier will not sell supplies, merchandise and other goods or services to the Seller or the Purchaser at any time after the Closing Date on terms and conditions similar to those imposed on current sales to the Business,
subject to general and customary price increases. 
  
 4.20 Real
Property. Seller does not own any real property.  
  
 4.21 Personal Property. 
  
 (a) Schedule
4.21 lists each material item or distinct group of machinery, equipment, tools, supplies, furniture, fixtures, vehicles, rolling stock and other tangible personal property used in the Business and owned or leased by the Seller (the
“Tangible Personal Property”), and the location thereof. 
  
 (b) The Seller has delivered to the Purchaser correct and complete copies of all leases for Tangible Personal Property and any and all material ancillary documents pertaining thereto (including, but not limited to, all amendments, consents
and evidence of commencement dates and expiration dates). With respect to each of such leases: 
  
 (i) such lease, together with all ancillary documents delivered pursuant to the first sentence of this Section 4.21(b), is legal, valid,
binding, enforceable and in full force and effect and represents the entire agreement between the respective lessor and lessee with respect to such property; 
  

(ii) subject to obtaining the consents identified in Schedule 4.6(c), such lease will not cease to be legal, valid, binding,
enforceable and in full force and effect on terms identical to those currently in effect as a result of the consummation of the transactions contemplated by this Agreement and the other Documents, nor will the consummation of the transactions
contemplated by this Agreement and the other Documents constitute a breach or default under such lease or otherwise give the lessor a right to terminate such lease; 
  

 21 

 (iii) with respect to each such lease, (A) the Seller has not received any notice of
cancellation or termination under such lease and, subject to obtaining the consents identified in Schedule 4.6(c) and subject to expiration of the term of any applicable Contract, no lessor has any right of termination or cancellation under
such lease or sublease except in connection with the default of the Seller thereunder, (B) the Seller has not received any notice of a breach or default under such lease, which breach or default has not been cured, and (C) the Seller has not granted
to any other Person not a party to such lease or an affiliate or subsidiary of such party any rights, adverse or otherwise, under such lease; and 
  
 (iv) neither the Seller, nor, to Seller’s knowledge, any other party to such lease, is in breach or default in any material respect,
and, to Seller’s knowledge, subject to obtaining the consents identified in Schedule 4.6(c), no event has occurred that, with notice or lapse of time or both would constitute such a breach or default or permit termination, modification
or acceleration under, such lease. 
  
 (c) Subject to obtaining
the consents identified in Schedule 4.6(c), the Seller has, and upon the Closing will continue to have, the full right to exercise any renewal options contained in the leases pertaining to the Tangible Personal Property on the terms and
conditions therein and upon due exercise would be entitled to enjoy the use of each item of leased Tangible Personal Property for the full term of such renewal options. 
  
 (d) All Tangible Personal Property is adequate and, to the Seller’s knowledge, usable for the use and purposes for
which it is currently used, is in good operating condition, normal wear and tear excepted, and has been maintained and repaired in accordance with good business practice as reasonably determined by the Seller. 
  
 4.22 Purchased Assets. 
  
 (a) The Seller (i) owns, leases or has the legal right to use all the
properties and assets currently used in the conduct of the Business, and (ii) with respect to contractual rights, is a party to and enjoys the right to the benefits of all Contracts identified in Schedule 4.6(a), all of which properties, assets and
rights, excluding the Excluded Assets, constitute Purchased Assets. The Seller has good and valid title to, or, in the case of leased or subleased Purchased Assets, valid and subsisting leasehold interests in, all the Purchased Assets, free and
clear of all Liens. 
  
 (b) Except for the Excluded Assets, the
Purchased Assets constitute all of the properties, assets and rights used or held in the Business. At all times, the Seller has caused the Purchased Assets to be maintained, in all material respects, in accordance with good business practice as
reasonably determined by the Seller, and all the Purchased Assets are in good operating condition and repair, normal wear and tear excepted, and are, to the Seller’s knowledge, suitable for the purposes for which they are currently used.

  
 (c) Subject to obtaining the consents identified in
Schedule 4.6(c), the Seller has the complete and unrestricted power and unqualified right to sell, assign, transfer, convey and deliver the Purchased Assets to the Purchaser without penalty or other adverse consequences. Following the
consummation of the transactions contemplated by this Agreement and the other Documents and the execution of the instruments of transfer contemplated by this Agreement, the Purchaser will own, with good and valid title, or lease, under valid and
subsisting leases, or 
  

 22 

 otherwise acquire the interests of the Seller in the Purchased Assets, free and clear of all Liens (other than Liens
occasioned by the leases to which such Purchased Assets may be subject, as are identified on Schedule 4.6(a)), and without incurring any penalty or other adverse consequence, including, without limitation, any increase in rentals, royalties,
or license or other fees imposed as a result of, or arising from, the consummation of the transactions contemplated by this Agreement and the other Documents. 
  

4.23 Insurance. The Seller has furnished or made available to the Purchaser true and complete copies of all insurance policies and fidelity
bonds covering the assets, business, equipment, properties and operations of the Seller relating to the Business. All such insurance policies are in full force and effect and will remain in full force and effect with respect to all events occurring
prior to the Closing. As of the date of this Agreement, such policies of insurance and bonds are of the type and in amounts customarily carried by Persons conducting businesses similar to that of the Seller. 
  
 4.24 Permits. Schedule 4.24 lists all Permits required in
connection with the conduct of the Business. Each of such Permits will be duly and validly transferred to the Purchaser in connection with the consummation of the transactions contemplated herein. The Seller is, and at all times has been, in
material compliance with all conditions and requirements imposed by the Permits and the Seller has not received any written notice (or to the Seller’s knowledge, oral notice) of, and has no reason to believe, that any appropriate authority
intends to cancel or terminate any of the Permits or that valid grounds for such cancellation or termination exist. The Seller owns or has the right to use the Permits in accordance with the terms thereof without any conflict or alleged conflict or
infringement with the rights of any other Person. Each of the Permits is valid and in full force and effect. 
  
 4.25 Taxes. All tax reports and returns required to be filed relating to the Business and the Purchased Assets have been filed with the appropriate
Governmental Authority and all taxes, penalties, interest, deficiencies, assessments and charges due as reflected on the filed returns or claimed to be due by such Governmental Authorities has been paid, except for deficiencies, assessments or
claims which are being contested in good faith and which in the aggregate are not material, and as are identified on Schedule 4.25 and that all such returns and reports are true, correct and complete in all material respects. In addition,
Seller has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, member or other third party, and all Forms W-2 and 1099 requiredwith
respect thereto have been or will be properly completed and timely filed.  
  
 4.26 Intellectual Property. 
  
 (a) Except as set forth in Schedule 4.26(d), the Seller does not own Intellectual Property (exclusive of shrink wrap Software having an acquisition price of less than $5,000), including, without limitation, Patents, Trademarks, trade
names, domain name registrations and Copyrights, which is or reasonably may become material to the Business as it is currently conducted, any of the Purchased Assets or any of the Assumed Liabilities. 
  

 23 

 (b) The Seller is not a party to or bound by any license agreements (other than license agreements in
connection with shrink wrap Software having an acquisition price of less than $5,000) granting any right to use or practice any rights under any Intellectual Property, whether the Seller is the licensee or licensor thereunder, or any assignments,
consents, forbearances to sue, judgments, Governmental Orders, settlements or similar obligations relating to any Intellectual Property (collectively, the “License Agreements”) which are or may become material to the Business, any of the
Purchased Assets or any of the Assumed Liabilities. 
  
 (c) The
conduct of the Business as currently conducted does not, to the Seller’s knowledge, infringe upon any Intellectual Property rights of any third party. The Seller has not been notified by any third party of any allegation that Seller’s
activities or the conduct of the Business infringes upon, violates or constitutes the unauthorized use of the Intellectual Property rights of any third party. No third party has notified the Seller that (i) any of such third party’s
Intellectual Property rights are infringed, or (ii) the Seller requires a license to any of such third party’s Intellectual Property rights. 
  
 (d) Schedule 4.26(d) lists all Software (other than off-the-shelf software applications programs having an acquisition price of less than $5,000)
which is owned, licensed to or by the Seller, leased to or by the Seller, or otherwise used by the Seller, and identifies which Software is owned, licensed, leased or otherwise used, as the case may be. Other than the Software listed in Schedule
4.26(d) and off-the-shelf software applications programs having an acquisition price of less than $5,000, all Software which the Seller owns and which is material to the operations of the Business was either developed (i) by employees of the
Seller within the scope of their employment, or (ii) by independent contractors who have assigned their rights to the Seller pursuant to enforceable written agreements. 
  
 (e) To the Seller’s knowledge, all Software owned by the Seller, and all Software licensed from third parties by the
Seller, is free from any significant defect or programming or documentation error, operates and runs in a reasonable and efficient business manner, conforms to the specifications thereof, if applicable, and, with respect to the Software owned by the
Seller for which Seller owns the source code, the applications can be compiled from their associated source code without undue burden. The Seller has furnished the Purchaser with all required documentation relating to use, maintenance and operation
of the Software. 
  
 4.27 Labor Matters. 
  
 (a) There are no employment, consulting, severance pay, continuation pay,
termination or indemnification agreements or other similar agreements of any nature (whether in writing or not) between the Seller and any current or former member, manager, officer or employee of or consultant to, the Seller. 
  
 (b) All managers, officers, management employees and technical and
professional employees of the Seller are under written obligation to the Seller to maintain in confidence all confidential or proprietary information acquired by them in the course of their employment and to assign to the Seller all inventions made
by them within the scope of their employment during such employment and for a reasonable period thereafter. 
  
 (c) The Seller is not a party to any collective bargaining agreement and there are no labor unions or other organizations representing, purporting to
represent or attempting to 
  

 24 

 represent any employees of the Seller. The Seller is currently in compliance with all applicable Laws relating to the
employment of labor, including those related to wages, hours and the payment and withholding of taxes and other sums as required by the appropriate Governmental Authority and has withheld and paid to the appropriate Governmental Authority or is
holding for payment not yet due to such Governmental Authority all amounts required to be withheld from employees of the Seller and is not liable for any arrears of wages, taxes, penalties or other sums for failure to comply with any of the
foregoing. There is no claim with respect to payment of wages, salary or overtime pay that has been asserted or is now pending or, to the Seller’s knowledge, threatened before any Governmental Authority with respect to any Persons currently or
formerly employed by the Seller. 
  
 4.28 Environmental
Matters. The Seller has all Environmental Permits which are or are reasonably expected to be required under Environmental Laws. The Seller is in compliance with all terms and conditions of such Environmental Permits. The Seller is in compliance
with all Environmental Laws and any other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in such Environmental Laws or contained in any Regulation, code, plan,
governmental Order, notice or demand letter issued, entered, promulgated or approved thereunder. As of the date hereof, to the Seller’s knowledge, there has not been any event, condition, circumstance, activity, practice, incident, action or
plan which will interfere with or prevent continued compliance with the terms of such Environmental Permits or which would give rise to any liability to the Purchaser under any Environmental Law or give rise to any common law or statutory liability,
based on or resulting from the Seller’s or its agents’ manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, or release into the environment, of any Hazardous
Substance. The Seller has taken all actions necessary under applicable requirements of Environmental Law to register any products or materials required to be registered by the Seller (or any of its agents acting in such capacity) thereunder.

  
 4.29 Certain Interests. Except as set forth on
Schedule 4.29, no member, manager or officer of the Seller and no relative or spouse (or relative of such spouse) who resides with, or is a dependent of, any such member, manager or officer: 
  
 (i) has any direct or indirect financial interest in any
competitor, supplier, customer or licensee of the Seller, provided, however, that the ownership of securities representing no more than one percent of the outstanding voting power of any competitor, supplier, customer or licensee, and
which are also listed on any national securities exchange or traded in the national over-the-counter market, shall not be deemed to be a “financial interest” so long as the Person owning such securities has no other connection or
relationship with such competitor, supplier, customer or licensee; or 
  
 (ii) owns, directly or indirectly (other than through an equity interest in the Seller), in whole or in part, or has any other interest in any tangible or intangible property which the Seller uses in the conduct of
the Business or otherwise. 
  
 4.30 Disclosure. No
representation or warranty of the Seller contained in this Agreement and the other Documents, and no statement, report or certificate furnished by or on 
  

 25 

 behalf of the Seller to the Purchaser or its agents pursuant to this Agreement or any of the other Documents, contains or
will contain any untrue statement of a material fact or omits or, to Seller’s knowledge, will omit to state a material fact necessary in order to make the statements contained herein or therein not misleading. 
  
 4.31 Accounts; Lockboxes; Safe Deposit Boxes; Powers of Attorney.
Schedule 4.31 is a true and complete list of (a) the names of each bank, savings and loan association, securities or commodities broker or other financial institution in which the Seller has an account, including cash contribution accounts,
and the names of all persons authorized to draw thereon or have access thereto, and (b) the names of all Persons, if any, holding powers of attorney from the Seller relating to the Business or the Seller. At the time of the Closing, the Seller shall
not have any such account, lockbox or safe deposit box other than those listed in Schedule 4.31, nor shall any additional Person have been authorized, from the date of this Agreement, to draw thereon or have access thereto or to hold any such
power of attorney, without the prior written consent of the Purchaser. The Seller has not commingled monies or accounts of the Seller with other monies or accounts of the members or any Affiliates of the Seller. At the time of the Closing, all
monies and accounts of the Seller shall be held by, and be accessible only to, the Seller. 
  
 4.32 Existing Equipment. Schedule 4.32 is a true and complete list of all Existing Equipment, as such term is defined in the Halsey Lease in Section 7.1(m)(vii). 
  
 4.33 Purchase For Investment. The Seller is acquiring the Shares and
will acquire the Additional Shares, if any, for investment for its own account and not with a view to the distribution or public offering thereof within the meaning of the Securities Act. The Seller understands that the Shares delivered at the
Closing have not been registered under the Securities Act and may not be sold or transferred without such registration, which registration shall occur in accordance with the terms and provisions of the Registration Rights Agreement, or an exemption
therefrom. The Seller is sufficiently experienced in financial and business matters to be capable of evaluating the risk of investment in the Shares and to make an informed decision relating thereto. The Seller is an “Accredited Investor”
as defined in Regulation D under the Securities Act. Prior to the execution and delivery of this Agreement, the Seller has had the opportunity to ask questions of and receive answers from representatives of Parent. 
  
 ARTICLE V 
  
 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 
  
 In order to induce the Seller to enter into this Agreement and to consummate the transactions contemplated hereby, each of
the Parent and the Purchaser represents and warrants to the Seller as follows: 
  
 5.1 Organization and Qualification. The Parent is a corporation duly organized validly existing and in good standing under the laws of the State of Delaware. The Purchaser is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of New York. Each of the Parent and the Purchaser is duly licensed or qualified to transact business as a corporation or a foreign limited liability company, as the case may
be, and in good standing in those jurisdictions where its failure to be so qualified would have a material 
  

 26 

 adverse effect on the business, operations, assets or liabilities (including, without limitation, contingent
liabilities), results of operations or the condition (financial or otherwise) of Parent and its Subsidiaries taken as a whole. 
  
 5.2 Authorization; Enforceability. Each of the Parent and the Purchaser has the corporate or limited liability company, as the case may be, power
and authority to execute, deliver and perform this Agreement and the other Documents, as applicable. The execution, delivery and performance of this Agreement and the other Documents and the consummation of the transactions contemplated herein and
therein have been duly authorized and approved by the Parent and the Purchaser, as applicable, and no other corporate or limited liability company, as the case may be, action on the part of the Parent or the Purchaser is necessary in order to give
effect thereto. This Agreement and each of the other Documents to be executed and delivered by the Parent and the Purchaser, as applicable, have been (or will be when executed and delivered by the parent and the Purchaser) duly executed and
delivered by, and constitute the legal, valid and binding obligations of, each of them, enforceable against each of them, in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought. 
  
 5.3 No Violation or Conflict. Except as set forth in Schedule
5.3, none of (a) the execution and delivery by the Parent and Purchaser of this Agreement and the other Documents to be executed and delivered by the Parent and the Purchaser, as applicable, (b) consummation by the Parent and Purchaser of the
transactions contemplated by this Agreement and the other Documents, or (c) the performance of this Agreement and the other Documents required by this Agreement to be executed and delivered by the Parent and the Purchaser at the Closing, will (i)
conflict with or violate the Certificate of Incorporation or By-Laws of the Parent or conflict with or violate the Articles of Organization or Operating Agreement of the Purchaser, (ii) conflict with or violate any Law, Order or Permit applicable to
the Parent or the Purchaser or by which Parent’s or Purchaser’s properties or assets are bound or affected or (iii) result in any breach or constitute a default under any material contract to which the Parent or the Purchaser is a party or
which would impact the Purchaser or Parent’s ability to fulfill its obligations under the Agreement and the other Documents. 
  
