Document:

ex10-1.htm

    Exhibit
      10.1

    PURCHASE
      AGREEMENT

    

    

    THIS
      PURCHASE AGREEMENT (“Agreement”)
      is made as of the 19th day of
      July, 2007
      by and among Terabeam, Inc., a Delaware corporation (the “Company”), and the
      Investors set forth on the signature pages affixed hereto (each an “Investor”
and collectively the “Investors”).

    

    Recitals

    

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

    

    B.           The
      Investors wish to purchase from the Company, and the Company wishes to sell
      and
      issue to the Investors, upon the terms and conditions stated in this Agreement,
      (i) an aggregate of 4,300,000 shares of the Company’s Common Stock, par value
      $0.01 per share (together with any securities into which such shares may be
      reclassified the “Common Stock”), at purchase price of $1.75 per share, and (ii)
      warrants to purchase an aggregate of 2,150,000 shares of Common Stock (subject
      to adjustment) at an exercise price of $2.45 per share (subject to adjustment)
      in the form attached hereto as Exhibit A (the “Warrants”);
      and

    

    C.           Contemporaneous
      with the sale of the Common Stock and Warrants, the parties hereto will execute
      and deliver a Registration Rights Agreement, in the form attached hereto as
      Exhibit B (the “Registration Rights Agreement”), pursuant to which the
      Company will agree to provide certain registration rights under the Securities
      Act of 1933, as amended, and the rules and regulations promulgated thereunder,
      and applicable state securities laws.

    

    In
      consideration of the mutual promises
      made herein and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties hereto agree as
      follows:

    

    1.          
       Definitions.  In addition to those terms defined above
      and elsewhere in this Agreement, for the purposes of this Agreement, the
      following terms shall have the meanings set forth below:

    

    “Affiliate”
means,
      with respect
      to any Person, any other Person which directly or indirectly through one or
      more
      intermediaries Controls, is controlled by, or is under common control with,
      such
      Person.

    

    “Business
      Day” means a day,
      other than a Saturday or Sunday, on which banks in New York City are open for
      the general transaction of business.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “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 exchangeable for, or otherwise entitles the holder
      thereof to receive, Common Stock.

    

    “Company’s
      Knowledge” means the
      actual knowledge of the executive officers (as defined in Rule 405 under the
      1933 Act) of the Company, after due inquiry.  Notwithstanding the
      foregoing, each of the Investors acknowledges and agrees that the Company has
      conducted no freedom to operate searches or similar inquiries as to the
      existence of any patents that would be infringed by the operation of the
      Company's and each of its Subsidiaries respective businesses, as currently
      conducted or currently proposed to be conducted, and that no knowledge of any
      matters that would be revealed by any such searches or inquiries will be imputed
      to Company under this Agreement.

    

    “Confidential
      Information” means
      trade secrets, confidential information and know-how (including but not limited
      to ideas, formulae, compositions, processes, procedures and techniques, research
      and development information, product price and cost information, computer
      program code, performance specifications, support documentation, drawings,
      specifications, designs, business and marketing plans, and customer and supplier
      lists and related information).

    

    “Control”
(including
      the terms
“controlling”, “controlled by” or “under common control with”) means the
      possession, direct or indirect, of the power to direct or cause the direction
      of
      the management and policies of a Person, whether through the ownership of voting
      securities, by contract or otherwise.

    

    “Intellectual
      Property” means
      all of the following: (i) patents, patent applications, patent disclosures
      and
      inventions (whether or not patentable and whether or not reduced to practice);
      (ii) trademarks, service marks, trade dress, trade names, corporate names,
      logos, slogans and Internet domain names, together with all goodwill associated
      with each of the foregoing; (iii) copyrights and copyrightable works; (iv)
      registrations, applications and renewals for any of the foregoing; and (v)
      proprietary computer software (including but not limited to data, data bases
      and
      documentation).

    

    “Material
      Adverse Effect” means
      a material adverse effect on (i) the assets, liabilities, results of operations,
      condition (financial or otherwise), business, or prospects of the Company and
      its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform
      its obligations under the Transaction Documents; provided that in determining
      whether there has been or would be a Material Adverse Effect circumstances
      attributable to general industry, economic, national or international conditions
      shall not be taken into account unless they have a disproportionate impact
      on
      the Company and its Subsidiaries.

    

    “Nasdaq”
means
      The Nasdaq Stock
      Market, Inc.

    

    “Person”
means
      an individual,
      corporation, partnership, limited liability company, trust, business trust,
      association, joint stock company, joint venture, sole
      proprietorship,

    
      
        
        

      

      
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    unincorporated
      organization, governmental authority or any other form of entity not
      specifically listed herein.

    

    “Purchase
      Price” means Seven
      Million Five Hundred Twenty-Five Thousand Dollars ($7,525,000).

    

    “Registration
      Statement” has the
      meaning set forth in the Registration Rights Agreement.

    

    “SEC
      Filings” has the meaning
      set forth in Section 4.6.

    

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

    

    “Shares”
means
      the shares of
      Common Stock being purchased by the Investors hereunder.

    

    “Subsidiary”
of
      any Person means
      another Person, an amount of the voting securities, other voting ownership
      or
      voting partnership interests of which is sufficient to elect at least a majority
      of its Board of Directors or other governing body (or, if there are no such
      voting interests, 50% or more of the equity interests of which) is owned
      directly or indirectly by such first Person.

    

    “Transaction
      Documents” means
      this Agreement, the Warrants and the Registration Rights Agreement.

    

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

    

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

    

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

    

    2.           Purchase
      and Sale of the Shares and Warrants.  Subject to the terms and
      conditions of this Agreement, on the Closing Date, each of the Investors shall
      severally, and not jointly, purchase, and the Company shall sell and issue
      to
      the Investors, the Shares and Warrants in the respective amounts set forth
      opposite the Investors’ names on the signature pages attached hereto in exchange
      for the Purchase Price as specified in Section 3 below.

    

    3.           Closing.  Upon
      confirmation that the other conditions to closing specified herein have been
      satisfied or duly waived by the Investors, the Company shall deliver to
      Lowenstein Sandler PC, in trust, a certificate or certificates, registered
      in
      such name or names as the Investors may designate, representing the Shares
      and
      Warrants, with instructions that such certificates are to be held for release
      to
      the Investors only upon payment in full of the Purchase Price to the Company
      by
      all the Investors.  Upon such receipt by Lowenstein Sandler PC of
      the

    
      
        
        

      

      
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    certificates,
      each Investor shall promptly, but no more than one Business Day thereafter,
      cause a wire transfer in same day funds to be sent to the account of the Company
      as instructed in writing by the Company, in an amount representing such
      Investor’s pro rata portion of the Purchase Price as set forth on the signature
      pages to this Agreement.  On the date (the “Closing Date”) the Company
      receives the Purchase Price, the certificates evidencing the Shares and Warrants
      shall be released to the Investors (the “Closing”).  The Closing of
      the purchase and sale of the Shares and Warrants shall take place at the offices
      of Lowenstein Sandler PC, 1251 Avenue of the Americas, 18th Floor, New York,
      New
      York 10020, or at such other location and on such other date as the Company
      and
      the Investors shall mutually agree.

    

    4.           Representations
      and Warranties of the Company.  The Company hereby represents and
      warrants to the Investors that, except as set forth in the disclosure letter
      delivered contemporaneous herewith (the “Disclosure Letter”) (with references to
      Schedules below referring to portions of the Disclosure Letter):

    

    4.
      1           Organization,
      Good Standing and Qualification.  Each of the Company and its
      Subsidiaries is a corporation duly organized, validly existing and in good
      standing under the laws of the jurisdiction of its incorporation and has all
      requisite corporate power and authority to carry on its business as now
      conducted and to own its properties.  Each of the Company and its
      Subsidiaries is duly qualified to do business as a foreign corporation and
      is in
      good standing in each jurisdiction in which the conduct of its business or
      its
      ownership or leasing of property makes such qualification or leasing necessary
      unless the failure to so qualify has not had and could not reasonably be
      expected to have a Material Adverse Effect.  The Company’s
      Subsidiaries are listed on Schedule 4.1 hereto.

    

    4.2           Authorization.  The
      Company has full power and authority and has taken all
      requisite action on the part of the Company, its officers, directors and
      stockholders necessary for (i) the authorization, execution and delivery of
      the
      Transaction Documents, (ii) the authorization of the performance of all
      obligations of the Company hereunder or thereunder, and (iii) the authorization,
      issuance (or reservation for issuance) and delivery of the
      Securities.  The Transaction Documents constitute the legal, valid and
      binding obligations of the Company, enforceable against the Company in
      accordance with their terms, subject to bankruptcy, insolvency, fraudulent
      transfer, reorganization, moratorium and similar laws of general applicability,
      relating to or affecting creditors’ rights generally.

