Document:

United States Securities and Exchange Commission Edgar Filing

EXHIBIT 10.1

BASIC LEASE INFORMATION

CANYON PARK TECHNOLOGY CENTER

OFFICE BUILDING LEASE AGREEMENT

“Lease Date”:

as of March 18, 2008

“Tenant”:

iMergent, Inc.

“Address of Tenant/

Premises”: 

1303 North Research Way

Orem, Utah 84097

Contact: Robert Lewis

“Landlord”: 

TCU - Canyon Park, LLC, a Utah limited liability company

 

“Address of Landlord”: 

Canyon Park Management Company

1501 North Technology Way

Orem, Utah 84097

Contact: Allen Finlinson 

 

“Landlord’s Counsel”:

Attn: Monte Deere

Bennett Tueller Johnson & Deere

3865 S. Wasatch Blvd., Suite 300

Salt Lake City, Utah 84109 

“Adjusted Rental”:

“The sum of the annual Basic Rental and the annual Excess Operating Expenses and Excess Taxes.

“Agency”:

None.

 

“Base Year”:

2008 

“Basic Rental”:

For office Premises:

Year:

Annual:

Monthly:

1st 

$1,185,598.94

$98,799.91

2nd

$1,221,487.34

$101,790.61

3rd

$1,258,016.61

$104,834.72

4th

$1,295,827.60

$107,985.63

5th

$1,334,920.32

$111,243.36

For storage Premises:

Year:

Annual:

Monthly:

1st 

$12,912.00

$1,076.00

2nd

$13,299.36

$1,108.28

3rd

$13,698.34

$1,141.53

4th

$14,109.29

$1,175.77

5th

$14,532.57

$1,211.05

The first month’s rent and security deposit shall be due upon execution of the Lease. The Security Deposit shall be equal to the last month’s rent. 

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“Broker”: 

Both parties agree that there is no real estate Broker or Agent is involved in this Lease and no commissions are due. Tenant represents that it has dealt directly with and only with Landlord with this Amendment. Tenant shall indemnify and hold Landlord harmless from all claims of any Brokers or Agents claiming to have represented Tenant in connection with this Amendment. Landlord agrees to indemnify and hold Tenant harmless from all claims of any Brokers or Agents claiming to have represented Landlord in connection with this Amendment.

“Building”:

The Building located in the Park known as “Canyon Park Technology Center” (“CPTC”) and designated as Building K on the site plan of the Park attached hereto as Exhibit A.

“Building Services”:

Standard building services as set forth herein shall be provided from 7 a.m. to 6 p.m., Monday through Friday and 9 a.m. to 1 p.m. on Saturday, except Holidays. After hours heating, ventilating and air conditioning (HVAC) and electrical service shall be charged at the rate of $15.00 per hour, per pod area with Tenant providing an honest report of after-hours usage to the Landlord upon request. If Tenant requests after hours services requiring service personnel, Tenant will be charged for the cost of such service plus an additional charge of 15% of such cost to cover overhead.

“Commencement Date”: 

The date on which the Premises are Substantially Completed. For purposes of this Lease, "Substantially Completed" and/or "Substantial Completion" means the earlier of (a) the date on which Tenant actually occupies the Premises, or (b) the date on which (i) Tenant improvements for the Premises ("Leasehold Improvements") have been completed so that Tenant may use the Premises for their intended purpose; (ii) Landlord has obtained authorization for occupancy of the Premises from appropriate governmental authorities, if required; (iii) Tenant, its employees, agents, customers, and invitees have ready access to the Building and the Premises through the lobby, entranceways, and hallways; (iv) the alterations, fixtures, and equipment installed or to be installed by Landlord are installed and in good operating order; (v) the Premises are ready for the installation of the equipment, furniture, fixtures, or alterations that Tenant will install; and (vi) the following items are installed by Landlord and in good operating order: (A) hallways on which the Premises are located (including walls, flooring, ceiling, lighting, etc.), (B) heating, ventilation, and air conditioning ("HVAC") systems, other mechanical systems, utilities and plumbing servicing the Premises, and (C) the doors and hardware serving the Premises. The Commencement Date is anticipated to be July 1, 2008.

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“Common Roadways”:

The private common roadways shown cross-hatched on Exhibit A-1.

“Escalators”:

“Basic Rent” shall increase annually on each one-year anniversary of the Lease “Commencement Date” as follows:

Year 2

$0.56 per rentable square feet

Year 3

$0.57 per rentable square feet

Year 4

$0.59 per rentable square feet

Year 5

$0.61 per rentable square feet

Landlord agrees that Tenant storage space shown on Exhibit B-1 is exempt from annual Escalators.

“Estimated Excess

Operating Expenses”: 

Landlord’s estimate of the Excess Operating Expenses, which shall be paid by Tenant to Landlord on a monthly basis after the Base Year. 

“Estimated Excess 

Taxes”:

Landlord’s estimate of the Excess Taxes, which shall be paid by Tenant to Landlord on a monthly basis after the Base Year.

“Excess Operating

 Expenses”: 

(i) The amount by which the Operating Expenses Per Square Foot of RA (defined in Exhibit E) for any calendar year or portion thereof during the Lease Term exceeds the Base Year Operating Expenses Per Square Foot of RA (defined in Exhibit E) multiplied by (ii) the RA of the Premises.

“Excess Taxes”:

The product of (i) the amount by which the Taxes per Square Foot of RA (defined in Exhibit E) for any calendar year or portion thereof during the Lease Term exceeds the Taxes Per Square Foot of RA during the Base Year, multiplied by (ii) the RA of the Premises.

“Furniture”:

Landlord will provide Tenant with the use of the Herman Miller modular furniture systems currently in the Premises and from existing Canyon Park inventory, provided such furniture is not being used by Landlord or other tenants and subject to availability and at no cost to Tenant. Tenant is responsible for any items needing to be purchased over and above current inventory. Tenant is responsible for any damage to the furniture, normal wear and tear excepted. Landlord shall be responsible for all setup costs to reconfigure, layout, design, delivery, and installation of Landlord furniture for Tenant for the initial setup of the Premises as shown on Exhibit B.

“HVAC System”:

The DDC controls have been upgraded in the entire Building. Some of the VAV boxes were replaced; including a VFD drive.

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“Land”:

The land upon which the Building is located, which land is shown hatched on Exhibit A attached hereto.

Legal Requirements:

Laws and ordinances of all federal, state, county, and municipal governments, and rules, regulations, orders and directives of all departments, agencies or offices thereof, and of any other governmental, public or quasi-public authorities having jurisdiction over the Premises, the Property, the Park or any portion(s) thereof.

“Park”:

All of the Park Buildings together with all of the land in Canyon Park Technology Center outlined on Exhibit A attached hereto comprised of approximately 85.5 acres and all landscaping, driveways, roadways, parking areas and other improvements now or hereafter located on such land.

“Park Buildings”:

The Buildings located in the Park including, without limitation, Building K, which Park Buildings are shown on the site plan of the Park attached hereto as Exhibit A.

“Parking/Reserved Parking”: 

Landlord shall provide Tenant with fifteen (15) Reserved Parking stalls close to the entrances of the Building free of charge throughout the Term of the Lease. Tenant agrees to reimburse the for the costs for Landlord to paint and maintain the reserved stalls described in the Parking/Reserved Parking section. Additional Reserved Parking can be made available to Tenant, by Landlord, for $300.00 per stall, per year. Other than the above Reserved Parking, all other parking shall be open and available on an unreserved basis in the parking areas shown on Exhibit A, provided Landlord may in its sole discretion designate parking spaces as reserved parking for individual tenants based on each tenant’s proportionate premises square footage. 

“Permitted Use”: 

Tenant shall use and occupy the Premises for limited warehouse use, shipping and receiving, general and executive offices, call center and data center space and for no other use or purpose. 

“Premises”:

The Premises are shown cross-hatched on the floor plan attached hereto as Exhibit B, B-1 and B-2.

“Property”:

Collectively the Land, the Building together with all landscaping, driveways, parking areas and other improvements now or hereafter situated on the Land.

Rentable Area

(or “RA”) of the

Premises: 

Approximately 66,238 rentable square feet located in the Building, consisting of approximately 64,086 rentable square feet of office and data center space and approximately 2,152 rentable square feet of storage space in the basement.

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“Restrictive 

Covenants”:

The covenants set forth on Exhibit H attached hereto, and any amendments or additions thereto pursuant to Paragraph 44.

“Redundant Power”:

Building K is equipped with redundant power systems, provided by Landlord for Tenant’s use that consists of the existing UPS system and backup power generation. Tenant, at no additional charge to Tenant, shall have the right to use their proportionate share (based on rentable square feet leased in the Building) of the redundant backup power systems in the Building.

“Right Of First Refusal”:

Tenant shall have the Right of First Refusal on any space in Building K as it becomes available throughout the Term of the Lease on the following conditions: Upon Landlord receiving an offer for the space by a third party, Tenant shall provide Landlord with a written commitment to lease additional space in the Building at ninety-five (95%) of the then-prevailing Fair Market Rent. As used herein, “Fair Market Rent shall mean the rental rate as determined by an averaging of comparable leases (not to include subleases) signed within the previous nine (9) months in Utah County, taking into account; Class of buildings, quality and condition of space, tenant improvements, amenities, concessions being offered to tenants, and commissions paid to agents/brokers. Upon the receipt of written notice that Landlord has received a bona fide offer (the “Offer”) for the lease of vacant space in the Building by a third party, Tenant shall have ten (10) days to provide Landlord with an unequivocal, irrevocable, written commitment to lease the balance of the Premises in Building. If Tenant fails to provide Landlord with such notice within such 10-day period, Landlord shall be free to lease the vacant space in the Building, to the third party pursuant to the Offer.

“Security Deposit”:

$112,454.41 payable upon execution of the Lease. 

“Security Services”:

Landlord currently provides basic security services, which include card access, security patrols and limited camera surveillance. Landlord shall provide one access card, without charge but subject to change without notice, to each employee at the beginning of the Lease Term and to each new employee when they are employed. There will be a $15.00 charge, subject to adjustment without notice, to Tenant for each card that needs to be replaced or changed for any reason, and that is not returned at the end of the Lease. Landlord will provide one key to the locks on the corridor doors entering the Premises, with additional keys to be furnished by the Landlord at Tenant’s expense. The Landlord at Tenant’s expense shall provide any keys or locks needed within the Premises. Landlord reserves the right to change these services upon notice. 

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“Shared Park Facilities”:

The Common Roadways, Fitness Center and other facilities of the Park described on Exhibit G attached hereto which are used in common on a non-exclusive basis by all tenants of the Park. Landlord reserves the right to reasonably change and notification of the availability and use of the Shared Park Facilities.

“Signage”:

Subject to Paragraph 9(b) of the Lease, Tenant can construct, at Tenant’s cost and expense, a monument sign on the Park land outside of the Building, provided that (a) the size, design, style, color, materials, location, content, and method of illumination of such sign are, in the reasonable opinion of Landlord and to city code, (i) aesthetically pleasing, (ii) complementary to the design, style, and materials of the Building, Park and Park Standards, and (b) the monument is not permanent and may be removed, at Landlord’s option, without expense to the Landlord upon the expiration of the Term or Tenant’s occupancy of the Premises. Additionally, Tenant shall have the right to placement of suite signage to Canyon Park Standard. Tenant shall not place any signs in the lobby or on the building without receiving prior written approval from the Landlord, which will not unreasonably be withheld. The signage shall be consistent with the guidelines and standards established for Canyon Park. Tenant shall have signage rights at all entrances of the Building, on the main level lobby directory and additional premise entry signage placed there by Landlord only. 

“Space Planning”;

Landlord shall provide and pay for all Space Planning on the Premises with a space planner approved and selected by the Landlord.

“Storage Premises”:

The Storage Premises are shown cross-hatched on the floor plan attached hereto as Exhibit B-2. These Premises shall be used by Tenant for Storage and for no other purpose. Tenant agrees that the Storage Premises will be cleaned by Landlord janitorial vendor twice monthly. 

“Tenant Improvements”:

Subject to the representations and warranties of Landlord Contained in the Lease, Tenant accepts the premises “As is” except for the improvements described herein and subject to Exhibit D attached hereto. Landlord agrees to provide and pay for all mutually approved Tenant Improvements in the Premises to include paint, new carpet in areas to replace the broadloom carpet, professional cleaning of all carpet tiles in the Premises, new CAT5e cabling as mutually agreed, upgrade of the security system to HID card readers, furniture and v-wall reconfiguration, new storefront glass as shown on Exhibit B hereto attached and reconfiguration of the K23 data center as shown on Exhibit B-1.

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“Term”:

The period commencing on the Commencement Date (as defined below) and, subject to and upon the terms and conditions set forth herein, or in any exhibit or addendum hereto, continuing for sixty (60) calendar months thereafter, provided, however, that if the Commencement Date falls on a date other than the first day of a calendar month, the expiration date of the primary term shall be extended so as to give effect to the full term specified above in addition to the remainder of the calendar month during which the Commencement Date falls.

“Termination of 

Building F Lease”:

Landlord shall release Tenant from its Lease obligations for building F, dated September 27, 2004 and subsequent amendments, on the following conditions: (a) Tenant is not in material breach of the Lease and no amount of Basic Rent, sundry items or after-hours HVAC is past due; (b) Tenant vacates the Premises in building F; (c) Tenant occupies the new Premises in Building K; (d) both parties agree to conduct a final inspection of the premises in building F, and within 48 hours (during normal business hours) after Tenant vacates the building F premises, to determine if there is any damage to the premises or required restoration as per the terms and conditions of the building F lease and amendments.

The foregoing Basic Lease Information is hereby incorporated into and made a part of the Lease attached hereto (the “Lease”).

Each reference in the Lease to any of the information and definitions set forth in the Basic Lease Information shall mean and refer to the information and definitions hereinabove set forth and shall be used in conjunction with and limited by all references thereto in the provisions of the Lease. In the event of any conflict between any Basic Lease Information and the Lease, the Lease shall control.

--INTENTIONALLY LEFT BLANK-SIGNATURE ON THE NEXT PAGE--

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	LANDLORD:

	TCU - Canyon Park, LLC, a Utah limited liability company

	  

	 
	 
	 

	Date: March 18, 2008

	                                

	By: 

	 

	 
	 
	Name:

	Allen Finlinson 

	 
	 
	Title:

	Vice President/GM

	  

	 
	 
	 

	  

	 
	 
	 

	TENANT:

	 
	iMergent, a Delaware corporation 

	  

	 
	 
	 

	Date: March 18, 2008

	 
	By:

	 

	  

	 
	 
	 

	 
	 
	Name:

	Robert Lewis 

	 
	 
	Title:

	CFO

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CANYON PARK TECHNOLOGY CENTER

OFFICE BUILDING LEASE AGREEMENT

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TABLE OF CONTENTS

Paragraph

No.

1. Definitions and Basic Provisions

 

2. Lease Grant

3. Rent

4. Security Deposit 

5. Leasehold Improvements 

6. Landlord's Obligations

7. Condition of Premises 

8. Use

9. Tenant's Repairs and Alterations

10. Assignment and Subletting

11. Compliance with Laws

12. Indemnity

13. Subordination

14. Rules and Regulations

15. Inspection

16. Condemnation

17. Fire or Other Casualty

18. Tenant Notice Regarding Term/Holdover Rent

19. Taxes on Tenant's Property

20. Events of Default

21. Remedies

22. Landlord's Liability

23. Surrender of Premises

24. Attorneys' Fees

25. Mechanic's Liens

26. No Subrogation-Insurance

27. Brokerage

28. Building Name

29. Estoppel Certificates

30. Notices

31. Severability

32. Amendments; No Waiver; Binding Effect

33. Quiet Enjoyment

34. Gender

35. Joint and Several Liability

36. Certain Rights Reserved by Landlord

37. Notice to Lender

38. Captions

39. Miscellaneous

40. Force Majeure

41. Applicable Law

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42. Third Party Rights

43. Americans with Disabilities Act

44. Site Plan and Restrictive Covenants

45 Security Services

46. Exhibits and Attachments

Exhibit A 

- Site Plan of Park

Exhibit A-1

- Land Owned and Controlled by Landlord

Exhibit B 

- Floor Plan of the Premises 

Exhibit B-1

- Storage Space

Exhibit C 

- Rules and Regulations

Exhibit D 

- Leasehold Improvements

Exhibit E 

- Operating Expenses

Exhibit F 

- Bankruptcy

Exhibit G 

- Shared Park Facilities

Exhibit H 

- Restrictive Covenants

Exhibit I 

- Parking

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CANYON PARK TECHNOLOGY CENTER

OFFICE BUILDING LEASE AGREEMENT

THIS LEASE AGREEMENT is entered into as of the Lease Date set forth in the Basic Lease Information by and between the Landlord and the Tenant named in the Basic Lease Information.

1.

Definitions and Basic Provisions.

The definitions and basic provisions set forth in the Basic Lease Information (the “Basic Lease Information”) executed by Landlord and Tenant contemporaneously herewith are incorporated herein by reference for all purposes and shall be used in conjunction with and limited by the reference thereto in the provisions of this Lease. As used herein, the term “RA,” when referring to the Premises (defined in the Basic Lease Information) shall mean and refer to the rentable area of the Premises measured in accordance with the Building Owners and Managers Association (“BOMA”) method of measurement. The term “RA,” when referring to the Building or any other Park Building, shall mean the aggregate total of all RA in the Building in question or in all of the Park Buildings, as applicable. The Landlord reserves the right to re-measure the Premises in accordance with BOMA standards, in which event the Basic Rental will be immediately adjusted to reflect the change in the RA of the Premises.

2.

Lease Grant. 

Landlord, in consideration of the rent to be paid and the other covenants and agreements to be performed by Tenant and upon the terms hereinafter stated, does hereby lease, demise and let unto Tenant the Premises commencing on the Commencement Date and ending on the last day of the Term unless sooner terminated as herein provided.

3.

Rent.