 5.4 Governmental Consents and Approvals. Except as set forth in Schedule 5.4, the execution, delivery and performance of this Agreement and
the other Documents by the Parent and Purchaser do not and will not require any consent, approval, authorization, Permit or other order of, action by, filing with or notification to, any Governmental Authority. 
  
 5.5 Brokers. Neither the Parent nor the Purchaser has employed any
financial advisor, broker or finder, and neither the Parent nor the Purchaser has incurred or will incur any broker’s, finder’s, investment banking or similar fees, commissions or expenses in connection with the transactions contemplated
by this Agreement or any of the other Documents. 
  
 5.6
Issuance of the Shares. The Shares and the Additional Shares that are being issued to the Seller hereunder, when issue livered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly
issued, fully paid, 
  

 27 

 nonassessable, free of restrictions on transfer other than restrictions on transfer under the other Documents and under
applicable state and federal securities laws. Such Shares and Additional Shares will not be issued in violation of any preemptive rights, rights or first refusal or any other Contract to which Parent is a party relating to equity securities of
Parent. 
  
 5.7 SEC Reports and Financial Statements.

  
 (a) As of their respective dates, each form, report, schedule,
registration statement, definitive proxy statement and other document (together with all amendments thereof and supplements thereto) filed by Parent or any of its subsidiaries with the SEC since January 1, 2001 (as such documents have since the time
of their filing been amended or supplemented, the “Parent SEC Reports”), which are all of the documents that Parent and its subsidiaries were required to file with the SEC since such date: (i) complied as to form in all material respects
with the requirements of the Securities Act, or the Exchange Act, as the case may be, and if applicable, the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder (the “Sarbanes-Oxley Act”), and (ii) did not
contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading except to
the extent that any statement or omission was corrected in or superceded by information contained in a later dated filing. The audited consolidated financial statements and unaudited interim consolidated financial statements (including, in each
case, the notes, if any, thereto) included in the Parent SEC Reports (the “Parent Financial Statements”) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the
SEC, including, without limitation, the Sarbanes-Oxley Act, applicable thereto, were prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto and except with respect to unaudited statements as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited interim financial statements, to normal, recurring year-end audit adjustments)
the consolidated financial position of the Parent and its consolidated Subsidiaries as at the respective dates thereof and the consolidated results of their operations and cash flows for the respective periods then ended. Each subsidiary of Parent
is treated as a consolidated subsidiary of Parent in the Parent Financial Statements for all periods covered thereby. 
  
 (b) Parent has maintained disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act; such controls and procedures were
effective to ensure that all material information concerning Parent and its subsidiaries was made known on a timely basis to the individuals responsible for the preparation of Parent’s filings with the SEC and other public disclosure documents.

  
 5.8 Capitalization. As of the date hereof, the
authorized capital of the Parent consists of: 
  
 (a)
2,000,000,000 shares of Parent Common Stock, 40,805,434 shares of which are issued and outstanding, and 5,784,594 shares of which have been reserved for issuance upon conversion of outstanding options and warrants (including options granted pursuant
to the Stock 
  

 28 

 Plans (as hereinafter defined)). All of the outstanding shares of Parent Common Stock have been duly authorized, validly
issued, fully paid and are nonassessable. 
  
 (b) The Parent has
reserved 5,587,968 shares of Parent Common Stock for issuance to officers, directors, employees and consultants of the Parent pursuant to its equity incentive plans duly adopted by the board of directors and approved by the stockholders of the
Parent (the “Stock Plans”). Of such reserved shares of Parent Common Stock, options and restricted stock to purchase 5,128,424 shares have been granted and are currently outstanding, and 459,544 shares remain available for issuance to
officers, directors, employees and consultants pursuant to the Stock Plan. 
  
 ARTICLE VI 
  
 PRE-CLOSING COVENANTS 
  
 6.1 Covenants of
Seller. From the date of this Agreement until the Closing, in addition to all of the other covenants and agreements of the Seller contained herein, the Seller shall comply with the following covenants: 
  
 (a) Operation of the Business. The Seller shall continue to carry on
the Business in the usual and ordinary course and consistent with recent practices in compliance with applicable Laws and will use reasonable commercial efforts to preserve its business, operations and the goodwill of its customers, employees and
others having business relations with it. Without limiting the generality of the foregoing, without the prior written consent of the Purchaser, the Seller shall not take any action that, if taken prior to the date of this Agreement and not disclosed
hereunder, would cause any of the representations and warranties of the Seller in Section 4.16 hereof to be untrue. 
  
 (b) Access to Facilities, Files and Records. The Seller will give or cause to be given to the officers, employees, accountants, counsel and
authorized representatives of the Purchaser and Parent (i) reasonable access during normal business hours to the management personnel, property, contracts and other books and records and files relating to the Business, and (ii) all such other
information relating to the transaction contemplated by this Agreement as the Purchaser or Parent may reasonably request, and shall otherwise cooperate and assist with the Purchaser’s investigation of the properties, assets, liabilities and
financial condition of the Seller. 
  
 (c) Notice of
Proceedings. Seller will promptly notify the Purchaser and Parent in writing upon (i) becoming aware of any Order or any Action praying for any order or decree restraining or enjoining the consummation of the transactions contemplated hereby or
by any of the other Documents, or (ii) receiving any notice from any Court or any Governmental Authority of its intention (x) to institute a suit or proceeding to restrain or enjoin the consummation of the transactions contemplated hereby or
thereby, or (y) to nullify or render ineffective this Agreement or any of the other Documents. 
  
 (d) Reasonable Commercial Efforts. Subject to the terms of this Agreement, the Seller agrees to use its reasonable commercial efforts to take, or cause to be taken, all actions, and to do, or cause to be done,
all things necessary under applicable Laws to permit consummation of the transactions contemplated hereby and by the other Documents as promptly 
  

 29 

 as practicable and otherwise enable consummation of the transactions contemplated hereby and thereby, including
satisfaction of the conditions set forth in Section 7.1 hereof. 
  
 (e) Notification of Certain Matters. The Seller shall give prompt notice to the Purchaser and Parent of any fact, event or circumstance known to it that (i) is reasonably likely to result in any Material Adverse Effect, or (ii) would
cause or constitute a breach of any of the representations, warranties, covenants or agreements of the Seller contained herein or in any of the other Documents. In connection therewith, the Seller may from time to time prior to or on the Closing
Date, by notice in accordance with this Agreement, supplement or amend the Disclosure schedule, including one or more supplements or amendments to (a) correct any matter that would otherwise constitute a breach of any representation, warranty or
covenant contained herein, or (b) to reflect information received by the Seller after the date of this Agreement on or prior to the Closing Date. Notwithstanding any other provision hereof to the contrary, the Disclosure Schedule and the
representations and warranties made by the Seller shall be deemed for all purposes other than Article VIII hereof to exclude such supplements and amendments and shall be deemed for all purposes of Article VIII hereof to include and reflect such
supplements and amendments as of the date hereof and at all time thereafter, including the Closing Date. 
  
 6.2 Covenants of the Purchaser and Parent. From the date of this Agreement until the Closing, in addition to all of the other covenants and
agreements of the Purchaser and the Parent contained herein, each of the Purchaser and the Parent shall comply with the following covenants: 
  
 (a) Notice of Proceedings. The Purchaser and/or Parent will promptly notify the Seller in writing upon (i) becoming aware of any Order or any
Action praying for an order or decree restraining or enjoining the consummation of the transactions contemplated hereby or by any of the other Documents, or (ii) receiving any notice from any Court or Governmental Authority of its intention (x) to
institute a suit or proceeding to restrain or enjoin the execution of this Agreement or the consummation of the transactions contemplated hereby or thereby, or (y) to nullify or render ineffective this Agreement or any of the other Documents.

  
 (b) Reasonable Commercial Efforts. Subject to the terms
of this Agreement, each of the Purchaser and Parent agrees to use all reasonable commercial efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary under applicable Laws to permit consummation of the
transactions contemplated hereby and by the other Documents as promptly as practicable and otherwise enable consummation of the transactions contemplated hereby and thereby, including satisfaction of the conditions set forth in Section 7.2 hereof.

  
 (c) Notification of Certain Matters. The Purchaser
and/or Parent shall give prompt notice to the Seller of any fact, event or circumstance known to it that (i) is reasonably likely to result in any material adverse effect on the business, operations, assets or liabilities (including, without
limitation, contingent liabilities), results of operations or the condition (financial or otherwise) of Parent and its Subsidiaries taken as a whole, or (ii) would cause or constitute a breach of any of its representations, warranties, covenants or
agreements contained herein or in any of the other Documents. 
  

 30 

 ARTICLE VII 
  
 CONDITIONS PRECEDENT TO CLOSING; 
 POST-CLOSING COVENANTS 
  
 7.1 Conditions Precedent to the Obligations of Parent and Purchaser. The obligations of the Parent and the Purchaser, as applicable, to consummate the transactions described in this Agreement and any and all liability of the Parent
or the Purchaser, as applicable, to the Seller shall be subject to the fulfillment on or before the Closing of the following conditions precedent, each of which may be waived by the Purchaser in its sole discretion: 
  
 (a) Representations and Warranties. The representations and warranties
of the Seller contained in this Agreement (i) that are qualified as to materiality and (ii) that are in Sections 4.3, 4.4, 4.7, 4.9, 4.11, 4.16, 4.18, 4.22 and 4.33, shall be true and correct in all respects and such other representations and
warranties that are either not in the enumerated sections or are not so qualified as to materiality shall be true and correct in all material respects, in each case as of the date of this Agreement and the Closing Date, with the same force and
effect as if made as of the Closing Date, other than such representations and warranties that are expressly made as of another date, and the Purchaser and Parent shall have received a certificate from the Seller to such effect signed by a duly
authorized officer thereof. 
  
 (b) Covenants. The Seller
shall have performed and complied (i) in all material respects with the covenants set forth in Sections 6.1(b), (c) and (e) of this Agreement, and (ii) in all respects with the covenants set forth in Sections 6.1(a) and (d) of this Agreement, to be
performed or complied with by it prior to or on the Closing and the Purchaser and the Parent shall have received a certificate from the Seller to such effect signed by a duly authorized officer thereof. 
  
 (c) No Adverse Change. No events or conditions shall have occurred
which individually or in the aggregate, have had, or may reasonably be anticipated by the Purchaser to give rise to any material adverse effect on the business, operations, assets or liabilities (including, without limitation, contingent
liabilities), results of operations or the condition (financial or otherwise) of the Seller. 
  
 (d) Governmental Approvals. The Purchaser shall have received evidence, in each instance in form and substance reasonably satisfactory to it, that any and all approvals from Governmental Authorities required
for the lawful consummation of the transactions contemplated by this Agreement and the other Documents shall have been obtained. 
  
 (e) Consents. The Purchaser shall have received evidence, each in form and substance satisfactory to it in its sole discretion, that all consents
and approvals from third parties which are identified in Schedule 2.4(c) have been obtained. 
  
 (f) Opinion of Counsel. The Parent and the Purchaser shall have received from Wolf, Block, Schorr and Solis-Cohen LLP, special counsel to the Seller, an opinion dated the Closing Date, in substantially the form
attached hereto as Exhibit C hereto. 
  

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 (g) No Actions, Suits or Proceedings. No Order of any Court or Governmental Authority shall have
been issued restraining, prohibiting, restricting or delaying, the consummation of the transactions contemplated by this Agreement and the other Documents. No Litigation shall be pending or, to the knowledge of the parties to this Agreement,
threatened, before any Court or Governmental Authority (i) to restrain, prohibit, restrict or delay, or to obtain damages or a discovery order in respect of this Agreement or any of the other Documents or the consummation of the transactions
contemplated hereby or thereby, or (ii) which has had or reasonably may be expected to have a Material Adverse Effect on the Business. No insolvency proceeding of any character, including, without limitation, bankruptcy, receivership,
reorganization, dissolution or arrangement with creditors, voluntary or involuntary, affecting the Seller shall be pending, and the Seller shall not have taken any action in contemplation of, or which would constitute the basis for, the institution
of any such proceedings. 
  
 (h) Delivery of Purchased
Assets. The Seller shall have delivered possession of the Purchased Assets to the Purchaser, and shall have made all intangible Purchased Assets available to Purchaser. 
  
 (i) Amendment to Credit Agreement. The Parent shall have entered into an Eleventh Amendment to the Amended and
Restated Credit Agreement, the terms and provisions of which shall be acceptable to the Seller. 
  
 (j) Permits. In order to facilitate the closing of the Construction Permit and Fire Department Permit (as referenced on Schedule 4.24), the Seller
shall have had its general contractor update the drawings for the leased space under the Halsey Lease with “as-built” conditions. The Seller shall have submitted such “as-built” drawings to its architect/engineer, who shall have
updated the drawings subject to the Parent’s reasonable approval. The architect/engineer shall have successfully submitted the updated “as-built” drawings to the Newark Department of Buildings for approval.  
  
 (k) Escrow Agreement. The Seller, the Purchaser, the Parent and the
Escrow Agent shall have entered into an escrow agreement with respect to the escrow of certain of the Shares, in substantially the form of Exhibit D attached hereto (the “Escrow Agreement”). 
  
 (l) Due Diligence. The Parent and Purchaser shall have
completed all of its business, legal and accounting due diligence with respect to the Business and the Purchased Assets, including, without limitation, an electrical audit, and shall, in its sole and absolute judgment, be satisfied with the results
thereof. 
  
 (m) Closing Documents. The Seller shall
have delivered to the Purchaser the resolutions, certificates, documents and instruments set forth below: 
  
 (i) each of the other Documents to which it is a party; 
  
 (ii) a copy of the resolutions duly and validly adopted by the members/managers of the Seller, certified by
its Secretary, authorizing and approving the execution and delivery and performance of this Agreement, the Ancillary Agreements and the other Documents and the transactions contemplated hereby and thereby and the acts of the officers and employees
of the Seller in carrying out the terms and provisions 
  

 32 

 hereof and thereof; 
  
 (iii) all of the books, data, documents, instruments and other records relating to the Business of the
Seller set forth on Schedule 2.1(a); 
  
 (iv) certificates issued by the Secretary of State or other similar appropriate governmental department, as of a date not more than five Business Days prior to the Closing, as to the good standing of the Seller in its jurisdiction of
organization and in each other jurisdiction in which it is qualified to do business, and, as to its jurisdiction of organization, certifying its Articles of Organization; 
  
 (v) a certificate of the Secretary of the Seller certifying the names and signatures of the officers of the
Seller authorized to sign this Agreement and the Documents; 
  
 (vi) a Non-Competition and Non-Disclosure Agreement with each of Oskar Brecher and Adam M. Brodsky in substantially the form of Exhibit E attached hereto; 
  
 (vii) a Consent to Assignment, in substantially the form of
Exhibit F attached hereto, executed by Market Halsey Urban Renewal, LLC (“Landlord”) with respect to the Lease Agreement, dated August 29, 1998, as amended, between Landlord and the Seller, as tenant (the “Halsey Lease”);

  
 (vii) a Consent to Assignment executed by
Reach Services (USA) Inc. (as assignee of Telstra, Inc.) (“Reach”) with respect to the Service Agreement, dated as of October 7, 1999, between Seller and Reach, as amended (the “Reach Consent”); 
  
 (ix) an Estoppel Certificate, in substantially the form of
Exhibit G attached hereto, executed by Williams Communications, LLC (as assignee of Ameritech Global Gateway Services, Inc., “Williams”) with respect to the Equipment Space Sublease between Seller and Williams, dated October 30,
1998 (as amended, the “Sublease”); and 
  
 (x) such other documents and instruments as the Parent, Purchaser or its counsel may reasonably request. 
  
 7.2 Conditions Precedent to the Obligations of the Seller. The obligation of the Seller to consummate the transactions described in this Agreement
and any and all liability of the Seller to each of the Parent and the Purchaser shall be subject to the fulfillment on or before the Closing Date of the following conditions precedent, each of which may be waived by the Seller in its sole respective
discretion: 
  
 (a) Representations and Warranties. The
representations and warranties of the Purchaser and Parent, as applicable, contained in this Agreement that are qualified as to materiality shall be true and correct in all respects and those not so qualified shall be true and correct in all
material respects    , in each case on the date of this Agreement and on the Closing Date,    , with the same force and effect as if made as of the Closing Date, other than such representations and warranties

  

 33 

 that are expressly made as of another date, and the Seller shall have received a certificate from the Purchaser and
Parent, as applicable, to such effect signed by a duly authorized officer thereof. 
  