    

    4.3           Capitalization.  Schedule
      4.3 sets forth (a) the authorized capital stock of the Company on the date
      hereof; (b) the number of shares of capital stock issued and outstanding; (c)
      the number of shares of capital stock issuable pursuant to the Company’s stock
      plans; and (d) the number of shares of capital stock issuable and reserved
      for
      issuance pursuant to securities (other than the Shares and the Warrants)
      exercisable for, or convertible into or exchangeable for any shares of capital
      stock of the Company.  All of the issued and outstanding shares of the
      Company’s capital stock have been duly authorized and validly issued and are
      fully paid, nonassessable and free of pre-emptive rights and were issued in
      full
      compliance with applicable state and federal securities law and any rights
      of
      third parties.  Except as described on Schedule 4.3, all of the
      issued and outstanding shares of capital stock of each Subsidiary have been
      duly
      authorized and validly issued and are fully paid, nonassessable and free of
      pre-emptive

    
      
        
        

      

      
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    rights,
      were issued in full compliance with applicable state and federal securities
      law
      and any rights of third parties and are owned by the Company, beneficially
      and
      of record, subject to no lien, encumbrance or other adverse
      claim.  Except as described on Schedule 4.3, no Person is
      entitled to pre-emptive or similar statutory or contractual rights with respect
      to any securities of the Company.  Except as described on Schedule
      4.3, there are no outstanding warrants, options, convertible securities or
      other rights, agreements or arrangements of any character under which the
      Company or any of its Subsidiaries is or may be obligated to issue any equity
      securities of any kind and except as contemplated by this Agreement, neither
      the
      Company nor any of its Subsidiaries is currently in negotiations for the
      issuance of any equity securities of any kind.  Except as described on
Schedule 4.3 and except for the Registration Rights Agreement, there are
      no voting agreements, buy-sell agreements, option or right of first purchase
      agreements or other agreements of any kind among the Company and any of the
      securityholders of the Company relating to the securities of the Company held
      by
      them.  Except as described on Schedule 4.3 and except as
      provided in the Registration Rights Agreement, no Person has the right to
      require the Company to register any securities of the Company under the 1933
      Act, whether on a demand basis or in connection with the registration of
      securities of the Company for its own account or for the account of any other
      Person.

    

    Except
      as described on Schedule
      4.3, the issuance and sale of the Securities hereunder will not obligate the
      Company to issue shares of Common Stock or other securities to any other Person
      (other than the Investors) and will not result in the adjustment of the
      exercise, conversion, exchange or reset price of any outstanding
      security.

    

    Except
      as described on Schedule
      4.3, the Company does not have outstanding stockholder purchase rights or
      “poison pill” or any similar arrangement in effect giving any Person the right
      to purchase any equity interest in the Company upon the occurrence of certain
      events.

    

    4.4           Valid
      Issuance.  The Shares have been duly and validly authorized and,
      when issued and paid for pursuant to this Agreement, will be validly issued,
      fully paid and nonassessable, and shall be free and clear of all encumbrances
      and restrictions (other than those created by the Investors), except for
      restrictions on transfer set forth in the Transaction Documents or imposed
      by
      applicable securities laws.  The Warrants have been duly and validly
      authorized.  Upon the due exercise of the Warrants, the Warrant Shares
      will be validly issued, fully paid and non-assessable free and clear of all
      encumbrances and restrictions, except for restrictions on transfer set forth
      in
      the Transaction Documents or imposed by applicable securities laws and except
      for those created by the Investors.  The Company has reserved a
      sufficient number of shares of Common Stock for issuance upon the exercise
      of
      the Warrants, free and clear of all encumbrances and restrictions, except for
      restrictions on transfer set forth in the Transaction Documents or imposed
      by
      applicable securities laws and except for those created by the
      Investors.

    

    4.5           Consents.  The
      execution, delivery and performance by the Company of the Transaction Documents
      and the offer, issuance and sale of the Securities require no consent of, action
      by or in respect of, or filing with, any Person, governmental body, agency,
      or
      official other than filings that have been made pursuant to applicable state
      securities laws and post-sale

    
      
        
        

      

      
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    filings
      pursuant to applicable state and federal securities laws which the Company
      undertakes to file within the applicable time periods.  Subject to the
      accuracy of the representations and warranties of each Investor set forth in
      Section 5 hereof, the Company has taken all action necessary to exempt (i)
      the
      issuance and sale of the Securities, (ii) the issuance of the Warrant Shares
      upon due exercise of the Warrants, and (iii) the other transactions contemplated
      by the Transaction Documents from the provisions of any stockholder rights
      plan
      or other “poison pill” arrangement, any anti-takeover, business combination or
      control share law or statute binding on the Company or to which the Company
      or
      any of its assets and properties may be subject and any provision of the
      Company’s Certificate of Incorporation or Bylaws that is or could reasonably be
      expected to become applicable to the Investors as a result of the transactions
      contemplated hereby, including without limitation, the issuance of the
      Securities and the ownership, disposition or voting of the Securities by the
      Investors or the exercise of any right granted to the Investors pursuant to
      this
      Agreement or the other Transaction Documents.

    

    4.6           Delivery
      of SEC Filings; Business.  The Company has made available to the
      Investors through the EDGAR system, true and complete copies of the Company’s
      most recent Annual Report on Form 10-K for the fiscal year ended December 31,
      2006 (the “10-K”), and all other reports filed by the Company pursuant to the
      1934 Act since the filing of the 10-K and prior to the date hereof
      (collectively, the “SEC Filings”).  The SEC Filings are the only
      filings required of the Company pursuant to the 1934 Act for such
      period.  The Company and its Subsidiaries are engaged in all material
      respects only in the business described in the SEC Filings and the SEC Filings
      contain a complete and accurate description in all material respects of the
      business of the Company and its Subsidiaries, taken as a whole.

    

    4.7           Use
      of Proceeds.  The net proceeds of the sale of the Shares and the
      Warrants hereunder shall be used by the Company for working capital and general
      corporate purposes.

    

    4.8           No
      Material Adverse Change.  Since December 31, 2006, except as
      identified and described in the SEC Filings or as described on Schedule
      4.8, there has not been:

    

    (i)           any
      change in the consolidated assets, liabilities, financial condition or operating
      results of the Company from that reflected in the financial statements included
      in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,
      2007, except for changes in the ordinary course of business which have not
      had
      and could not reasonably be expected to have a Material Adverse Effect,
      individually or in the aggregate;

    

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

    

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

    

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

    
      
        
        

      

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

    

    (vi)           any
      change or amendment to the Company's Certificate of Incorporation or Bylaws,
      or
      material change to any material contract or arrangement by which the Company
      or
      any Subsidiary is bound or to which any of their respective assets or properties
      is subject;

    

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

    

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

    

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

    

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

    

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

    

    4.9           SEC
      Filings; S-3 Eligibility.

    

    (a)           At
      the time of filing thereof, the SEC Filings complied as to form in all material
      respects with the requirements of the 1934 Act and did 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 the light of the circumstances
      under which they were made, not misleading.

    

    (b)           Each
      registration statement and any amendment thereto filed by the Company since
      January 1, 2004 pursuant to the 1933 Act and the rules and regulations
      thereunder, as of the date such statement or amendment became effective,
      complied as to form in all material respects with the 1933 Act and did not
      contain any untrue statement of a material fact or omit to state any material
      fact required to be stated therein or necessary in order to make the statements
      made therein not misleading; and each prospectus filed by the Company since
      January 1, 2004 pursuant to Rule 424(b) under the 1933 Act, as of its issue
      date
      and as of the closing of any sale of securities pursuant thereto did not contain
      any untrue statement of a material fact or omit to state any material fact
      required to be stated therein or necessary in order to make the statements
      made
      therein, in the light of the circumstances under which they were made, not
      misleading.

    
      
        
        

      

      
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    (c)           The
      Company is eligible to use Form S-3 to register the Registrable Securities
      (as
      such term is defined in the Registration Rights Agreement) for sale by the
      Investors as contemplated by the Registration Rights Agreement.

    

    4.10           No
      Conflict, Breach, Violation or Default.  The execution, delivery
      and performance of the Transaction Documents by the Company and the issuance
      and
      sale of the Securities will not conflict with or result in a breach or violation
      of any of the terms and provisions of, or constitute a default under (i) the
      Company’s Certificate of Incorporation or the Company’s Bylaws, both as in
      effect on the date hereof (true and complete copies of which have been made
      available to the Investors through the EDGAR system), or (ii)(a) any statute,
      rule, regulation or order of any governmental agency or body or any court,
      domestic or foreign, having jurisdiction over the Company, any Subsidiary or
      any
      of their respective assets or properties, or (b) any agreement or instrument
      to
      which the Company or any Subsidiary is a party or by which the Company or a
      Subsidiary is bound or to which any of their respective assets or properties
      is
      subject.

    

    4.11           Tax
      Matters.  The Company and each Subsidiary has timely prepared and
      filed all tax returns required to have been filed by the Company or such
      Subsidiary with all appropriate governmental agencies and timely paid all taxes
      shown thereon or otherwise owed by it, except for such instances of
      noncompliance as have not had and could not reasonably be expected to have
      a
      Material Adverse Effect, individually or in the aggregate.  The
      charges, accruals and reserves on the books of the Company in respect of taxes
      for all fiscal periods are adequate in all material respects, and there are
      no
      material unpaid assessments against the Company or any Subsidiary nor, to the
      Company’s Knowledge, any basis for the assessment of any additional taxes,
      penalties or interest for any fiscal period or audits by any federal, state
      or
      local taxing authority except for any assessment which is not material to the
      Company and its Subsidiaries, taken as a whole.  All taxes and other
      assessments and levies that the Company or any Subsidiary is required to
      withhold or to collect for payment have been duly withheld and collected and
      paid to the proper governmental entity or third party when due.  There
      are no tax liens or claims pending or, to the Company’s Knowledge, threatened
      against the Company or any Subsidiary or any of their respective assets or
      property.  Except as described on Schedule 4.11, there are no
      outstanding tax sharing agreements or other such arrangements between the
      Company and any Subsidiary or other corporation or entity.

    

    4.12           Title
      to Properties.  Except as disclosed in the SEC Filings, the
      Company and each Subsidiary has good and marketable title to all real properties
      and all other properties and assets owned by it, in each case free from liens,
      encumbrances and defects that would materially affect the value thereof or
      materially interfere with the use made or currently planned to be made thereof
      by them; and except as disclosed in the SEC Filings, the Company and each
      Subsidiary holds any leased real or personal property under valid and
      enforceable leases with no exceptions that would materially interfere with
      the
      use made or currently planned to be made thereof by them.