(a)

Tenant shall pay to Landlord Adjusted Rental, which is the sum of the monthly Basic Rental, the monthly Excess Operating Expenses and the monthly Excess Taxes (as defined in the Basic Lease Information), as estimated by Landlord from time to time, in monthly installments in advance on the fifth day of each month in lawful money of the United States to Landlord at its address set forth above (or such other address as Landlord shall designate in writing to Tenant) without notice or demand and without any abatement, deduction or set-off, for each month of the entire Term. One such monthly installment, shall be payable by Tenant to Landlord upon the execution of this Lease. A like monthly installment shall be due and payable without demand beginning on the first day of the calendar month immediately following the month in which the Commencement Date occurs and continuing thereafter on or before the first day of each succeeding calendar month during the Lease Term. Rent for any fractional month at the beginning of the Lease Term shall be prorated based on one-three hundred sixty-fifth (1/365) of the current annual Adjusted Rental for each day of the partial month this Lease is in effect, and shall be due and payable on or before the first day of the calendar month immediately following the month in which the Commencement Date occurs.

(b)

During the Term of this Lease, the Basic Rental shall be increased at the beginning of each lease year as outlined above in the Basic Lease Terms. The dates described in this Section for computing the adjustment in Basic Rental are hereinafter sometimes referred to 

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collectively as “Rental Adjustment Dates” and singularly as a “Rental Adjustment Date”. After each Rental Adjustment Date, the rent as increased shall be deemed the Basic Rental for all purposes of this Lease.

(c)

If all of any sum due under this Lease is not received by its due date, then Tenant, to the extent permitted by law, shall pay, in addition to the sum owed, a late payment charge equal to five percent (5%) of the sum (or portion thereof) which is overdue. If a check remitted to pay any sum due to Landlord hereunder shall not be honored upon presentment for payment, then Tenant in addition to the amount owed, shall pay to Landlord on demand a fee of five percent (5%) of the amount owed. Following the dishonor of any check presented for payment, Landlord may require all further payments to be made hereunder to be made by certified check or money order. Also, if Landlord does not receive any Adjusted Rental within thirty (30) days after the due date thereof, or fails to pay any sum (other than Adjusted Rental) which at any time becomes due to Landlord under any provision of this Lease as and when the same becomes due hereunder, then, in either such event, Tenant shall pay Landlord interest on such overdue amounts from the due date thereof until paid at an annual rate (the “Past Due Rate”) which equals the lesser of (i) eighteen percent ( 18%) or (ii) the highest rate then permitted by law. All late payment charges and fees for dishonored checks are to reimburse Landlord for additional costs and expenses which Landlord presently expects to incur in connection with the handling and processing of late or dishonored payments. Provision for such late charge, interest or fee for dishonor shall be in addition to all other rights and remedies available to Landlord hereunder or at law or in equity and shall not be construed as liquidated damages or limiting Landlord's remedies in any manner.

(d)

Tenant's covenants and obligations to pay Adjusted Rental and all additional rental (collectively, the “Rent”) hereunder are unconditional and independent of any other covenant or condition imposed on either Landlord or Tenant, whether under this Lease, at law or in equity.

4.

Security Deposit.

The Security Deposit is due upon execution of the Lease. Landlord shall hold the Security Deposit without liability for interest and as security for the performance by Tenant of Tenant's obligations under this Lease. Tenant agrees that such deposit will not be considered an advance payment of rental or a measure of Landlord's damages in case of default by Tenant. Landlord may, from time to time, without prejudice to any other remedy, use such deposit to make good any arrearage in any amount due hereunder and to reimburse Landlord for any other damage, injury, expense or liability caused to Landlord by any breach of this Lease. Following any such application of the Security Deposit, Tenant shall pay to Landlord on demand the amount so applied in order to restore the Security Deposit to its original amount. If Tenant is not then in default hereunder, one-half (1/2) of any remaining balance of the Security Deposit shall be returned by Landlord to Tenant within a reasonable period of time (not to exceed 30 business days) after the expiration of this Lease. The balance of the Security Deposit shall be held by Landlord until final computation of any sums (such as the Excess Operating Expenses) which Tenant may owe under this Lease, not to exceed 60 business days after the expiration of this Lease. If Landlord transfers its interest in the Premises during the Lease Term, Landlord may assign the Security Deposit to the transferee and thereafter shall have no further liability for the 

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return of the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from its general funds.

5.

Leasehold Improvements.

If Landlord has agreed to construct improvements upon the Premises, such improvements shall be installed as provided in Exhibit D attached hereto.

6.

Landlord's Obligations.

(a)

Subject to the following limitations, Landlord shall furnish Tenant while Tenant is occupying the Premises and performing all of its obligations under this Lease, facilities to provide (i) water (hot and cold) for lavatory and cleaning purposes at those points of supply provided for general use of tenants in the Building; (ii) heated and refrigerated air conditioning in season, during Customary Business Hours (defined below), and at such temperatures and in such amounts as are considered to be standard in the industry; (iii) janitorial service to the Premises as is reasonably considered by Landlord to be standard on weekdays other than Holidays (as hereinafter defined) and such window-washing as may from time to time in Landlord's judgment reasonably be required; (iv) elevator service in common with other tenants; provided that Landlord may limit the number of elevators in operation at times other than Customary Building Hours; and (v) replacement of Building standard light bulbs and fluorescent tubes. Also, Landlord shall maintain the public and common areas of the Building in reasonably good order and condition; provided, however, that Tenant shall reimburse Landlord for the cost of repairing any damage to such areas occasioned by Tenant, or its employees, contractor’s agents or invitees. The cost of these facilities and services shall be included in Operating Expenses (as defined in Exhibit F). If Tenant desires any of the services specified in this Paragraph 6 at a time or in an amount other than times or amounts herein designated, such excess service or services shall be supplied to Tenant, subject to availability, upon Tenant's request for such services, which request shall be made in accordance with Landlord's normal operating procedures. Tenant shall pay to Landlord as additional rent the cost of such excess service or services (which may include a charge for depreciation of Landlord's equipment) within fifteen (15) days after Tenant's receipt of a bill therefor. “Customary Business Hours” means 8:00 a.m. to 6:00 p.m. Monday through Friday, and Saturday 9:00 a.m. to 1:00 p.m., except Holidays. “Holidays” means New Year's Day, Martin Luther King Day, Presidents Day, Memorial Day, the Fourth of July, Labor Day, Thanksgiving Day, the Friday following Thanksgiving and Christmas Day. After hours heating, ventilating, air conditioning (HVAC) and electrical service shall be charged at the rate of $15.00 per hour, per pod with the Tenant providing an honest report of after hours usage to the Landlord upon request. If Tenant requests after hours services requiring service personnel, Tenant will be charged for the cost of such service plus an additional charge of 15% of such cost to cover overhead.

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(b)

Landlord shall make available to Tenant electric power facilities in the Premises sufficient to furnish power for lighting, personal computers, typewriters, voice writers, calculating machines and other machines of similar low electrical consumption; provided, however, that Landlord shall not provide power in excess of five (5) watts per square foot of RA of the Premises. If, in Landlord's judgment, Tenant's use of power exceeds that permitted by the preceding sentence, Tenant shall bear the entire cost of the excess, including without limitation, the cost of any metering devices which may be necessary to determine the amount of such excess. Landlord shall also make available electric lighting and current for the common areas of the Building in the manner and to the extent deemed by Landlord to be standard.

(c)

Landlord's obligation to make available the utilities described in this Paragraph 6 is subject to the rules and regulations of the suppliers of utilities and of any municipal or other governmental authority regulating the business of providing utility services. Landlord shall not be responsible or liable to Tenant for any loss, damage or expense that Tenant may sustain or incur if either the quantity or character of any utility service is changed, provided such change is not caused by any action of the Landlord. Any riser or risers or wiring to meet Tenant's excess electrical requirements will be installed by Landlord at Tenant's sole cost and expense (if approved by Landlord in accordance with Paragraph 9 below). If heat generating machines, equipment, fixtures or devices of any nature whatsoever which affect the temperature otherwise maintained by the air conditioning system are used in the Premises by Tenant, Landlord may install supplementary air conditioning units in the Premises at Tenant's expense (including the cost of installation and the cost of operation and maintenance thereof).

(e)

Landlord's failure to any extent to make available, or any slowdown, stoppage or interruption of, the services set forth in this Paragraph 6 resulting from any cause beyond Landlord’s control (as defined in Paragraph 40) shall not render Landlord liable in any respect for damages to person, property or business, nor be construed an eviction of Tenant or work an abatement of Rent, nor relieve Tenant from fulfilling any covenant or agreement hereof; however, Landlord shall use reasonable efforts (and shall not be required to employ any workers at overtime rates) to resume said services in a timely manner.

7.

Condition of Premises. TENANT EXPRESSLY ACKNOWLEDGES THAT (A) TENANT HAS THOROUGHLY EXAMINED THE PREMISES AND TAKES AND ACCEPTS THE PREMISES IN ITS “AS IS” CONDITION ON THE COMMENCEMENT DATE EXCEPT WITH REGARDS TO LANDLORDS’ OBLIGATIONS PURSUANT TO SECTION 5 ABOVE , (B) LANDLORD AND LANDLORD'S AGENTS AND EMPLOYEES HAVE MADE NO REPRESENTATIONS OR WARRANTIES AS TO THE CONDITION OF THE PREMISES, THE BUILDING, THE PROPERTY OR THE PARK, NOR HAS LANDLORD MADE ANY COMMITMENTS TO REMODEL, REPAIR OR REDECORATE, EXCEPT AS EXPRESSLY SET FORTH HEREIN AND (C) LANDLORD EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT'S INTENDED COMMERCIAL PURPOSE. TENANT EXPRESSLY WAIVES AND RELEASES LANDLORD FROM ANY OF SAME. 

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8.

Use. 

(a)

Tenant shall use the Premises only for the Permitted Use (as defined in the Basic Lease Information). Tenant shall not occupy or use the Premises, or permit any portion of the Premises to be occupied or used, for any business or purpose other than the Permitted Use or for any use or purpose which is unlawful in part or in whole or deemed by Landlord to be disreputable in any manner or extra hazardous on account of fire, nor permit anything to be done that will in any way invalidate or increase the rate of insurance on the Building or its contents. Tenant shall promptly upon demand reimburse Landlord for any additional premium charged for any such insurance by reason of Tenant's failure to comply with the provisions of this Paragraph. Tenant will conduct its business and control its agents, employees and invitees in such a manner as not to create any nuisance, interfere with, annoy or disturb other tenants or interfere with Landlord in the management of the Building, the Property or the Park. Tenant will maintain the Premises in a clean, healthful and safe condition and will comply with all laws, ordinances, orders, rules and regulations of all state, federal, municipal and other agencies or bodies having jurisdiction over the Premises and governing the use, condition or occupancy of the Premises, whether existing as of the Commencement Date or enacted subsequent thereto.

(b)

If any governmental license or permit shall be required for the proper and lawful conduct of Tenant's business in the Premises or any part thereof, Tenant shall duly procure and thereafter maintain such license or permit and submit the same to Landlord. Landlord agrees to cooperate with Tenant and to execute such applications, certificates and other documents as Tenant shall reasonably request in order for Tenant to procure or maintain any such license or permit, provided that same is at no cost or expense to Landlord. Tenant shall at all times comply with the terms and conditions of each such license or permit. Tenant shall not at any time use or occupy, or suffer or permit anyone to use or occupy the Premises, or do or permit anything to be done in the Premises, in any manner which (i) violates the existing, permanent Certificate of Occupancy for the Premises; (ii) causes or is likely to cause injury to the Building or any equipment, facilities or systems therein; (iii) constitutes a violation of the Legal Requirements; (iv) materially impairs the character, reputation or appearance of the Building as Class A office Buildings; or (v) materially impairs the proper and economic maintenance, operation and repair of the Building and/or its equipment, facilities or systems.

9.

Repairs and Alterations. 

(a)

Tenant shall keep and maintain the Premises in a good, clean condition of repair and maintenance. Tenant shall not damage or injure the Premises. If any repairs or maintenance required to be performed by Tenant are not commenced within fifteen (15) days and completed within thirty (30) days after Landlord notifies Tenant of the need for same, Landlord may make such repairs or replacement, and Tenant shall pay the cost thereof (plus an additional charge of fifteen percent (15%) of such cost to cover overhead) to Landlord within fifteen (15) days after Tenant's receipt of a statement from Landlord. Tenant further agrees not to commit or allow any waste or damage to be committed on any portion of the Property, and at the termination of this Lease, by lapse of time or otherwise, Tenant shall deliver up the Premises to Landlord in as good condition as at the Commencement Date, ordinary wear and tear excepted. Except as may be set forth in Exhibit D, Landlord shall not be required to make any improvements or repairs of any kind or character on or to the Property, or any portion thereof, during the Lease Term. Notwithstanding the foregoing, Landlord shall make all necessary repairs 

17

to the Building components servicing or supporting, but located outside, the Premises, including without limitation the foundation, outside walls, interior load-bearing walls, roof, load-bearing beams, and other major structural components of the Building and treat such repairs as Operating Expenses (as defined in Exhibit E), unless the need for such repair arises out of (1) the performance by Tenant of any alterations or other work, (2) any act or omission of Tenant or its employees, invitees or contractors or (3) the installation of any equipment, fixtures or property by Tenant in the Premises or the moving of the foregoing in or out of the Premises, in which event Tenant shall be responsible to make the repairs. 

(b)

Tenant, without the prior written consent of Landlord, shall not paint, install lighting or decorations (except wall hangings), or install any signs, window or door lettering or advertising media of any type on or about the Property, or any part thereof, or make any other alterations, improvements or physical additions in or to the Property, or any part thereof, which consent shall not be unreasonably with held by Landlord. At the termination of the Lease, at Landlord's option and subject to the Landlord’s right to retain improvements desired by Landlord, Tenant shall restore any portions of the Premises altered, added to, or improved by Tenant to the original condition. Notwithstanding the Tenant’s duty hereunder to remove its, any alterations, additions, or improvements, including without limitation any HVAC, power supply, or other equipment attached to the Premises, whether temporary or permanent in character, made in or upon the Property shall, at Landlord’s sole discretion and option, be Landlord's property on termination of this Lease and shall remain on the Property without compensation to Tenant. All furniture and unattached, movable equipment and trade fixtures kept in the Premises by Tenant shall be removed by Tenant at the termination of this Lease. If the items are not removed, Landlord may elect that such items will become Landlord's property. If removal occurs, Tenant, at Tenant's expense, shall repair and restore to its original condition any portion of the Premises which is damaged by such removal. All such installations, removals and restorations shall be accomplished in a good workmanlike manner so as not to damage the Premises or the primary structure or structural qualities of the Building or any plumbing or electrical lines or other utility facilities. All contractors used by Tenant in performance of any alterations or other work in the Premises shall be subject to the approval of Landlord, such approval not to be unreasonably withheld provided that with respect to any structural, mechanical or electrical work (regardless of the cost thereof) Tenant will use Landlord's contractors. If the cost of the alterations or other work to be performed by Tenant as reasonably estimated by Landlord shall exceed $30,000 (i) Landlord shall have the right to approve the Tenant’s architect, which approval shall not be unreasonably withheld, unless Tenant agrees to use Landlord's architect and (ii) Tenant may either use Landlord, Landlord's property manager or Landlord's outside construction manager as construction manager for the project and pay to such construction manager a fee equal to 3% of the cost of such alteration work or use its own construction manager with the prior written consent of Landlord, which consent shall not be unreasonably withheld. Notwithstanding anything herein to the contrary, with respect to any non-structural alteration which (i) does not affect any Building system or any portion of the Building outside the Premises and (ii) does not cost more than $30,000, the consent of Landlord will not be unreasonably withheld or delayed. In addition, with respect to painting and other cosmetic work that does not cost more than $30,000 in the aggregate, Landlord's consent shall not be required provided Landlord receives at least 10 days advance notice thereof. Promptly after Tenant completes any alteration; it will deliver to Landlord a set of as-built drawings. 

18

10.

Assignment and Subletting.

(a)

Tenant shall not, either voluntarily or by operation of law, assign all or any portion of this Lease, nor sublet the Premises or any part thereof, nor permit the Premises or any part thereof to be occupied by any person other than Tenant or Tenant's employees, without the prior written consent of Landlord which shall not be unreasonably withheld. If Tenant desires to assign this Lease or sublet the Premises or any part thereof, Tenant shall so notify Landlord at least sixty (60) days prior to the date on which Tenant desires to make such assignment or sublease, which notice shall contain all material terms of the proposed assignment or sublease and financial information regarding the proposed assignee or subtenant as a condition of such sublease or assignment, Landlord may require plans to verify compliance with Building and fire codes. Landlord may assess its reasonable out of pocket costs for review of such plans. If Tenant desires to assign this Lease, Landlord shall have the option within thirty (30) days after receipt of such notice to notify Tenant in writing that Landlord elects to terminate this Lease as of the date specified by Tenant for said assignment. If Tenant desires to sublet more than 50% of the RA of the Premises, Landlord shall have the option within thirty (30) days after receipt of such notice to notify Tenant in writing that Landlord elects to terminate this Lease as of the date specified by Tenant for such subletting. If Landlord fails to timely exercise the foregoing recapture right or if the requested sublease does not trigger a recapture right on behalf of Landlord, then Landlord shall have forty-five (45) days after receipt of such notice to notify Tenant whether Landlord consents to such an assignment or subletting. Landlord shall not unreasonably withhold or delay its consent to a subletting provided that (a) the sublessee under any such subletting shall be such person or entity as in the Landlord's judgment is of a character and engaged in a business such as is in keeping with the standards of the Park and its occupancy, (b) the sublessee shall have sufficient net worth to perform its obligations under its sublease, (c) the sublessee shall not be a (i) government or a governmental authority or a subdivision or an agency of any government or any governmental authority, (ii) a tenant of the Landlord elsewhere in the Park, (iii) an entity or person with whom the Landlord has negotiated (for purposes hereof, “negotiated” shall mean exchanging of written proposals, leases being prepared or drafts distributed and modified) for a proposed lease of space in the Park at any time during the six (6) month period prior to the receipt of said notice by the Landlord or (iv) competitor of Landlord and (d) the space so to be sublet shall be regular in shape. If Landlord fails to notify Tenant in writing of such election within said forty-five (45) day period, Landlord shall be deemed to have consented to such assignment or sublease. If Landlord consents to a sublease, Tenant shall provide, at its expense, direct access from the sublet space to a public corridor of the Building in accordance with plans and specifications approved by Landlord. No assignment or subletting by Tenant shall relieve Tenant of any obligations under this Lease. Landlord's consent to any assignment, sublease or other transaction shall not be deemed a consent to any other or subsequent transaction.