 (b) Covenants. The Purchaser and Parent shall have performed and complied in all material respects with the covenants and agreements required by this Agreement and any of the other Documents to be performed or
complied with by them prior to or on the Closing and the Seller shall have received a certificate from each of them to such effect signed by a duly authorized officer thereof. 
  
 (c) No Adverse Change. No events or conditions shall have occurred which individually or in the aggregate, have had,
or may reasonably be anticipated by the Seller to give rise to any material adverse effect on the business, operations, assets or liabilities (including, without limitation, contingent liabilities), results of operations or the condition (financial
or otherwise) of Parent and its Subsidiaries taken as a whole. 
  
 (d) Opinion of Counsel. The Seller shall have received from Mintz Levin Cohn Ferris Glovsky and Popeo PC, counsel to the Seller, an opinion dated the Closing Date, in substantially the form attached hereto as Exhibit H hereto.

  
 (e) No Actions, Suits or Proceedings. No Order of any
Court or Governmental Authority shall have been issued restraining, prohibiting, restricting or delaying, the consummation of the transactions contemplated by this Agreement and the other Documents. No Litigation shall be pending or, to the
knowledge of the parties to this Agreement, threatened, before any Court or Governmental Authority to restrain, prohibit, restrict or delay, or to obtain damages or a discovery order in respect of this Agreement, any of the other Documents or the
consummation of the transactions contemplated hereby or thereby. No insolvency proceeding of any character including without limitation, bankruptcy, receivership, reorganization, dissolution or arrangement with creditors, voluntary or involuntary,
affecting the Purchaser or the Parent shall be pending, and neither the Purchaser nor the Parent shall have taken any action in contemplation of, or which would constitute the basis for, the institution of any such proceedings. 
  
 (f) Purchase Price. The Purchaser shall have delivered the Purchase
Price as provided in Section 3.2. 
  
 (g) Closing
Documents. The Parent and the Purchaser, as applicable, shall have delivered to the Seller the resolutions, certificates, documents and instruments set forth below: 
  
 (i) each of the other Documents to which either is a party; 
  
 (ii) with respect to each of the Parent and the Purchaser, a
copy of the resolutions duly and validly adopted by its Board of Directors or similar governing body, certified by its Secretary, with respect to authorizing and approving the execution and delivery and performance of this Agreement, the Ancillary
Agreements and the other Documents and the transactions contemplated hereby and thereby and the acts of the officers and employees of the Parent and Purchaser in carrying out the terms and provisions hereof; 
  

 34 

 (iii) certificates issued by the Secretary of State or other similar appropriate
governmental department, as of a date not more than five Business Days prior to the Closing, as to the good standing of each of the Parent and the Purchaser in its jurisdiction of incorporation and in each other jurisdiction in which it is qualified
to do business, and, as to its jurisdiction of incorporation or organization, certifying its Certificate of Incorporation or its Articles of Organization, as applicable; 
  
 (iv) a certificate of the Secretary of the Parent certifying the names and signatures of the officers of the
Purchaser authorized to sign this Agreement and the Documents, as well as a certificate of the Secretary of the Purchaser certifying the names and signatures of the managing member or members of the Purchaser authorized to sign this Agreement and
the Documents; and 
  
 (v) such other documents
and instruments as the Seller or its counsel may reasonably request. 
  
 (h) Registration Rights Agreement. The Seller and the Parent shall have entered into a registration rights agreement with respect to the resale of Shares and Additional Shares, if any, in substantially the form of Exhibit I
attached hereto ( the “Registration Rights Agreement”). 
  
 (i) Amendment to Credit Agreement. The Parent shall have entered into an Eleventh Amendment to the Amended and Restated Credit Agreement, the terms and provisions of which shall be acceptable to the Seller. 
  
 (j) Escrow Agreement. The Seller, the Purchaser, the Parent and the
Escrow Agent shall have entered into an Escrow Agreement in substantially the form of Exhibit D attached hereto. 
  
 (k) Designation of Board Member and Observation Rights. The Board of Directors of the Parent (the “Board”) shall appoint one nominee of
the Seller to the Board and shall grant one individual designated by the Seller observation rights with respect to the meetings of the Board, effective as of, and subject to, the Closing. The length of the appointment and the duration of the
observation rights shall be pursuant to the terms and provisions of a letter agreement between the Seller and the Parent, in substantially the form of Exhibit J attached hereto. 
  
 (l) Listing on Nasdaq. The Parent Common Stock shall continue to be quoted for trading on the Nasdaq SmallCap Market,
and Parent shall not have received notice, or have reason to believe, that it will cease to qualify for such quotation. 
  
 (m) Consulting Agreement. The Parent and Adam M. Brodsky shall have entered into a Consulting Agreement in substantially the form of Exhibit K
attached hereto. 
  
 7.3 Post-Closing Covenants of the
Seller. The Seller covenants and agrees, in addition to all of the other covenants and agreements of the Seller contained herein, as follows: 
  

 35 

 (a) Non-Disclosure of Information. The Seller shall not publish, disclose or
otherwise make accessible to any third party any confidential information concerning the Business, properties, assets (including the Purchased Assets) or rights of Seller relating thereto. 
  
 (b) Covenant Not to Compete. The Seller hereby agrees
that for a period commencing on the date hereof and for three years thereafter, the Seller shall not engage (individually or as a stockholder, partner, agent, employee, representative or otherwise of a firm, person, corporation or association) or
have any interest, direct or indirect, in any colocation business substantially similar to the Business and conducted anywhere in the United States of America; provided, however, that the provisions of this Section 7.3(b) shall not be deemed
breached merely because the Seller owns not more than 1% of the outstanding equity securities of a corporation or other entity, if, at the time of acquisition by the Seller, such stock is listed on a national securities exchange or is traded on the
over-the-counter market by a member of a national securities exchange. 
  
 (d) Further Action. The Seller hereby agrees to use all reasonable effort to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, and execute and deliver such
documents and other papers, as may be required to carry out the provisions of this Agreement and to assist Purchaser and Parent in transferring the Purchased Assets and give reasonable assistance in transitioning the Business, including, without
limitation, executing and acknowledging such documentation as may be necessary to allow Parent access to Seller’s bank accounts as are maintained in the operation of the Business. 
  
 7.4 Post-Closing Covenants of the Purchaser and Parent. Each of the Purchaser and the Parent covenants and agrees, as
applicable, in addition to all of the other covenants and agreements of the Purchaser and Parent contained herein, as follows: 
  
 (a) Operation of the Business. For a period of twenty-four months from the Closing Date, Purchaser and Parent will continue to
operate the Business in the ordinary course; provided, however, the Parent may undertake any action with respect to the operations of the Business that the Board of Directors of Parent deems desirable or in the best interests of Parent’s
stockholders.  
  
 (b) Maintain
Lease. Parent will not, nor will it cause or permit the Purchaser to take any action to cause the Landlord to terminate the Halsey Lease; provided, however, the Parent may undertake any action with respect to the operations of the Business that
the Board of Directors of Parent deems desirable or in the best interests of Parent’s stockholders. 
  
 (c) SEC Filings. Parent will use commercially reasonable efforts to file with the SEC in a timely manner all reports and other
documents required of the Parent under the Securities Act and the Exchange Act (at any time it is subject to such reporting requirements), and will take all actions necessary to ensure that the Purchaser complies with the requirements of Rule 144(e)
under the Securities Act such that Seller may sell the Shares and Additional Shares pursuant to such rule. 
  
 (d) Quarterly Reports. With respect to the quarterly results of operations of the Purchased Assets and the conduct of the Business,
Parent will deliver to Seller a quarterly 
  

 36 

 profit and loss statement at such time the Parent publicly files its quarterly reports under the Exchange Act. Such
profit and loss statement shall include a calculation of Gross Revenue for each month that is covered by the statement. 
  
 ARTICLE VIII 
  
 INDEMNIFICATION 
  
 8.1 Survival of Representations, Warranties. The representations and warranties contained in this Agreement and the other Documents, shall survive the Closing and any investigation at any time made by or on
behalf of any party for a period of two years; provided however that the representations and warranties set forth in Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.12 and 4.33 shall survive the Closing and continue in full force and effect indefinitely,
(b) the representations and warranties set forth in Section 4.25 shall survive the Closing and continue in full force and effect until the expiration of the period, if any, during which an assessment, reassessment or other form of recognized
document assessing liability for Tax, interest or penalties under applicable Tax Laws in respect of any taxation year to which such representations and warranties extend could be issued under applicable Tax Laws to the Seller, the Purchaser or the
Parent, (c) the representations and warranties set forth in Section 4.28 shall survive the Closing and continue in full force for a period of ten years, and (d) a claim for any breach of a representation or warranty contained in this Agreement or
any of the Documents involving fraud or fraudulent misrepresentation may be made at any time following the Closing Date, subject only to applicable limitation periods imposed by Law. Any claims for indemnification asserted in writing as provided for
in this Article VIII prior to the expiration date applicable to the representation or warranty with respect to which such claim for indemnification is made shall survive until finally resolved and satisfied in full, provided that indemnification
claims for breach any representation or warranty must be properly made prior to the expiration date applicable to the representation or warranty. For convenience of reference, the date upon which any representation and warranty contained herein
shall terminate is referred to herein as the “Survival Date.” No third party other than Purchaser Indemnified Persons and Seller Indemnified Persons (as hereinafter defined) shall be a third party or other beneficiary of such
representations and warranties and no such third party shall have any rights of contribution with respect to such representations or warranties or any matter subject to or resulting in indemnification under this Article VIII or otherwise. All
covenants and agreements contained in this Agreement (and in the corresponding covenants and agreements set forth in any of the other Documents) shall survive the Closing and continue in full force until fully performed in accordance with their
terms. 
  
 8.2 Indemnification and Reimbursement By the
Seller. The Seller will indemnify and hold harmless each of the Parent and the Purchaser, and their respective officers, directors, employees, agents, Affiliates and representatives (collectively, the “Purchaser Indemnified Persons”),
and will reimburse the Purchaser Indemnified Persons for any loss, liability, claim, damage, expense (including costs of investigation and defense and reasonable attorneys’ fees and expenses) or diminution of value, whether or not involving a
third-party claim (collectively, “Damages”), arising from or in connection with: 
  
 (a) any breach of any representation or warranty made by the Seller in this Agreement; 
  

 37 

 (b) any breach of any covenant or obligation of the Seller in this Agreement; 
  
 (c) any Liability arising out of the ownership or operation of the Business
or the Purchased Assets prior to the Closing other than the Assumed Liabilities; and 
  
 (d) any brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding made, or alleged to have been made, by any Person with the Seller (or any Person acting on their
behalf) in connection with any of the transactions contemplated by this Agreement. 
  
 8.3 Indemnification and Reimbursement By the Purchaser. The Purchaser will indemnify and hold harmless the Seller, its officers, members, managers, employees, agents, Affiliates and representatives
(collectively, the “Seller Indemnified Persons”), and will reimburse the Seller Indemnified Persons for any Damages arising from or in connection with: 
  
 (a) any breach of any representation or warranty made by the Parent or the Purchaser in this Agreement; 
  
 (b) any breach of any covenant or obligation of the Parent or the Purchaser
in this Agreement; 
  
 (c) any claim by any Person for brokerage
or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with the Parent or the Purchaser (or any Person acting on the Parent’s or the Purchaser’s behalf)
in connection with any of the transactions contemplated by this Agreement or any of the Documents; and any Assumed Liabilities; 
  
 (d) the Assumed Liabilities; and 
  
 (e) any Liability arising out of the ownership or operation of the Purchased Assets or the Business on or after the Closing Date. 
  
 8.4 Escrow of Shares. As security for the performance by Seller of its
obligations under this Agreement, including, but not limited to, the indemnification obligations pursuant to Section 8.2 hereof, Seller shall deposit 1,000,000 shares of Parent Common Stock payable pursuant to Section 3.2(b) in escrow, and such
shares to be held by the Escrow Agent and delivered to the Purchaser or the Seller in accordance with the terms and provisions of the Escrow Agreement. 
  
 8.5 Parent’s Right of Set-Off. In the event the Seller is entitled to receive Additional Shares pursuant to Section 3.3 hereof, such
Additional Shares shall be subject to a right of set-off for the amount of Damages to which any of the Purchaser Indemnified Persons claims to be entitled to pursuant to Section 8.2 (the “Set-Off Amount”). For purposes of any such set-off,
the Additional Shares shall have a value that is equal to the Undisputed 10 Day Average. If the Parent intends to set off amounts pursuant to this Section 8.5, the Parent shall notify the Seller of 
  

 38 

 the Set-Off Amount in the Revenue Certification. In the event the Seller disputes or disagrees with the Set-Off Amount,
and if the Seller so demands in writing within five (5) days of the Seller’s receipt of the Revenue Certification, the Parent will deposit with the Escrow Agent pursuant to the Escrow Agreement Additional Shares having a value equal to 150% of
the portion of the Set-Off Amount that is in dispute based upon the Undisputed 10 Day Average (which number of Additional Shares so deposited shall not be accessible to the Seller until final resolution of such dispute and only to the extent it is
determined that such amounts are not payable to the Parent or another Purchaser Indemnified Person). All disputes or disagreements with respect to the Set-Off Amount shall be resolved by arbitration pursuant to a proceeding under Section 10.11
hereof. 
  
 8.6 Limitations on Seller’s
Indemnification. 
  
 (a) No reimbursement for Damages
pursuant to Section 8.2 shall be required unless the aggregate amount of Damages exceeds $50,000 (the “Threshold”), and, in such event indemnification shall be made by the Seller only to the extent that Damages exceed the Threshold. The
Purchaser Indemnified Persons shall not have the right to indemnification for any individual Damage that is less than $2,500 and individual Damages that are equal to or less than such amount shall not be counted for purposes of determining whether
the aggregate amount of Damages exceeds the Threshold. 
  
 (b) All
Damages incurred by the Purchaser Indemnified Persons shall be reduced by (i) the amount of any insurance proceeds payable to the Purchaser Indemnified Persons with respect to such loss, (ii) any indemnity, contribution or other similar payment
payable to any of the Purchaser Indemnified Persons by any third party with respect to such loss and (iii) an amount equal to any reduction of income Taxes attributable to such loss. 
  
 (c) In no event shall the Seller’s aggregate liability to the Purchaser Indemnified Persons under this Agreement for
breaches of representations or warranties, covenants or agreements, whether pursuant to Article VIII or otherwise, exceed $2,000,000. However, the limitation on liability set forth in this Section 8.6(c) will not apply to any breaches, actions or
omissions, which are not subsequently amended by a supplement or amendment prior to Closing, that amount to fraud. 
  
 (d) The indemnification set forth in this Article VIII shall be the sole monetary remedy of Parent, the Purchaser and the other Purchaser Indemnified
Persons with respect to the matters set forth in clauses (a) through (d) of Section 8.2. Notwithstanding any other provisions of this Agreement and except with respect to claims by third parties, the Seller shall not be liable, whether in contract,
in tort (including negligence and strict liability), or otherwise, for any special, indirect, incidental or consequential damages whatsoever, including, but not limited to, loss of profits or revenue, loss of use of equipment or facilities, business
interruptions, costs of capital and claims of customers that in any way arise out of, relate to, or are a consequence of, any of the matters set forth in clauses (a) through (d) of Section 8.2. 
  
 8.7 Limitations on Purchaser’s Indemnification. 
  

 39 

 (a) No reimbursement for Damages pursuant to Section 8.3 (other than for a breach of Parent’s and
Purchaser’s obligations to make the payments required by Sections 3.2 and 3.3 hereof) shall be required unless the aggregate amount of Damages exceeds the Threshold, and, in such event indemnification shall be made by the Seller only to the
extent that Damages exceed the Threshold. The Seller Indemnified Persons shall not have the right to indemnification for any individual Damage (other than Damages arising from a breach of Parent’s and Purchaser’s obligations to make the
payments required by Sections 3.2 and 3.3 hereof) that is less than $2,500 and individual Damages that are equal to or less than such amount shall not be counted for purposes of determining whether the aggregate amount of Damages exceeds the
Threshold. 
  
 (b) All Damages incurred by the Seller Indemnified
Persons shall be reduced by (i) the amount of any insurance proceeds payable to the Seller Indemnified Persons with respect to such loss, (ii) any indemnity, contribution or other similar payment payable to any of the Seller Indemnified Persons by
any third party with respect to such loss and (iii) an amount equal to any reduction of income Taxes attributable to such loss. 
  