    

    4.13           Certificates,
      Authorities and Permits.  The Company and each Subsidiary possess
      adequate certificates, authorities or permits issued by appropriate governmental
      agencies

    
      
        
        

      

      
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    or
      bodies
      necessary to conduct the business now operated by it, and neither the Company
      nor any Subsidiary has received any notice of proceedings relating to the
      revocation or modification of any such certificate, authority or permit that,
      if
      determined adversely to the Company or such Subsidiary, could reasonably be
      expected to have a Material Adverse Effect, individually or in the
      aggregate.

    

                          4.14           Labor
      Matters.

    

                          (a)           Except
      as set forth on Schedule 4.14, the Company is not a party to or bound by
      any collective bargaining agreements or other agreements with labor
      organizations.  The Company has not violated in any material respect
      any laws, regulations, orders or contract terms, affecting the collective
      bargaining rights of employees, labor organizations or any laws, regulations
      or
      orders affecting employment discrimination, equal opportunity employment, or
      employees’ health, safety, welfare, wages and hours.

    

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

    

                          (c)           The
      Company is, and at all times has been, in compliance in all material respects
      with all applicable laws respecting employment (including laws relating to
      classification of employees and independent contractors) and employment
      practices, terms and conditions of employment, wages and hours, and immigration
      and naturalization.  There are no claims pending against the Company
      before the Equal Employment Opportunity Commission or any other administrative
      body or in any court asserting any violation of Title VII of the Civil Rights
      Act of 1964, the Age Discrimination Act of 1967, 42 U.S.C. §§ 1981 or 1983 or
      any other federal, state or local Law, statute or ordinance barring
      discrimination in employment.

    

                          (d)           Except
      as disclosed in the SEC Filings or as described on Schedule 4.14, the
      Company is not a party to, or bound by, any employment or other contract or
      agreement that contains any severance, termination pay or change of control
      liability or obligation, including, without limitation, any “excess parachute
      payment,” as defined in Section 280G(b) of the Internal Revenue
      Code.

    

                          (e)           Except
      as specified in Schedule 4.14, each of the Company's employees is a
      Person who is either a United States citizen or a permanent resident entitled
      to
      work in the United States.  To the Company's Knowledge, the Company
      has no liability for the improper classification by the Company of such
      employees as independent contractors or leased employees prior to the
      Closing.

    
      
        
        

      

      
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    4.15           Intellectual
      Property.

    

    (a)           All
      Intellectual Property of the Company and its Subsidiaries is currently in
      compliance with all legal requirements (including timely filings, proofs and
      payments of fees) and, to the Company’s Knowledge, is valid and
      enforceable.  No Intellectual Property of the Company or its
      Subsidiaries which is necessary for the conduct of Company’s and each of its
      Subsidiaries’ respective businesses as currently conducted or as currently
      proposed to be conducted has been or is now involved in any cancellation,
      dispute or litigation, and, to the Company’s Knowledge, no such action is
      threatened.  No patent of the Company or its Subsidiaries has been or
      is now involved in any interference, reissue, re-examination or opposition
      proceeding.

    

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

    

    (c)           The
      Company and its Subsidiaries own or have the valid right to use all of the
      Intellectual Property that is necessary for the conduct of the Company’s and
      each of its Subsidiaries’ respective businesses as currently conducted and for
      the ownership, maintenance and operation of the Company’s and its Subsidiaries’
properties and assets, free and clear of all liens, encumbrances, adverse claims
      or obligations to license all such owned Intellectual Property and Confidential
      Information, other than licenses entered into in the ordinary course of the
      Company’s and its Subsidiaries’ businesses.  The Company and its
      Subsidiaries have a valid and enforceable right to use all third party
      Intellectual Property and Confidential Information used or held for use in
      the
      respective businesses of the Company and its Subsidiaries.

    

    (d)           To
      the Company’s Knowledge, the conduct of the Company’s and its Subsidiaries’
businesses as currently conducted does not infringe or otherwise impair or
      conflict with (collectively, “Infringe”) any Intellectual Property rights of any
      third party or any confidentiality obligation owed to a third party, and, to
      the
      Company’s Knowledge, the Intellectual Property and Confidential Information of
      the Company and its Subsidiaries which are necessary for the conduct of
      Company’s and each of its Subsidiaries’ respective businesses as currently
      conducted or as currently proposed to be conducted are not being Infringed
      by
      any third party.  There is no litigation or order pending or
      outstanding or, to the Company’s

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    Knowledge,
      threatened or imminent, that seeks to limit or challenge or that concerns the
      ownership, use, validity or enforceability of any Intellectual Property or
      Confidential Information of the Company and its Subsidiaries and the Company’s
      and its Subsidiaries’ use of any Intellectual Property or Confidential
      Information owned by a third party, and, to the Company’s Knowledge, there is no
      valid basis for the same.

    

    (e)           The
      consummation of the transactions contemplated hereby and by the other
      Transaction Documents will not result in the alteration, loss, impairment of
      or
      restriction on the Company’s or any of its Subsidiaries’ ownership or right to
      use any of the Intellectual Property or Confidential Information which is
      necessary for the conduct of Company’s and each of its Subsidiaries’ respective
      businesses as currently conducted or as currently proposed to be
      conducted.

    

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

    

    4.16           Environmental
      Matters.  Neither the Company nor any Subsidiary is in violation
      of any statute, rule, regulation, decision or order of any governmental agency
      or body or any court, domestic or foreign, relating to the use, disposal or
      release of hazardous or toxic substances or relating to the protection or
      restoration of the environment or human exposure to hazardous or toxic
      substances (collectively, “Environmental Laws”), owns or operates any real
      property contaminated with any substance that is subject to any Environmental
      Laws, is liable for any off-site disposal or contamination pursuant to any
      Environmental Laws, or is subject to any claim relating to any Environmental
      Laws, which violation, contamination, liability or claim has had or could
      reasonably be expected to have a Material Adverse Effect, individually or in
      the
      aggregate; and there is no pending or, to the Company’s Knowledge, threatened
      investigation that might lead to such a claim.

    

    4.17           Litigation.  Except
      as described on Schedule 4.17, there are no pending actions, suits or
      proceedings against or affecting the Company, its Subsidiaries or any of its
      or
      their properties; and to the Company’s Knowledge, no such actions, suits or
      proceedings are threatened or contemplated.  Neither the Company nor
      any Subsidiary, nor any director or officer thereof, is or since January 1,
      2002
      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 Company’s Knowledge,
      there is not pending or contemplated, any investigation by the SEC involving
      the
      Company or any current or former director or officer of the
      Company.  The SEC has not issued any stop order or other
      order

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    suspending
      the effectiveness of any registration statement filed by the Company or any
      Subsidiary under the 1933 Act or the 1934 Act.

    

    4.18           Financial
      Statements.  The financial statements included in each SEC Filing
      present fairly, in all material respects, the consolidated financial position
      of
      the Company as of the dates shown and its consolidated results of operations
      and
      cash flows for the periods shown, and such financial statements have been
      prepared in conformity with United States generally accepted accounting
      principles applied on a consistent basis (“GAAP”) (except as may be disclosed
      therein or in the notes thereto, and, in the case of quarterly financial
      statements, as permitted by Form 10-Q under the 1934 Act).  Except as
      set forth in the financial statements of the Company included in the SEC Filings
      filed prior to the date hereof or as described on Schedule 4.18, neither
      the Company nor any of its Subsidiaries has incurred any liabilities, contingent
      or otherwise, except those incurred in the ordinary course of business,
      consistent (as to amount and nature) with past practices since the date of
      such
      financial statements, none of which, individually or in the aggregate, have
      had
      or could reasonably be expected to have a Material Adverse Effect.

    

    4.19           Insurance
      Coverage.  The Company and each Subsidiary maintains in full force
      and effect insurance coverage that is customary for comparably situated
      companies for the business being conducted and properties owned or leased by
      the
      Company and each Subsidiary, and the Company reasonably believes such insurance
      coverage to be adequate against all liabilities, claims and risks against which
      it is customary for comparably situated companies to insure.

    

    4.20           Compliance
      with Nasdaq Continued Listing Requirements.  The Company is in
      compliance with applicable Nasdaq continued listing
      requirements.  There are no proceedings pending or, to the Company’s
      Knowledge, threatened against the Company relating to the continued listing
      of
      the Common Stock on Nasdaq and the Company has not received any notice of,
      nor
      to the Company’s Knowledge is there any basis for, the delisting of the Common
      Stock from Nasdaq.

    

    4.21           Brokers
      and Finders.  No Person will have, as a result of the transactions
      contemplated by the Transaction Documents, any valid right, interest or claim
      against or upon the Company, any Subsidiary or an Investor for any commission,
      fee or other compensation pursuant to any agreement, arrangement or
      understanding entered into by or on behalf of the Company, other than as
      described in Schedule 4.21.

    

    4.22           No
      Directed Selling Efforts or General Solicitation.  Neither the
      Company nor any Person acting on its behalf has conducted any general
      solicitation or general advertising (as those terms are used in Regulation
      D) in
      connection with the offer or sale of any of the Securities.

    

    4.23           No
      Integrated Offering.  Neither the Company nor any of its
      Affiliates, nor any Person acting on its or their behalf has, directly or
      indirectly, made any offers or sales of any Company security or solicited any
      offers to buy any security, under circumstances that would adversely affect
      reliance by the Company on Section 4(2) for the exemption from registration
      for

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    the
      transactions contemplated hereby or would require registration of the Securities
      under the 1933 Act.