(b)

If Landlord consents to any subletting or assignment by Tenant as hereinabove provided and the rent, additional rent and other consideration received by Tenant under or relating to such sublease exceeds the Rent payable to Landlord under this Lease, or if Tenant receives any consideration from the assignee under any such assignment, then 50% of such excess rents and consideration under or relating to such sublease or 50% of such consideration for any assignment shall automatically be due and payable by Tenant to Landlord as additional rent hereunder. 

19

(c)

Landlord may transfer and assign, in whole or in part, its rights and obligations hereunder concurrently with the transfer and assignment of all or any portion of the Park and in such event and upon assumption by the transferee of Landlord's obligations hereunder (any such transferee to have the benefit of, and be subject to, the provisions of this Lease), no further liability or obligation shall thereafter accrue against Landlord hereunder.

(d)

If Tenant is a corporation, then any merger, consolidation, dissolution or liquidation, or any change (whether in one or a series of transactions) in ownership or power to vote of fifty percent (50%) or more of its outstanding voting stock shall constitute an assignment of this Lease requiring the consent of Landlord. If Tenant is a partnership, joint venture or other entity, then any liquidation or dissolution, or any transfer of ownership of interests totaling fifty percent (50%) or more of the total interests in such entity (whether in one or a series of transactions) shall constitute an assignment of this Lease requiring the consent of Landlord. 

(e)

Tenant agrees that it shall not place (or permit the placement of) any signs on or about the Premises or the Park, nor conduct (or permit anyone to conduct) any public advertising which includes any pictures, renderings, sketches or other representations of any Building (or a portion thereof) with respect to any proposed assignment or subletting of the Premises, without Landlord's prior written consent. In all events, Tenant shall comply with all applicable governmental regulations.

(f)

Tenant shall not mortgage, pledge, hypothecate or otherwise encumber (or grant a security interest in) this Lease or any of Tenant's rights hereunder

(g)

Landlord may terminate this Lease if Tenant sells, transfers, exchanges, distributes, or otherwise disposes of more than thirty percent (30%) of its assets (except in the ordinary course of business, in a public offering of the Tenant’s stock, or in a merger or acquisition) unless after such disposition, the net worth of Tenant as demonstrated to the reasonable satisfaction of Landlord is an amount acceptable to the Landlord.

(h)

If Tenant assigns this Lease or sublets all or substantially all of the Premises, any option then held by Tenant (such as an option to renew this Lease or to expand the size of the Premises) shall terminate automatically upon the assignment or sublease unless approved otherwise by Landlord. 

(i)

Tenant shall pay Landlord's reasonable expenses incurred in reviewing any request by Tenant under this Paragraph upon demand.

(j)

If the Premises or any part thereof are sublet or used or occupied by anyone other than Tenant, whether or not in violation of this Lease, Landlord may, after default by Tenant and expiration of Tenant's time to cure such default, collect rent from the subtenant or occupant. Landlord may apply the net amount collected to the Rent, but no such subletting, occupancy or collection shall be deemed a waiver of any of the provisions of this Paragraph 10 or the acceptance of the subtenant or occupant as tenant, or a release of Tenant from the performance of Tenant's obligations under this Lease. Landlord's consent to any subletting or use or occupancy by others shall not relieve Tenant of its obligation to obtain Landlord's written consent to any other subletting, use or occupancy by others. 

20

(k)

If requested by Tenant in connection with a potential subletting of the Premises by Tenant, Landlord agrees (1) to use commercially reasonable efforts to tour potential sublessees of the Premises, as determined in Landlord’s sole discretion, through the portion of the Premises to be sublet, and/or (2) refer Tenant to Landlord’s listing broker. Nothing contained herein shall be construed as to obligate Landlord to pay any commissions to its listing broker, alleviate the need for Tenant to obtain Landlord’s consent with respect to any specific subletting or assignment by Tenant as set forth above, require Landlord to send prospective tenants of the Park to Tenant rather than lease office space in the Park to such prospective tenants, or require Landlord to take any actions with respect to any attempt by Tenant to sublet the Premises other than as specifically set forth herein.

11.

Compliance with Laws. Tenant shall comply with all Legal Requirements which relate to Tenant's use of the Premises or Tenant's method of operation therein, or impose any violation, order or duty on Tenant by reason thereof. Tenant shall pay all the costs, expenses, penalties and damages which may be imposed upon Landlord by reason of Tenant's failure to fully and promptly comply with and observe the provisions of this Paragraph. Landlord shall comply with all Legal Requirements which relate to the Shared Park Facilities. Landlord agrees to remedy any non-compliance with Legal Requirements elsewhere in the Park if such non-compliance has the effect of preventing or hindering Tenant from obtaining a permit, certificate or approval that Tenant is entitled to obtain hereunder from local authorities.

12.

Indemnity. 

(a)

Landlord shall not be liable or responsible to Tenant for any loss or damage to any property or person occasioned by theft, act of God, public enemy, injunction, riot, strike, insurrection, war, court order, requisition or order of governmental body or authority, or for any damage or inconvenience that may arise through repair or alteration of any part of the Building or any part of the Park, or failure to make any such repairs unless caused by the gross negligence or willful misconduct of Landlord. In addition, Landlord shall not be liable to Tenant, or to Tenant's agents, servants, employees, customers or invitees and Tenant shall indemnify, defend and hold harmless Landlord of and from all fines, suits, claims, demands, losses, liabilities, actions and costs (including court costs and attorneys' fees, at trial and on appeal) arising in whole or in part from (i) any injury to person or damage to property caused by any act, omission or gross neglect of Tenant, Tenant's agents, servants, employees, customers or invitees, (ii) Tenant's use of the Premises or the conduct of Tenant's business or profession, (iii) any activity, work, or thing done, permitted or suffered by Tenant in or about the Premises or (d) any breach or default in the performance of any obligation on Tenant's part to be performed under the terms of this Lease unless caused by the gross negligence or willful misconduct of Landlord. Landlord shall indemnify, defend and hold harmless Tenant of and from all fines, suits, claims, demands, losses, liabilities, actions and costs (including court costs and attorneys' fees, at trial and on appeal) arising directly from (i) any injury to person or damage to property caused by Landlord, Landlord’s agents, servants or employees, or (ii) conduct of Landlord, unless caused by the gross negligence or willful misconduct of Tenant.

(b)

Tenant shall not (i) do any act or thing in respect of the Premises, or use or occupy the Premises, or conduct Tenant's business in any manner, or (ii) permit or suffer to be done any act or thing or fail to act in respect of the Premises, whereby the fire insurance or any other insurance then in effect for the Building, the Property or any other part of the Park or any 

21

part thereof shall become void or suspended or whereby any insurance premiums maintained by Landlord (or imputed premiums, if Landlord self-insures) shall be higher than those which would normally have been in effect for the occupancy contemplated under the Permitted Uses in accordance with the terms and provisions of this Lease. In case of a breach of the provisions of this Paragraph, if the breach is not due to circumstances beyond Tenant's reasonable control and if Tenant shall not have remedied the breach within ten (10) days of Landlord's written notice of the breach to Tenant, then in addition to all other rights and remedies of Landlord hereunder, Tenant shall (i) indemnify and hold Landlord and its affiliates harmless from and against any loss which would have been covered by insurance which shall have become void or suspended because of such breach by Tenant, and (ii) pay to Landlord any and all increases of premiums (including imputed premiums) on any insurance resulting from any such breach.

(c)

Tenant shall defend, indemnify and hold harmless Landlord, its affiliates and its or their officers, directors, employees and agents, (“Landlord's Indemnities”) from and against any and all claims arising from or in connection with (i) any work or thing whatsoever done in the Premises by or for Tenant, (ii) any act or any condition created in the Premises by Tenant or any of its subtenants, or its or their-agents, employees, invitees or contractors, or (iii) any accident, bodily injury (including death) or damage to property, including damage to property or injury of Tenant or its employees, agents, contractors, or invitees occurring in the Premises, unless (i) caused by the gross negligence of Landlord, its agents, employees, or contractors, or (ii) caused by or relating to any breach or default by Landlord in the full and prompt performance of Landlord's obligations under this Lease which remains uncured beyond a reasonable period of time after Landlord is given notice thereof by Tenant. 

(d)

Notwithstanding any provision to the contrary, Tenant shall look solely to Landlord's interests in the Park in the event of any claim against Landlord arising out of this Lease. No other properties or assets of Landlord or any agent or employee of Landlord shall be subject to levy, execution or other enforcement procedures for the satisfaction of any remedy of Tenant arising out of this Lease. Landlord in no event shall be liable for consequential damages arising out of any loss of use of the Premises or any equipment or facilities therein by Tenant or any person claiming through Tenant.

(e)

The indemnity and hold harmless agreements in this Paragraph shall include indemnification from and against any and all liability, fines, suits, demands, costs and expenses of any kind or nature (including, without limitation, reasonable attorneys' fees and disbursements) incurred in or in connection with any such claim or proceeding brought thereon, and the defense thereof, but shall be limited to the extent any proceeds actually collected by Landlord or Tenant (as the case may be) or such injured party under policies owned by Landlord or Tenant (as the case may be) or such injured party with respect to such damage or injury are insufficient to satisfy same. The indemnity and hold harmless agreements in this Paragraph in favor or a party shall not apply in cases of that party's sole negligence. 

13.

Subordination.

(a)

This Lease and all rights of Tenant hereunder are and shall be subject and subordinate to any deeds of trust, mortgages or other instruments of security (“Security Instruments”), as well as to any ground leases or primary leases (“Master Leases”), that now or hereafter cover any of the Property or any interest of Landlord therein, and to any and all advances made on the security thereof, and to any and all increases, renewals, modifications, 

22

consolidations, replacements and extensions thereof. Landlord hereby expressly reserves the right, at its option and declaration, to place Security Instruments and Master Leases on and against any of the Property or any interest of Landlord therein, superior in effect to this Lease and the estate created hereby. This clause shall be self-operative and no further instrument of subordination need be required, however, upon Landlord's request, or upon the request of any holder (a “Holder”) under any Security Instrument, or of any lessor (a “Lessor”) under any Master Lease, Tenant shall execute promptly any instrument (including without limitation an amendment to this Lease that does not materially and adversely affect Tenant's rights or duties under this Lease) or instruments intended to subordinate this Lease or to evidence the subordination of this Lease to any such Security Instrument or Master Lease. Tenant hereby appoints Landlord Tenant's attorney in fact to execute any such instrument for and on behalf of Tenant.

(b)

In the event of the enforcement by a Holder under any Security Instrument of the remedies provided for by law or by such Security Instrument, or in the event of the termination of any Master Lease, the Holder or the Lessor may terminate this Lease or may continue this Lease in full force and effect as a direct lease between such Holder or Lessor and Tenant. If the Holder or Lessor continues this lease, Tenant will attorn to and automatically become the tenant of such successor in interest without change in the terms or other provisions of this Lease (Tenant hereby waiving any right Tenant may have to terminate this Lease or surrender possession of the Premises) and this Lease shall continue in full force and effect; provided, however, that such successor in interest shall not be bound by or liable for (i) any payment of Rent for more than one month in advance, (ii) any amendment or modification of this Lease made without the written consent of such Holder, Lessor or successor in interest, or (iii) any offset, claim or cause of action which Tenant may have against Landlord relating to the period which is prior to the time Tenant becomes the tenant of such successor in interest. Upon request by any Holder, Lessor or successor in interest to either, Tenant shall execute and deliver an instrument confirming this attornment herein provided for.

(c)

Tenant agrees that any Holder or Lessor may at any time subordinate any rights which Holder or Lessor may hold to the rights of Tenant under this Lease.

14.

Rules and Regulations. Tenant shall comply fully with the rules and regulations of the Building, the Property and the Park that are attached hereto as Exhibit C, and made a part hereof as though fully set out herein. Tenant shall further be responsible for the compliance with such rules and regulations by the employees, servants, agents, contractors, visitors and invitees of Tenant. Landlord reserves the right to amend or rescind any of the rules and regulations and to make such other and further rules and regulations as in its reasonable judgment shall from time to time be prudent in the operation and management of the Premises, the Property and/or the Park, which rules and regulations shall be binding upon Tenant upon notice to Tenant of same provided that Landlord agrees to give advance notice to Tenant of any amendment to the rules and regulations and to consider Tenant's comments thereto, if any.

15.

Inspection and Access. Landlord and its officers, agents and representatives shall have the right to enter into and upon any and all parts of the Premises at all reasonable hours (or, if any emergency, at any hour) for all reasonable purposes, including without limitation making repairs or alterations, inspecting the Premises, and showing the Premises to prospective tenants, purchasers or lenders; and Tenant shall not be entitled to any abatement or reduction of Rent by 

23

reason thereof, nor shall such be deemed to be an actual or constructive eviction. Unless there is an emergency, Landlord shall give prior notice to Tenant and shall allow a representative to accompany Landlord provided such representative does not interfere with such entry.

16.

Condemnation. 

(a)

If all of the Premises shall be taken by any public or quasi-public authority under the power of condemnation, eminent domain or expropriation, or in the event of conveyance of all of the Premises in lieu thereof, this Lease shall terminate as of the day possession shall be taken by such authority. If thirty percent (30%) or less of the Premises shall be so taken or conveyed, this Lease shall terminate only in respect of the part so taken or conveyed as of the day possession shall be taken by such authority. If more than thirty percent (30%) of the Premises or if an essential portion of the Property shall be so taken or conveyed, this Lease shall terminate only in respect of the part of the Premises, so taken or conveyed as of the day possession shall be taken by such authority, but Landlord and Tenant shall have the right to terminate this Lease upon notice given to the other party within 30 days after such taking of possession. Landlord shall receive any and all funds or compensation paid by the authority for property taken or conveyed, provided that Tenant shall receive any portion of such condemnation proceeds awarded by the authority specifically allocated to improvements paid for by Tenant to the extent such improvements increased the value of the Premises for purposes of such award.

(b)

If this Lease shall continue in effect as to any portion of the Premises not so taken or conveyed, the Basic Rent and the RA of the Premises shall be computed on the basis of the remainder of the Premises as of the day possession shall be taken. Except as specifically provided herein, in the event of any such taking or conveyance there shall be no reduction in Rent. If this Lease shall continue in effect, Landlord shall make all necessary alterations so as to constitute the remainder of the Premises a complete tenantable unit. Landlord shall do so at its expense, but shall be obligated only to the extent of the net award or other compensation (after deducting all expenses in connection with obtaining same) available to Landlord for the improvements taken or conveyed (excluding any award or other compensation for land). Within thirty (30) days of Landlord's receipt of the net award or other compensation, Landlord shall advise Tenant whether such funds are sufficient or constitute the remainder of the Premises a complete tenantable unit. If such funds are not sufficient and if Landlord elects therefore not to proceed, or if for any other reason Landlord does not make such alterations to constitute the remainder of the Premises a tenantable unit, Tenant shall have the right upon notice to terminate this Lease.

(c)

All awards and compensation for any taking or conveyance, whether for the whole or a part of the Premises, the Property or any other portion of the Park shall be property of Landlord, and Tenant hereby assigns to Landlord all of Tenant's right, title and interest in and to any and all such awards and compensation. Tenant shall be entitled to claim in the condemnation proceeding such award or compensation as may be allowed for Tenant's personal property and for loss of business, and the cost of Tenant's relocation, but only if such award or compensation shall be made by the condemning authority in addition to, and shall not result in a reduction of, the award or compensation made by it to Landlord.

17.

Fire or Other Casualty. If the Premises or the Building shall be destroyed or materially damaged and Landlord is unable to restore the Premises or the Building to an acceptable condition within a reasonable amount of time, then either party may terminate this 

24

Lease by notice to the other within thirty (30) days after the occurrence of the casualty, and this Lease shall terminate as of the date of the casualty. If neither party terminates this Lease, Landlord shall proceed with reasonable diligence and at its sole cost and expense to rebuild and repair the Premises or the Building, as the case may be, and this Lease shall continue in full force and effect. If the casualty is due wholly or in part to an act or omission of Tenant or Tenant's agents, employees, invitees or contractors, Tenant shall pay to Landlord any deductible under Landlord's insurance policies. Notwithstanding the foregoing, if any Holder requires that the insurance proceeds be used to retire a debt, or if any Lessor should terminate a Master Lease as a result of any such casualty, then Landlord may elect not to rebuild and this Lease shall terminate upon delivery to Tenant of a notice to that effect. Landlord's obligation to rebuild and repair under this Paragraph 17 shall in all events be limited to restoring the Premises to substantially the condition same were in immediately preceding the casualty, excluding all signs, fixtures, equipment or furniture of Tenant and any alterations, additions or improvements to the Premises made by Tenant, whether prior to or after the Commencement Date. Tenant agrees that promptly after completion of such work by Landlord, Tenant shall proceed with reasonable diligence and at its sole cost and expense to rebuild, repair and restore all signs, furniture, equipment, fixtures and other improvements which may have been placed by Tenant within the Premises. Provided that the casualty did not occur by reason of any act or omission of Tenant or Tenant's agents, employees, invitees or contractors, Landlord shall allow Tenant a diminution of Basic Rental during the time the Premises are unfit for occupancy, which diminution shall be based upon the proportion of square feet which are unfit for occupancy to the total square feet in the Premises. Except as hereinafter provided, any insurance which may be carried by Landlord or Tenant against loss or damage to the Building or to the Premises shall be for the sole benefit of the party carrying such insurance and under its sole control. Tenant shall be responsible for obtaining fire and extended coverage insurance for full replacement cost upon all improvements and fixtures installed in the Premises at Tenant's expense, if any, and the contents of the Premises. 