 (c) In no event shall the Purchaser’s aggregate liability to the Seller Indemnified Persons under this Agreement for breaches of representations or
warranties, covenants or agreements, whether pursuant to Article VIII or otherwise, exceed $2,000,000. However, the limitation on liability set forth in this Section 8.7(c) will not apply to: (i) any breaches, actions or omissions that amount to
fraud; (ii) any breach of any of Purchaser’s representations and warranties of which Purchaser had actual knowledge at any time prior to the date on which such representation or warranty is made; and (iii) any intentional breach by Purchaser of
any covenant or obligation, in such events, Purchaser will be liable for all Damages with respect to such breaches, acts or omissions. 
  
 (d) The indemnification set forth in this Article VIII shall be the sole monetary remedy of Seller and the other Seller Indemnified Persons with respect
to the matters set forth in clauses (a) through (e) of Section 8.3. Notwithstanding any other provisions of this Agreement and except with respect to claims by third parties, the Purchaser shall not be liable, whether in contract, in tort (including
negligence and strict liability), or otherwise, for any special, indirect, incidental or consequential damages whatsoever, including, but not limited to, loss of profits or revenue, loss of use of equipment or facilities, business interruptions,
costs of capital and claims of customers that in any way arise out of, relate to, or are a consequence of, any of the matters set forth in clauses (a) through (e) of Section 8.3. 
  
 8.8 Indemnification Procedures. The party or parties making a claim for indemnification under this Agreement is, for
purposes of this Agreement, referred to as the “Indemnified Party” and the Party against whom such claims are asserted under this Article VIII is, for the purposes of this Agreement, referred to as the “Indemnifying
Party”. All claims by an Indemnified Party under this Agreement shall be asserted and resolved as follows: 
  
 (a) In the event that (A) any claim for which an Indemnifying Party would be liable to an Indemnified Party hereunder is asserted against
or sought to be collected from such Indemnified Party by a third party (such claim, a “Third Party Claim”) or (B) any Indemnified Party hereunder should have a claim against any Indemnifying Party hereunder which does not involve a
claim being asserted against or sought to be collected from it by a third party (such 
  

 40 

 Claim, a “Direct Claim”), the Indemnified Party shall with reasonable promptness notify
in writing the Indemnifying Party of such claim, specifying the nature of and the specific basis for such claim and the amount or the estimated amount thereof to the extent then feasible to determine (which estimate (except as set forth in the next
sentence) shall not be conclusive of the final amount of such Claim) (a “Claim Notice”); provided, however, the failure to so notify the Indemnifying Party (x) will not relieve the Indemnifying Party from liability
under this Article VIII unless and to the extent it has been actually and materially prejudiced by such failure and (y) will not, in any event, relieve the Indemnifying Party from any obligations to any Indemnified Party other than the
indemnification obligation provided in this Article VIII. Unless the Indemnifying Party notifies the Indemnified Party within thirty (30) days of receipt of a Claim Notice that it disputes such claim, the amount of such claim shall be conclusively
deemed a liability of the Indemnifying Party hereunder. 
  
 (b) In the event of a Third Party Claim, the Indemnifying Party may, and upon request of the Indemnified Party shall, retain counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party
and shall pay the fees and disbursements of such counsel with regard thereto; provided, that the Indemnified Party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnifying Party (except that the Indemnifying Party shall be liable for the fees and expenses of counsel employed by the Indemnified Party for any period during which the Indemnifying Party has failed to assume the defense of any
Third Party Claim within a reasonable period of time after receipt of a written notice of such Third Party Claim pursuant to clause (a) above). Notwithstanding the foregoing, the Indemnified Party shall have the right to employ one firm or separate
counsel (plus local counsel), and the Indemnifying Party shall bear the reasonable fees, costs and expenses of such separate counsel, if (w) the use of counsel chosen by the Indemnifying Party to represent the Indemnified Party would present such
counsel with a conflict of interest (based upon written advice of counsel to the Indemnified Party), (x) the actual or potential defendants in, or targets of, any such action include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded that there may be legal defenses available to it or other Indemnified Parties which are different from or additional to those available to the Indemnifying Party, (y) the Indemnifying Party shall not
have employed counsel satisfactory to the Indemnified Party (in the exercise of the Indemnified Party’s reasonable judgment) to represent the Indemnified Party within a reasonable time after notice of the Third Party Claim or (z) the
Indemnifying Party shall authorize in writing the Indemnified Party to employ separate counsel at the expense of the Indemnifying Party. 
  
 (c) Whether or not the Indemnifying Party shall have assumed the defense of a Third Party Claim, the Indemnifying Party shall not admit
any liability with respect to, or settle, compromise or discharge, any pending or threatened Third Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld); provided, however,
that if the Indemnified Party does not give its consent to a settlement approved by the Indemnifying Party, then in no event shall the Indemnifying Party be liable for indemnification of Damages in excess of such amount as would be payable
pursuant to such settlement. If the Indemnifying Party shall have assumed the defense of a Third Party Claim, the Indemnified Party shall agree to any settlement, compromise or discharge of a Third Party Claim which the Indemnifying Party shall
recommend and which releases the Indemnified Party 
  

 41 

 completely and unconditionally from all liability in connection with such Third Party Claim and which
would not otherwise adversely affect the Indemnified Party. 
  
 (d) Notwithstanding the foregoing, in the event the Indemnifying Party fails timely, in good faith or diligently to defend, contest or otherwise protect against any Third Party Claim (after having assumed the defense
therefor), the Indemnified Party shall have the right, but not the obligation, to assume the defense of such Third Party Claim and take such other action as it may elect to defend, protect against or settle such Third Party Claim as it may
determine, all at the expense of the Indemnifying Party. 
  
 ARTICLE IX 
  
 TERMINATION

  
 9.1 Termination. This Agreement may be terminated
at any time prior to the Closing Date: 
  
 (a) By mutual written
consent of Parent and the Seller; 
  
 (b) By Parent or the Seller,
if the Closing shall not have occurred on or before January 31, 2004 (provided that the right to terminate this Agreement under this Section 9.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing to have occurred on or before such date); or 
  
 (c) By Parent or the Seller, if any Order shall have been enacted, entered, promulgated or enforced which prohibits or enjoins the consummation of the
sale and purchase of the Purchased Assets and such Order is or shall have become final and nonappealable. 
  
 9.2 Effect of Termination. If this Agreement is terminated in accordance with Section 9.1 above, this Agreement shall become null and void and of
no further force and effect, except that (i) the terms and provisions of this Section 9.2 and Article X and the Agreement of Non-Disclosure of Confidential Information dated September 29, 2003, between the Parent and Seller, shall remain in full
force and effect and (ii) any termination of this Agreement shall not relieve any party hereto from any liability for fraud or breach of its obligations hereunder. 
  
 ARTICLE X 
  
 MISCELLANEOUS 
  
 10.1 Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be addressed to the receiving
party’s address set forth below or to such other address as a party may designate by notice hereunder, and shall be either (i) delivered by hand, (ii) made by facsimile transmission (provided that such materials shall also be sent via
recognized overnight courier on the date such facsimile is sent), (iii) sent by recognized overnight courier, or (iv) sent by certified mail, return receipt requested, postage prepaid. 
  

 42 

			
	 If to the Parent/Purchaser to:
	  	 FiberNet Telecom Group, Inc.

	 	  	 570 Lexington Avenue

	 	  	 New York, New York 10022

	 	  	 Telephone: (212) 405-6200

	 	  	 Facsimile: (212) 421-8860

	 	  	 Attn: Michael S. Hubner, Esq.

		
	 With a copy to:
	  	 Stephen J. Gulotta, Jr., Esq.

		
	 	  	 Todd E. Mason, Esq.

	 	  	 Mintz, Levin, Cohn, Ferris,

	 	  	 Glovsky and Popeo, P.C.

	 	  	 Chrysler Center, 666 Third Avenue

	 	  	 New York, New York 10017

	 	  	 Telephone: (212) 935-3000

	 	  	 Facsimile: (212) 983 3115

	 If to the Seller to:
	  	 gateway.realty.new jersey.llc

		
	 	  	 c/o Telecom Realty Management, LLC

	 	  	 16 East 48th Street, 5th Floor

	 	  	 New York, New York 10017

	 	  	 Attn: Oskar Brecher

	 	  	 Telephone: (212) 826-9200

	 	  	 Facsimile: (212) 371-3747

		
	 With a copy to:
	  	 Wolf, Block, Schorr and Solis-Cohen LLP

		
	 	  	 Wolf, Block, Schorr and Solis-Cohen LLP

	 	  	 250 Park Avenue

	 	  	 New York, New York 10177

	 	  	 Attn: Joseph D. D’Angelo, Esq.

	 	  	 Telephone: (212) 883-4944

	 	  	 Facsimile: (212) 672-1144

  
 All notices, requests,
consents and other communications hereunder shall be deemed to have been (a) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (b) if sent by facsimile transmission, at the time
receipt has been acknowledged by electronic confirmation or otherwise, (c) if sent by overnight courier, on the next business day following the day such notice is delivered to the courier service, or (d) if sent by certified mail, on the fifth
business day following the day such mailing is made. 
  
 10.2
Entire Agreement The Documents embody the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede all prior oral or written agreements and understandings relating to the subject
matter hereof. No statement, representation, warranty, covenant or agreement of any kind not expressly set forth in the Documents shall affect, or be used to interpret, change or restrict, the express terms and provisions of this Agreement.

  

 43 

 10.3 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, heirs, personal representatives, legal representatives and permitted assigns. 
  
 10.4 Assignment. Neither this Agreement, nor any right hereunder, may be assigned by any of the parties hereto without the prior written consent of
the other parties, except that the Parent or the Purchaser may assign all or part of its rights and obligations, under this Agreement to one or more direct or indirect wholly owned Subsidiaries of Parent (in which event, representations and
warranties relating to the Parent or the Purchaser shall be appropriately modified), provided that such party shall agree to be bound by the terms of this Agreement. 
  
 10.5 Modifications and Amendments. The terms and provisions of this Agreement may be modified or amended only by
written agreement executed by all parties hereto. 
  
 10.6
Waivers and Consents. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such
waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and
for the purpose for which it was given, and shall not constitute a continuing waiver or consent. No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no course of dealing between the parties
hereto, shall operate as a waiver of any such right, power or remedy of the party. No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such
right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of
such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand. 
  
 10.7 No Third Party Beneficiary. Nothing expressed or implied in this Agreement is intended, or shall be construed,
to confer upon or give any Person other than indemnified parties under Article VII and the parties hereto and their respective heirs, personal representatives, legal representatives, successors and permitted assigns, any rights or remedies under or
by reason of this Agreement. 
  
 10.8 Severability. If any
term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an 
  

 44 

 acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible. 
  
 10.9 Publicity. No party to this Agreement shall make, or cause to be
made, any press release or public announcement in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior consent of the Purchaser and the Seller, except as may be required by
Law or any listing agreement related to the trading of the shares of such party on any national securities exchange or national automated quotation system, in which case the party proposing to issue such press release or make such public
announcement shall upon advice from outside counsel to the other party to the effect that such disclosure is required by Law or such listing agreement and shall use reasonable efforts to consult in good faith with the other party before issuing any
such press release or making any such public announcement. The parties shall cooperate as to the timing and contents of any such press release or public announcement. 
  
 10.10 Governing Law This Agreement and the rights and obligations of the parties hereunder shall be construed in
accordance with and governed by the laws of the State of New York without giving effect to the conflict of law principles thereof. 
  
 10.11 Arbitration; Consent to Injunctive Relief. 
  
 (a) Any controversy, dispute or claim arising out of or relating to this Agreement or the any of the Documents shall be settled by arbitration in
accordance with the following provisions: 
  
 (i)
Disputes Covered. Subject to Section 10.11(b) hereof, the agreement of the parties to arbitrate covers all disputes of every kind relating to or arising out of this Agreement, the Documents or any of the transactions contemplated hereby or
thereby. Disputes include actions for breach of contract with respect to this Agreement or the Documents, as well as any claim based upon tort or any other causes of action relating to the transactions contemplated hereby or thereby, such as claims
based upon an allegation of fraud or misrepresentation and claims based upon a federal or state statute. In addition, the arbitrators selected according to the procedures set forth below shall determine the arbitrability of any matter brought to
them and their decisions shall be final and binding on the parties. 
  
 (ii) Forum. The governing law for the arbitration shall be the law of the State of New York, without reference to its conflicts of law provisions, and such arbitration shall be conducted in New York, New York.

  
 (iii) Selection. There shall be three
arbitrators, unless the parties are able to agree on a single arbitrator. In the absence of such agreement, within 10 days after the initiation of an arbitration proceeding, the Seller shall select one arbitrator and the Purchaser shall select one
arbitrator, and those two arbitrators shall then select, within 10 days, a third arbitrator. If those two arbitrators are unable to select a third arbitrator within such 10 day period, a third arbitrator shall be appointed by the commercial panel of
the American Arbitration Association (the “AAA”). The decision in writing of at least two of the three arbitrators shall be final and binding upon the parties. 
  

 45 

 (iv) Administration. The arbitration shall be administered by the AAA. 

 
 (v) Rules. The rules of arbitration shall be the
Commercial Arbitration Rules of the AAA (the “Rules”), as modified by any other instructions that the parties may agree upon at the time, except that each party shall have the right to conduct discovery in any manner and to the extent
authorized by the Federal Rules of Civil Procedure as interpreted by the federal courts. If there is any conflict between the Rules and the provisions of this Section 10.11, the provisions of this Section 10.11 shall prevail. 
  
 (vi) Substantive Law. The arbitrators shall be bound
by and shall strictly enforce the terms of this Agreement and may not limit, expand or otherwise modify its terms. The arbitrators shall make a good faith effort to apply substantive law, but an arbitration decision shall not be subject to review
because of errors of law. The arbitrators shall be bound to honor claims of privilege or work-product doctrine recognized at law, but the arbitrators shall have the discretion to determine whether any such claim of privilege or work product doctrine
applies. 
  
 (vii) Expenses. Each party
shall bear its own fees and expenses with respect to the arbitration and any proceeding related thereto and the parties shall share equally the fees and expenses of the AAA. 
  
 (viii) Decision; Remedies; Award. The arbitrators’ decision shall provide a reasoned
based for the resolution of each dispute and for any award. The arbitrators shall have the power and authority to award any remedy or judgment that could be awarded by a court in the State of New York. The award rendered by arbitration shall be
final and binding upon the parties, and judgment upon the award may be entered in any court of competent jurisdiction in the United States. 
  
 (b) The Seller acknowledges that a breach of the provisions of either Section 7.3(a) or Section 7.3(b) could not be adequately compensated for by money
damages. Accordingly, the Purchaser shall be entitled, in addition to any other right or remedy available to it, to seek an injunction restraining such breach, and, in either case, no bond or other security shall be required in connection therewith.

  
 10.12 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement. Facsimile signatures shall constitute original signatures for all purposes of this Agreement. 
  
 10.13 Headings The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. 
  
 10.14 Expenses. Except as otherwise specified in this Agreement, all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this Agreement and the other Documents and the transactions contemplated hereby and thereby shall be paid by the party incurring such costs and expenses, whether or not the
Closing shall have occurred. 
  

 46 

 REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 
  

 47 

 IN WITNESS WHEREOF, the parties hereto have each executed and delivered this Agreement as of the day and
year first above written. 
  

			
	LOCAL FIBER, LLC
		
	By:	 	 
	 	 	

	Name:	 	 
	 	 	

	 Title:
	 	 
	 	 	

	
	 FIBERNET TELECOM GROUP, INC.