    

    4.24           Private
      Placement.  The offer and sale of the Securities to the Investors
      as contemplated hereby is exempt from the registration requirements of the
      1933
      Act.

    

    4.25           Questionable
      Payments.  Neither the Company nor any
      of its Subsidiaries nor, to the Company’s Knowledge, any of their respective
      current or former stockholders, directors, officers, employees, agents or other
      Persons acting on behalf of the Company or any Subsidiary, has on behalf of
      the
      Company or any Subsidiary or in connection with their respective businesses:
      (a)
      used any corporate funds for unlawful contributions, gifts, entertainment or
      other unlawful expenses relating to political activity; (b) made any direct
      or
      indirect unlawful payments to any governmental officials or employees from
      corporate funds; (c) established or maintained any unlawful or unrecorded fund
      of corporate monies or other assets; (d) made any false or fictitious entries
      on
      the books and records of the Company or any Subsidiary; or (e) made any unlawful
      bribe, rebate, payoff, influence payment, kickback or other unlawful payment
      of
      any nature.

    

    4.26           Transactions
      with Affiliates.  Except as disclosed in the SEC Filings or as
      disclosed on Schedule 4.26, none of the officers or directors of the
      Company and, to the Company’s Knowledge, none of the employees of the Company is
      presently a party to any transaction with the Company or any Subsidiary (other
      than as holders of stock options and/or warrants, and for services as employees,
      officers and directors), including any contract, agreement or other arrangement
      providing for the furnishing of services to or by, providing for rental of
      real
      or personal property to or from, or otherwise requiring payments to or from
      any
      officer, director or such employee or, to the Company’s Knowledge, any entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner.

    

    4.27           Internal
      Controls.  The Company is in material compliance with the
      provisions of the Sarbanes-Oxley Act of 2002 currently applicable to the
      Company.  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.
      The
      Company has established disclosure controls and procedures (as defined in 1934
      Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure
      controls and procedures to ensure that material information relating to the
      Company, including the Subsidiaries, is made known to the certifying officers
      by
      others within those entities, particularly during the period in which the
      Company’s most recently filed periodic report under the 1934 Act, as the case
      may be, is being prepared.  The Company's certifying officers have
      evaluated the effectiveness of the Company's controls and procedures as of
      the
      end of the period covered by the most recently filed periodic report under
      the
      1934 Act (such date, the "Evaluation Date").

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    The
      Company presented in its most recently filed periodic report under the 1934
      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.  Since the Evaluation Date, there have been no
      significant changes in the Company's internal controls (as such term is defined
      in Item 308 of Regulation S-K) or, to the Company's Knowledge, in other factors
      that could significantly affect the Company's internal controls.  The
      Company maintains and will continue to maintain a standard system of accounting
      established and administered in accordance with GAAP and the applicable
      requirements of the 1934 Act.

    

    4.28           Application
      of Takeover Protections.  There is no control share acquisition,
      business combination, poison pill (including any distribution under a rights
      agreement) or other similar anti-takeover provision under the Company’s or any
      Subsidiary's charter documents or the laws of its state of incorporation that
      is
      or could become applicable to any of the Investors as a result of the Investors
      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 Investors’ ownership of the
      Securities.

    

    Section
      4.29    Disclosures.  Neither the Company
      nor any Person acting on its behalf has provided the Investors or their agents
      or counsel with any information that constitutes or might constitute material,
      non-public information, other than the terms of the transactions contemplated
      hereby.  The written materials delivered to the Investors in
      connection with the transactions contemplated by the Transaction Documents
      do
      not contain any untrue statement of a material fact or omit to state a material
      fact necessary in order to make the statements contained therein, in light
      of
      the circumstances under which they were made, not misleading.

    

    5.           Representations
      and Warranties of the Investors.  Each of the Investors hereby
      severally, and not jointly, represents and warrants to the Company
      that:

    

    5.1           Organization
      and Existence.  Such Investor, if applicable, is a validly
      existing corporation, limited partnership or limited liability company and
      has
      all requisite corporate, partnership or limited liability company power and
      authority to invest in the Securities pursuant to this Agreement.

    

    5.2           Authorization.  The
      execution, delivery and performance by such Investor of the Transaction
      Documents to which such Investor is a party have been duly authorized and each
      constitute the valid and legally binding obligation of such Investor,
      enforceable against such Investor in accordance with their respective terms,
      subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
      moratorium and similar laws of general applicability, relating to or affecting
      creditors’ rights generally.

    

    5.3           Purchase
      Entirely for Own Account.  The Securities to be received by such
      Investor hereunder will be acquired for such Investor’s own account, not as
      nominee or agent, and not with a view to the resale or distribution of any
      part
      thereof in violation of the 1933 Act or any applicable state securities laws,
      and such Investor has no present intention of selling, granting any
      participation in, or otherwise distributing the same in violation of the 1933
      Act or any applicable state securities laws without prejudice, however, to
      such Investor’s right at all

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    times
      to
      sell or otherwise dispose of all or any part of such Securities in compliance
      with applicable federal and state securities
      laws.  Nothing contained herein shall be deemed a
      representation or warranty by such Investor to hold the Securities for any
      period of time.  Such Investor is not a broker-dealer registered with
      the SEC under the 1934 Act or an entity engaged in a business that would require
      it to be so registered.

    

    5.4           Investment
      Experience.  Such Investor acknowledges that it can bear the
      economic risk and complete loss of its investment in the Securities and has
      such
      knowledge and experience in financial or business matters that it is capable
      of
      evaluating the merits and risks of the investment contemplated
      hereby.

    

    5.5           Disclosure
      of Information.  Such Investor has had an opportunity to receive
      all information related to the Company requested by it and to ask questions
      of
      and receive answers from the Company regarding the Company, its business and
      the
      terms and conditions of the offering of the Securities.  Such Investor
      acknowledges receipt of copies of the SEC Filings.  Neither such
      inquiries nor any other due diligence investigation conducted by such Investor
      shall modify, limit or otherwise affect such Investor’s right to rely on the
      Company’s representations and warranties contained in this
      Agreement.

    

    5.6           Restricted
      Securities.  Such Investor understands that the Securities are
      characterized as “restricted securities” under the U.S. federal securities laws
      inasmuch as they are being acquired from the Company in a transaction not
      involving a public offering and that under such laws and applicable regulations
      such securities may be resold without registration under the 1933 Act only
      in
      certain limited circumstances.

    

    5.7           Legends.  It
      is understood that, except as provided below, certificates evidencing the
      Securities may bear the following or any similar legend:

    

    (a)           “The
      securities represented hereby may not be transferred unless (i) such securities
      have been registered for sale pursuant to the Securities Act of 1933, as
      amended, (ii) such securities may be sold pursuant to Rule 144(k), or (iii)
      the
      Company has received an opinion of counsel reasonably satisfactory to it that
      such transfer may lawfully be made without registration under the Securities
      Act
      of 1933 or qualification under applicable state securities laws.”

    

    (b)           If
      required by the authorities of any state in connection with the issuance of
      sale
      of the Securities, the legend required by such state authority.

    

    5.8           Accredited
      Investor.  Such Investor is an accredited investor as defined in
      Rule 501(a) of Regulation D, as amended, under the 1933 Act.

    

    5.9           No
      General Solicitation.  Such Investor did not learn of the
      investment in the Securities as a result of any general solicitation or general
      advertising.

    

    5.10           Brokers
      and Finders.  No Person will have, as a result of the transactions
      contemplated by the Transaction Documents, any valid right, interest or claim
      against or upon

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    the
      Company, any Subsidiary or an Investor for any commission, fee or other
      compensation pursuant to any agreement, arrangement or understanding entered
      into by or on behalf of such Investor.

    

    5.11           Prohibited
      Transactions.  During the last thirty (30) days prior to the date
      hereof, neither such Investor nor any Affiliate of such Investor which (x)
      had
      knowledge of the transactions contemplated hereby, (y) has or shares discretion
      relating to such Investor’s investments or trading or information concerning
      such Investor’s investments, including in respect of the Securities, or (z) is
      subject to such Investor’s review or input concerning such Affiliate’s
      investments or trading (collectively, “Trading Affiliates”) has, directly or
      indirectly, effected or agreed to effect any short sale, whether or not against
      the box, established any “put equivalent position” (as defined in Rule 16a-1(h)
      under the 1934 Act) with respect to the Common Stock, granted any other right
      (including, without limitation, any put or call option) with respect to the
      Common Stock or with respect to any security that includes, relates to or
      derived any significant part of its value from the Common Stock or otherwise
      sought to hedge its position in the Securities (each, a “Prohibited
      Transaction”).  Until the end of the Effectiveness Period (as defined
      in the Registration Rights Agreement), so long as any Investor continues to
      hold
      any Securities, such Investor shall not, and shall cause its Trading Affiliates
      not to, engage, directly or indirectly, in a Prohibited Transaction; provided,
      however, that the provisions of this sentence shall not apply during any period
      when either (i) the bid price per share of the Common Stock is more than $3.00
      per share (appropriately adjusted for any stock split, reverse stock split,
      stock dividend or other reclassification or combination of the Common Stock
      occurring after the date hereof) or (ii) a Registration Statement covering
      the
      Registrable Securities (as defined in the Registration Rights Agreement) is
      required to be effective under the terms of the Registration Rights Agreement
      but is not effective and available for resales of the Registrable Securities
      (other than as a result of an Allowed Delay).  Such Investor
      acknowledges that the representations, warranties and covenants contained in
      this Section 5.11 are being made for the benefit of the Investors as well as
      the
      Company and that each of the other Investors shall have an independent right
      to
      assert any claims against such Investor arising out of any breach or violation
      of the provisions of this Section 5.11.