18.

Tenant Notice Regarding Term/Holdover Rent. For the duration of the Term of the Lease, Tenant hereby agrees to give Landlord written notice no later than six (6) months prior to the end of the then-current Term of the Lease of Tenant’s intent to either (a) extend the Term of the Lease or (b) permit the Term of the Lease to expire upon the end of the Term. If Tenant fails to give such written notice to Landlord, the Term of the Lease shall automatically be renewed in each case for an additional one-year period, subject to the terms and conditions of the Lease. For the avoidance of any doubt, if Tenant gives proper notice hereunder that it will permit the current Term of the Lease to expire sixty (60) months from the Commencement Date above, Should Tenant after giving written notice of termination, or any of its successors in interest, holdover the Premises, or any part thereof, after the expiration of the Lease Term, unless otherwise agreed in writing by Landlord, such holding over shall constitute and be construed as a tenancy at will only, at a daily rental equal to the daily Basic Rental payable for the last month of the Lease Term plus twenty-five (25%) of such amount. The inclusion of the preceding sentence shall not be construed as Landlord’s consent for Tenant to hold over.

19.

Taxes on Tenant's Property. Tenant shall be liable for all taxes levied or assessed against all personal property, furniture or fixtures placed by Tenant in the Premises. If any such taxes for which Tenant is liable are levied or assessed against Landlord or Landlord's property and if Landlord pays same or if the assessed value of Landlord's property is increased by inclusion of personal property, furniture or fixtures placed by Tenant in the Premises, and 

25

Landlord pays the taxes based on such increase, Tenant shall pay to Landlord upon demand that part of such taxes for which Tenant is primarily liable hereunder.

20.

Events of Default. The following events shall be deemed to be events of default by Tenant under this Lease:

(a)

Tenant shall fail to pay when due any Adjusted Rental or other sums payable by Tenant hereunder and such failures continues for a period of five (5) days after written notice to Tenant by Landlord (or under any other lease now or hereafter executed by Tenant in connection with space in the Property).

(b)

Tenant shall fail to comply with or observe any other provision of this Lease (or any other lease now or hereafter executed by Tenant in connection with space in the Park), and such failure continues for fifteen (15) business days after delivery to Tenant of notice thereof, provided that if such failure cannot with due diligence be cured within said 15 business day period, said failure shall not constitute an event of default if Tenant commences to cure such default within 10 days after its occurrence and thereafter diligently proceeds to cure such default to completion.

(c)

Tenant shall make a transfer in fraud of creditors or an assignment for the benefit of creditors.

(d)

Any petition shall be filed by or against Tenant under any appropriate federal or state bankruptcy or insolvency law and with respect to an involuntary petition, same is not dismissed within 60 days after its filing; or Tenant shall be adjudged bankrupt or insolvent in proceedings filed thereunder; or Tenant shall admit that it cannot meet its financial obligations as they become due. For additional provisions regarding Tenant's bankruptcy see Exhibit F.

(e)

A receiver or trustee shall be appointed for all or substantially all of the assets of Tenant.

(f)

One or more of the events enumerated in clauses (c), (d) and (e) occurs to Guarantor.

 

(g)

Tenant shall abandon any portion of the Premises. For purposes of this Lease, Tenant shall be deemed to have abandoned the Premises if Tenant fails to utilize all or substantially all of the Premises for the purpose permitted herein for ten (10) or more consecutive business days.

(h)

Tenant shall do or permit to be done anything which creates a lien upon the Premises which is not removed within 20 days after its creation.

(i)

Tenant shall fail to execute an Estoppel Certificate in the form and time period requested by Landlord pursuant to Paragraph 29.

The following events shall be deemed to be events of default by Landlord under this Lease:

(a)

Landlord shall fail to comply with or observe any other provision of this Lease (particularly paragraph 6), and such failure continues for fifteen (15) business days after delivery to Landlord of notice thereof, provided that if such failure cannot with due diligence be cured within said 15 business day period, said failure shall not constitute an event of default if 

26

Landlord commences to cure such default within 10 days after its occurrence and thereafter diligently proceeds to cure such default to completion.

21.

Remedies. Upon the occurrence of any event of default by either party specified in this Lease, the other party may pursue any and all remedies which it may then have hereunder or at law or in equity. In all cases, each party agrees that it will make commercially reasonable efforts to mitigate damages from any default by the other party. Upon the occurrence of an event of default by Tenant, Landlord may exercise any one or more of the following remedies, which shall not be cumulative:

(a)

Terminate this Lease, in which event Tenant immediately shall surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or any arrearage in Rent hereunder or at law or in equity, enter upon and take possession of the Premises. If default is by Tenant, to the extent permitted by law, Tenant agrees to pay to Landlord on demand the amount of all loss, cost, expense and damage which Landlord may suffer or incur by reason of such termination, whether through inability (after a commercially reasonable effort) to relet the Premises on satisfactory terms or otherwise, including the following:

(i)

the worth at the time of award of any unpaid Rent which had been earned at the time of such termination; plus

(ii)

the worth at the time of award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such rental loss which Tenant proves could have been reasonably avoided; plus

(iii)

to the extent such damages are not mitigated by obtaining a new tenant, the amount of the unpaid Rent for the balance of the term; plus 

(iv)

any other amount, including court costs, or costs of reletting (including leasing and refitting costs), necessary to compensate Landlord for all detriment proximately caused by Tenant's failure to perform Tenant's obligations under this Lease or which in the ordinary course of things would be likely to result therefrom; plus

(v)

at Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable law; and

(vi)

all reasonable attorneys' fees incurred by Landlord relating to the default and termination of this Lease.

All Rent shall be computed on the basis of the amount thereof which was due and payable to Landlord for the month immediately prior to default. As used in subparagraphs (i) and (ii) above, the “worth at the time of award” is to be computed by allowing interest at the Past Due Rate.

If any event of default by Landlord occurs and remains uncured pursuant to the terms hereof, upon Tenant’s prior written notice to Landlord describing in detail the default and Landlord’s failure to cure, Landlord shall release Tenant from obligations under this Lease arising after the date of such written notice and refund the Security Deposit pursuant to the terms set forth herein.

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(b)

Enter upon and take possession of the Premises by virtue of the laws of the State of Utah for summary proceedings for possession of real estate or such other proceeding as may be applicable, and if Landlord so elects, relet all or any part of the Premises on such terms as Landlord shall deem advisable (including, without limitation, such concessions and free rent as Landlord deems necessary or desirable) and receive and retain all of the rent therefor; and Tenant agrees (i) to pay to Landlord on demand any deficiency that may arise by reason of such reletting for the remainder of the Lease Term (or any extension thereof, if the event of default occurs during such extension term), and (ii) that Tenant shall not be entitled to any rents or other payments received by Landlord in connection with such reletting even if such rents and other payments are in excess of the amounts that would otherwise be payable to Landlord under this Lease. Tenant shall be liable immediately to Landlord for all costs Landlord incurs in reletting the Premises, including, without limitation, brokers' commissions, reasonable attorneys' fees incurred in connection with the reletting and in connection with Tenant's default hereunder, expenses of repairing, altering and remodeling the Premises required by the reletting, and like costs. Tenant expressly acknowledges that Landlord has no duty to relet the Premises, that Landlord may offer all or any part of the Premises for any period, to any tenant and for any use which Landlord may elect, and that Landlord may offer for lease any vacant space in the Project Buildings prior to offering the Premises for lease.

(c)

Make such payments or enter upon the Premises, and perform whatever Tenant is obligated to pay or perform under the terms of this Lease; and Tenant agrees to reimburse Landlord on demand for any expenditures and expenses (together with interest thereon at the Past Due Rate from the date paid by Landlord) which Landlord may make or incur in thus effecting compliance with Tenant's obligations under this Lease.

(d)

Receive from Tenant all sums, the payment of which may have been waived or abated by Landlord or which may have been paid by Landlord pursuant to any agreement to grant Tenant a rental abatement or other monetary inducement or concession, including but not limited to any tenant finish allowance or moving allowance, it being agreed that any such concession or abatement was made on the basis that Tenant fully perform all obligations and covenants under the Lease for the entire Lease Term.

(e)

Collect, from time to time, by suit or otherwise, each installment of Rent or other sum as it becomes due hereunder, or to enforce, from time to time, by suit or otherwise, any term or provision hereof on the part of Tenant required to be kept or performed.

(f)

No re-entry or taking possession of the Premises by Landlord shall be construed as an election on Landlord's part to terminate this Lease, unless a written notice of such intention be given to Tenant. Notwithstanding any such reletting or re-entry or taking possession, Landlord may at any time thereafter terminate this Lease for a previous default. Pursuit of any remedy set forth herein shall not preclude pursuit of any other remedy provided herein or available at law, nor shall pursuit of any remedy constitute a forfeiture or waiver of any Rent due to Landlord hereunder or of any damage suffered by Landlord because of the violation of any term of this Lease. Landlord's acceptance of any Rent following an event of default hereunder shall not waive such event of default. No payment by Tenant or receipt by Landlord of any amount less than the amounts due by Tenant hereunder shall be deemed to be other than on account of the amounts due by Tenant hereunder, nor shall an endorsement or statement on any check or document accompanying any payment be deemed an accord and satisfaction.

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(g)

If Landlord takes possession of the Premises as permitted herein, Landlord may keep in place and use all furniture, fixtures and equipment at the Premises, including that which is owned by or leased to Tenant at all times prior to any foreclosure thereon by Landlord or repossession thereof by a lessor thereof or third party having a lien thereon. Landlord also may remove from the Premises (without the necessity of obtaining a distress warrant, writ of sequestration or other legal process) all or any portion of such furniture, fixtures, equipment and other property located thereon and store same at any premises within Utah County, Utah. In such event, Tenant shall pay to Landlord all costs incurred by Landlord in connection with such removal and storage and shall indemnify and hold Landlord harmless from all loss, damage, cost, expense and liability in connection with such removal and storage. Landlord's rights herein are in addition to any and all other rights which Landlord has or may hereafter have at law or in equity. 

(h)

If Landlord must notify Tenant of any failure (monetary or non-monetary) of Tenant to comply with any provision of this Lease, that obligation to notify tenant shall terminate following the second such notice delivered to Tenant within any twelve-month period during the Lease Term.

(i)

Notwithstanding any provision of this Lease to the contrary, the amount payable by Landlord to Tenant pursuant to the preceding provision of this Section 21 (in addition to refund of Tenant’s Security Deposit) shall not exceed two times the Basic Rental under the Lease for the last full calendar month prior to such termination.

22.

Landlord's Liability. Landlord shall not be in default under this Lease unless and until it fails to perform an obligation hereunder within fifteen (15) business days after written notice by Tenant to Landlord specifying the obligation which Landlord has not performed. However, if Landlord's obligation reasonably requires more than fifteen (15) business days for its performance, Landlord shall not be in default if it commences performance within such fifteen business-day period and uses reasonable efforts to complete same. Tenant has no right to claim any nature of lien against the Building or the Property. All obligations of Landlord hereunder are binding upon Landlord only during the period of its ownership of the Property. The term “Landlord” means only the owner, for the time being, of the Property. In the event of the transfer by such owner of its interest in the Property, such owner shall thereupon be released and discharged from all covenants and obligations of Landlord thereafter accruing, but such covenants and obligations shall be binding during the Lease Term upon each new owner for the duration of such owner's ownership. Any liability of Landlord to Tenant relating to this Lease shall be limited to the interest of Landlord in the Premises, and Landlord shall not be personally liable for any deficiency.

23.

Surrender of Premises. No act or thing done by Landlord or its agents during the Lease Term shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept a surrender of the Premises shall be valid unless the same be made in writing and signed by Landlord.

24.

Attorneys' Fees. In the event that any action or proceeding is brought to enforce any term, covenant or condition of this Lease on the part of Landlord or Tenant, the prevailing party in such action or proceeding shall be entitled to reasonable attorneys' fees to be fixed by the court therein.

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25.

Mechanic's Liens. Tenant will not permit any mechanic's lien or liens to be placed upon the Premises, the Building or any other portion of the Park, or any portion thereof, caused by or resulting from any work performed, materials furnished or obligation incurred by or at the request of Tenant, and in the case of the filing of any such lien, Tenant will immediately pay or otherwise obtain the release of same. If default in compliance with this Paragraph shall continue for fifteen (15) days after delivery to Tenant of a notice thereof from Landlord, Landlord shall have the right and privilege at Landlord's option of paying the same or any portion thereof without inquiry as to the validity thereof, and any amounts so paid, including expenses and interest, shall be so much additional rent hereunder due from Tenant to Landlord and shall be repaid to Landlord (together with interest at the Past Due Rate from the date paid by Landlord) within fifteen (15) days after delivery to Tenant of a request from Landlord therefor.

26.

No Subrogation-Insurance.

(a)

Each party hereto waives any cause of action it might have against the other party on account of any loss or damage that is insured against under any insurance policy (to the extent that such loss or damage is recoverable under such insurance policy) that covers the Premises, the Building, Landlord's or Tenant's fixtures, personal property, leasehold improvements or business and which names Landlord or Tenant, as the case may be, as a party insured. Notwithstanding the foregoing, the release in the preceding sentence shall be applicable and in force and effect only so long as and to the extent that such release does not invalidate any policy or policies of insurance now or hereafter maintained by the other party hereto. Each party hereto agrees that it will request its insurance carrier to endorse all applicable policies waiving the carrier's rights of recovery under subrogation or otherwise against the other party and obtain such waiver of subrogation if it is obtainable at no extra cost or expense to the insured (or if there is an extra cost if the other party pays such extra cost).

(b)

Tenant shall maintain a policy of comprehensive general liability insurance pertaining to its use and occupancy of the Premises hereunder, with the premiums thereof fully paid in advance, issued by and binding upon a solvent insurance company qualified to do business in the State of Utah, such insurance to name Landlord as an additional insured. Such policy shall afford minimum protection of not less than Five Million and No/100 Dollars ($5,000,000.00) combined single limit for bodily injury, death to any one person, or property damage in any one occurrence. Additionally, Tenant shall obtain and maintain (i) a contractual liability coverage endorsement with “incidental contract” coverage including all oral or written contracts relating to the named insured's business and (ii) All Risk insurance in respect to Tenant's stock in trade, fixtures, furnishings, floor covering, equipment and all other property of Tenant in the Premises, insuring 100% insurable value of such property. The adequacy of the coverage afforded by said liability insurance shall be subject to review by Landlord from time to time, and if Landlord is advised by Landlord's insurance agent that a prudent businessman in Utah County, Utah, using the Premises for the Permitted Use, would increase the limits of said insurance, Tenant shall to that extent increase the insurance coverage required by this Paragraph 26. In addition to the remedies provided in Paragraph 21 of this Lease, if Tenant fails to maintain the insurance required by this Paragraph 26, Landlord may, but is not obligated to, obtain such insurance without notice to Tenant and Tenant shall pay to Landlord upon demand as additional rental the premium cost thereof plus interest at the Past Due Rate from the date of payment by Landlord until repaid by Tenant.

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(c)

Upon Tenant's execution of this Lease and at any time from time to time thereafter when Landlord so requests, Tenant shall furnish a certificate of insurance and other evidence satisfactory to Landlord of the maintenance of all insurance coverages required hereunder, and Tenant shall obtain a written obligation on the part of each insurance company to notify Landlord at least thirty (30) days prior to cancellation or material change of any such insurance. All insurance required by this Paragraph 26 shall be primary and noncontributing with any insurance which may be carried by Landlord.

27.

Brokerage. Tenant warrants that it has had no dealings with any broker or agent in connection with the negotiation or execution of this Lease other than the Broker (as defined in the Basic Lease Information), and Tenant agrees to indemnify Landlord against all costs, expenses, attorneys' fees or other liability for commissions or other compensation or charges claimed by any broker or agent other than Broker who claims same by, through or under Tenant.

28.

Building Name. Landlord reserves the right at any time to give a name to the Building or to change the name by which the Building is designated.

29.

Estoppel Certificates. Tenant agrees to furnish from time to time when requested by (a) Landlord, (b) a Holder or a Lessor, or (c) any prospective Holder, Lessor or purchaser of the Building or the Property, a certificate signed by Tenant confirming such factual certifications and representations as to the terms and conditions of this Lease and amendments, if any, as may be deemed appropriate by Landlord or any such Holder, Lessor, or purchaser, and Tenant shall, within fifteen (15) days following Tenant's receipt of said proposed certificate from Landlord, return a fully executed copy of said certificate to Landlord. In the event Tenant fails to return a fully executed copy of such certificate to Landlord within said fifteen-day period, then Tenant conclusively shall be deemed to have approved and confirmed all of the terms, certifications and representations contained in such certificate.

30.

Notices. Each provision of this Lease, or of any applicable governmental laws, ordinances, regulations, and other requirements with reference to the sending, mailing or delivery of any notice, or with reference to the making of any payment by Tenant or Landlord, shall be deemed to be complied with when and if the following specs are taken:

(a)

All Rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to, and must be received by, Landlord on the date due and at the address set forth in the Basic Lease Information or at such other address as Landlord may specify from time to time by written notice delivered in accordance herewith.

(b)

Any notice, request or documents (excluding Rent and other payments) permitted or required to be delivered hereunder must be in writing and shall be deemed delivered upon receipt if actually received and whether or not received when deposited in the United States mail, postage prepaid, certified mail (with or without return receipt requested), addressed to Tenant and Landlord (with a copy to Landlord’s Counsel) at the respective addresses set forth in the Basic Lease Information or at such other address as either of said parties have theretofore specified by written notice delivered in accordance herewith. To be effective, any notice sent to Landlord must also be sent to Landlord’s Counsel. 

If and when included within the term “Tenant” as used in this Lease there are more than one person, firm or corporation, all shall arrange among themselves for their joint execution of such 

31

notices specifying some individual at some specific address for the receipt of notices and payments to Tenant. All parties included within the term “Tenant” shall be bound by notices and payments given in accordance with the provisions of this Paragraph the same as if each had received such notice or payment.