		
	By:	 	 
	 	 	

	Name:	 	 
	 	 	

	 Title:
	 	 
	 	 	

	
	 GATEWAY.REALTY.NEW JERSEY.LLC

		
	By:	 	 
	 	 	

	Name:	 	 
	 	 	

	 Title:
	 	 
	 	 	

  

 48Common Stock Purchase Agreement, dated 01/30/2004

 EXHIBIT 10.2 
  
 COMMON STOCK PURCHASE 
  
 AGREEMENT 
  
 Dated as of January 30, 2004 
  
 by and among 
  
 FIBERNET
TELECOM GROUP, INC. 
  
 and 
  
 THE PURCHASERS LISTED ON EXHIBIT A 

 TABLE OF CONTENTS 
  

							
	 	  	 	  	 	  	Page

	ARTICLE I    Purchase and Sale of Common Stock and Warrants	  	1
	 	  	Section 1.1	  	Purchase and Sale of Common Stock and Warrants	  	1
	 	  	Section 1.2	  	Purchase Price and Closing	  	1
		
	ARTICLE II    Representations and Warranties	  	2
	 	  	Section 2.1	  	Representations and Warranties of the Company	  	2
	 	  	Section 2.2	  	Representations and Warranties of the Purchasers	  	12
		
	ARTICLE III    Covenants	  	15
	 	  	Section 3.1	  	Securities Compliance	  	15
	 	  	Section 3.2	  	Registration and Listing	  	15
	 	  	Section 3.3	  	Inspection Rights	  	15
	 	  	Section 3.4	  	Compliance with Laws	  	16
	 	  	Section 3.5	  	Keeping of Records and Books of Account	  	16
	 	  	Section 3.6	  	Reporting Requirements	  	16
	 	  	Section 3.7	  	Other Agreements	  	16
	 	  	Section 3.8	  	Subsequent Financings; Right of First Refusal	  	16
	 	  	Section 3.9	  	Use of Proceeds	  	17
	 	  	Section 3.10	  	Reporting Status; Form S-3 Eligibility	  	17
	 	  	Section 3.11	  	Disclosure of Transaction	  	17
	 	  	Section 3.12	  	Disclosure of Material Information	  	18
	 	  	Section 3.13	  	Pledge of Securities	  	18
		
	ARTICLE IV    Conditions	  	18
	 	  	Section 4.1	  	Conditions Precedent to the Obligation of the Company to Close and to Sell the Securities	  	18
	 	  	Section 4.2	  	Conditions Precedent to the Obligation of the Purchasers to Close and to Purchase the Securities	  	19
		
	ARTICLE V    Certificate Legend	  	20
	 	  	Section 5.1	  	Legend	  	20
		
	ARTICLE VI    Indemnification	  	22
	 	  	Section 6.1	  	General Indemnity.	  	22
	 	  	Section 6.2	  	Indemnification Procedure	  	22
		
	ARTICLE VII    Miscellaneous	  	23
	 	  	Section 7.1	  	Fees and Expenses	  	23
	 	  	Section 7.2	  	Specific Performance; Consent to Jurisdiction; Venue.	  	23
	 	  	Section 7.3	  	Entire Agreement; Amendment	  	24
	 	  	Section 7.4	  	Notices	  	24
	 	  	Section 7.5	  	Waivers	  	25
	 	  	Section 7.6	  	Headings	  	25
	 	  	Section 7.7	  	Successors and Assigns	  	25
	 	  	Section 7.8	  	No Third Party Beneficiaries	  	25

 TABLE OF CONTENTS 
 (continued) 
  

							
	 	  	 	  	 	  	Page

	 	  	Section 7.9	  	Governing Law	  	25
	 	  	Section 7.10	  	Survival	  	26
	 	  	Section 7.11	  	Counterparts	  	26
	 	  	Section 7.12	  	Publicity	  	26
	 	  	Section 7.13	  	Severability	  	26
	 	  	Section 7.14	  	Further Assurances	  	26

 COMMON STOCK PURCHASE AGREEMENT 
  
 This COMMON STOCK PURCHASE AGREEMENT this (“Agreement”), dated as of January 30, 2004 by and between
FiberNet Telecom Group, Inc., a Delaware corporation (the “Company”), and the purchasers listed on Exhibit A hereto (each a “Purchaser” and collectively, the “Purchasers”), for the purchase
and sale of shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) by the Purchasers. 
  
 The parties hereto agree as follows: 
  
 ARTICLE I 
  
 Purchase and Sale of Common Stock and Warrants 
  
 Section 1.1 Purchase and Sale of Common Stock and Warrants. 
  
 (a) Upon the following terms and conditions, the Company shall issue and sell to the Purchasers, and the
Purchasers shall purchase from the Company, an aggregate of 6,400,000 shares of Common Stock (the “Shares”) at a price per share of $1.25 (the “Per Share Purchase Price”) for an aggregate purchase price of
$8,000,000 (the “Purchase Price”). The Company and the Purchasers are executing and delivering this Agreement in accordance with and in reliance upon the exemption from securities registration afforded by Section 4(2) of the U.S.
Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), including Regulation D (“Regulation D”), and/or upon such other exemption from the registration
requirements of the Securities Act as may be available with respect to any or all of the investments to be made hereunder. 
  
 (b) Upon the following terms and conditions, the Purchasers shall be issued Warrants, in substantially the form attached hereto as
Exhibit B (the “Warrants”), to purchase the number of shares of Common Stock set forth opposite such Purchaser’s name on Exhibit A hereto. The Warrants shall have an exercise price equal to $1.75 per share and
shall be exercisable on the date that is six months and one day following the Closing Date. Any shares of Common Stock issuable upon exercise of the Warrants (and such shares when issued) are herein referred to as the “Warrant
Shares”. The Shares, the Warrants and the Warrant Shares are sometimes collectively referred to herein as the “Securities”. 
  
 Section 1.2 Purchase Price and Closing. The Company agrees to issue and sell to the Purchasers and, in consideration of and in
express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, the Purchasers, severally but not jointly, agree to purchase the number of Shares and Warrants, in each case, set forth opposite their
respective names on Exhibit A. The closing of the purchase and sale of the Shares and Warrants to be acquired by the Purchasers from the Company under this Agreement shall take place at the offices of Jenkens & Gilchrist Parker Chapin
LLP, The Chrysler Building, 405 Lexington Avenue, New York, New York 10174 (the “Closing”) at 10:00 a.m., New York time (i) on or before January 31, 2004, provided, that all of the conditions set forth in Article IV

  

 1 

 hereof and applicable to the Closing shall have been fulfilled or waived in accordance herewith, or (ii)
at such other time and place or on such date as the Purchasers and the Company may agree upon (the “Closing Date”). At the Closing, the Company shall deliver or cause to be delivered to each Purchaser (i) a certificate registered in
the name of the Purchaser representing the number of Shares that such Purchaser is purchasing pursuant to the terms hereof and (ii) a certificate representing a Warrant to purchase such number of shares of Common Stock as is set forth opposite the
name of such Purchaser on Exhibit A. At the Closing, each Purchaser shall deliver its Purchase Price by wire transfer to an account designated by the Company. 
  
 ARTICLE II 
  
 Representations and Warranties 
  
 Section 2.1 Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchasers as follows,
as of the date hereof and the Closing Date, except as set forth on the Schedule of Exceptions attached hereto with each numbered Schedule corresponding to the section number herein: 
  
 (a) Organization, Good Standing and Power. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. The Company does not have any
Subsidiaries (as defined in Section 2.1(g)) or own securities of any kind in any other entity except as set forth on Schedule 2.1(g) hereto. The Company and each such Subsidiary (as defined in Section 2.1(g)) is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary except for any jurisdiction(s) (alone or in the aggregate) in which the
failure to be so qualified will not have a Material Adverse Effect. For the purposes of this Agreement, “Material Adverse Effect” means any effect on the business, operations, properties, prospects or financial condition of the
Company that is material and adverse to the Company and its Subsidiaries, taken as a whole, and any condition, circumstance or situation that would prohibit the Company from entering into and performing any of its obligations hereunder and under the
other Transaction Documents (as defined below). 
  
 (b) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Warrants and that certain Registration Rights Agreement by and among the Company and the
Purchasers, dated as of the date hereof, substantially in the form of Exhibit C attached hereto (the “Registration Rights Agreement” and, together with this Agreement and the Warrants, the “Transaction
Documents”) and to issue and sell the Securities in accordance with the terms hereof. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby
have been duly and validly authorized by all necessary corporate action, and, except as set forth on Schedule 2.1(b), no further consent or authorization of the Company, its Board of Directors or stockholders is required. When executed and
delivered by the Company, each of the Transaction Documents shall constitute a valid and binding obligation of the Company enforceable against the Company in accordance with its 
  

 2 

 terms, except as such enforceability may be limited by applicable bankruptcy, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application. 
  
 (c) Capitalization. The authorized capital stock of
the Company as of the date of this Agreement consists of 2,000,000,000 shares of Common Stock, of which 40,557,200 were issued and outstanding as of January 27, 2004, and 20,000,000 shares of preferred stock, par value $.001 per share, of which none
were issued and outstanding as of January 27, 2004. All of the outstanding shares of the Common Stock and any other outstanding security of the Company have been duly and validly authorized. Except as set forth in this Agreement and as set forth on
Schedule 2.1(c) hereto, no shares of Common Stock or any other security of the Company are entitled to preemptive rights or registration rights and there are no outstanding options, warrants, scrip, rights to subscribe to, call or commitments
of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company. Furthermore, except as set forth in this Agreement and as set forth on Schedule 2.1(c) hereto, there are no
contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of the capital stock of the Company or options, securities or rights convertible into shares of capital stock of the
Company. Except for customary transfer restrictions contained in agreements entered into by the Company in order to sell restricted securities or as provided on Schedule 2.1(c) hereto, the Company is not a party to or bound by any agreement
or understanding granting registration or anti-dilution rights to any person with respect to any of its equity or debt securities. Except as set forth on Schedule 2.1(c), the Company is not a party to, and it has no knowledge of, any
agreement or understanding restricting the voting or transfer of any shares of the capital stock of the Company. 
  
 (d) Issuance of Securities. The Shares and the Warrants to be issued at the Closing have been duly authorized by all necessary
corporate action and, when paid for and issued in accordance with the terms hereof and the Warrants, respectively, the Shares and the Warrant Shares will be validly issued, fully paid and nonassessable and free and clear of all liens, encumbrances
and rights of refusal of any kind and the holders shall be entitled to all rights accorded to a holder of Common Stock. 
  
 (e) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby do not and will not (i) violate any provision of the Company’s Certificate of Incorporation (the “Certificate”) or Bylaws (the “Bylaws”), each as
amended to date, or any Subsidiary’s comparable charter documents, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries’ respective properties or assets are bound, or (iii) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries are bound or affected, except, in all cases, other than violations pursuant to clauses (i) or (iii) (with
respect to federal 
  

 3 

 and state securities laws) above, except, for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect. The business of the Company and its Subsidiaries is not being conducted in violation of any laws, ordinances or regulations of
any governmental entity, except for possible violations, which singularly or in the aggregate do not and will not have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is required under federal, state, foreign or local law,
rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under the Transaction Documents or
issue and sell the Securities in accordance with the terms hereof (other than any filings, consents and approvals which may be required to be made by the Company under applicable state and federal securities laws, rules or regulations, the Nasdaq
SmallCap Market prior to or subsequent to the Closing, or any registration provisions provided in the Registration Rights Agreement). 
  
 (f) Commission Documents, Financial Statements. The Common Stock of the Company is registered pursuant to Section 12(b) or 12(g) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, except as disclosed on Schedule 2.1(f) hereto, the Company has timely filed all reports, schedules, forms, statements and other documents required to
be filed by it with the Securities and Exchange Commission (the “Commission”) pursuant to the reporting requirements of the Exchange Act (all of the foregoing including filings incorporated by reference therein being referred to
herein as the “Commission Documents”). At the times of their respective filing, the Form 10-Q for the fiscal quarter ended September 30, 2003 (the “Form 10-Q”) and the Form 10-K for the fiscal year ended December
31, 2002 (the “Form 10-K”) complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder and other federal, state and local laws, rules and
regulations applicable to such documents, and the Form 10-Q and Form 10-K did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the Commission Documents complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles
(“GAAP”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the Notes thereto or (ii) in the case of unaudited interim statements, to the extent they
may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the financial position of the Company and its Subsidiaries as of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). 
  
 (g) Subsidiaries. Schedule 2.1(g) hereto sets forth each Subsidiary of the Company, showing the jurisdiction of its
incorporation or organization and showing the percentage of each person’s ownership of the outstanding stock or other interests of such Subsidiary. For the purposes of this Agreement, “Subsidiary” shall mean any corporation or
other entity of which at least a majority of the securities or other ownership interest having ordinary voting power (absolutely or contingently) for the election of directors or other persons 
  

 4 

 performing similar functions are at the time owned directly or indirectly by the Company and/or any of
its other Subsidiaries. All of the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, and are fully paid and nonassessable. There are no outstanding preemptive, conversion or other rights, options,
warrants or agreements granted or issued by or binding upon any Subsidiary for the purchase or acquisition of any shares of capital stock of any Subsidiary or any other securities convertible into, exchangeable for or evidencing the rights to
subscribe for any shares of such capital stock. Neither the Company nor any Subsidiary is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of the capital stock of any Subsidiary or any
convertible securities, rights, warrants or options of the type described in the preceding sentence except as set forth on Schedule 2.1(g) hereto. Neither the Company nor any Subsidiary is party to, nor has any knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of any Subsidiary. 
  
 (h) No Material Adverse Change. Since September 30, 2003, the Company has not experienced or suffered any Material Adverse Effect,
except as disclosed on Schedule 2.1(h) hereto. 
  
 (i) No Undisclosed Liabilities. Except as disclosed on Schedule 2.1(i) hereto, since September 30, 2003, neither the Company nor any of its Subsidiaries has incurred any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) other than those incurred in the ordinary course of the Company’s or its Subsidiaries respective businesses and which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect. 
  
 (j) No Undisclosed Events or Circumstances. Since September 30, 2003, except as disclosed on Schedule 2.1(j) hereto, no event or circumstance has occurred or exists with respect to the Company or its
Subsidiaries or their respective businesses, properties, prospects, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly
announced or disclosed. 
  
 (k)
Indebtedness. Schedule 2.1(k) hereto sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of
this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $300,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements
and other contingent obligations in respect of Indebtedness of others in excess of $100,000, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $25,000 due under leases required to be capitalized in accordance with GAAP.
Neither the Company nor any Subsidiary is in default with respect to any Indebtedness. 
  
 (l) Title to Assets. Each of the Company and the Subsidiaries has good and marketable title to all of its real and personal
property reflected in the Commission Documents, 
  

 5 

 free and clear of any mortgages, pledges, charges, liens, security interests or other encumbrances,
except for those indicated on Schedule 2.1(l) hereto or such that, individually or in the aggregate, do not cause a Material Adverse Effect. All said leases of the Company and each of its Subsidiaries are valid and subsisting and in full
force and effect. 
  
 (m) Actions Pending.
There is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or other proceeding pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary which questions the validity of
this Agreement or any of the other Transaction Documents or any of the transactions contemplated hereby or thereby or any action taken or to be taken pursuant hereto or thereto. Except as set forth on Schedule 2.1(m) hereto, there is no
action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or other proceeding pending or, to the knowledge of the Company, threatened, against or involving the Company, any Subsidiary or any of their respective
properties or assets, which individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. There are no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any Subsidiary or any officers or directors of the Company or Subsidiary in their capacities as such, which individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

  
 (n) Compliance with Law. The business
of the Company and the Subsidiaries has been and is presently being conducted in accordance with all applicable federal, state and local governmental laws, rules, regulations and ordinances, except as set forth in the Commission Documents or on
Schedule 2.1(n) hereto or such that, individually or in the aggregate, the noncompliance therewith could not reasonably be expected to have a Material Adverse Effect. The Company and each of its Subsidiaries have all franchises, permits,
licenses, consents and other governmental or regulatory authorizations and approvals necessary for the conduct of its business as now being conducted by it unless the failure to possess such franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 
  

(o) Taxes. Except as set forth on Schedule 2.1(o) hereto, the Company and each of the Subsidiaries has accurately
prepared and filed all federal, state and other tax returns required by law to be filed by it, has paid or made provisions for the payment of all taxes shown to be due and all additional assessments, and adequate provisions have been and are
reflected in the financial statements of the Company and the Subsidiaries for all current taxes and other charges to which the Company or any Subsidiary is subject and which are not currently due and payable. Except as disclosed on Schedule
2.1(o) hereto, none of the federal income tax returns of the Company or any Subsidiary have been audited by the Internal Revenue Service. The Company has no knowledge of any additional assessments, adjustments or contingent tax liability
(whether federal or state) of any nature whatsoever, whether pending or threatened against the Company or any Subsidiary for any period, nor of any basis for any such assessment, adjustment or contingency. 
  
 (p) Certain Fees. Except as set forth on Schedule
2.1(p) hereto, the Company has not employed any broker or finder or incurred any liability for any brokerage or investment 
  

 6 

 banking fees, commissions, finders’ structuring fees, financial advisory fees or other similar fees
in connection with the Transaction Documents. 
  
 (q) Disclosure. To the best of the Company’s knowledge, neither this Agreement or the Schedules hereto nor any other documents, certificates or instruments furnished to the Purchasers by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by this Agreement contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made herein or therein, in the light of the
circumstances under which they were made herein or therein, not misleading. 
  