    

    

    6.  Conditions
      to
      Closing.

    

    6.1           Conditions
      to the Investors’ Obligations. The obligation of each Investor to purchase
      the Shares and the Warrants at the Closing is subject to the fulfillment to
      such
      Investor’s satisfaction, on or prior to the Closing Date, of the following
      conditions, any of which may be waived by such Investor (as to itself
      only):

    

    (a)           The
      representations and warranties made by the Company in Section 4 hereof qualified
      as to materiality shall be true and correct at all times prior to and on the
      Closing Date, except to the extent any such representation or warranty expressly
      speaks as of an earlier date, in which case such representation or warranty
      shall be true and correct as of such earlier date, and, the representations
      and
      warranties made by the Company in Section 4 hereof not qualified as to
      materiality shall be true and correct in all material respects at all times
      prior to and on the Closing Date, except to the extent any such representation
      or warranty expressly

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    speaks
      as
      of an earlier date, in which case such representation or warranty shall be
      true
      and correct in all material respects as of such earlier date.  The
      Company shall have performed in all material respects all obligations and
      covenants herein required to be performed by it on or prior to the Closing
      Date.

    

    (b)           The
      Company shall have obtained any and all consents, permits, approvals,
      registrations and waivers necessary or appropriate for consummation of the
      purchase and sale of the Securities and the consummation of the other
      transactions contemplated by the Transaction Documents, all of which shall
      be in
      full force and effect.

    

    (c)           The
      Company shall have executed and delivered the Registration Rights
      Agreement.

    

    (d)           The
      Company shall have filed with Nasdaq a Notification Form for the inclusion
      of
      the Shares and the Warrant Shares in the Nasdaq Capital Market.

    

    (e)           No
      judgment, writ, order, injunction, award or decree of or by any court, or judge,
      justice or magistrate, including any bankruptcy court or judge, or any order
      of
      or by any governmental authority, shall have been issued, and no action or
      proceeding shall have been instituted by any governmental authority, enjoining
      or preventing the consummation of the transactions contemplated hereby or in
      the
      other Transaction Documents.

    

    (f)           The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Chief Executive Officer or its Chief Financial Officer, dated as of the
      Closing Date, certifying to the fulfillment of the conditions specified in
      subsections (a), (b), (d), (e) and (i) of this Section 6.1.

    

    (g)           The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Secretary, dated as of the Closing Date, certifying the resolutions adopted
      by the Board of Directors of the Company approving the transactions contemplated
      by this Agreement and the other Transaction Documents and the issuance of the
      Securities, certifying the current versions of the Certificate of Incorporation
      and Bylaws of the Company and certifying as to the signatures and authority
      of
      persons signing the Transaction Documents and related documents on behalf of
      the
      Company.

    

    (h)           The
      Investors shall have received an opinion from Foley Hoag LLP, the Company's
      counsel, dated as of the Closing Date, in form and substance reasonably
      acceptable to the Investors and addressing such legal matters as the Investors
      may reasonably request.

    

    (i)           No
      stop order or suspension of trading shall have been imposed by Nasdaq, the
      SEC
      or any other governmental or regulatory body with respect to public trading
      in
      the Common Stock.

    

    6.2           Conditions
      to Obligations of the Company. The Company's obligation to sell and issue
      the Shares and the Warrants at the Closing is subject to the fulfillment to
      the

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    satisfaction
      of the Company on or prior to the Closing Date of the following conditions,
      any
      of which may be waived by the Company:

    

    (a)           The
      representations and warranties made by the Investors in Section 5 hereof, other
      than the representations and warranties contained in Sections 5.3, 5.4, 5.5,
      5.6, 5.7, 5.8 and 5.9 (the “Investment Representations”), shall be true and
      correct in all material respects when made, and shall be true and correct in
      all
      material respects on the Closing Date with the same force and effect as if
      they
      had been made on and as of said date.  The Investment Representations
      shall be true and correct in all respects when made, and shall be true and
      correct in all respects on the Closing Date with the same force and effect
      as if
      they had been made on and as of said date.  The Investors shall have
      performed in all material respects all obligations and covenants herein required
      to be performed by them on or prior to the Closing Date.

    

    (b)           The
      Investors shall have executed and delivered the Registration Rights
      Agreement.

    

    (c)           The
      Investors shall have delivered the Purchase Price to the Company.

    

    6.3           Termination
      of Obligations to Effect Closing; Effects.

    

    (a)           The
      obligations of the Company, on the one hand, and the Investors, on the other
      hand, to effect the Closing shall terminate as follows:

    

    (i)           Upon
      the mutual written consent of the Company and the Investors;

    

    (ii)           By
      the Company if any of the conditions set forth in Section 6.2 shall have become
      incapable of fulfillment, and shall not have been waived by the
      Company;

    

    (iii)           By
      an Investor (with respect to itself only) if any of the conditions set forth
      in
      Section 6.1 shall have become incapable of fulfillment, and shall not have
      been
      waived by the Investor; or

    

    (iv)           By
      either the Company or any Investor (with respect to itself only) if the Closing
      has not occurred on or prior to July 31, 2007;

    

    provided,
      however, that, except in the case of clause (i) above, the party seeking to
      terminate its obligation to effect the Closing shall not then be in breach
      of
      any of its representations, warranties, covenants or agreements contained in
      this Agreement or the other Transaction Documents if such breach has resulted
      in
      the circumstances giving rise to such party’s seeking to terminate its
      obligation to effect the Closing.

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    (b)           In
      the event of termination by any Investor of its obligations to effect the
      Closing pursuant to this Section 6.3 (such Investor, a “Terminating Investor”),
      written notice thereof shall forthwith be given by the Company to the other
      Investors, and each other Investor shall have the right (but not the obligation)
      to purchase at a price per Share equal to the Per Share Purchase Price a pro
      rata portion of the Terminating Investor’s allocated portion of the total number
      of Shares to be acquired by all Investors under this Agreement (or such greater
      portion of the Terminated Investor’s allocated portion of the Shares as
      otherwise agreed to among each of the other Investors electing to purchase
      a
      portion of the Terminated Investor’s allocated portion of the
      Shares).  Nothing in this Section 6.3 shall be deemed to release any
      party from any liability for any breach by such party of the terms and
      provisions of this Agreement or the other Transaction Documents or to impair
      the
      right of any party to compel specific performance by any other party of its
      obligations under this Agreement or the other Transaction
      Documents.]

    

    7.           Covenants
      and Agreements of the Company.

    

    7.1           Reservation
      of Common Stock.  The Company shall at all times reserve and keep
      available out of its authorized but unissued shares of Common Stock, solely
      for
      the purpose of providing for the exercise of the Warrants, such number of shares
      of Common Stock as shall from time to time equal the number of shares sufficient
      to permit the exercise of the Warrants issued pursuant to this Agreement in
      accordance with their respective terms.

    

    7.2           Reports.  The
      Company will furnish to the Investors and/or their assignees such information
      relating to the Company and its Subsidiaries as from time to time may reasonably
      be requested by the Investors and/or their assignees; provided, however, that
      the Company shall not disclose material nonpublic information to the Investors,
      or to advisors to or representatives of the Investors, unless prior to
      disclosure of such information the Company identifies such information as being
      material nonpublic information and provides the Investors, such advisors and
      representatives with the opportunity to accept or refuse to accept such material
      nonpublic information for review and any Investor wishing to obtain such
      information enters into an appropriate confidentiality agreement with the
      Company with respect thereto.

    

    7.3           No
      Conflicting Agreements.  The Company will not take any action,
      enter into any agreement or make any commitment that would conflict or interfere
      in any material respect with the Company’s obligations to the Investors under
      the Transaction Documents.

    

    7.4           Compliance
      with Laws.  The Company will comply in all material respects with
      all applicable laws, rules, regulations, orders and decrees of all governmental
      authorities.

    

    7.5           Listing
      of Underlying Shares and Related Matters.  Promptly following the
      date hereof, the Company shall take all necessary action to cause the Shares
      and
      the Warrant Shares to be listed on the Nasdaq Capital Market no later than
      the
      Closing Date.  Further, if the Company applies to have its Common
      Stock or other securities traded on any other principal stock exchange or
      market, it shall include in such application the Shares and the Warrant Shares
      and will take such other action as is necessary to cause such Common Stock
      to be
      so listed.  The Company will use commercially reasonable efforts to
      continue the listing and trading of its

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    Common
      Stock on the Nasdaq Capital Market and, in accordance, therewith, will use
      commercially reasonable efforts to comply in all respects with the Company’s
      reporting, filing and other obligations under the bylaws or rules of such market
      or exchange, as applicable.

    

    7.6           Termination
      of Covenants.  The provisions of Sections 7.2 through 7.4 shall
      terminate and be of no further force and effect on the date on which the
      Company’s obligations under the Registration Rights Agreement to register or
      maintain the effectiveness of any registration covering the Registrable
      Securities (as such term is defined in the Registration Rights Agreement) shall
      terminate.