31.

Severability. If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws effective during the Lease Term, then and in that event, it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby, and it is also the intention of the parties to this Lease that in lieu of each clause or provision of this Lease that is illegal, invalid or unenforceable, there be added as a part of this Lease a clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible and be legal, valid and enforceable.

32.

Amendments: No Waiver: Binding Effect. This Lease may not be altered, changed or amended, except by instrument in writing signed by both parties hereto. No provision of this Lease shall be deemed to have been waived by Landlord or Tenant unless such waiver be in writing signed by the party making the waiver and addressed to the other party, nor shall any custom or practice which may evolve between the parties in the administration of the terms hereof be construed to waive or lessen the right of Landlord to insist upon the performance by Tenant in strict accordance with the terms hereof. The terms and conditions contained in this Lease shall apply to, inure to the benefit of, and be binding upon the parties hereto, and upon their respective successors in interest and legal representatives, except as otherwise herein expressly provided.

33.

Quiet Enjoyment. Tenant shall peaceably and quietly hold and enjoy the Premises for the Lease Term, without hindrance from Landlord or Landlord's successors or assigns, subject to (i) the terms and conditions of this Lease, including the performance by Tenant of all of the terms and conditions of this Lease to be performed by Tenant, including the payment of rent and other amounts due hereunder, and (ii) actions and claims of any person or entity holding superior title to that of Landlord, including, but not by way of limitation, any person or entity who holds an interest in the Premises to which the leasehold interests created by this Lease is subordinate.

34.

Gender. Words of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires.

35.

Joint and Several Liability. If there be more than one Tenant, the obligations hereunder imposed upon Tenant shall be joint and several. If there be a Guarantor of Tenant's obligations hereunder, the obligations hereunder imposed upon Tenant shall be the joint and several obligations of Tenant and Guarantor and Landlord need not first proceed against Tenant before proceeding against Guarantor nor shall Guarantor be released from its guaranty for any reason whatsoever, including, without limitation, in case of any amendments hereto, waivers hereof or failure to give Guarantor any notices hereunder.

36.

Certain Rights Reserved by Landlord. Landlord shall have the following rights, exercisable without notice and without liability to Tenant for damage or injury to property, person or business and without effecting an eviction, constructive or actual, or disturbance of Tenant's use or possession or giving rise to any claim for Set-off or abatement of Rent:

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(a)

To decorate and to make repairs, alterations, additions, changes or improvements, whether structural or otherwise, in and about the Premises, the Building and/or the Park, or any part thereof, and for such purposes to enter upon the Premises, the Building or other parts of the Park and, during the continuance of any such work, to temporarily close doors, entryways, public space and corridors in the Premises, the Building or other parts of the Park, to store materials in the Premises, to interrupt or temporarily suspend Building services and facilities, to change the arrangement and location of entrances or passageways, doors and doorways, corridors, elevators, stairs, toilets, or other public parts of the Building, and to change the arrangement and location of all parking areas, sidewalks and driveways situated upon the Land or elsewhere in the Park, all without abatement of Rent or affecting any of Tenant's obligations hereunder, so long as the Premises are reasonably accessible.

(b)

To grant to anyone the exclusive right to conduct any business or render any service in or to the Building, provided such exclusive right shall not operate to exclude Tenant from the use expressly permitted herein.

(c)

To prohibit the placing of vending or dispensing machines of any kind in or about the Premises without the prior written permission of Landlord.

(d)

To take all such reasonable measures as Landlord may deem advisable for the security of the Property and its occupants, including, without limitation, the evacuation of the Building for cause, suspected cause, or for drill purposes, the temporary denial of access to the Building, and the closing of the Building after Customary Business Hours and on Saturdays, Sundays and Holidays, subject, however, to Tenant's right to admittance when the Building is closed after Customary Business Hours under such reasonable regulations as Landlord may prescribe from time to time which may include, by way of example but not of limitation, that persons entering or leaving the Building, whether or not during Customary Business Hours, use a pass key, or identify themselves to a security officer by registration or otherwise and that such persons establish their right to enter or leave the Building.

37.

Notice to Lender. Upon written notice from Landlord or Landlord’s lender (the “Lender”) to Tenant that includes the Lender’s address, Tenant agrees to deliver by certified mail to the Lender a copy of any written notice of nonperformance given by Tenant to Landlord, specifying the alleged failure to perform in reasonable detail, provided that prior to giving any such notice to Landlord. Tenant further agrees that if Landlord fails to cure any nonperformance within the time provided for in this Lease, then the Lender shall have an additional forty-five (45) days within which to cure such nonperformance, or if same cannot be cured within that time, then such additional time as may be necessary for cure if, within such 45-day period, the Lender has commenced performance of such obligation and diligently pursues the same to completion, including but not limited to commencement of foreclosure proceedings necessary to effect such cure.

38.

Captions. The captions contained in this Lease are for convenience of reference only, and in no way limit or enlarge the terms and conditions of this Lease.

39.

Miscellaneous.

(a)

Any approval by Landlord or Landlord's architects and/or engineers of any of Tenant's drawings, plans and specifications that are prepared in connection with any 

33

construction of improvements in the Premises shall not in any way be construed or operate to bind Landlord or to constitute a representation or warranty of Landlord as to the adequacy or sufficiency of such drawings, plans and specifications, or the improvements to which they relate, for any use, purpose, or condition, but such approval shall merely be the consent of Landlord as may be required hereunder in connection with Tenant's construction of improvements in the Premises in accordance with such drawings, plans and specifications.

(b)

Each and every covenant and agreement contained in this Lease is, and shall be construed to be, a separate and independent covenant and agreement.

(c)

There shall be no merger of this Lease or of the leasehold estate hereby created with the fee estate in the Premises or any part thereof by reason of the fact that the same person may acquire or hold, directly or indirectly, this Lease or the leasehold estate hereby created or any interest in this Lease or in such leasehold estate as well as the fee estate in the Premises or any interest in such fee estate.

(d)

Neither Landlord nor Landlord's agents or brokers have made any representations or promises with respect to the Property, or any portion thereof, except as herein expressly set forth and no rights, easements or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in the provisions of this Lease.

(e)

The submission of this Lease to Tenant for examination does not constitute an offer, reservation or option in favor of Tenant, and Tenant shall have no rights with respect to this Lease or the Premises unless and until Landlord shall execute a copy of this Lease and deliver the same to Tenant.

(f)

This Lease shall be subject to any and all easements, rights-of-way, covenants, liens, conditions, restrictions, outstanding mineral interest and royalty interests, if any, relating to the Park, to the extent, and only to the extent, same still may be in force and effect and either shown of record in the Office of the County Clerk of Utah County, Utah or apparent on the Property.

(g)

Tenant shall not bring or permit to remain on the Premises any asbestos, lead, PCBs, petroleum or petroleum products, explosives, toxic materials, or substances defined as hazardous wastes, hazardous materials, or hazardous substances under any federal, state, or local law or regulation (“Hazardous Materials”). Tenant's violation of the foregoing prohibition shall constitute a material breach and default hereunder and Tenant shall indemnify, hold harmless and defend Landlord from and against any claims, damages, penalties, liabilities, and costs (including reasonable attorneys' fees and court costs) caused by or arising out of (i) a violation of the foregoing prohibition or (ii) the presence or any release of any Hazardous Materials on, under, or about the Premises during Tenant's occupancy or control of the Premises. Tenant shall clean up, remove, remediate and repair any soil or ground water contamination and damage caused by the presence or release of any Hazardous Materials in, on, under, or about the Premises during Tenant's occupancy of the Premises in conformance with the requirements of applicable law. Tenant shall immediately give Landlord written notice of any suspected breach of this Paragraph, upon learning of the presence or any release of any Hazardous Materials, and upon receiving any notices from governmental agencies pertaining to Hazardous Materials which may affect the Premises. The obligations of Tenant hereunder shall survive the expiration or earlier termination, for any reason, of this Lease.

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(h)

Tenant shall not record this Lease.

(i)

If Tenant is a corporation or association, Tenant shall deliver to Landlord upon execution of this Lease a certified copy of a resolution of its board of directors or executive committee authorizing the execution of this Lease and naming the officers who are authorized to execute this Lease on behalf of Tenant. Notwithstanding the preceding sentence, Tenant shall be bound by the signature of any officer of Tenant purporting to have the necessary authority to sign this Lease, but Landlord may elect to terminate this Lease if Landlord has not received and approved the form of such a resolution within sixty (60) days of the execution of this Lease.

(j)

The term “business day,” when used herein, shall mean every day that is not a Saturday, Sunday or Holiday.

(k)

Except as expressly provided herein, whenever this Lease calls for a consent or approval of Landlord, or the exercise of Landlord's judgment, the granting or denial of such approval and the exercise of such judgment shall be within the sole discretion of Landlord and Landlord shall not, for any reason or to any extent, be required to grant such approval or consent or exercise such judgment in any manner regardless of the reasonableness of either the request or Landlord's judgment.

(l)

Tenant shall have the right to use the Shared Park Facilities on a non-exclusive basis together with Landlord and all other occupants of the Park subject to the rules and regulations promulgated or to be promulgated by Landlord with respect to the use of the Shared Park Facilities. Landlord reserves the right at its sole discretion to discontinue the Fitness Center, and other amenities as part of the Shared Facilities. Landlord reserves the right to change the availability and use of the Shared Park Facilities.

(m)

Tenant shall summon the appropriate municipal emergency forces (police, fire department, or ambulance, as the case may be) in the event of fire, serious injury or other emergency in the Premises immediately upon obtaining knowledge thereof. Immediately after summoning municipal emergency forces, Tenant shall advise Landlord and the security forces. Tenant shall cooperate fully with local and/or regional emergency forces and with Landlord during any emergency.

(n)

Tenant acknowledges that certain of Landlord's employees and its agents will, in response to a signal by Landlord, assist Landlord in addressing an emergency in the Park. None of these personnel will be held liable by Tenant for any actions taken in responding to an emergency in the Park; further, Tenant shall indemnify and hold Landlord, its agents and employees harmless from and against any and all claims brought by Tenant's employees, contractors, agents or invitees and any of their dependents, heirs, successors or assigns arising out of any act or omission, including negligence, which may occur while responding to an emergency in the Park.

(o)

All payments required to be made hereunder other than Basic Rent shall constitute additional rent hereunder. Landlord shall have the same rights and remedies with respect to the non-payment of additional rent as it is with respect to the non-payment of Basic Rent.

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(p)

If Tenant shall default in the performance of any of Tenant's obligations under this Lease, Landlord, without thereby waiving such default, may (but shall not be obligated to) perform the same for the account and at the expense of Tenant, without notice in a case of emergency, and in any other case only if such default continues after the expiration of five (5) days from the date Landlord gives Tenant notice of the default. Bills for any such expenses incurred by Landlord, and bills for all reasonable costs, expenses and disbursements, including reasonable attorneys' fees and expenses, involved in collecting the Rent or enforcing any rights against Tenant or Tenant's obligations hereunder, may be sent by Landlord to Tenant immediately, and such amounts shall be due and payable in accordance with their terms.

40.

Force Majeure. If Landlord is delayed in performing an obligation of Landlord hereunder as a result of strikes, lockouts, shortages of labor, fuel or materials, acts of God, legal requirements, fire or other casualty, or any other cause beyond Landlord's control, then performance of such obligation shall be excused for the period of such delay, and the period to perform such obligation shall be extended by the number of days equivalent to the number of days of such delay. Landlord shall not be required to settle or compromise any strike, lockout or other labor disputes, the resolution thereof being within the sole discretion of Landlord.

41.

Applicable Law. This Lease shall be governed in all respects by the laws of the State of Utah. Landlord and Tenant intend to conform strictly to all applicable state and federal usury laws. All agreements between Landlord and Tenant, whether now existing or hereafter arising and whether written or oral, are expressly limited so that in no contingency or event whatsoever shall the amount contracted for, charged or received by Landlord for the use, forbearance or detention of money exceed the maximum amount which Landlord is legally entitled to contract for, charge or collect under applicable state or federal law. If, from any circumstance whatsoever, fulfillment of any provision hereof at the time performance of such provision shall be due shall involve transcending the limit of validity prescribed by law, then the obligation to be fulfilled shall be automatically reduced to the limit of such validity, and if from any such circumstance, Landlord shall ever receive as interest or otherwise an amount in excess of the maximum that can be legally collected, then such amount which would be excessive interest shall be applied to the reduction of the Rent; and if such amount which would be excessive interest exceed the Rent, then such additional amount shall be refunded to Tenant.

42.

Third Party Rights. Nothing herein expressed or implied is intended, or shall be construed, to confer upon or give to any person or entity, other than the parties hereto, any right or remedy under or by reason of this Lease.

43.

Americans With Disabilities Act. Landlord and Tenant acknowledge that during the term of this Lease, the Americans With Disabilities Act, 42 U.S.C.A. §12101 et seq. (the “Act”), may require modifications to the Premises, the Building and to the Park. With respect to the Act, Landlord and Tenant agree as follows:

(a)

Landlord shall be responsible for any modifications to the Premises required to bring the Premises into compliance with the Act as it reads as of the date of commencement hereof.

(b)

Landlord shall modify the improvements which constitute the Building (other than the Premises) and the Shared Park Facilities if required to bring the Building and the Shared Park Facilities in compliance with the Act, as same may be modified from time to time. 

36

The cost of such modifications shall be amortized upon such reasonable basis as Landlord may elect and shall be included in the Operating Expenses.

(c)

If, during the term hereof, changes in the Act require modifications or alterations to the Premises or if Tenant makes any changes to the Premises that cause the Premises to be out of compliance with the Act, Tenant shall, following notification of Landlord, be responsible for, and expressly agrees to pay (or reimburse Landlord) for the cost of any modifications or alterations required to bring the Premises into compliance with the Act. All alterations and modifications to the Premises shall be done in a good and workmanlike manner and in accordance with the provisions of Paragraph 7 above, and with plans and specifications approved in writing by Landlord.

(d)

Each party shall indemnify and hold the other harmless from and against any and all fines, suits, claims, demands, losses and actions (including attorneys' fees and costs and court costs) arising out of or related to the other’s failure to perform any of its obligations under this Paragraph 43. 

44.

Site Plan and Restrictive Covenants. Tenant agrees that it will not occupy or use the Premises in violation of or perform any act which violates the site plan for the Park or any of the Restrictive Covenants, as they may hereafter be amended from time to time. 

45.

Access Control Services. Landlord currently provides basic access control services, which include card access, security patrols and limited camera surveillance. Landlord shall provide one access card, without charge but subject to change without notice, to each employee at the beginning of the Lease Term and to each new employee when they are employed. There will be a $15.00 charge, subject to adjustment without notice, to the Tenant for each card that needs to be replaced or changed for any reason, and that is not returned at the end of the Lease. Landlord will provide two keys to the locks on the corridor doors entering the Premises, with additional keys to be furnished by the Landlord at Tenant’s expense. The Landlord at Tenant’s expense shall provide any keys or locks needed within the Premises. Landlord and Tenant shall cooperate in good faith to coordinate access policies, procedures, and codes for employees, maintenance personnel, security personnel, and other persons who may need access to the Premises. Landlord’s security personnel shall have access to patrol and monitor all reasonable areas, including without limitation server rooms, boilers, chillers, telephone rooms, conduit areas, common areas, and office space. Notwithstanding the foregoing, any security services are provided at the complete discretion of the Landlord and are not to be construed as an obligation of the Landlord under the Lease, except that Landlord shall have the obligation to maintain and repair the card access equipment as part of the Operating Expenses (defined in Exhibit E) as long as Landlord uses such card system to control access to the building. Landlord reserves the right to change these services upon notice. Landlord shall not be held liable for any failure to provide security services or take other security measures for the Building or Park. 

46.

Exhibits and Attachments. All exhibits and attachments, riders and addenda referred to in this Lease and the exhibits listed below and attached hereto are incorporated into this Lease and made a part hereof for all intents and purposes as if fully set out herein. All capitalized terms used in such documents shall, unless otherwise defined therein, have the same meanings as are set forth herein.

37

Exhibit A 

-

Site Plan of the Park

Exhibit A-1

-

Land Owned and Controlled by Landlord 

Exhibit B 

-

Plans of Premises located in the Building-Subject to Tenant’s final approval and space planning.

Exhibit B-1

-

Storage Space

Exhibit C 

-

Rules and Regulations

Exhibit D 

-

Leasehold Improvements

Exhibit E 

-

Operating Expenses

Exhibit F 

-

Bankruptcy

Exhibit G 

-

Shared Park Facilities

Exhibit H 

-

Restrictive Covenants

--INTENTIONALLY LEFT BLANK-SIGNATURE ON THE NEXT PAGE--

38

				
	DATED as of the date first written.

	 
	 
	 

	  

	 
	 
	 

	LANDLORD:

	 
	TCU Properties I, LLC, a Utah limited liability 

	 
	 
	           Company

	  

	 
	 
	 

	Date: March 18, 2008

	           

	By:

	 

	 
	 
	Name:

	Allen Finlinson 

	 
	 
	Title:

	Vice President/GM

	 
	 
	 
	 

	 
	 
	 
	 

	TENANT:

	 
	iMergent, a Delaware Corporation 

	 

	 
	 
	 

	Date: March 18, 2008

	 
	By:

	 

	 
	 
	Name:

	 Robert Lewis 

	 
	 
	Title:

	CFO

39

EXHIBIT C

RULES AND REGULATIONS

The following rules and regulations shall apply, where applicable, to the Property and the Park and to each portion thereof:

1.

Smoking will not be permitted within the Building or any other Park Building. No tenant or tenant's agent, employee, invitee or contractor may smoke anywhere on the Land other than areas outside the Building which are expressly designated as smoking areas.

2.

Sidewalks, doorways, vestibules, halls, stairways and other similar areas shall not be obstructed by tenants or used by any tenant for any purpose other than ingress and egress to and from that tenant's premises and for going from one to another part of the Park.