 (r) Operation of Business. Except as set forth on Schedule 2.1(r) hereto, the Company and each of the Subsidiaries owns or possesses the rights to all patents, trademarks, domain names (whether or not
registered) and any patentable improvements or copyrightable derivative works thereof, websites and intellectual property rights relating thereto, service marks, trade names, copyrights, licenses and authorizations which are necessary for the
conduct of its business as now conducted without any conflict with the rights of others. 
  
 (s) Environmental Compliance. Except as disclosed on Schedule 2.1(s) hereto, the Company and each of its Subsidiaries have
obtained all material approvals, authorization, certificates, consents, licenses, orders and permits or other similar authorizations of all governmental authorities, or from any other person, that are required under any Environmental Laws.
“Environmental Laws” shall mean all applicable laws relating to the protection of the environment including, without limitation, all requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, material or wastes,
whether solid, liquid or gaseous in nature. Except as set forth on Schedule 2.1(s) hereto, the Company has all necessary governmental approvals required under all Environmental Laws and used in its business or in the business of any of its
Subsidiaries, except for such instances as would not individually or in the aggregate have a Material Adverse Effect. The Company and each of its Subsidiaries are also in compliance with all other limitations, restrictions, conditions, standards,
requirements, schedules and timetables required or imposed under all Environmental Laws. Except for such instances as would not individually or in the aggregate have a Material Adverse Effect, there are no past or present events, conditions,
circumstances, incidents, actions or omissions relating to or in any way affecting the Company or its Subsidiaries that violate or would be reasonably likely to violate any Environmental Law after the Closing or that would be reasonably likely to
give rise to any environmental liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation (i) under any Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including, without limitation, underground storage tanks), disposal, transport or handling, or the emission, discharge, release or threatened release of any hazardous substance. “Environmental
Liabilities” means all liabilities of a person (whether such liabilities are owed by such person to governmental authorities, third parties or otherwise) whether currently in existence or arising hereafter which arise under or relate to any
Environmental Law. 
  

 7 

 (t) Books and Records; Internal Accounting Controls. The records and documents of
the Company and its Subsidiaries accurately reflect in all material respects the information relating to the business of the Company and the Subsidiaries, the location and collection of their assets, and the nature of all transactions giving rise to
the obligations or accounts receivable of the Company or any Subsidiary. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient, in the judgment of the Company’s board of directors, to provide
reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate actions are taken with respect to any differences. 
  
 (u) Material Agreements. Except for the Transaction Documents (with respect to clause (i) only), as disclosed in the Commission
Documents or as set forth on Schedule 2.1(u) hereto, or as would not be reasonably likely to have a Material Adverse Effect, (i) the Company and each of its Subsidiaries have performed all obligations required to be performed by them to date
under any written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement, filed or required to be filed with the Commission (the “Material Agreements”), (ii) neither the Company nor any of its
Subsidiaries has received any notice of default under any Material Agreement and, (iii) to the best of the Company’s knowledge, neither the Company nor any of its Subsidiaries is in default under any Material Agreement now in effect.

  
 (v) Transactions with Affiliates.
Except as set forth on Schedule 2.1(v) hereto, there are no loans, leases, agreements, contracts, royalty agreements, management contracts or arrangements or other continuing transactions between (a) the Company, any Subsidiary or any of
their respective customers or suppliers on the one hand, and (b) on the other hand, any officer, employee, consultant or director of the Company, or any of its Subsidiaries, or any person owning any capital stock of the Company or any Subsidiary or
any member of the immediate family of such officer, employee, consultant, director or stockholder or any corporation or other entity controlled by such officer, employee, consultant, director or stockholder, or a member of the immediate family of
such officer, employee, consultant, director or stockholder which, in each case, is required to be disclosed in the Commission Documents or in the Company’s most recently filed definitive proxy statement on Schedule 14A, that is not so
disclosed in the Commission Documents or in such proxy statement. 
  
 (w) Securities Act of 1933. Based in material part upon the representations herein of the Purchasers, the Company has complied and will comply with all applicable federal and state securities laws in connection
with the offer, issuance and sale of the Securities hereunder. Neither the Company nor anyone acting on its behalf, directly or indirectly, has or will sell, offer to sell or solicit offers to buy any of the Securities or similar securities to, or
solicit offers with respect thereto from, or enter into any negotiations relating thereto with, any person, or has taken or will take any action so as to bring the issuance and sale of any of the Securities under the registration provisions of the
Securities Act and applicable state securities laws, and neither the Company nor any of its affiliates, nor any person acting on its or their 
  

 8 

 behalf, has engaged in any form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of any of the Securities. 
  
 (x) Governmental Approvals. Except as set forth on Schedule 2.1(x) hereto, and except for the filing of any notice prior or
subsequent to the Closing that may be required under applicable state and/or federal securities laws (which if required, shall be filed on a timely basis), no authorization, consent, approval, license, exemption of, filing or registration with any
court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, is or will be necessary for, or in connection with, the execution or delivery of the Securities, or for the performance by the Company of
its obligations under the Transaction Documents. 
  
 (y) Employees. Neither the Company nor any Subsidiary has any collective bargaining arrangements or agreements covering any of its employees, except as set forth on Schedule 2.1(y) hereto. Except as set forth on Schedule
2.1(y) hereto, neither the Company nor any Subsidiary has any employment contract, agreement regarding proprietary information, non-competition agreement, non-solicitation agreement, confidentiality agreement, or any other similar contract or
restrictive covenant, relating to the right of any officer, employee or consultant to be employed or engaged by the Company or such Subsidiary required to be disclosed in the Commission Documents that is not so disclosed. Since September 30, 2003,
no officer, consultant or key employee of the Company or any Subsidiary whose termination, either individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect, has terminated or, to the knowledge of the Company, has
any present intention of terminating his or her employment or engagement with the Company or any Subsidiary. 
  
 (z) Absence of Certain Developments. Except as provided on Schedule 2.1(z) hereto, since September 30, 2003, neither the
Company nor any Subsidiary has: 
  
 (i) issued
any stock, bonds or other corporate securities or any right, options or warrants with respect thereto; 
  
 (ii) borrowed any amount in excess of $300,000 or incurred or become subject to any other liabilities in excess of $100,000 (absolute or
contingent) except current liabilities incurred in the ordinary course of business which are comparable in nature and amount to the current liabilities incurred in the ordinary course of business during the comparable portion of its prior fiscal
year, as adjusted to reflect the current nature and volume of the business of the Company and its Subsidiaries; 
  
 (iii) discharged or satisfied any lien or encumbrance in excess of $250,000 or paid any obligation or liability (absolute or contingent)
in excess of $250,000, other than current liabilities paid in the ordinary course of business; 
  
 (iv) declared or made any payment or distribution of cash or other property to stockholders with respect to its stock, or purchased or
redeemed, or made any agreements so to purchase or redeem, any shares of its capital stock, in each case in excess of $50,000 individually or $100,000 in the aggregate; 
  

 9 

 (v) sold, assigned or transferred any other tangible assets, or canceled any debts or
claims, in each case in excess of $250,000, except in the ordinary course of business; 
  
 (vi) sold, assigned or transferred any patent rights, trademarks, trade names, copyrights, trade secrets or other intangible assets or
intellectual property rights in excess of $250,000, or disclosed any proprietary confidential information to any person except to customers in the ordinary course of business or to the Purchasers or their representatives; 
  
 (vii) suffered any material losses or waived any rights of
material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of prospective business; 
  
 (viii) made any changes in employee compensation except in the ordinary course of business and consistent with past practices; 

 
 (ix) made capital expenditures or commitments therefor
that aggregate in excess of $500,000 except for such capital expenditures or commitments made in the ordinary course of business; 
  
 (x) entered into any material transaction, whether or not in the ordinary course of business; 
  
 (xi) made charitable contributions or pledges in excess of
$25,000; 
  
 (xii) suffered any material damage,
destruction or casualty loss, whether or not covered by insurance; 
  
 (xiii) experienced any material problems with labor or management in connection with the terms and conditions of their employment; or 
  
 (xiv) entered into an agreement, written or otherwise, to take any of the foregoing actions. 
  
 (aa) Public Utility Holding Company Act and Investment
Company Act Status. The Company is not a “holding company” or a “public utility company” as such terms are defined in the Public Utility Holding Company Act of 1935, as amended. The Company is not, and as a result of and
immediately upon the Closing will not be, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended. 
  
 (bb) ERISA. No liability to the Pension Benefit
Guaranty Corporation has been incurred with respect to any Plan by the Company or any of its Subsidiaries which is or would be materially adverse to the Company and its Subsidiaries. The execution and delivery of this Agreement and the issuance and
sale of the Shares and the Warrants will not involve any transaction which is subject to the prohibitions of Section 406 of ERISA or in connection with 
  

 10 

 which a tax could be imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as amended,
provided that, if any of the Purchasers, or any person or entity that owns a beneficial interest in any of the Purchasers, is an “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) with respect to which the
Company is a “party in interest” (within the meaning of Section 3(14) of ERISA), the requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this Section 2.1(cc), the term “Plan” shall mean an
“employee pension benefit plan” (as defined in Section 3 of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company or any Subsidiary or by any trade or business, whether or
not incorporated, which, together with the Company or any Subsidiary, is under common control, as described in Section 414(b) or (c) of the Code. 
  
 (cc) Delisting Notification. The Company has not received notice (written or oral) from the Nasdaq SmallCap Market to the effect
that the Company is not in compliance with the listing or maintenance requirements of such market. 
  
 (dd) Independent Nature of Purchasers. The Company acknowledges that the obligations of each Purchaser under the Transaction
Documents are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under the Transaction Documents. The decision of each
Purchaser to purchase Securities pursuant to this Agreement has been made by such Purchaser independently of any other purchase and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets,
properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or of its Subsidiaries which may have made or given by any other Purchaser or by any agent or employee of any other Purchaser, and no
Purchaser or any of its agents or employees shall have any liability to any Purchaser (or any other person) relating to or arising from any such information, materials, statements or opinions. The Company further acknowledges that nothing contained
herein, or in any Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.
For reasons of administrative convenience only, the Transaction Documents have been prepared by counsel for one of the Purchasers. Such counsel does not represent all of the Purchasers but only such Purchaser and the other Purchasers have retained
their own individual counsel with respect to the transactions contemplated hereby. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or
requested to do so by the Purchasers. The Company acknowledges that such procedure with respect to the Transaction Documents in no way creates a presumption that the Purchasers are in any way acting in concert or as a group with respect to the
Transaction Documents or the transactions contemplated hereby or thereby. 
  

 11 

 (ee) No Integrated Offering. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the offering of the Securities pursuant to this Agreement
to be integrated with prior offerings by the Company for purposes of the Securities Act which would prevent the Company from selling the Securities pursuant to Regulation D and Rule 506 thereof under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any of its affiliates or subsidiaries take any action or steps that would cause the offering of the Securities to be integrated with other offerings. The Company does not have
any registration statement pending before the Commission or currently under the Commission’s review. 
  
 (ff) Sarbanes-Oxley Act. The Company is in substantial compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002
(the “Sarbanes-Oxley Act”), and the rules and regulations promulgated thereunder, that are effective and intends to comply substantially with other applicable provisions of the Sarbanes-Oxley Act, and the rules and regulations promulgated
thereunder, upon the effectiveness of such provisions. 
  
 Section 2.2 Representations and Warranties of the Purchasers. Each of the Purchasers hereby represents and warrants to the Company with respect solely to itself and not with respect to any other Purchaser as follows as of the date
hereof and as of the Closing Date: 
  
 (a)
Organization and Standing of the Purchasers. If the Purchaser is an entity, such Purchaser is a corporation, limited liability company or partnership duly incorporated or organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. 
  
 (b) Authorization and Power. Each Purchaser has the requisite power and authority to enter into and perform the Transaction Documents and to purchase the Securities being sold to it hereunder. The execution, delivery and performance
of the Transaction Documents by each Purchaser and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate or partnership action, and no further consent or authorization of such Purchaser
or its Board of Directors, stockholders, or partners, as the case may be, is required. When executed and delivered by the Purchasers, the other Transaction Documents shall constitute valid and binding obligations of each Purchaser enforceable
against such Purchaser in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application. 
  
 (c) No Conflict. The execution, delivery and performance of the Transaction Documents by the Purchaser and the consummation by the
Purchaser of the transactions contemplated thereby and hereby do not and will not (i) violate any provision of the Purchaser’s charter or organizational documents, (ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Purchaser is a party or by which the Purchaser’s respective properties or assets are bound, or (iii) 
  

 12 

 result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations) applicable to the Purchaser or by which any property or asset of the Purchaser are bound or affected, except, in all cases, other than violations pursuant to clauses (i) or
(iii) (with respect to federal and state securities laws) above, except, for such conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, materially and adversely
affect the Purchaser’s ability to perform its obligations under the Transaction Documents. 
  
 (d) Acquisition for Investment. Each Purchaser is purchasing the Shares and Warrants solely for its own account for the purpose of
investment and not with a view to or for sale in connection with distribution. Each Purchaser does not have a present intention to sell any of the Shares or Warrants, nor a present arrangement (whether or not legally binding) or intention to effect
any distribution of any of the Shares or Warrants to or through any person or entity; provided, however, that by making the representations herein, such Purchaser does not agree to hold the Shares or the Warrants for any minimum or
other specific term and reserves the right to dispose of the Shares or the Warrants at any time in accordance with Federal and state securities laws applicable to such disposition. Each Purchaser acknowledges that it (i) has such knowledge and
experience in financial and business matters such that Purchaser is capable of evaluating the merits and risks of Purchaser’s investment in the Company, (ii) is able to bear the financial risks associated with an investment in the Securities
and (iii) has been given full access to such records of the Company and the Subsidiaries and to the officers of the Company and the Subsidiaries as it has deemed necessary or appropriate to conduct its due diligence investigation. 
  
 (e) Rule 144. Each Purchaser understands that the
Securities must be held indefinitely unless such Shares are registered under the Securities Act or an exemption from registration is available. Each Purchaser acknowledges that such person is familiar with Rule 144 of the rules and regulations of
the Commission, as amended, promulgated pursuant to the Securities Act (“Rule 144”), and that such Purchaser has been advised that Rule 144 permits resales only under certain circumstances. Each Purchaser understands that to the
extent that Rule 144 is not available, such Purchaser will be unable to sell any Securities without either registration under the Securities Act or the existence of another exemption from such registration requirement. 
  
 (f) General. Each Purchaser understands that the
Securities are being offered and sold in reliance on a transactional exemption from the registration requirements of federal and state securities laws and the Company is relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of such Purchaser to acquire the Securities. Each Purchaser understands that no United
States federal or state agency or any government or governmental agency has passed upon or made any recommendation or endorsement of the Securities. 
  
 (g) No General Solicitation. Each Purchaser acknowledges that the Securities were not offered to such Purchaser by means of any
form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or 

 

 13 

 similar media, or broadcast over television or radio, or (ii) any seminar or meeting to which such
Purchaser was invited by any of the foregoing means of communications. 
  
 (h) Accredited Investor. Each Purchaser is an “accredited investor” (as defined in Rule 501 of Regulation D), and such Purchaser has such experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the Securities. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act and such Purchaser is not a broker-dealer. Each Purchaser
acknowledges that an investment in the Securities is speculative and involves a high degree of risk. Each Purchaser has completed or caused to be completed the Investor Questionnaire Certification attached hereto as Exhibit D certifying as to
its status as an “accredited investor” and understands that the Company is relying upon the truth and accuracy of the Purchaser set forth therein to determine the suitability of such Purchaser to acquire the Securities. 
  
 (i) Certain Fees. The Purchasers have not employed
any broker or finder or incurred any liability for any brokerage or investment banking fees, commissions, finders’ structuring fees, financial advisory fees or other similar fees in connection with the Transaction Documents. 
  
 (j) Independent Investment. No Purchaser has agreed
to act with any other Purchaser for the purpose of acquiring, holding, voting or disposing of the Securities purchased hereunder for purposes of Section 13(d) under the Exchange Act, and each Purchaser is acting independently with respect to its
investment in the Securities. 
  