    

    7.7           Removal
      of Legends.  Upon the earlier of (i) registration for resale
      pursuant to the Registration Rights Agreement or (ii) Rule 144(k) becoming
      available the Company shall (A) deliver to the transfer agent for the Common
      Stock (the “Transfer Agent”) irrevocable instructions that the Transfer Agent
      shall reissue a certificate representing shares of Common Stock (or make
      available such shares in electronic format via DWAC) without legends upon
      receipt by such Transfer Agent of the legended certificates for such shares,
      together with either (1) a customary representation by the Investor that Rule
      144(k) applies to the shares of Common Stock represented thereby or (2) a
      statement by the Investor that such Investor has sold the shares of Common
      Stock
      represented thereby in accordance with the Plan of Distribution contained in
      the
      Registration Statement, and (B) cause its counsel to deliver to the Transfer
      Agent one or more blanket opinions to the effect that the removal of such
      legends in such circumstances may be effected under the 1933
      Act.  From and after the earlier of such dates, upon an Investor’s
      written request, the Company shall promptly cause certificates evidencing the
      Investor’s Securities to be replaced with certificates which do not bear such
      restrictive legends or to be replaced with unlegended shares made available
      electronically via DWAC, and Warrant Shares subsequently issued upon due
      exercise of the Warrants shall not bear such restrictive legends provided the
      provisions of either clause (i) or clause (ii) above, as applicable, are
      satisfied with respect to such Warrant Shares.  When the Company is
      required to cause an unlegended certificate (or electronic unlegended shares)
      to
      replace a previously issued legended certificate, if: (1) the unlegended
      certificate is not delivered (or unlegended electronic shares are not made
      available) to an Investor within three (3) Business Days of submission by that
      Investor of a legended certificate and supporting documentation to the Transfer
      Agent as provided above (a copy of which shall be given to the Company) and
      (2)
      prior to the time such unlegended certificate is received by the Investor (or
      unlegended electronic shares are made available to the Investor via DWAC),
      the
      Investor, or any third party on behalf of such Investor or for the Investor’s
      account, purchases (in an open market transaction or otherwise) shares of Common
      Stock to deliver in satisfaction of a sale by the Investor of shares represented
      by such certificate (a “Buy-In”), then the Company shall pay in cash to the
      Investor (for costs incurred either directly by such Purchaser or on behalf
      of a
      third party) the amount by which the total purchase price paid for Common Stock
      as a result of the Buy-In (including brokerage commissions, if any) exceeds
      the
      proceeds received by such Investor as a result of the sale to which such Buy-In
      relates.  The Investor shall provide the Company written notice
      indicating the amounts payable to the Investor in respect of the
      Buy-In.

    

    7.8           Subsequent
      Equity Sales.  From the date hereof until such time as no Investor
      holds any of the Securities (but in no event beyond July 1, 2009), the Company
      shall be

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    prohibited
      from effecting or entering into an agreement to effect any Subsequent Financing
      involving a “Variable Rate Transaction”.  The term “Variable Rate
      Transaction” shall mean 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, exercise 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.

    

    7.9           Equal
      Treatment of Investors.  No consideration 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.  For
      clarification purposes, this provision constitutes a separate right granted
      to
      each Investor by the Company and negotiated separately by each Investor, and
      is
      intended for the Company to treat the Investors as a class and shall not in
      any
      way be construed as the Investors acting in concert or as a group with respect
      to the purchase, disposition or voting of Securities or otherwise.

    

    7.10          Right
      of First Refusal on Future Financings. From the date hereof until the first
      anniversary of the Closing Date, upon any financing by the Company of its Common
      Stock or Common Stock Equivalents at an effective price per share of $2.70
      or
      less (appropriately adjusted for any stock split, reverse stock split, stock
      dividend or other reclassification or combination of the Common Stock occurring
      after the date hereof), the primary purpose of which is the raising of capital
      (a “Subsequent Financing”), each Investor shall have the right to participate in
      such Subsequent Financing as provided herein.  At least five (5)
      Business Days prior to the closing of the Subsequent Financing, the Company
      shall deliver to each Investor a written notice of its intention to effect
      a
      Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Investor if
      it wants to review the details of such financing (such additional notice, a
      “Subsequent Financing Notice”).  Upon the request of an Investor, and
      only upon a request by such Investor, for a Subsequent Financing Notice, the
      Company shall promptly, but no later than one Business Day after such request,
      deliver a Subsequent Financing Notice to such Investor.  Any Investor
      who elects to receive a Subsequent Financing Notice shall keep the contents
      thereof confidential until the consummation or the abandonment of the Subsequent
      Financing.  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, the Person with whom such Subsequent
      Financing is proposed to be effected, and attached to which shall be a term
      sheet or similar document relating thereto.  Each Investor shall
      notify the Company by 6:30 p.m. (New York City time) on the fifth (5th) Business
      Day
      after their receipt of the Subsequent Financing Notice of its willingness to
      provide the Subsequent Financing on the terms described in the Subsequent
      Financing Notice, subject to completion of mutually acceptable
      documentation.  If one or more Investors shall fail to so notify the
      Company of their willingness to participate in the Subsequent Financing, the
      Investors agreeing to participate in the

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    Subsequent
      Financing (the “Participating Investors”) shall have the right to provide all of
      the Subsequent Financing.  If one or more Investors fail to notify the
      Company of their willingness to provide all of the Subsequent Financing and
      the
      Participating Investors do not agree to provide all of the Subsequent Financing,
      the Company may effect the remaining portion of such Subsequent Financing on
      substantially the same terms and to the Persons set forth in the Subsequent
      Financing Notice; provided that the Company must provide the Investors with
      a
      second Subsequent Financing Notice, and the Investors will again have the right
      of first refusal set forth above in this Section 7.10, 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
      60 Business Days after the date of the initial Subsequent Financing Notice
      with
      the Person identified in the Subsequent Financing Notice.  In the
      event the Company receives responses to Subsequent Financing Notices from
      Investors seeking to purchase more than the financing sought by the Company
      in
      the Subsequent Financing such Investors shall have the right to purchase their
      Pro Rata Portion (as defined below) of the Common Stock or Common Stock
      Equivalents to be issued in such Subsequent Financing.  “Pro Rata
      Portion” is the ratio of (x) the amount invested by such Investor pursuant to
      this Agreement (the “Subscription Amount”) and (y) the aggregate sum of all of
      the Subscription Amounts.  Notwithstanding the foregoing, this Section
      7.10 shall not apply in respect of the issuance of (a) shares of Common Stock
      or
      options to employees, consultants, officers or directors of the Company pursuant
      to any stock or option plan duly adopted by the Board of Directors of the
      Company or a majority of the members of a committee of non-employee directors
      established for such purpose and (b) securities upon the exercise of or
      conversion of any convertible securities, options or warrants 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
      shares of Common Stock issuable thereunder or to lower the exercise or
      conversion price thereof.

    

    8.        
         Survival and Indemnification.

    

    8.1  Survival.  The
      representations, warranties, covenants and agreements contained in this
      Agreement shall survive the Closing of the transactions contemplated by this
      Agreement.

    

    8.2  Indemnification.  The
      Company agrees to indemnify and hold harmless each Investor and its Affiliates
      and their respective directors, officers, employees and agents from and against
      any and all losses, claims, damages, liabilities and expenses (including without
      limitation reasonable attorney fees and disbursements and other expenses
      incurred in connection with investigating, preparing or defending any action,
      claim or proceeding, pending or threatened and the costs of enforcement thereof)
      (collectively, “Losses”) to which such Person may become subject as a result of
      any breach of representation, warranty, covenant or agreement made by or to
      be
      performed on the part of the Company under the Transaction Documents, and will
      reimburse any such Person for all such amounts as they are incurred by such
      Person.

    

    8.3  Conduct
      of
      Indemnification Proceedings.  Promptly
      after receipt by any Person (the “Indemnified Person”) of
      notice of any demand, claim or circumstances which would or might give rise
      to a
      claim or the commencement of any action, proceeding or investigation in respect
      of which indemnity may be sought pursuant to Section 8.2, such

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    Indemnified
      Person shall promptly notify the Company in writing and the Company shall assume
      the defense thereof, including the employment of counsel reasonably satisfactory
      to such Indemnified Person, and shall assume the payment of all fees and
      expenses; provided, however, that the failure of any
      Indemnified Person so to notify the Company shall not relieve the Company of
      its
      obligations hereunder except to the extent that the Company is materially
      prejudiced by such failure to notify.  In any such proceeding, any
      Indemnified Person shall have the right to retain its own counsel, but the
      fees
      and expenses of such counsel shall be at the expense of such Indemnified Person
      unless: (i) the Company and the Indemnified Person shall have mutually agreed
      to
      the retention of such counsel; or (ii) in the reasonable judgment of counsel
      to
      such Indemnified Person representation of both parties by the same counsel
      would
      be inappropriate due to actual or potential conflicts of interest between
      them.  The Company shall not be liable for any settlement of any
      proceeding effected without its written consent, which consent shall not be
      unreasonably withheld, but if settled with such consent, or if there be a final
      judgment for the plaintiff, the Company shall indemnify and hold harmless such
      Indemnified Person from and against any loss or liability (to the extent stated
      above) by reason of such settlement or judgment.  Without the prior
      written consent of the Indemnified Person, which consent shall not be
      unreasonably withheld, the Company shall not effect any settlement of any
      pending or threatened proceeding in respect of which any Indemnified Person
      is
      or could have been a party and indemnity could have been sought hereunder by
      such Indemnified Party, unless such settlement includes an unconditional release
      of such Indemnified Person from all liability arising out of such
      proceeding.

    

    9.           Miscellaneous.

    

    9.1           Successors
      and Assigns.  This Agreement may not be assigned by a party hereto
      without the prior written consent of the Company or the Investors, as
      applicable, provided, however, that (a) an Investor may assign its rights and
      delegate its duties hereunder in whole or in part to an Affiliate or to a third
      party acquiring some or all of its Securities in a transaction complying with
      applicable securities laws without the prior written consent of the Company
      or
      the other Investors and (b) the Company may assign its rights and delegate
      its
      duties hereunder to any surviving or successor corporation in connection with
      a
      merger or consolidation of the Company with another corporation, or a sale,
      transfer or other disposition of all or substantially all of the Company’s
      assets to another corporation without the prior written consent of the
      Investors, after notice duly given by the Company to each
      Investor.  The provisions of this Agreement shall inure to the benefit
      of and be binding upon the respective permitted successors and assigns of the
      parties.  Nothing in this Agreement, express or implied, is intended
      to confer upon any party other than the parties hereto or their respective
      successors and assigns any rights, remedies, obligations, or liabilities under
      or by reason of this Agreement, except as expressly provided in this
      Agreement.