3.

Plumbing, fixtures and appliances shall be used only for the purposes for which designed, and no sweepings, rubbish, rags or other unsuitable material shall be thrown or placed therein. Damage resulting to any such fixtures or appliances from misuse by a tenant or such tenant's agents, employees or invitees shall be paid by such tenant and Landlord shall not in any case be responsible therefor.

4.

No signs, advertisements or notices shall be painted or affixed on or to any windows or doors or other exterior part of the Building (or be visible from any public or common area) unless they are of such color, size and style and in such places as shall be first approved in writing by Landlord. Landlord, at each tenant's sole cost and expense, shall install all letters or numbers by or on doors in such tenant's premises which letters or numbers shall be in Building standard graphics. No nails, hooks or screws shall be driven or inserted in any part of the Building outside the premises except by any Building maintenance personnel nor shall any part of any Building be defaced by tenants. No curtains or other window treatments shall be placed between the glass and the Building standard window treatments.

5.

Two keys to the locks on the corridor doors entering each tenant's premises shall be furnished by Landlord free of charge, with any additional keys to be furnished by Landlord to each tenant, at such tenant's cost. Landlord shall provide all locks for other doors in each tenant's premises, at the cost of such tenant, and no tenant shall place any additional lock or locks on any door in or to its premises without Landlord's prior written consent. All such keys shall remain the property of Landlord. Each tenant shall give to Landlord the explanation of the combination of all locks for safes, safe cabinets and vault doors, if any, in such tenant's premises.

6.

With respect to work being performed by tenants in any premises with the approval of Landlord, all tenants will refer all contractors, contractors' representatives and installation technicians rendering any service to them to Landlord for Landlord's supervision, approval and control before the performance of any contractual services. This provision shall apply to all work performed in the Building including, but not limited to, installations of telephones, telegraph equipment, electrical devices and attachments, doors, entrances, and any and all installations of every nature affecting floors, walls, woodwork, trim, windows, ceilings, equipment and any other physical portion of the Building.

C-1

Initials:

Landlord: ______

Tenant: ______

7.

Movement in or out of the Building of furniture or office equipment, or dispatch or receipt by tenants of any bulky material or merchandise which requires use of elevators or stairways, or movement through the Building entrances or lobby shall be restricted to such hours as Landlord shall designate. All such movements shall be under the supervision of Landlord and in the manner agreed between the tenants and Landlord by prearrangement before performance. Such prearrangement initiated by a tenant will include Landlord's determination, and be subject to Landlord's decision and control, as to the time, method, and routing of movement and as to limitations for safety or other concern which may prohibit any article, equipment or any other item from being brought into the Building. Tenants shall assume all risk as to the damage to articles moved and injury to persons or public engaged or not engaged in such movement, including equipment, property and personnel of Landlord if damaged or injured as a result of acts in connection with carrying out this service for a tenant from time of entering the Property to completion of work; and Landlord shall not be liable for acts of any person engaged in, or any damage or loss to any of said property or persons resulting from, any act in connection with such service performed for a tenant.

8.

Landlord may prescribe the weight and position of safes and other heavy equipment or items, which shall in all cases, to distribute weight, stand on supporting devices approved by Landlord. All damages done to the Building by the installation or removal of any property of a tenant, or done by a tenant's property while in the Building, shall be repaired at the expense of such tenant. Each tenant shall bear all costs incurred by Landlord or such tenant in determining the feasibility or actual installation of any such heavy equipment. A tenant shall notify the Building manager when safes or other heavy equipment are to be taken in or out of the Building, and the moving shall be done under the supervision of the Building manager, after written permission from Landlord. Persons employed to move such property must be acceptable to Landlord.

9.

Corridor doors, when not in use, shall be kept closed.

10.

Each tenant shall cooperate with Landlord's employees in keeping its premises neat and clean.

11.

Landlord shall be in no way responsible to the tenants, their agents, employees or invitees for any loss of property from the premises or public areas or for any damages to any property thereon from any cause whatsoever.

12.

To ensure orderly operation of the Building, no ice, mineral or other water, towels, newspapers, etc. shall be delivered to any premises except by persons appointed or approved by Landlord in writing.

13.

Should a tenant require telegraphic, telephonic, annunciator or other communication service, Landlord will direct the electrician where and how wires are to be introduced and placed and none shall be introduced or placed except as Landlord shall direct. Except as provided in each tenant's lease, electric current shall not be used for heating or nonstandard power requirements without Landlord's prior written permission.

14.

Tenant shall not make or permit any improper, objectionable or unpleasant noises or odors in the Building or otherwise interfere in any way with other tenants or persons having business with them.

C-2

Initials:

Landlord: ______

Tenant: ______

15.

Nothing shall be swept or thrown into the corridors, halls, elevator shafts or stairways. No birds or animals shall be brought into or kept in, on or about any tenant's premises, except as may be allowed by law.

16.

No machinery of any kind shall be operated by any tenant in its premises without the prior written consent of Landlord, nor shall any tenant use or keep in the Building any inflammable or explosive fluid or substance.

17.

No portion of any tenant's premises shall at any time be used or occupied as sleeping or lodging quarters.

18.

Each tenant and its agents, employees and invitees shall park only in those areas designated by Landlord for parking and shall not park on any public or private streets contiguous to, surrounding or in the vicinity of the Building without Landlord's prior written consent.

19.

Landlord will not be responsible for lost or stolen property, money or jewelry from any tenant's premises or public or common areas regardless of whether such loss occurs when the area is locked against entry or not.

C-3

Initials:

Landlord: ______

Tenant: ______

EXHIBIT D

LEASEHOLD IMPROVEMENTS

This Exhibit D sets forth the terms and conditions governing the design and construction of the tenant improvements, including without limitation the preparation of the Space Plan and Drawings and Specifications (defined below) to be installed in the Premises (“Tenant Work”).

1.

Allowance for Tenant Work. Landlord shall pay the cost of construction of the Tenant Work directly to Landlord's general contractor or other contractor approved by Landlord, which approval shall not be unreasonably withheld.

 

2.

Design.

(a) Tenant Plans.

(i)

Space Plan: The term “Space Plan” shall mean the plan to be 

agreed upon by Landlord and Tenant and attached hereto and made a part hereof as Exhibit D-1 to the Lease. Tenant shall pay all costs of preparing and reviewing the space plan, provided that Tenant may direct Landlord to costs as a Tenant Improvement for such Space Plan costs. 

(ii)

Drawings and Specifications: The term “Drawings and 

Specifications” shall mean the construction working drawings, the mechanical, electrical and other technical specifications, and the finishing details, including wall finishes and colors and technical and mechanical equipment installation, if any, all of which detail the installation of the Tenant Work. A list of the page titles, reference numbers and dates which constitute the fully approved Drawings and Specifications shall be initialed by each party and attached hereto and made a part hereof as Exhibit D-2 to the Lease. The Space Plan and Drawings and Specifications may be collectively referred to herein as the “Tenant Plans.”

(b)

Time Periods for Design of Tenant Plans. The following 

maximum time periods shall be allowed for the following matters:

			
	Action

	 
	Time Limits (Based on Business Days)

			
	(i)

Tenant furnishes all necessary 

information to Landlord's space 

planner or other planner approved by Landlord to enable the space planner to prepare the Space Plan (locates partitions and doors, indicates mechanical/ electrical/plumbing requirements (including HVAC, lighting, acoustical or extra 

	 
	 

D-1

Initials:

Landlord: ______

Tenant: ______

			
	floorload requirements)

	 
	(i)

10 business days after the Lease 

Date

	 
	 
	 

			
	(ii)

Planner delivers to Tenant draft 

of Space Plan

	 
	(ii)

10 business days after receipt of 

information specified in (i).

			
	(iii)

Tenant approves Space Plan or 

delivers to Landlord any requested minor changes to Space Plan

	 
	(iii)

5 business days after delivery of 

Space Plan

			
	(iv)

If necessary, Landlord delivers 

revised Space Plan to Tenant

	 
	(iv)

5 business days after receipt of 

requested revisions

			
	(v)

Tenant approves revised Space 

Plan

	 
	(v)

3 business days after delivery to 

Tenant

			
	(vi)

Tenant furnishes information to 

Landlord's architect or other architect approved by Landlord to the extent required to enable Landlord's architect to prepare Drawings and Specifications (i.e. mechanical, electrical, telephones, finish selections, etc.).

(vii)

Architect delivers Drawings and 

Specifications to Tenant

	 
	(vi)

5 business days after Tenant 

approves the Space Plan

(vii)

10 business days after receipt of 

information specified in (vi)

			
	(viii)

Tenant approves or requests minor 

changes to Drawings and Specifications.

	 
	(viii)

3 business days after delivery of 

Drawings and Specifications to Tenant.

			
	(ix)

If necessary, Architect delivers 

revised Drawings and Specifications to Tenant

(x)

Tenant approves revised Drawings 

and Specifications

	 
	(ix)

3 business days after receipt of 

requested revisions

(x)

2 business days after delivery to 

Tenant

			
	(xi)

Tenant provides Landlord with 

any Cost Estimates (as defined below) and the timing for installation of Tenant Work.

	 
	(xi)

6 business days after agreement 

upon Drawings and Specifications 

	 
	 
	 

(c) Approvals by Landlord.

Each party shall evidence its 

approval of each component of the Tenant Plans by executing same. All Tenant Plans, and any changes, additions or modifications that Tenant desires to make to the Tenant Plans, shall be subject to Landlord's prior written approval. 

D-2

Initials:

Landlord: ______

Tenant: ______

(d) Cosmetic Improvements.

Notwithstanding the foregoing, Tenant and Landlord may agree to perform certain cosmetic improvements such as painting or installing new carpet immediately without the preparation of a Space Plan and Drawings and Specifications, provided such cosmetic work is shown in the Space Plan and Drawings and Specifications.  

 

3.

Pricing and Construction. After approval of the Drawings and Specifications, Landlord shall obtain cost estimates for the Tenant Work (the “Cost Estimates”), and shall administer the construction of the Tenant Work in accordance with the approved Drawings and Specifications and approved change orders. All approved Tenant Work shall be constructed by Landlord's general contractor or another contractor approved by Landlord, which approval shall not be unreasonably withheld. 

4.

Change Orders. If Tenant requests any change or addition to the Tenant Work after Tenant's and Landlord's approval of the Drawings and Specifications and determination of the Cost Estimate, Landlord shall respond to Tenant's request for consent as soon as possible.    

5.

Tenant Actions. If Tenant, with Landlord's prior written consent, employs or acts as its own architect to provide any portion of Tenant's Plans, Tenant shall assume all liability and responsibility for that portion of Tenant's Plans provided by Tenant or Tenant's architect for compliance with all applicable codes and ordinances. If Tenant, with Landlord's prior written consent, employs or acts as its own contractor, Tenant shall assume all liability and responsibility for the improvements to be constructed in accordance with Tenant's Plans and all applicable codes and ordinances. Tenant's liability shall include, but not be limited to paying all architectural, engineering and construction costs to correct the Tenant Work to comply with all applicable codes and ordinance. .

 

D-3

Initials:

Landlord: ______

Tenant: ______

EXHIBIT E

OPERATING EXPENSES

In addition to the Basic Rental payable by Tenant under this Lease, Tenant shall pay additional rent determined as follows:

(1)

The Operating Expenses (as hereinafter defined) attributable to the Premises shall be computed by multiplying the “Operating Expenses Per Square Foot of RA” (as defined in Paragraph (7) below) by the RA of the Premises. For the purposes of this Exhibit E, the term “Operating Expenses” shall mean the sum of (i) any and all costs, expenses and disbursements of every kind and character, which Landlord shall incur, pay or become obligated to pay in connection with the ownership of any estate or interest in, operation, maintenance, repair, replacement and security of the Applicable Leased Buildings (as hereafter defined), or any portion thereof and (ii) the Applicable Share (as hereunder defined) of all costs, expenses and disbursements of every kind and character which Landlord shall incur, pay or become obligated to pay in connection with the ownership, operation, maintenance, repair, replacement and security of the Shared Park Facilities in each instance, determined in accordance with generally accepted accounting principles consistently applied, including but not limited to the following:

(a)

Wages, salaries and other benefits of all employees of Landlord and/or any managing agent who are engaged in the operation, repair, replacement, maintenance and security of the Applicable Leased Buildings and/or the Shared Park Facilities and any property manager for the Park (including without limitation, payroll, unemployment, social security and other taxes, insurance, vacation, holiday and sick pay and other fringe benefits, but excluding any profit sharing benefits) management fees of any managing agent of the Applicable Leased Buildings and/or the Shared Park Facilities and legal fees and expenses incurred in connection with the Applicable Leased Building and/or the Shared Park Facilities.

(b)

All supplies, equipment and materials used in the operation, maintenance, repair, replacement and security of all or any portion of the Applicable Leased Buildings and/or the Shared Park Facilities. A charge for depreciation of equipment so used may be included in Operating Expenses.

(c)

Annual cost of all capital improvements made to the Applicable Leased Buildings and/or the Shared Park Facilities which although capital in nature can reasonably be expected to reduce the normal operating costs of the Applicable Leased Buildings and/or the Shared Park Facilities, as well as all capital improvements made in order to comply with any statutes, rules, regulations or directives of any governmental authority relating to energy conservation, public safety or security or access for disabled individuals, as amortized (with interest on the unamortized balance at the market rate then generally available for such improvements) over the useful life of such improvements by Landlord for federal income tax purposes.

E-1

Initials:

Landlord: ______

Tenant: ______

(d)

Cost of all utilities, other than the cost of excess or individually metered utilities supplied to tenants of the Applicable Leased Buildings which is actually reimbursed to Landlord by such tenants.

(e)

Cost of all maintenance and service agreements on equipment relating to or in the Applicable Leased Buildings and/or the Shared Park Facilities, including without limitation alarm service, HVAC service, security service, and elevator maintenance, and window cleaning for the Applicable Leased Buildings and/or Shared Park Facilities.

(f)

Cost of casualty, rental abatement and liability insurance applicable to the Applicable Leased Building and/or the Shared Park Facilities and Landlord's personal property, equipment and fixtures used in connection therewith, together with any other insurance deemed necessary or desirable by Landlord or any holder of a lien secured by the Property, including any deductible under any policy of insurance.

(g)

Cost of repairs, replacements and general maintenance of the Applicable Leased Buildings and/or the Shared Park Facilities or any portion thereof.

(h)

Cost of service or maintenance contracts for the operation, maintenance, repair, replacement or security of the Applicable Leased Buildings and/or the Shared Park Facilities or any portion thereof, including without limitation janitorial and cleaning contracts.

(i)

Any costs incurred by reason of easements or restrictions affecting all or any portion of the Applicable Leased Buildings and/or the Shared Park Facilities (including without limitation any fees, charges or assessments of any property owners association) and any costs incurred in the operation, maintenance, repair, replacement and security of the common and public areas on or serving the Property, or any portion thereof, including, but not limited to, the parking garages or parking facilities serving the Applicable Leased Buildings and/or the Shared Park Facilities.

“Operating Expenses” shall not include capital improvements made to the Applicable Leased Buildings and/or the Shared Park Facilities, other than (A) capital improvements described in subparagraph (l)(c) above and (B) items which, though capital for accounting purposes, are properly considered maintenance and repair items (such as painting of common areas, replacement of carpet, and the like), or payments made by Tenant or other tenants of the Applicable Leased Buildings, either to third parties or to Landlord, under agreements for direct reimbursement for services. 

“Operating Expenses” shall also not include the following expenses: (i) Taxes, (ii) costs with respect to services for which Landlord is reimbursed by tenants of the Applicable Leased Buildings (other than pursuant to an operating expense escalation provision) provided such service is not of a type being supplied by Landlord to Tenant under this Lease. 

E-2

Initials:

Landlord: ______

Tenant: ______

(2)

For purposes of determining, “Excess Taxes” (as such term is defined in the Basic Lease Information), “Taxes Per Square Foot of RA” shall mean Taxes, (hereinafter defined) attributable to the Applicable Leased Buildings divided by the aggregate rentable square feet of office space in the Applicable Leased Buildings. As used herein, the term “Taxes” shall mean all taxes and assessments and government charges whether federal, state, county or municipal, and whether they be by taxing districts or authorities presently taxing or by others, subsequently created or otherwise, and any other taxes or assessments attributable to the Applicable Leased Buildings and its operations, excluding, however, federal and state taxes on income (except as specifically permitted by this subparagraph (2), together with all costs and expenses of contesting the validity or amount of such taxes and assessments. If at any time during the Lease Term, the present method of taxation shall be changed so that in lieu of or in addition to the whole or any part of the Taxes, there shall be levied, assessed or imposed on Landlord a capital levy or other tax directly on the rents received therefrom and/or a franchise tax, assessment, levy or charge measured by or based, in whole or in part, upon such rents of the Applicable Leased Buildings, then all such taxes, assessments, levies or charges, or the part thereof so measured or based, shall be deemed to be included within the term “Taxes” for purposes of this Exhibit E. Notwithstanding the foregoing, if during any calendar year the Applicable Leased Buildings are not separately taxed from other portions of the Park, then the term Taxes per Square Foot of RA shall be deemed equal to the Taxes for the entire Park multiplied by Applicable Share and divided by the aggregate rentable square feet in the Applicable Leased Buildings. 