 (k) Patriot
Act. If the Purchaser is an individual, the Purchaser certifies that he or she is not nor to his or her knowledge has been designated, a “suspected terrorist” as defined in Executive Order 13224. If the Purchaser is a corporation,
trust, partnership, limited liability company or other organization, the Purchaser certifies that, to the best of Purchaser’s knowledge, the Purchaser has not been designated, and is not owned or controlled, by a “suspected terrorist”
as defined in Executive Order 13224. The Purchaser hereby acknowledges that the Company seeks to comply with all applicable laws concerning money laundering and related activities. In furtherance of those efforts, the Purchaser hereby represents,
warrants and agrees that to its knowledge: (i) none of the cash or property that the Purchaser will pay or will contribute to the Company has been or shall be derived from, or related to, any activity that is deemed criminal under United States law;
and (ii) no contribution or payment by the Purchaser to the Company, to the extent that they are within the Purchaser’s control shall cause the Company to be in violation of the United States Bank Secrecy Act, the United States International
Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. The Purchaser shall promptly notify the Company if any of these representations ceases to be true and
accurate regarding the Purchaser. The Purchaser agrees to provide the Company any additional information regarding the Purchaser that the Company deems necessary or convenient to ensure compliance with all applicable laws concerning money laundering
and similar activities. The Purchaser understands and agrees that if at any time it is discovered that any of the foregoing representations are incorrect, or if otherwise required by applicable law or regulation related to money laundering similar
activities, the Company may undertake appropriate actions to ensure compliance with applicable law or regulation, including but not limited to segregation and/or redemption of the 
  

 14 

 Purchaser’s investment in the Company. In the event that the Company is requested or required (by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or similar legal, judiciary or regulatory process or as otherwise required by applicable law or regulation) to disclose any confidential information about a Purchaser, the
Company shall (A) provide the Purchaser with prompt prior written notice of such request or requirement and (B) cooperate with the Purchaser so that the Purchaser may seek a protective order or other appropriate remedy. In the event that such
protective order or other remedy is not obtained, the Company and their respective representatives shall disclose only that portion of the confidential information that such person is advised by legal counsel in writing is legally required to be
disclosed, and provided that the Company uses reasonable efforts to obtain reliable assurance that confidential treatment will be accorded any confidential information so disclosed. 
  
 ARTICLE III 
  
 Covenants 
  
 The Company covenants with each Purchaser as follows, which covenants are for the benefit of each Purchaser and their
respective permitted assignees. 
  
 Section 3.1
Securities Compliance. The Company shall notify the Commission in accordance with its rules and regulations, of the transactions contemplated by any of the Transaction Documents and shall take all other necessary action and proceedings as may
be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Securities to the Purchasers, or their respective subsequent holders. 
  
 Section 3.2 Registration and Listing. The Company shall use its reasonable best efforts to cause its
Common Stock to continue to be registered under Sections 12(b) or 12(g) of the Exchange Act, to comply in all respects with its reporting and filing obligations under the Exchange Act, to comply with all requirements related to any registration
statement filed pursuant to this Agreement, and to not take any action or file any document (whether or not permitted by the Securities Act or the rules promulgated thereunder) to terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under the Exchange Act or Securities Act, except as permitted herein. The Company shall use its reasonable best efforts to continue the listing or trading of its Common Stock on the Nasdaq SmallCap Market or any
successor market. The Company will promptly file the “Listing Application” for, or in connection with, the issuance and delivery of the Shares and the Warrant Shares. 
  
 Section 3.3 Inspection Rights. The Company shall permit, during normal business hours and upon
reasonable request and reasonable notice, each Purchaser or any employees, agents or representatives thereof, so long as such Purchaser shall be obligated hereunder to purchase the Shares or shall beneficially own any Shares or Warrant Shares, for
purposes reasonably related to such Purchaser’s interests as a stockholder to examine and make reasonable copies of and extracts from the records and books of account of, and visit and inspect the properties, assets, operations and business of
the Company and any Subsidiary, and to 
  

 15 

 discuss the affairs, finances and accounts of the Company and any Subsidiary with any of its officers,
consultants, directors, and key employees. 
  
 Section 3.4 Compliance with Laws. The Company shall comply, and cause each Subsidiary to comply, with all applicable laws, rules, regulations and orders, noncompliance with which would be reasonably likely to have a Material Adverse
Effect. 
  
 Section 3.5 Keeping of Records and
Books of Account. The Company shall keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied, reflecting all financial transactions of the Company and its Subsidiaries on a
consolidated basis, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection with its business shall be made. 
  
 Section 3.6 Reporting Requirements. If the Company
ceases to file its periodic reports with the Commission, or if the Commission ceases making these periodic reports available via the Internet without charge, then the Company shall furnish the following to each Purchaser so long as such Purchaser
shall be obligated hereunder to purchase the Securities or shall beneficially own Shares or Warrant Shares: 
  
 (a) Quarterly Reports filed with the Commission on Form 10-Q as soon as available, and in any event within forty-five (45) days after the
end of each of the first three fiscal quarters of the Company; 
  
 (b) Annual Reports filed with the Commission on Form 10-K as soon as available, and in any event within ninety (90) days after the end of each fiscal year of the Company; and 
  
 (c) Copies of all notices, information and proxy statements
in connection with any meetings, that are, in each case, provided to holders of shares of Common Stock, contemporaneously with the delivery of such notices or information to such holders of Common Stock. 
  
 Section 3.7 Other Agreements. The Company shall not
enter into any agreement in which the terms of such agreement would restrict or impair the right or ability to perform of the Company or any Subsidiary under any Transaction Document. 
  
 Section 3.8 Subsequent Financings; Right of First Refusal. (a) For a period of one (1) year following
the Closing Date, the Company covenants and agrees to promptly notify (in no event later than five (5) days after making or receiving an applicable offer) in writing (a “Rights Notice”) the Purchasers of the terms and conditions of
any proposed offer or sale to, or exchange with (or other type of distribution to) any third party (a “Subsequent Financing”), of Common Stock or any securities convertible, exercisable or exchangeable into Common Stock, including
convertible debt securities (collectively, the “Financing Securities”). The Rights Notice shall describe, in reasonable detail, the proposed Subsequent Financing, the proposed closing date of the Subsequent Financing, which shall
not be within twenty (20) calendar days from the date the Rights Notice is given nor later than forty five (45) calendar days from the date the Rights Notice is given, including, without limitation, all of the material terms and conditions

  

 16 

 thereof and proposed definitive documentation to be entered into in connection therewith. The Rights
Notice shall provide each Purchaser an option (the “Rights Option”) during the five (5) trading days following delivery of the Rights Notice (the “Option Period”) to purchase up to fifty percent (50%) of its
Purchase Price for the securities being offered in such Subsequent Financing on the same, absolute terms and conditions as contemplated by such Subsequent Financing (the “First Refusal Rights”). If any Purchaser elects not to
participate in such Subsequent Financing, the other Purchasers may participate on a pro-rata basis so long as such participation in the aggregate does not exceed fifty percent (50%) of the total Purchase Price hereunder. Delivery of any Rights
Notice constitutes a representation and warranty by the Company that there are no other material terms and conditions, arrangements, agreements or otherwise except for those disclosed in the Rights Notice, to provide additional compensation to any
party participating in any proposed Subsequent Financing, including, but not limited to, additional compensation based on changes in the Purchase Price or any type of reset or adjustment of a purchase or conversion price or to issue additional
securities at any time after the closing date of a Subsequent Financing. If the Company does not receive notice of exercise of the Rights Option from any of the Purchasers within the Option Period, the Company shall have the right to close the
Subsequent Financing on the scheduled closing date with a third party (and, if applicable, with such Purchasers as shall have exercised their Rights Option); provided that all of the material terms and conditions of the closing are the same as those
provided to the Purchasers in the Rights Notice. If the closing of the proposed Subsequent Financing does not occur within 60 days from the date the Rights Notice is given, any closing of the contemplated Subsequent Financing or any other Subsequent
Financing shall be subject to all of the provisions of this Section, including, without limitation, the delivery of a new Rights Notice. 
  
 (b) For purposes of this Agreement, a Permitted Financing (as defined hereinafter) shall not be considered a Subsequent Financing. A
“Permitted Financing” shall mean (1) shares of Common Stock to be issued to strategic partners and/or in connection with a strategic merger or acquisition; (2) shares of Common Stock or the issuance of options to purchase shares of
Common Stock to employees, officers, directors, consultants and vendors in accordance with the Company’s equity incentive policies; (3) the issuance of securities pursuant to a bona fide firm underwritten public offering of the Company’s
securities; (4) the conversion or exercise of convertible or exercisable securities issued or outstanding prior to the date hereof; (5) up to an aggregate of 500,000 shares of Common Stock to be issued to settle pending and threatened litigation
against the Company; (6) up to an aggregate of 2,000,000 shares of Common Stock to be issued in satisfaction of the Company’s outstanding liabilities, including, but not limited to, currently existing obligations under the Company’s real
estate leases; and (7) equity securities to be issued upon the conversion of $5,000,000 of debt securities of the Company at a conversion price above the Per Share Purchase Price. 
  
 Section 3.9 Use of Proceeds. The proceeds from the sale of the Shares will be used by the Company for
working capital and general corporate purposes and for the repayment of certain Indebtedness. 
  
 Section 3.10 Reporting Status; Eligibility to Use Form S-3. So long as a Purchaser beneficially owns any of the Securities,
the Company shall timely file all reports required to be filed with the Commission pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the 
  

 17 

 Exchange Act or the rules and regulations thereunder would permit such termination. The Company currently
meets, and will take all necessary action to continue to meet, the “registrant eligibility” requirements set forth in the general instructions to Form S-3 applicable to “resale” registrations on Form S-3 during the Effectiveness
Period (as defined in the Registration Rights Agreement). 
  
 Section 3.11 Disclosure of Transaction. The Company shall issue a press release describing the material terms of the transactions contemplated hereby (the “Press Release”) as soon as
practicable after the Closing; provided, however, that if Closing occurs after 4:00 P.M. Eastern Time on any Trading Day but in no event later than one hour after the Closing, the Company shall issue the Press Release no later than 9:00 A.M. Eastern
Time on the first Trading Day following the Closing Date. The Company shall also file with the Commission a Current Report on Form 8-K (the “Form 8-K”) describing the material terms of the transactions contemplated hereby (and
attaching as exhibits thereto this Agreement, the Registration Rights Agreement and the form of Warrant) as soon as practicable following the date of execution of this Agreement but in no event more than two (2) Trading Days following the date of
execution of this Agreement, which Press Release and Form 8-K shall be subject to prior review and comment by the Purchasers. “Trading Day” means any day during which the Nasdaq SmallCap Market (or other principal exchange on which the
Common Stock is traded) shall be open for trading. 
  
 Section 3.12 Disclosure of Material Information. The Company covenants and agrees that neither it nor any other person acting on its behalf has provided or will provide any Purchaser or its agents or counsel with any information that
the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each
Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the Company. 
  
 Section 3.13 Pledge of Securities. The Company acknowledges and agrees that the Securities may be pledged by a Purchaser in
connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Common Stock. The pledge of Common Stock shall not be deemed to be a transfer, sale or assignment of the Common Stock hereunder,
and no Purchaser effecting a pledge of Common Stock shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document; provided that a
Purchaser and its pledgee shall be required to comply with the provisions of Article V hereof in order to effect a sale, transfer or assignment of Common Stock to such pledgee. At the Purchasers’ expense, the Company hereby agrees to execute
and deliver such documentation as a pledgee of the Common Stock may reasonably request in connection with a pledge of the Common Stock to such pledgee by a Purchaser, subject to applicable federal securities laws. 
  

 18 

 ARTICLE IV 
  

Conditions 
  
 Section 4.1 Conditions Precedent to the Obligation of the Company to Close and to Sell the Securities. The obligation hereunder of
the Company to close and issue and sell the Securities to the Purchasers at the Closing Date is subject to the satisfaction or waiver, at or before the Closing of the conditions set forth below. These conditions are for the Company’s sole
benefit and may be waived by the Company at any time in its sole discretion. 
  
 (a) Accuracy of the Purchasers’ Representations and Warranties. The representations and warranties of each Purchaser shall be true and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time, except for representations and warranties that are expressly made as of a particular date, which shall be true and correct in all material respects as of such date. 
  
 (b) Performance by the Purchasers. Each Purchaser
shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Purchasers at or prior to the Closing Date. 

 
 (c) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this
Agreement. 
  
 (d) Delivery of Purchase
Price. The Purchase Price for the Shares shall have been delivered to the Company on the Closing Date. 
  
 (e) Delivery of Transaction Documents. The Transaction Documents shall have been duly executed and delivered by the Purchasers to
the Company. 
  
 Section 4.2 Conditions
Precedent to the Obligation of the Purchasers to Close and to Purchase the Securities. The obligation hereunder of the Purchasers to purchase the Securities and consummate the transactions contemplated by this Agreement is subject to the
satisfaction or waiver, at or before the Closing Date, of each of the conditions set forth below. These conditions are for the Purchasers’ sole benefit and may be waived by the Purchasers at any time in their sole discretion. 
  
 (a) Accuracy of the Company’s Representations and
Warranties. Each of the representations and warranties of the Company in this Agreement and the Registration Rights Agreement shall be true and correct in all material respects as of the Closing Date, except for representations and warranties
that speak as of a particular date, which shall be true and correct in all material respects as of such date. 
  
 (b) Performance by the Company. The Company shall have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions 
  

 19 

 required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the
Closing Date. 
  
 (c) No Suspension, Etc.
Trading in the Common Stock shall not have been suspended by the Commission or the Nasdaq SmallCap Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing),
and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg Financial Markets (“Bloomberg”) shall not have been suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by Bloomberg, or on the New York Stock Exchange, nor shall a banking moratorium have been declared either by the United States or New York State authorities. 
  
 (d) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this
Agreement. 
  
 (e) No Proceedings or
Litigation. No action, suit or proceeding before any arbitrator or any governmental authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Company or any Subsidiary, or any
of the officers, directors or affiliates of the Company or any Subsidiary seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in connection with such transactions. 
  
 (f) Opinion of Counsel. The Purchasers shall have
received an opinion of counsel to the Company, dated the date of such Closing, substantially in the form of Exhibit E hereto, with such exceptions and limitations as shall be reasonably acceptable to counsel to the Purchasers. 
  
 (g) Shares and Warrants. At or prior to the Closing,
the Company shall have delivered to the Purchasers certificates representing the Shares (in such denominations as each Purchaser may request) and certificates representing the Warrants, in each case, being acquired by the Purchasers at the Closing.

  
 (h) Secretary’s Certificate. The
Company shall have delivered to the Purchasers a secretary’s certificate, dated as of the Closing Date, as to (i) the resolutions adopted by the Board of Directors approving the transactions contemplated hereby, (ii) the Certificate, (iii) the
Bylaws, each as in effect at the Closing, and (iv) the authority and incumbency of the officers of the Company executing the Transaction Documents and any other documents required to be executed or delivered in connection therewith. 
  
 (i) Officer’s Certificate. On the Closing Date,
the Company shall have delivered to the Purchasers a certificate signed by an executive officer on behalf of the Company, dated as of the Closing Date, confirming the accuracy of the Company’s representations, warranties and covenants as of the
Closing Date and confirming the compliance by the Company with the conditions precedent set forth in paragraphs (a)-(e) of this Section 4.2 as of the Closing 
  

 20 

 Date (provided that, with respect to the matters in paragraphs (d) and (e) of this Section 4.2, such
confirmation shall be based on the knowledge of the executive officer after due inquiry). 
  
 (j) Registration Rights Agreement. As of the Closing Date, the parties shall have entered into the Registration Rights Agreement in
the form of Exhibit C attached hereto. 
  
 (k) Material Adverse Effect. No Material Adverse Effect shall have occurred at or before the Closing Date. 
  
 ARTICLE V 
  
 Certificate Legend 
  
 Section 5.1 Legend. Each certificate representing the Securities shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required by applicable state
securities or “blue sky” laws): 
  
 THE SECURITIES
REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR FIBERNET TELECOM GROUP, INC. SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. 
  
 The Company agrees to reissue certificates representing any of the Shares and the Warrant Shares, without the legend set forth above if at such time, prior to making any transfer of any such Shares or Warrant Shares, such holder thereof
shall give written notice to the Company describing the manner and terms of such transfer and removal as the Company may reasonably request. Such proposed transfer and removal will not be effected until: (a) the Company has notified such holder that
either (i) in the opinion of Company counsel, the registration of the Shares or Warrant Shares under the Securities Act is not required in connection with such proposed transfer; or (ii) a registration statement under the Securities Act covering
such proposed disposition has been filed by the Company with the Commission and has become effective under the Securities Act; and (b) the Company has notified such holder that either: (i) in the opinion of Company counsel, the registration or
qualification under the securities or “blue sky” laws of any state is not required in connection with such proposed disposition, or (ii) compliance with applicable state securities or “blue sky” laws has been effected. The
Company will respond to any such notice from a holder within five (5) Business Days. In the case of any proposed transfer under this Section 5.1, the Company will use reasonable efforts to comply with any such applicable state securities or
“blue sky” laws, but shall in no event be required, (x) to qualify to do business in any state where it is not then qualified, (y) to take any action that would subject it to tax or to the general service of process in 
  

 21 

 any state where it is not then subject, or (z) to comply with state securities or “blue sky” laws of any state
for which registration by coordination is unavailable to the Company. The restrictions on transfer contained in this Section 5.1 shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other
section of this Agreement. Whenever a certificate representing the Shares or Warrant Shares is required to be issued to a Purchaser without a legend, in lieu of delivering physical certificates representing the Shares or Warrant Shares, provided the
Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, the Company shall use its best efforts to cause its transfer agent to electronically transmit
the Shares or Warrant Shares to a Purchaser by crediting the account of such Purchaser’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system (to the extent not inconsistent with any provisions
of this Agreement). 
  