    

    9.2           Counterparts;
      Faxes.  This Agreement may be executed in two or more
      counterparts, each of which shall be deemed an original, but all of which
      together shall constitute one and the same instrument.  This Agreement
      may also be executed via facsimile (including electronic transmission of scanned
      documents), which shall be deemed an original.

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

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

    

    9.4           Notices.  Unless
      otherwise provided, any notice required or permitted under this Agreement shall
      be given in writing and shall be deemed effectively given as hereinafter
      described (i) if given by personal delivery, then such notice shall be deemed
      given upon such delivery, (ii) if given by telex or telecopier, then such notice
      shall be deemed given upon receipt of confirmation of complete transmittal,
      (iii) if given by mail, then such notice shall be deemed given upon the earlier
      of (A) receipt of such notice by the recipient or (B) three days after such
      notice is deposited in first class mail, postage prepaid, and (iv) if given
      by
      an internationally recognized overnight air courier, then such notice shall
      be
      deemed given one Business Day after delivery to such carrier.  All
      notices shall be addressed to the party to be notified at the address as
      follows, or at such other address as such party may designate by ten days’
advance written notice to the other party:

    

    If
      to the Company:

    

    Terabeam,
      Inc.

    2115
      O’Nel Drive

    San
      Jose,
      California 95131

    Attention:

    Fax:

    

    With
      a copy to:

    

    Terabeam,
      Inc.

    881
      North
      King Street, Suite 100

    Northampton,
      Massachusetts 01060

    Attention:  David
      L. Renauld

    Fax:  (413)
      584-2685

    

    If
      to the Investors:

    

    to
      the
      addresses set forth on the signature pages hereto.

    

    9.5           Expenses.  The
      parties hereto shall pay their own costs and expenses in connection herewith,
      except that the Company shall pay the reasonable fees and expenses of Andrews
      Kurth LLP not to exceed $10,000 and of Lowenstein Sandler PC not to exceed
      $35,000; it being understood that Lowenstein Sandler PC has only rendered legal
      advice to funds affiliated with SRB Greenway Capital participating in this
      transaction and not to the Company or any other Investor in connection with
      the
      transactions contemplated hereby, and that each of the Company and each Investor
      has relied for such matters on the advice of its own respective
      counsel.  Such expenses shall be paid not later than the
      Closing.  The Company shall reimburse the Investors upon demand for
      all reasonable out-of-pocket expenses incurred by the Investors, including
      without limitation reimbursement of attorneys’ fees and disbursements, in
      connection

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    with
      any
      amendment, modification or waiver of this Agreement or the other Transaction
      Documents.  In the event that legal proceedings are commenced by any
      party to this Agreement against another party to this Agreement in connection
      with this Agreement or the other Transaction Documents, the party or parties
      which do not prevail in such proceedings shall severally, but not jointly,
      pay
      their pro rata share of the reasonable attorneys’ fees and other reasonable
      out-of-pocket costs and expenses incurred by the prevailing party in such
      proceedings.

    

    9.6           Amendments
      and Waivers.  Any term of this Agreement may be amended and the
      observance of any term of this Agreement may be waived (either generally or
      in a
      particular instance and either retroactively or prospectively), only with the
      written consent of the Company and the Investors.  Any amendment or
      waiver effected in accordance with this paragraph shall be binding upon each
      holder of any Securities purchased under this Agreement at the time outstanding,
      each future holder of all such Securities, and the Company.

    

    9.7           Publicity.  Except
      as set forth below, no public release or announcement concerning the
      transactions contemplated hereby shall be issued by the Company or the Investors
      without the prior consent of the Company (in the case of a release or
      announcement by the Investors) or the Investors (in the case of a release or
      announcement by the Company) (which consents shall not be unreasonably
      withheld), except as such release or announcement may be required by law or
      the
      applicable rules or regulations of any securities exchange or securities market,
      in which case the Company or the Investors, as the case may be, shall allow
      the
      Investors or the Company, as applicable, to the extent reasonably practicable
      in
      the circumstances, reasonable time to comment on such release or announcement
      in
      advance of such issuance.  By 8:30 a.m. (New York City time) on the
      trading day immediately following the Closing Date, the Company shall issue
      a
      press release disclosing the consummation of the transactions contemplated
      by
      this Agreement.  No later than the fourth trading day following the
      Closing Date, the Company will file a Current Report on Form 8-K attaching
      the
      press release described in the foregoing sentence as well as copies of the
      Transaction Documents.  In addition, the Company will make such other
      filings and notices in the manner and time required by the SEC or
      Nasdaq.

    

    9.8           Severability.  Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof but shall be interpreted as if it were written so as to be
      enforceable to the maximum extent permitted by applicable law, and any such
      prohibition or unenforceability in any jurisdiction shall not invalidate or
      render unenforceable such provision in any other jurisdiction.  To the
      extent permitted by applicable law, the parties hereby waive any provision
      of
      law which renders any provision hereof prohibited or unenforceable in any
      respect.

    

    9.9           Entire
      Agreement.  This Agreement, including the Exhibits and the
      Disclosure Letter, and the other Transaction Documents constitute the entire
      agreement among the parties hereof with respect to the subject matter hereof
      and
      thereof and supersede all prior agreements and understandings, both oral and
      written, between the parties with respect to the subject matter hereof and
      thereof.

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

    

    9.10            Further
      Assurances.  The parties shall execute and deliver all such
      further instruments and documents and take all such other actions as may
      reasonably be required to carry out the transactions contemplated hereby and
      to
      evidence the fulfillment of the agreements herein contained.

    

    9.11            Governing
      Law; Consent to Jurisdiction; Waiver of Jury Trial.  This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of New York without regard to the choice of law principles
      thereof.  Each of the parties hereto irrevocably submits to the
      exclusive jurisdiction of the courts of the State of New York located in New
      York County and the United States District Court for the Southern District
      of
      New York for the purpose of any suit, action, proceeding or judgment relating
      to
      or arising out of this Agreement and the transactions contemplated
      hereby.  Service of process in connection with any such suit, action
      or proceeding may be served on each party hereto anywhere in the world by the
      same methods as are specified for the giving of notices under this
      Agreement.  Each of the parties hereto irrevocably consents to the
      jurisdiction of any such court in any such suit, action or proceeding and to
      the
      laying of venue in such court.  Each party hereto irrevocably waives
      any objection to the laying of venue of any such suit, action or proceeding
      brought in such courts and irrevocably waives any claim that any such suit,
      action or proceeding brought in any such court has been brought in an
      inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
      REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
      REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
      WAIVER.

    

    9.12           Independent
      Nature of Investors' Obligations and Rights.  The obligations of
      each Investor under any Transaction Document are several and not joint with
      the
      obligations of any other Investor, and no Investor shall be responsible in
      any
      way for the performance of the obligations of any other Investor under any
      Transaction Document.  The decision of each Investor to purchase
      Securities pursuant to the Transaction Documents has been made by such Investor
      independently of any other Investor.  Nothing contained herein or in
      any Transaction Document, and no action taken by any Investor pursuant thereto,
      shall be deemed to constitute the Investors as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Investors 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 Investor acknowledges that no other Investor has
      acted as agent for such Investor in connection with making its investment
      hereunder and that no Investor will be acting as agent of such Investor in
      connection with monitoring its investment in the Securities or enforcing its
      rights under the Transaction Documents.  Each Investor 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 Investor
      to
      be joined as an additional party in any proceeding for such
      purpose.  The Company acknowledges that each of the Investors has been
      provided with the same Transaction Documents for the purpose of closing a
      transaction with multiple Investors and not because it was required or requested
      to do so by any Investor.

    [signature
      page follows]

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties have
      executed this Agreement or caused their duly authorized officers to execute
      this
      Agreement as of the date first above written.

    

    
      	
              The
                Company:

            	
              TERABEAM,
                INC.

            
	 	 	 
	 	 	 
	 	 	 
	 	
              By:

            	
               /s/
                Robert E. Fitzgerald

            
	 	
              Name:

            	
               Robert
                E. Fitzgerald

            
	 	
              Title:

            	
               Chief
                Executive Officer

            

    

    

    

    

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    

    
      	
              The
                Investors:

            	
              SRB
                GREENWAY CAPITAL, L.P.

            
	 	 
	 	
              By:  SRB
                Management, L.P., General Partner

            
	 	 
	 	
              By:  BC
                Advisors, L.L.C., General Partner

            
	 	 
	 	 
	 	
              By:
                /s/ Steven R. Becker

            
	 	
              Name:  Steven
                R. Becker

            
	 	
              Title:  Member

            

    

    

    
      	
              Aggregate
                Purchase Price:

            	 	$	
              322,875

            	 
	
              Number
                of Shares:

            	 	 	
              184,500

            	 
	
              Number
                of Warrants:

            	 	 	
              92,250

            	 

    

    

    
      	
              Address
                for Notice:

            	
              300
                Crescent Court, Suite 1111

            
	 	
              Dallas,
                Texas 75201

            
	 	
              214-756-6040
                (telephone)

            
	 	
              214-756-6079
                (fax)

            
	 	
              Attn:  George
                Lee

            
	 	 
	 	
              with
                a copy to:

            
	 	 
	 	
              Lowenstein
                Sandler PC

            
	 	
              65
                Livingston Avenue

            
	 	
              Roseland,
                NJ  07068

            
	 	
              Attn:  John
                D. Hogoboom, Esq.