(3)

During the Lease Term, Tenant shall pay as a component of the Adjusted Rental, the Excess Operating Expenses and the Excess Taxes (both as defined in the Basic Lease Information). With respect to each calendar year during the Lease Term commencing with calendar year 2008, Landlord shall have the option of making a good faith estimate of the Excess Operating Expenses and the Excess Taxes for the calendar year in question or the upcoming calendar year as the case may be, and upon thirty (30) days written notice to Tenant may require that Tenant pay said estimated Excess Operating Expenses and estimated Excess Taxes in equal monthly installments in the manner and at the times set forth in Paragraph 3 of the Lease for payment of the Adjusted Rental. Alternatively, Landlord may require payment of the Excess Operating Expenses and the Excess Taxes in a lump sum at the time when the Operating Expenses and Taxes are available for each calendar year. For purposes of calculating the Excess Operating Expenses and the Excess Taxes payable with respect to any fractional calendar year during the Lease Term, Landlord may either (i) estimate Operating Expenses and Taxes for the portion of the Lease Term during such partial year, or (ii) estimate Operating Expenses and Taxes for the entire calendar year and reduce the same to an amount bearing the same proportion to the full amount of estimated Operating Expenses and estimated Taxes for such year as the number of days in such fractional calendar year bears to the total number of days in such full calendar year. All payments of Excess Operating Expenses and Excess Taxes based upon an estimate of Landlord shall be subject to adjustment as more particularly described in Paragraph 3 of this Exhibit E. 

(4)

On or before May 1 of each calendar year during the Lease Term (or of the calendar year immediately succeeding the termination of this Lease), or as soon thereafter as practical, Landlord shall furnish to Tenant a statement of the Operating Expenses, the Operating 

E-3

Initials:

Landlord: ______

Tenant: ______

Expenses Per Square Foot of RA and the RA of the Premises for the previous calendar year. If Tenant's total payments of Excess Operating Expenses for any calendar year (or portion thereof) during the Lease Term (based on Landlord's estimate of the Excess Operating Expenses) exceed the Excess Operating Expenses actually due during such year (or portion thereof), then Landlord, at Landlord's sole option, either shall credit to Tenant's account or shall refund to Tenant any overpayment. Likewise, Tenant shall pay to Landlord within ten (10) days after written demand, the amount by which the Excess Operating Expenses for any calendar year (or portion thereof) during the Lease Term, exceed the Excess Operating Expenses payments received by Landlord from Tenant for such calendar Year (or portion thereof).

(5)

If the Applicable Leased Buildings taken as a whole shall be less than ninety-five percent (95%) occupied during any calendar year, Operating Expenses for such calendar year shall be increased to equal Operating Expenses for the Applicable Leased Buildings as if they were 95% occupied during such calendar year.

(6)

Tenant's obligation to pay additional rent pursuant to this Exhibit E shall survive any termination or expiration of this Lease, and shall continue and shall cover all periods up to the termination date of this Lease as calculated pursuant to the Basic Lease Information. If Landlord terminates this Lease without specifically waiving in writing Landlord's right to seek damages against Tenant, Tenant's obligations to pay any and all additional rent pursuant to this Lease shall not terminate as a result thereof.

(7)

Definitions. As used herein, 

(a)

the term “Applicable Leased Buildings” shall mean Building K as shown on the site plan for the Park provided that (i) if any of said Buildings shall not be occupied by at least one tenant of Landlord for at least 180 days during any calendar year, then such Building shall not be deemed an Applicable Leased Building for such calendar year and (ii) if any Park Building other than the Buildings listed above shall be occupied by at least one tenant of Landlord for at least 180 days during any calendar year then such Building shall be deemed an Applicable Leased Building for such calendar year;

(b)

the term “Applicable Share” shall mean 7.18%, provided that if the RA of any Applicable Leased Building or any Park Building shall increase or decrease such percentage shall be appropriately modified, it being the intent of the parties that Applicable Share shall mean the aggregate RA of the Applicable Leased Buildings divided by the RA of all Park Buildings; and

(c)

the term “Operating Expenses Per Square Foot of RA” shall mean Operating Expenses during the calendar year in question divided by the aggregate RA of the Applicable Leased Buildings.

E-4

Initials:

Landlord: ______

Tenant: ______

EXHIBIT F

BANKRUPTCY

(1)

If a petition is filed by, or an order for relief is entered against, Tenant under Chapter 7 of the United States Bankruptcy Code (the “Code”) and the trustee of Tenant elects to assume this Lease for the purpose of assigning it, the election or assignment, or both, may be made only if all of the terms and conditions of subparagraph a(i) are satisfied. If the trustee fails to elect to assume this Lease for the purpose of assigning it within sixty (60) days after his appointment, this Lease will be deemed to have been rejected. Landlord shall then immediately be entitled to possession of the Premises without further obligation to Tenant or the trustee, and this Lease will be cancelled. Landlord's right to be compensated for damages in the bankruptcy proceeding, however, shall survive.

(a)

If Tenant files a petition for reorganization under Chapters 11 or 13 of the Code or a proceeding that is filed by or against Tenant under any other chapter of the Code is converted to a Chapter 11 or 13 proceeding and Tenant's trustee or Tenant as a debtor-in-possession fails to assume this Lease within sixty (60) days from the date of the filing of the petition or the conversion, the trustee or the debtor-in-possession will be deemed to have rejected this Lease. To be effective, an election to assume this Lease must be in writing and addressed to Landlord and, in Landlord's business judgment, all of the following conditions, which Landlord and Tenant acknowledge to be commercially reasonable, must have been satisfied:

(i)

The trustee or the debtor-in-possession has cured or has provided to Landlord adequate assurance, as defined in this subparagraph a, that:

(1)(A)

The trustee will cure all monetary defaults under this Lease within ten (10) days from the date of the assumption; and

(B)

The trustee will cure all nonmonetary defaults under this Lease within thirty (30) days from the date of the assumption.

(2)

The trustee or the debtor-in-possession has compensated Landlord, or has provided to Landlord adequate assurance, as defined in this subparagraph a, that within ten (10) days from the date of the assumption Landlord will be compensated for any pecuniary loss Landlord incurred arising from the default of Tenant, the trustee, or the debtor-in-possession as recited in Landlord's written statement of pecuniary loss sent to the trustee or the debtor-in-possession.

(3)

The trustee or the debtor-in-possession has provided Landlord with adequate assurance of the future performance of each of Tenant's obligations under this Lease; provided, however, that:

F-1

(A)

The trustee or debtor-in-possession will also deposit with Landlord, as security for the timely payment of rental, an amount equal to two months' Adjusted Rental and other monetary charges accruing under this Lease;

(B)

From and after the date of the assumption of this Lease, the trustee or debtor-in-possession will pay when due each Adjusted Rental payment due hereunder; and

(C)

The obligations imposed upon the trustee or the debtor-in-possession will continue for Tenant after the completion of bankruptcy proceedings.

(4)

Landlord has determined that the assumption of this Lease will not breach any provision in any other lease, mortgage, financing agreement, or other agreement by which Landlord is bound relating to the Premises.

(5)

For purposes of this subparagraph a, “adequate assurance” means that:

(A)

Landlord will determine that the trustee or the debtor-in-possession has, and will continue to have, sufficient unencumbered assets after the payment of all secured obligations and administrative expenses to assure Landlord that the trustee or the debtor-in-possession will have sufficient funds to fulfill Tenant's obligations under this Lease; and

(B)

An order will have been entered segregating sufficient cash payable to Landlord and/or a valid and perfected first lien and security interest will have been granted in property of Tenant, trustee, or debtor-in-possession that is acceptable for value and kind to Landlord, to secure to Landlord the obligation of the trustee or debtor-in-possession to cure the monetary or nonmonetary defaults under this Lease within the time periods set forth above.

(b)

In the event that this Lease is assumed by a trustee appointed for Tenant or by Tenant as debtor-in-possession under the provisions of subparagraph a and, thereafter, Tenant is either adjudicated a bankrupt or files a subsequent petition for rearrangement under Chapter 11 of the Code, then Landlord may terminate, at its option, this Lease and all Tenant's rights under it, by giving written notice of Landlord's election to terminate.

(c)

If the trustee or the debtor-in-possession has assumed this Lease, under the terms of subparagraph a, to assign or to elect to assign Tenant's interest under this Lease or the estate created by that interest to any other person, that interest or estate may be assigned only if Landlord acknowledges in writing that the intended assignee has provided adequate assurance, as defined in this subparagraph c, of future 

F-2

performance of all of the terms, covenants, and conditions of this Lease to be performed by Tenant

For the purposes of this subparagraph c, adequate assurance of future performance means that Landlord has ascertained that each of the following conditions has been satisfied:

(i)

The assignee has submitted a current financial statement, audited by a certified public accountant, that shows a net worth and working capital in amounts determined by Landlord to be sufficient to assure the future performance by the assignee of Tenant's obligation under this Lease;

(ii)

If reasonably requested by Landlord, the assignee will obtain guarantees, in form and substance satisfactory to Landlord, from one or more persons who satisfy Landlord's standards of credit worthiness: and

(iii)

Landlord has obtained all consents or waivers from any third party required under any lease, mortgage, financing arrangement, or other agreement by which Landlord is bound, to enable Landlord to permit the assignment.

(d)

When, pursuant to the Code, the trustee or the debtor-in-possession is obligated to pay reasonable use and occupancy charges for the use of all or part of the Premises, the charges will not be less than the Adjusted Rental then required to be paid by Tenant hereunder.

(e)

Neither Tenant's interest in this Lease nor any estate of Tenant created in this Lease will pass to any trustee, receiver, or assignee for the benefit of creditors, or any other person or entity, or otherwise by operation of law under the laws of any state having jurisdiction of the person or property of Tenant, unless Landlord consents in writing to this transfer. Landlord's acceptance of rental or any other payments from any trustee, receiver, assignee, person, or other entity will not be deemed to affect or alter (i) the need to obtain Landlord's consent or (ii) Landlord's right to terminate this Lease for any transfer of Tenant's interest under this Lease without such consent. 

F-3Securities Purchase Agreement

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of April 30, 2008 between GigaBeam Corporation, a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and permitted assigns, a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

1.1

Definitions.  In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Debentures (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.7.

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.  

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day except Saturday, Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Certificate of Designation” shall mean the Company’s Series D Certificate of Designation and Preferences. 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

“Closing Date” means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities have been satisfied or waived.

“Closing Statement” means the Closing Statement in the form Annex A attached hereto.

 “Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive Common Stock.

“Company Counsel” means Trombly Business Law, with offices located at 1320 Centre Street, Suite 202, Newton, MA 02459.

“Conversion Price” shall have the meaning ascribed to such term in the Debentures.

“Debentures” means the Original Issue Discount Secured Convertible Debentures due, subject to the terms therein, 2 years from their date of issuance, issued by the Company to the Purchasers hereunder, in the form of Exhibit A attached hereto.

“Disclosure Schedules” shall have the meaning ascribed to such term in Section 3.1.

“Discussion Time” shall have the meaning ascribed to such term in Section 3.2(f).

“Effective Date” means the date that the Underlying Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions; provided, however, that in no event shall the Effective Date be later than two years from the date of this Agreement.

“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(r). 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

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“Exempt Issuance” means the issuance of (a) shares of Common Stock, options or other stock-based awards or grants to employees, officers, directors or consultants, provided that such issuances to consultants shall not exceed 500,000 shares (subject to adjustment for reverse and forward stock splits, recapitalizations and the like that occur after the date hereof) in any 12 month period of the Company pursuant to any stock or option plan duly adopted for such purpose by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion (including issuance of regularly scheduled dividend payments on outstanding preferred stock pursuant to the terms thereof) of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise, exchange or conversion price of such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities and (d) up to 500,000 shares of Common Stock (subject to adjustment for reverse and forward stock splits, recapitalizations and the like that occur after the date hereof), in the aggregate during any 12 month period, with a cost basis of not less than 80% of the VWAP on the date of issuance, issued in lieu of cash payments of trade payables.

“FWS” means Feldman Weinstein & Smith LLP with offices located at 420 Lexington Avenue, Suite 2620, New York, New York 10170-0002.

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa).

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

“Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c). 

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction. 

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

“Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).

“Maximum Rate” shall have the meaning ascribed to such term in Section 5.17.

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“Participation Maximum” shall have the meaning ascribed to such term in Section 4.12(a). 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Pre-Notice” shall have the meaning ascribed to such term in Section 4.12(b). 

“Preferred Stock” shall mean the 26,748 currently outstanding shares of the Company’s Series D Convertible Redeemable Preferred Stock which were issued pursuant to the Securities Exchange Agreement, having the rights, preferences and privileges set forth in the Certificate of Designation.

 “Principal Amount” means, as to each Purchaser, the amounts set forth below such Purchaser’s signature block on the signature pages hereto next to the heading “Principal Amount,” in United States Dollars, which shall equal such Purchaser’s Subscription Amount multiplied by 1.24.

“Pro Rata Portion” shall have the meaning ascribed to such term in Section 4.12(e).

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.10.

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

“Required Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants or conversion in full of all Debentures (including Underlying Shares issuable as payment of interest on the Debentures), ignoring any conversion or exercise limits set forth therein.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

“Securities” means the Debentures, the Warrants, the Warrant Shares and the Underlying Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

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“Securities Exchange Agreement” means those Securities Exchange and Amendment Agreements, each dated as of December 31, 2007, by and among the Company and the signatories thereto.  Collectively, the Securities and Exchange and Amendment Agreements shall be referred to as the “Securities Exchange Agreement”.

“Security Agreement” means the Security Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit C attached hereto.

“Security Documents” shall mean the Security Agreement, the Subsidiary Guarantee and any other documents and filing required thereunder in order to grant the Purchasers a first priority security interest in the assets of the Company and the Subsidiaries as provided in the Security Agreement, including all UCC-1 filing receipts. 

“Senior Notes” means the Senior Convertible Notes issued by the Company on January 28, 2005 and February 1, 2005.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 

 “Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Debentures and Warrants purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds; provided, however, that Midsummer Investment, Ltd. shall be permitted to surrender any outstanding indebtedness owed to it by the Company on a $1 for $1 basis in lieu of cash consideration.

“Subsequent Financing” shall have the meaning ascribed to such term in Section 4.12(a).

“Subsequent Financing Notice” shall have the meaning ascribed to such term in Section 4.12(b).

“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

“Subsidiary Guarantee” means the Subsidiary Guarantee, dated the date hereof, by each Subsidiary in favor of the Purchasers, in the form of Exhibit D attached hereto.

“Trading Day” means a day on which the principal Trading Market is open for trading.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

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 “Transaction Documents” means this Agreement, the Debentures, the Warrants, the Security Agreement, the Subsidiary Guarantee and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

“Transfer Agent” means Continental Stock Transfer & Trust, the current transfer agent of the Company with a mailing address of 17 Battery Place, New York, New York 10004 and a facsimile number of (212) 509-5150, and any successor transfer agent of the Company.

“Underlying Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Debentures and upon exercise of the Warrants and issued and issuable in lieu of the cash payment of interest on the Debentures in accordance with the terms of the Debentures.

“Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.13(b).

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)); (b)  if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the reasonable fees and expenses of which shall be paid by the Company.

“Warrants” means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be exercisable immediately and have a term of exercise equal to 5 years, in the form of Exhibit B attached hereto.

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

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ARTICLE II.

PURCHASE AND SALE

2.1

Closing.  On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $3,720,000 in principal amount of the Debentures.  Each Purchaser shall deliver to the Company via wire transfer or a certified check, immediately available funds equal to its Subscription Amount and the Company shall deliver to each Purchaser its respective Debenture and a Warrant, as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.  Upon satisfaction of the conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of FWS or such other location as the parties shall mutually agree. Midsummer Investment, Ltd. shall be permitted to surrender any outstanding indebtedness owed to it by the Company on a $1 for $1 basis in lieu of cash consideration and must surrender copies of securities evidencing such indebtedness, including a letter stating that such indebtedness is extinguished upon the issuance of the Securities as described herein.

Deliveries

(a)

On the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

(i)        this Agreement duly executed by the Company;

(ii)

a legal opinion of Company Counsel, in substantially the form of Exhibit E attached hereto;

(iii)

a Debenture with a principal amount equal to such Purchaser’s Subscription Amount, registered in the name of such Purchaser;

(iv)

a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 200% of such Purchaser’s Principal Amount divided by $0.35, with an exercise price equal to $0.35, subject to adjustment therein; and

(v)

the Security Agreement, duly executed by the Company and each Subsidiary, along with all of the Security Documents, including the Subsidiary Guarantee, duly executed by the parties thereto.

(b)

On the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following: 

(i)        this Agreement duly executed by such Purchaser;

(ii)

such Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company; and

(iii)

the Security Agreement duly executed by such Purchaser.

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2.2

Closing Conditions. 

(a)

The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

(i)

the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Purchasers contained herein;

(ii)

all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

(iii)

the delivery by each Purchaser of the items set forth in Section 2.1(b) of this Agreement.

(b)

The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:

(i)

the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein;

(ii)

all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed; 

(iii)

the delivery by the Company of the items set forth in Section 2.1(a) of this Agreement; 

(iv)

there shall have been no Material Adverse Effect with respect to the Company since the date hereof;

(v)

Purchasers holding at least 51% of the outstanding shares of Preferred Stock shall have executed this Agreement (or have agreed to the terms of the amendments and waivers set forth in Section 4.19 by separate agreement acceptable to the Purchasers); and

(vi)

from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission  or the Company’s principal Trading 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 L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of each Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1

Representations and Warranties of the Company.  Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules or with respect to which the relevance of such qualification is readily apparent on the face of such disclosure, the Company hereby makes the following representations and warranties to each Purchaser:

(a)

Subsidiaries.  All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a).  The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.  If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.

(b)

Organization and Qualification.  The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

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(c)

Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith other than in connection with the Required Approvals.  Each Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d)

No Conflicts.  The execution, delivery and performance by the Company of the Transaction Documents and the consummation by it to which it is a party of the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary (other than under the Security Document), or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

(e)

Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.6, (ii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Underlying Shares for trading thereon in the time and manner required thereby and (iii) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

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(f)

Issuance of the Securities.  The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.  The Underlying Shares, when issued and paid for in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.  The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares at least equal to the Required Minimum on the date hereof.  

(g)

Capitalization.  The capitalization of the Company is as set forth on Schedule 3.1(g).  Other than Midsummer Investment, Ltd., no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  Except as a result of the purchase and sale of the Securities and except as set forth on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.  Other than with respect to securities held by the Purchasers, the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities.  There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

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(h)

SEC Reports; Financial Statements.  Except as set forth on Schedule 3.1(h), the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for 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, immaterial, year-end audit adjustments.