 ARTICLE VI 
  
 Indemnification 
  
 Section 6.1 General Indemnity. 
  
 (a) The Company agrees to indemnify and hold harmless each
Purchaser (and its respective directors, officers, affiliates, agents, successors and assigns) from and against any and all losses, liabilities, deficiencies, costs, damages and expenses (including, without limitation, reasonable attorneys’
fees, charges and disbursements) (“Losses”) incurred by each Purchaser as a result of any inaccuracy in or breach of the representations, warranties or covenants made by the Company herein. The Purchasers severally but not jointly
agree to indemnify and hold harmless the Company and its directors, officers, affiliates, agents, successors and assigns from and against any and all Losses incurred by the Company as result of any inaccuracy in or breach of the representations,
warranties or covenants made by the Purchasers herein. 
  
 (b) Notwithstanding the foregoing, neither the Company nor the Purchasers shall be entitled to any indemnification under this Article VI unless and until all Losses of the Company or the Purchasers, as applicable, in the aggregate, are in
excess of $50,000 and the Company, or the Purchasers, as applicable, shall then only be liable for Losses in excess of such amount. The maximum aggregate liability of the Company pursuant to its indemnification obligations under this Article VI
shall not exceed the aggregate Purchase Price received hereunder, and the maximum aggregate liability of each Purchaser pursuant to its indemnification obligations shall not exceed the portion of the Purchase Price paid by such Purchaser hereunder.

  
 Section 6.2 Indemnification Procedure.
Any party entitled to indemnification under this Article VI (an “indemnified party”) will give written notice to the indemnifying party of any matters giving rise to a claim for indemnification; provided, that the failure of any party
entitled to indemnification hereunder to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Article VI except to the extent that the indemnifying party is actually prejudiced by such failure to give
notice. In case any such action, 
  

 22 

 proceeding or claim is brought against an indemnified party in respect of which indemnification is sought
hereunder, the indemnifying party shall be entitled to participate in and, unless in the reasonable judgment of the indemnifying party a conflict of interest between it and the indemnified party exists with respect to such action, proceeding or
claim (in which case the indemnifying party shall be responsible for the reasonable fees and expenses of one separate counsel for the indemnified parties), to assume the defense thereof with counsel reasonably satisfactory to the indemnified party.
In the event that the indemnifying party advises an indemnified party that it will not contest such a claim for indemnification hereunder, or fails, within thirty (30) days of receipt of any indemnification notice to notify, in writing, such person
of its election to defend, settle or compromise, at its sole cost and expense, any action, proceeding or claim (or discontinues its defense at any time after it commences such defense), then the indemnified party may, at its option, defend, settle
or otherwise compromise or pay such action or claim. In any event, unless and until the indemnifying party elects in writing to assume and does so assume the defense of any such claim, proceeding or action, the indemnified party’s costs and
expenses arising out of the defense, settlement or compromise of any such action, claim or proceeding shall be losses subject to indemnification hereunder. The indemnified party shall cooperate fully with the indemnifying party in connection with
any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the indemnified party which relates to such action or claim. The indemnifying party
shall keep the indemnified party fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. If the indemnifying party elects to defend any such action or claim, then the indemnified party shall
be entitled to participate in such defense with counsel of its choice at its sole cost and expense. The indemnifying party shall not be liable for any settlement of any action, claim or proceeding effected without its prior written consent.
Notwithstanding anything in this Article VI to the contrary, the indemnifying party shall not, without the indemnified party’s prior written consent, settle or compromise any claim or consent to entry of any judgment in respect thereof which
imposes any future obligation on the indemnified party or which does not include, as an unconditional term thereof, the giving by the claimant or the plaintiff to the indemnified party of a release from all liability in respect of such claim. The
indemnification required by this Article VI shall be made by periodic payments of the amount thereof during the course of investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred, so long as the
indemnified party irrevocably agrees to refund such moneys if it is ultimately determined by a court of competent jurisdiction that such party was not entitled to indemnification. The indemnity agreements contained herein shall be in addition to (a)
any cause of action or similar rights of the indemnified party against the indemnifying party or others, and (b) any liabilities the indemnifying party may be subject to pursuant to the law. 
  
 ARTICLE VII 
  
 Miscellaneous 
  
 Section 7.1 Fees and Expenses. Each party shall pay
the fees and expenses of its advisors, counsel, accountants and other experts, if any, and all other expenses, incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement, provided,
however, that the Company shall pay (i) such fees and expenses set forth 
  

 23 

 on Schedule 2.1(p) hereto, including all reasonable attorneys’ fees and expenses (exclusive
of disbursements and out-of-pocket expenses) incurred by the Purchasers in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Transaction Documents and the transactions contemplated thereunder and
(ii) the costs of any amendments, modifications or waivers of this Agreement or any of the other Transaction Documents. 
  
 Section 7.2 Specific Performance; Consent to Jurisdiction; Venue. 
  
 (a) The Company and the Purchasers acknowledge and agree that irreparable damage would occur in the event
that any of the provisions of this Agreement or the other Transaction Documents were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement or the other Transaction Documents and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any of them
may be entitled by law or equity. 
  
 (b) The
parties agree that venue for any dispute arising under this Agreement will lie exclusively in the state or federal courts located in New York County, New York, and the parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue. The parties irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York. The Company and each Purchaser consent to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this
Section 7.2 shall affect or limit any right to serve process in any other manner permitted by law. The Company and the Purchasers hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to the Securities,
this Agreement or the Registration Rights Agreement, shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party. 
  
 Section 7.3 Entire Agreement; Amendment. This Agreement and the Transaction Documents contain the entire understanding and
agreement of the parties with respect to the matters covered hereby and, except as specifically set forth herein or in the other Transaction Documents, neither the Company nor any Purchaser make any representation, warranty, covenant or undertaking
with respect to such matters, and they supersede all prior understandings and agreements with respect to said subject matter, all of which are merged herein. No provision of this Agreement may be waived or amended other than by a written instrument
signed by the Company and the Purchasers holding at least a majority of all Shares then held by the Purchasers. Any amendment or waiver effected in accordance with this Section 7.3 shall be binding upon each Purchaser (and their permitted assigns)
and the Company. 
  
 Section 7.4 Notices.
Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated 
  

 24 

 below (if delivered on a business day during normal business hours where such notice is to be received),
or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier
service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: 
  

			
	If to the Company:	  	FiberNet Telecom Group, Inc.
	 	  	570 Lexington Avenue
	 	  	New York, New York 10022
	 	  	Attention: President
	 	  	Tel. No.: (212) 405-6200
	 	  	Fax No.: (212) 421-8860
		
	with copies (which copies	  	 
	shall not constitute notice	  	 
	to the Company) to:	  	Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
	 	  	Chrysler Center
	 	  	666 Third Avenue
	 	  	New York, New York 10022
	 	  	Attention: Todd Mason
	 	  	Fax No.: (212) 983-3115
		
	If to any Purchaser:	  	At the address of such Purchaser set forth on Exhibit A to this Agreement.
		
	with copies to:	  	Jenkens & Gilchrist Parker Chapin LLP
	 	  	The Chrysler Building
	 	  	405 Lexington Ave.
	 	  	New York, New York 10174
	 	  	Attention: Christopher S. Auguste
	 	  	Tel No.: (212) 704-6000
	 	  	Fax No.: (212) 704-6288

  
 Any party hereto may
from time to time change its address for notices by giving written notice of such changed address to the other party hereto. 
  
 Section 7.5 Waivers. No waiver by either party of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter. 
  
 Section 7.6 Headings. The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of
the provisions hereof. 
  

 25 

 Section 7.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and assigns. After the Closing, the assignment by a party to this Agreement of any rights hereunder shall not affect the obligations of such party under this Agreement. Subject to Section 5.1
hereof, the Purchasers may assign the Securities and its rights under this Agreement and the other Transaction Documents and any other rights hereto and thereto without the consent of the Company. 
  
 Section 7.8 No Third Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person. 
  
 Section 7.9 Governing Law. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the choice of law provisions. This Agreement shall not interpreted or construed with any presumption against the party causing this
Agreement to be drafted. 
  
 Section 7.10
Survival. The representations and warranties of the Company and the Purchasers shall survive the execution and delivery hereof and the Closing until the second anniversary of the Closing Date, except the agreements and covenants set forth in
Articles I, III, V, VI and VII of this Agreement shall survive the execution and delivery hereof and the Closing hereunder. 
  
 Section 7.11 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. 
  
 Section 7.12 Publicity. The Company agrees that it
will not disclose, and will not include in any public announcement, the names of the Purchasers without the consent of the Purchasers, which consent shall not be unreasonably withheld or delayed, or unless and until such disclosure is required by
law, rule or applicable regulation, and then only to the extent of such requirement. 
  
 Section 7.13 Severability. The provisions of this Agreement are severable and, in the event that any court of competent
jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of this Agreement and this Agreement shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been
contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible. 
  
 Section 7.14 Further Assurances. From and after the date of this Agreement, upon the request of the Purchasers or the Company, the
Company and each Purchaser shall execute and deliver such instruments, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement, the Warrants
and the Registration Rights Agreement. 
  

 26 

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 
  
  

 27 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective
authorized officers as of the date first above written. 
  

			
	FIBERNET TELECOM GROUP, INC.
		
	By:	 	  

	 	 	Name:
	 	 	Title:
	
	PURCHASER:
		
	By:	 	  

	 	 	Name:
	 	 	Title:
	
	PURCHASER:
		
	By:	 	  

	 	 	Name:
	 	 	Title:
	
	PURCHASER:
		
	By:	 	  

	 	 	Name:
	 	 	Title:

  
  
  
  

 28 

 EXHIBIT A 
 LIST OF PURCHASERS 
  

			
	 Names and Addresses
 of
Purchasers

	 	 Number of Shares 
 & Warrants
Purchased

  
  
  

 i 

 EXHIBIT B 
 FORM OF WARRANT 
  

 ii 

 EXHIBIT C 
 FORM OF REGISTRATION RIGHTS AGREEMENT 
  

 iii 

 EXHIBIT D 
 INVESTOR QUESTIONNAIRE CERTIFICATION 
  
 FIBERNET TELECOM GROUP, INC. 
 ACCREDITED INVESTOR CERTIFICATION 
  
 PURCHASE OF THE UNREGISTERED COMMON STOCK AND WARRANTS INVOLVES SIGNIFICANT
RISKS AND IS A SUITABLE INVESTMENT ONLY FOR CERTAIN TYPES OF POTENTIAL INVESTORS. 
  
 The purchase of Unregistered Common Stock and Warrants is suitable only for investors who have no need for liquidity in their investments and who have adequate means of providing for their current needs and
contingencies even if the investment in the Unregistered Common Stock and Warrants results in a total loss. Unregistered Common Stock and Warrants will be sold only to prospective investors which are “accredited investors” promulgated
under the Securities Act. “Accredited Investors” are those investors which make certain written representations that evidence the investor comes within one of the following categories: 
  
 (Initial the appropriate category) 
  

	    	Any bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act,
whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended; any insurance company as defined in Section 2(13) of the Securities Act; any
investment company registered under the Investment Company Act of 1940, as amended, or a business development company as defined in Section 2(a)(48) of that act; any Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended, if the investment decision is made
by a plan fiduciary, as defined in Section 3(21) of such act, which plan fiduciary is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors; 

  

	    	Any private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended; 

  

	    	Any natural person whose individual net worth or joint net worth with that person’s spouse, at the time of investment in the Unregistered Common Stock and Warrants, exceeds
$1,000,000; 

  

 iv 

	    	Any natural person who had an individual income in excess of $200,000 in each of the two most recent calendar years or joint income with that person’s spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching that same income level in the current year; 

  

	    	Any partnership or trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Unregistered Common Stock and Warrants, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D and who has such knowledge and experience in financial and business matters that he is capable of evaluating the risks and merits of an investment in the units; or

  

	    	Any entity in which all of the equity owners are accredited investors. 

  
 As used in this Common Stock Purchase Agreement the term “net worth” means the excess of total assets over total liabilities. In determining
income, an investor should add to his or her adjusted gross income any amounts attributable to tax exempt income received, losses claimed as a limited partner in any limited partnership, deductions claimed for depletion, contributions to an IRA or
Keogh retirement plan, alimony payments and without any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income. 
  
 The Company may make or cause to be made such further inquiry and obtain such additional information as it deems appropriate
with regard to the suitability of prospective investors. The Company may reject subscriptions in whole or in part if, in its discretion, it deems such action to be in the best interests of the Company. 
  
 If any information furnished or representations made by a prospective
investor or others acting on its behalf mislead the Company or the Company as to the suitability or other circumstances of such investor, of if, because of any error or misunderstanding as to such circumstances, a copy of the Subscription Agreement
is delivered to any such prospective investor, the delivery of the Common Stock Purchase Agreement to such prospective investor shall not be deemed to be an offer and the Common Stock Purchase Agreement must be returned to the Company immediately.

  

			
	Purchaser:
		
	By:	 	 
	 	 	

		
	Name:	 	 
	 	 	

		
	Title:	 	 
	 	 	

  
  
  
  

 v 

 EXHIBIT E 
 FORM OF OPINION 
  
 1. The
Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power to own, lease and operate its properties and assets, and to carry on its business as
presently conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the failure to so qualify would have a Material Adverse Effect. 
  
 2. The Company has the requisite corporate power and authority to enter into
and perform its obligations under the Transaction Documents and to issue the Shares and the Warrants. The execution, delivery and performance of each of the Transaction Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly and validly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors is required. Each of the Transaction Documents have been duly executed and
delivered and each of the Transaction Documents constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its respective terms. The Shares are not subject to any preemptive rights under the
Certificate of Incorporation or the Bylaws. 
  
 3. The Shares and
the Warrants have been duly authorized and, the Shares when delivered against payment in full as provided in the Purchase Agreement, will be validly issued, fully paid and nonassessable. The shares of Common Stock issuable upon exercise of the
Warrants have been duly authorized and reserved for issuance, and when delivered against payment in full as provided in the Warrants, will be validly issued, fully paid and nonassessable. 
  
 4. The execution, delivery and performance of and compliance with the terms of the Transaction Documents and the issuance of
the Shares and the Warrants do not (a) violate any provision of the Certificate of Incorporation or Bylaws, (b) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company is a party and which is
known to us, (c) create or impose a lien, charge or encumbrance on any property of the Company under any agreement or any commitment known to us to which the Company is a party or by which the Company is bound or by which any of its respective
properties or assets are bound, or (d) result in a violation of any Federal, state, local or foreign statute, rule, regulation, order, judgment, injunction or decree (including Federal and state securities laws and regulations) applicable to the
Company or by which any property or asset of the Company is bound or affected, except, in all cases other than violations pursuant to clauses (a) and (d) above, for such conflicts, default, terminations, amendments, acceleration, cancellations and
violations as would not, individually or in the aggregate, have a Material Adverse Effect. 
  
 5. No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Company is required under Federal, state or local law, rule or regulation in
connection with the valid execution, delivery and performance of the 
  

 vi 

 Transaction Documents, or the offer, sale or issuance of the Shares and the Warrants other than filings as may be
required by applicable Federal and state securities laws and regulations and the Nasdaq rules and regulations. 
  
 6. To our knowledge, there is no action, suit, claim, investigation or proceeding pending or threatened against the Company which questions the validity
of the Agreement or the transactions contemplated thereby or any action taken or to be taken pursuant thereto. There is no action, suit, claim, investigation or proceeding pending, or to our knowledge, threatened, against or involving the Company or
any of its properties or assets and which, if adversely determined, is reasonably likely to result in a Material Adverse Effect. There are no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any officers or directors of the Company in their capacities as such. 
  
 7. The offer, issuance and sale of the Shares and the Warrants are exempt from the registration requirements of the Securities Act of 1933, as amended.

  

 vii

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