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(i)

Material Changes.  Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders, except as required for its outstanding Series A, B or C preferred stock holders, or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans and stock purchase plans or except as set forth on Schedule 3.1(i)(a), and pursuant to the conversion or exercise of any outstanding Common Stock Equivalents.  The Company does not have pending before the Commission any request for confidential treatment of information.  Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i)(b), no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

(j)

Litigation.  There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any Subsidiary, nor, to the Company’s knowledge, any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

13

(k)

Labor Relations.  No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which could reasonably be expected to result in a Material Adverse Effect.  None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good.  No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.  The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(l)

Compliance.  Neither the Company nor any Subsidiary: (i) except as set forth on the Schedule 3.1(l), is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived) except as set forth on the Schedule 3.1(l), (ii) is in violation of any order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

(m)

Regulatory Permits.  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

14

(n)

Title to Assets.  The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

(o)

Patents and Trademarks.  The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described in the SEC Reports as necessary or material for use in connection with their respective businesses and which the failure to so have could reasonably be expected to have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.  The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(p)

Insurance.  The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount.  Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

15

(q)

Transactions with Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

(r)

Sarbanes-Oxley; Internal Accounting Controls.  The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date.  The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the SEC Reports, the Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.

(s)

Certain Fees.  No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.  The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

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(t)

Private Placement.  Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

(u)

Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act of 1940, as amended.

(v)

Registration Rights.  No Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company, except as set forth in the Certificate of Designation for the Preferred Stock.

(w)

Listing and Maintenance Requirements.  The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.  The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market.  Set forth on Schedule 3.1(w) are certain correspondences relating to the Company’s non-compliance with the Trading Market listing and maintenance requirements.

(x)

Application of Takeover Protections.  The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

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(y)

Disclosure.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, including information set forth on the Disclosure Schedules and disclosures furnished by the Company to the Purchasers regarding the Company and its business in connection therewith, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, nonpublic information.  The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.  All disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the information set forth in the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

(z)

No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, 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 this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated. 

(aa)

Solvency.  Based on the consolidated financial condition of the Company as of the Closing Date after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid.  The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).  The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date.  Schedule 3.1(aa) 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” means (x) any 

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liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, 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 (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP.  Except as disclosed to the Purchasers by separate letter, neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

(bb)

Tax Status. 

 Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary.

(cc)

No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising.  The Company has offered the Securities for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

(dd)

Foreign Corrupt Practices.  Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is  in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

(ee)

Accountants.  The Company’s accounting firm is set forth on Schedule 3.1(ee) of the Disclosure Schedules.  To the knowledge and belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the year ending December 31, 2007.

(ff)

Seniority.  As of the Closing Date, no Indebtedness or other claim against the Company is senior to the Debentures in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby) or as otherwise set forth in Schedule 3.1(ff).

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(gg)

No Disagreements with Accountants and Lawyers.  There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents.

(hh)

Acknowledgment Regarding Purchasers’ Purchase of Securities.  The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby.  The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities.  The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

(ii)

Acknowledgment Regarding Purchasers’ Trading Activity

..  Notwithstanding anything in this Agreement or elsewhere herein to the contrary (except for Sections 3.2(f) and 4.15 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked to agree by the Company, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may presently have a “short” position in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction.  

The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Underlying Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing stockholders' equity interests in the Company at and after the time that the hedging activities are being conducted.  The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

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(jj)

Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the securities of the Company, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Securities.

3.2

Representations and Warranties of the Purchasers.    Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:

(a)

Organization; Authority.  Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate or similar action on the part of such Purchaser.  Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b)

Own Account.  Such Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting such Purchaser’s right to sell the Securities in compliance with applicable federal and state securities laws) in violation of the Securities Act or any applicable state securities law.  Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

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(c)

Purchaser Status.  At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants or converts any Debentures it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.  Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

(d)

Experience of Such Purchaser.  Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.  Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

(e)

General Solicitation.  Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(f)

Short Sales and Confidentiality Prior To The Date Hereof.  Other than consummating the transactions contemplated hereunder, such Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing from the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder until the date hereof (“Discussion Time”).  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.  Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).

(g)

Acknowledgement Regarding “Restricted Securities”.  Each Purchaser acknowledges and agrees that notwithstanding the removal from the certificates representing the Underlying Shares of the legend set forth in Section 4.1(b) hereof upon effectiveness of a registration statement covering the Underlying Shares, the Underlying Shares shall remain “restricted securities” until such Securities have been sold pursuant to (i) an effective registration statement or (ii) Rule 144.  Each Purchaser understands that any sales by such Purchaser of any of the Underlying Shares that are not made in compliance with Section 3.2(g) could subject the Company and such Purchaser to possible civil and criminal liability under applicably federal securities laws and applicable state securities or “blue sky” laws.

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ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1

Transfer Restrictions.

(a)

The Securities may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act.  As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement.

(b)

The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES CONSISTENT WITH FEDERAL AND STATE SECURITIES LAWS.

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The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties.  Such pledges will be consistent with federal and state securities laws.  Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.  Further, no notice shall be required of such pledge.  At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities.

(c)

Certificates evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a registration statement covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Underlying Shares pursuant to Rule 144, (iii) if such Underlying Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder.  If all or any portion of a Debenture is converted or Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if such Underlying Shares may be sold under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Underlying Shares shall be issued free of all legends.  The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than three Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends.  The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.  Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser.

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(d)

In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $2,000 of Underlying Shares (based on the VWAP of the Common Stock on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day 5 Trading Days after such damages have begun to accrue) for each Trading Day after the second Trading Day following the Legend Removal Date until such certificate is delivered without a legend.  Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

4.2

Acknowledgment of Dilution.  The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions.  The Company further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.

4.3

Furnishing of Information.  If the Common Stock is not registered under Section 12(b) or 12(g) of the Exchange Act on the date hereof, the Company agrees to cause the Common Stock to be registered under Section 12(g) of the Exchange Act on or before the 60th calendar day following the date hereof. Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act.    As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Securities under Rule 144.  The Company further covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule 144. 

4.4

Integration.  The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities to the Purchasers in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market.

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4.5

Conversion and Exercise Procedures.  Each of the form of Notice of Exercise included in the Warrants and the form of Notice of Conversion included in the Debentures set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants or convert the Debentures.  No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise their Warrants or convert their Debentures.  The Company shall honor exercises of the Warrants and conversions of the Debentures and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.

4.6

Securities Laws Disclosure; Publicity.  The Company shall, by 8:30 a.m. (New York City time) on the Trading Day immediately following the date hereof, issue a Current Report on Form 8-K, disclosing the material terms of the transactions contemplated hereby and including the Transaction Documents as exhibits thereto.  The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.  Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection with the filing of final Transaction Documents (including signature pages thereto) with the Commission and any other disclosure document filed with the Commission or in response to comments from the staff of the Commission if required by law, and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

4.7

Shareholder Rights Plan.  No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

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4.8

Non-Public Information.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, 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 covenant in effecting transactions in securities of the Company.  If the Company shall fail for any reason to satisfy the current public information requirement under Rule 144 and as a result thereof the Purchaser is not able to sell the Underlying Shares pursuant to Rule 144 without volume or manner restrictions, the Company shall pay to each Purchaser, in cash, an amount equal to 1% of the Principal Amount of Debentures then held by such Purchaser per month (pro-rata daily for periods of less than 30 days) until such requirement is met or the Purchaser can sell the Underlying Shares under Rule 144, whichever is earlier.

4.9

Use of Proceeds.  Except as set forth on Schedule 4.9 attached hereto, the Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes and shall not use such proceeds for: (a) the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) the redemption of any Common Stock or Common Stock Equivalents or (c) the settlement of any outstanding litigation.

4.10

Indemnification of Purchasers.   Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling person (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been 

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specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents.

4.11

Reservation and Listing of Securities.

(a)

Subject to Sections 4.11(b) and (c), the Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may then be required to fulfill its obligations in full under the Transaction Documents.

(b)

Subject to Section 4.11(c), if, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required Minimum on such date, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s Certificate of Incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such time, as soon as possible and in any event not later than the 75th day after such date or August 1, 2008, whichever is later.  The Holders acknowledge that the Company does not have sufficient Common Stock authorized as of the Closing Date to reserve the Required Minimum and meet its other reserve requirements. Notwithstanding Section 4.11(a) and 4.11(b) to the contrary, the parties agree that the Purchasers, to the extent each owns any Common Stock, will approve an increase in the number of authorized shares of Common Stock; and pending such approval, the Company will reserve all unreserved Common Stock with respect to the Securities.

(c)

The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing on such Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing and (iv) maintain the listing of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or another Trading Market.

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4.12

Participation in Future Financing. 

(a)

From the date hereof until the date that is the later of the 12 month anniversary of the Effective Date and the date that the Debentures are no longer outstanding, upon any issuance by the Company or any of its Subsidiaries of Common Stock, Common Stock Equivalents, Indebtedness (or a combination of units hereof) (a “Subsequent Financing”), each Purchaser shall have the right to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing.

(b)

At least 5 Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).  Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later than 1 Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser.  The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.    

(c)

Any Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30 p.m. (New York City time) on the 5th Trading Day after all of the Purchasers have received the Pre-Notice that the Purchaser is willing to participate in the Subsequent Financing, the amount of the Purchaser’s participation, and that the Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice.  If the Company receives no notice from a Purchaser as of such 5th Trading Day, such Purchaser shall be deemed to have notified the Company that it does not elect to participate.  

(d)

If by 5:30 p.m. (New York City time) on the 5th Trading Day after all of the Purchasers have received the Pre-Notice, notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.  

(e)

If by 5:30 p.m. (New York City time) on the 5th Trading Day after all of the Purchasers have received the Pre-Notice, the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum.  “Pro Rata Portion” means the ratio of (x) the Subscription Amount of Securities purchased on the Closing Date by a Purchaser participating under this Section 4.12 and (y) the sum of the aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchasers participating under this Section 4.12.

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(f)

The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of participation set forth above in this Section 4.12, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within 30 Trading Days after the date of the initial Subsequent Financing Notice. 

(g)

Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of (i) an Exempt Issuance, or (ii) an underwritten public offering of Common Stock.

4.13

Subsequent Equity Sales.

(a)

From the date hereof until 90 days after the Effective Date, neither the Company nor any Subsidiary shall issue shares of Common Stock or Common Stock Equivalents.

(b)

From the date hereof until such time as no Purchaser holds any of the Securities, the Company shall be prohibited from effecting or entering into an agreement to effect any Subsequent Financing involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company issues or sells (i) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price. 

(c)

Notwithstanding the foregoing, this Section 4.13 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance. 

4.14

Equal Treatment of Purchasers.  No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. Further, the Company shall not make any payment of principal or interest on the Debentures in amounts which are disproportionate to the respective principal amounts outstanding on the Debentures at any applicable time.  For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

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4.15

Short Sales and Confidentiality After The Date Hereof. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it, will execute any Short Sales during the period commencing with the Discussion Time and ending at such time the transactions contemplated by this Agreement are first publicly announced as described in Section 4.6.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company as described in Section 4.6, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules.  Notwithstanding the foregoing, no Purchaser makes any representation, warranty or covenant hereby that it will not engage in Short Sales in the securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced as described in Section 4.6.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

4.16

Form D; Blue Sky Filings.  The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Purchasers agree to timely respond to any requests for information by the Company necessary to complete the Form D filing or other applicable securities or “Blue Sky” filings.  The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

4.17

Capital Changes.  Until the one year anniversary of the Effective Date, the Company shall not undertake a reverse or forward stock split or reclassification of the Common Stock without the prior written consent of the Purchasers holding a majority in principal amount outstanding of the Debentures.

4.18

Registration Statements.  The Company shall not file any registration statements with the Commission without the consent of at least 67% in interest of the Purchasers.  Notwithstanding the foregoing, the Company may file registration statements on Form S-8 and S-4 and may file a registration statement covering the Warrant Shares and the shares underlying the warrants issued pursuant to the Securities Exchange Agreement and such warrants issued in connection with the Company’s Series D recapitalization.

4.19

Certain Waivers and Amendments to the Preferred Stock and Preferred Stock Warrants. 

(a)

In connection with the transactions contemplated by the Transaction Documents, the Company and the Purchasers hereby agree to amend and/or waive the following terms of the Securities Exchange Agreement (and other transaction documents entered into in connection therewith as referenced below) as follows:

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(i)

The term “Exempt Issuance” as used in the Securities Exchange Agreement shall be amended and restated as follows: ““Exempt Issuance” shall have the meaning ascribed to such term in the Certificate of Designation.”  Additionally, the definition of “Exempt Issuance” in the Securities Exchange Agreement shall be deemed to include the transactions and issuances contemplated under this Agreement.

(ii)

Unless a holder of Preferred Stock purchased its pro-rata share of Debentures and Warrants (based on the initial issuance of Preferred Stock pursuant to the Securities Exchange Agreement), the consummation of the transactions contemplated hereunder and the issuances of securities shall not result in an adjustment pursuant to Section 7(b) of the Certificate of Designation (Subsequent Equity Sales).  Such adjustment is hereby waived as to any holders of Preferred Stock that is not also a Purchaser hereunder as required above.  As such, a holder of Preferred Stock that purchased its pro-rata share of Debentures and Warrants hereunder shall receive the full adjustment to $0.35 (subject to further adjustment therein including the reset provision set forth in Section 4(b) of the Debenture) pursuant to Section 7(b) while any such holders that are not Purchasers or purchased less than their pro-rata share shall not receive any adjustment as a result of the transactions contemplated hereunder.

(iii)

The “Exercise Price” of the Preferred Stock Warrants held by Purchasers purchasing their pro-rata share (based on initial purchases Preferred Stock) of Debentures and Warrants hereunder (but not the Preferred Stock Warrants held by non-participating holders of Preferred Stock Warrants) is hereby reduced to equal $0.35, subject to further adjustment therein, and if the Conversion Price is reset pursuant to Section 4(b) of the Debenture to equal the Adjusted Price (as defined in the Debenture), to the Adjusted Price, subject to further adjustment as set forth in the Preferred Stock Warrants; and

(iv)

Each Purchaser consents to the consummation of the transaction contemplated pursuant to this Agreement and waives the restrictions set forth in Section 10 of the Certificate of Designation solely as it relates to the transactions consummated hereunder.

(b)

Subject to the amendments provided in this Section 4.19, all of the terms and conditions of the Securities Exchange Agreement (and the agreements entered into in connection therewith) shall continue in full force and effect after the execution of this Agreement and shall not be in any way changed, modified or superseded by the terms set forth herein.  Except as expressly set forth herein, this Section 4.19 shall not be deemed to be a waiver, amendment or modification of any provisions of the Securities Exchange Agreement or the respective transaction documents or of any right, power or remedy of the purchasers, or constitute a waiver of any provision of the respective transaction documents (except to the extent set forth in this Section 4.19), or any other document, instrument and/or agreement executed or delivered in connection therewith, in each case whether arising before or after the date hereof or as a result of performance hereunder or thereunder.

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ARTICLE V.

MISCELLANEOUS

5.1

Termination.  This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before April 30, 2008; provided, however, that such termination will not affect the right of any party to sue for any breach by the other party (or parties).

5.2

Fees and Expenses.  At the Closing, the Company has agreed to (a) reimburse Midsummer Capital, LLC (“Midsummer”) the non-accountable sum of $30,000 for its legal fees and expenses and (b) pay Trombly Business Law, special counsel to the Company, its unpaid legal fees and expenses of $30,000.  The Company shall deliver to each Purchaser, prior to the Closing, a completed and executed copy of the Closing Statement attached hereto as Annex A.  Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, 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.  The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

5.3

Entire Agreement.  The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.4

Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.

5.5

Amendments; Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding at least 67% in interest of the Securities then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.  No waiver 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 subsequent default 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.

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5.6

Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.  The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

5.7

Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger).  Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

5.8

No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.10.

5.9

Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof, except the Warrant, to the extent that Delaware General Corporation Law is mandatorily applicable.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) 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 contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.   If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

5.10

Survival.  The representations and warranties shall survive the Closing and the delivery of the Securities for the applicable statute of limitations.

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5.11

Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

5.12

Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

5.13

Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the case of a rescission of a conversion of a Debenture or exercise of a Warrant, the Purchaser shall be required to return any shares of Common Stock subject to any such rescinded conversion or exercise notice.

5.14

Replacement of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction.  The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

5.15

Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

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5.16

Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

5.17

Usury.  To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce any right or remedy under any Transaction Document.  Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate.  It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date forward, unless such application is precluded by applicable law.  If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser’s election.

5.18

Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document.  Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant 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.  Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents.  For reasons of administrative convenience only, Purchasers and their respective counsel have chosen to communicate with the Company through FWS.  FWS does not 

36

represent all of the Purchasers but only Midsummer Investment, Ltd.  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.

5.19

Liquidated Damages.  The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

5.20

Saturdays, Sundays, Holidays, etc.

If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

5.21

Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto.

5.22

WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. 

(Signature Pages Follow)

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

		
	GIGABEAM CORPORATION

	Address for Notice:

4021 Stirrup Creek Drive

Suite 400

	By:_/s/ S. Jay Lawrence ____________________

     Name: S. Jay Lawrence

     Title:   Chief Executive Officer

With a copy to (which shall not constitute notice):

	Durham, North Carolina 27703

Attn: Jay Lawrence

Tel: (858) 414-3209

	Amy Trombly

Trombly Business Law

1320 Centre Street, Suite 202

Newton, MA 02459

Tel: (617) 243-0060

	 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

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[PURCHASER SIGNATURE PAGES TO GGBM SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser: ________________________________________________________

Signature of Authorized Signatory of Purchaser: __________________________________

Name of Authorized Signatory: ____________________________________________________

Title of Authorized Signatory: _____________________________________________________

Email Address of Authorized Signatory: _____________________________________________

Facsimile Number of Authorized Signatory: __________________________________________

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for notice):

Subscription Amount: _____________

Principal Amount (1.24 x Subscription Amount): _____________

Warrant Shares: _________________

[SIGNATURE PAGES CONTINUE]

39

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