            
	 	
              Telephone:   973.597.2500

            
	 	
              Facsimile:     
                973.597.2400

            

    

    

    

    
      	 	
              SRB
                GREENWAY CAPITAL (Q.P.), L.P.

            
	 	 
	 	
              By:  SRB
                Management, L.P., General Partner

            
	 	 
	 	
              By:  BC
                Advisors, L.L.C., General Partner

            
	 	 
	 	 
	 	
              By:
                /s/ Steven R. Becker

            
	 	
              Name:  Steven
                R. Becker

            
	 	
              Title:  Member

            

    

    

    
      	
              Aggregate
                Purchase Price:

            	 	$	
              2,797,725

            	 
	
              Number
                of Shares:

            	 	 	
              1,598,700

            	 
	
              Number
                of Warrants:

            	 	 	
              799,350

            	 

    

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

    

    
      	
              Address
                for Notice:

            	
              300
                Crescent Court, Suite 1111

            
	 	
              Dallas,
                Texas 75201

            
	 	
              214-756-6040
                (telephone)

            
	 	
              214-756-6079
                (fax)

            
	 	
              Attn:  George
                Lee

            
	 	 
	 	
              with
                a copy to:

            
	 	 
	 	
              Lowenstein
                Sandler PC

            
	 	
              65
                Livingston Avenue

            
	 	
              Roseland,
                NJ  07068

            
	 	
              Attn:  John
                D. Hogoboom, Esq.

            
	 	
              Telephone: 
                973.597.2500

            
	 	
              Facsimile:    
                973.597.2400

            

    

    

    
      	 	
              SRB
                GREENWAY OFFSHORE

            
	 	
              OPERATING
                FUND, L.P.

            
	 	 
	 	
              By:  SRB
                Management, L.P., General Partner

            
	 	 
	 	
              By:  BC
                Advisors, L.L.C., General Partner

            
	 	 
	 	 
	 	
              By:
                /s/ Steven R. Becker

            
	 	
              Name:  Steven
                R. Becker

            
	 	
              Title:  Member

            

    

    

    
      	
              Aggregate
                Purchase Price:

            	 	$	
              116,900

            	 
	
              Number
                of Shares:

            	 	 	
              66,800

            	 
	
              Number
                of Warrants:

            	 	 	
              33,400

            	 

    

    

    
      	
              Address
                for Notice:

            	
              300
                Crescent Court, Suite 1111

            
	 	
              Dallas,
                Texas 75201

            
	 	
              214-756-6040
                (telephone)

            
	 	
              214-756-6079
                (fax)

            
	 	
              Attn:  George
                Lee

            
	 	 
	 	
              with
                a copy to:

            
	 	 
	 	
              Lowenstein
                Sandler PC

            
	 	
              65
                Livingston Avenue

            
	 	
              Roseland,
                NJ  07068

            
	 	
              Attn:  John
                D. Hogoboom, Esq.

            
	 	
              Telephone:   
                973.597.2500

            
	 	
              Facsimile:      
                973.597.2400

            

    

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

    

    
      	 	
              Lloyd
                I. Miller, III

            
	 	 
	 	
              /s/
                Lloyd I. Miller, III

            
	 	
              Lloyd
                I. Miller, III

            

    

    

    
      	
              Aggregate
                Purchase Price:

            	 	$	
              1,618,750

            	 
	
              Number
                of Shares:

            	 	 	
              925,000

            	 
	
              Number
                of Warrants:

            	 	 	
              462,500

            	 

    

    

    
      	
              Address
                for Notice:

            	
              4550
                Gordon Drive

            
	 	
              Naples,
                Florida 34102

            
	 	
              Tel:  (239)
                262-8577

            
	 	
              Fax:  (239)
                262-8025

            
	 	 
	 	
              with
                a copy to:

            
	 	 
	 	
              Robyn
                Tupper

            
	 	
              4550
                Gordon Drive

            
	 	
              Naples,
                Florida 34102

            
	 	
              Tel:  (239)
                263-8860

            
	 	
              Fax:  (239)
                262-8025

            

    

    

    
      	 	
              MILFAM
                II, LP

            
	 	 
	 	
              By:
                Milfam LLC, its General Partner

            
	 	 
	 	
              By:
                /s/ Lloyd I. Miller, III

            
	 	
              Name:  Lloyd
                I. Miller, III

            
	 	
              Title:  Manager

            

    

    

    
      	
              Aggregate
                Purchase Price:

            	 	$	
              1,618,750

            	 
	
              Number
                of Shares:

            	 	 	
              925,000

            	 
	
              Number
                of Warrants:

            	 	 	
              462,500

            	 

    

    

    
      	
              Address
                for Notice:

            	
              4550
                Gordon Drive

            
	 	
              Naples,
                Florida 34102

            
	 	
              Tel:  (239)
                262-8577

            
	 	
              Fax:  (239)
                262-8025

            
	 	 
	 	
              with
                a copy to:

            
	 	 
	 	
              Robyn
                Tupper

            
	 	
              4550
                Gordon Drive

            
	 	
              Naples,
                Florida 34102

            
	 	
              Tel:  (239)
                263-8860

            
	 	
              Fax:  (239)
                262-8025

            

    

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

    

    
      	 	
              CLARION
                CAPITAL CORP.

            
	 	 
	 	 
	 	 
	 	
              By:
                /s/ Morton A. Cohen

            
	 	
              Name:  Morton
                A. Cohen

            
	 	
              Title:  Chairman

            

    

    

    Aggregate
      Purchase Price:  $525,000

    Number
      of
      Shares:  300,000

    Number
      of
      Warrants:  150,000

    

    
      	
              Address
                for Notice:

            	 
	 	
              3690
                Orange Place, Suite 400

            
	 	
              Beachwood,
                Ohio 44122

            

    

    

    

    
      	 	
              CLARION
                WORLD OFFSHORE FUND, LTD.

            
	 	 
	 	 
	 	 
	 	
              By:
                /s/ Morton A. Cohen

            
	 	
              Name:  Morton
                A. Cohen

            
	 	
              Title:  Investment
                Manager

            

    

    

    Aggregate
      Purchase Price:  $175,000

    Number
      of
      Shares:  100,000

    Number
      of
      Warrants:  50,000

    

    
      	
              Address
                for Notice:

            	 
	 	
              3690
                Orange Place, Suite 400

            
	 	
              Beachwood,
                Ohio 44122

            

    

    

    

    
      	 	
              THE
                AMENDED & RESTATED DECLARATION OF

            
	 	
              TRUST
                OF MORTON A. COHEN, DATED MAY 9, 2005

            
	 	 
	 	 
	 	 
	 	
              By:
                /s/ Morton A. Cohen

            
	 	
              Name:  Morton
                A. Cohen

            
	 	
              Title:  Trustee

            

    

    

    Aggregate
      Purchase Price:  $175,000

    Number
      of
      Shares:  100,000

    Number
      of
      Warrants:  50,000

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

    

    
      	
              Address
                for Notice:

            	 
	 	
              3690
                Orange Place, Suite 400

            
	 	
              Beachwood,
                Ohio 44122

            

    

    

    

    
      	 	
              SHAKER
                INVESTMENTS TOWER, L.P.

            
	 	 
	 	 
	 	 
	 	
              By:
                /s/ Edward Hemmelgarn

            
	 	
              Name:  Edward
                Hemmelgarn

            
	 	
              Title:  Managing
                Member

            
	 	 

    

    Aggregate
      Purchase Price:  $175,000

    Number
      of
      Shares:  100,000

    Number
      of
      Warrants:  50,000

    

    
      	
              Address
                for Notice:

            	 
	 	
              3690
                Orange Place, Suite 400

            
	 	
              Beachwood,
                Ohio 44122

            
	 	 

    

     

    -32-ex10-2.htm

    Exhibit
      10.2

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement (the “Agreement”) is made and entered into as of
      this 23rd day of July, 2007 by and among Terabeam, Inc., a Delaware corporation
      (the “Company”), and the “Investors” named in that certain Purchase Agreement by
      and among the Company and the Investors (the “Purchase Agreement”).

     

    The
      parties hereby agree as follows:

     

    1.      Certain
      Definitions.

     

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

     

    “Affiliate”
      means, with respect to any person, any other person which directly or indirectly
      controls, is controlled by, or is under common control with, such
      person.

     

    “Business
      Day” means a day, other than a Saturday or Sunday, on which banks in New
      York City are open for the general transaction of business.

     

    “Common
      Stock” shall mean the Company’s common stock, par value $0.01 per share, and
      any securities into which such shares may hereinafter be
      reclassified.

     

    “Investors”
      shall mean the Investors identified in the Purchase Agreement and any Affiliate
      or permitted transferee of any Investor who is a subsequent holder of any
      Warrants or Registrable Securities.

     

    “Prospectus”
      shall mean (i) the prospectus included in any Registration Statement, as amended
      or supplemented by any prospectus supplement, with respect to the terms of
      the
      offering of any portion of the Registrable Securities covered by such
      Registration Statement and by all other amendments and supplements to the
      prospectus, including post-effective amendments and all material incorporated
      by
      reference in such prospectus, and (ii) any “free writing prospectus” as defined
      in Rule 405 under the 1933 Act.

     

    “Register,”
      “registered” and “registration” refer to a registration made by
      preparing and filing a Registration Statement or similar document in compliance
      with the 1933 Act (as defined below), and the declaration or ordering of
      effectiveness of such Registration Statement or document.

     

    “Registrable
      Securities” shall mean (i) the Shares, (ii) the Warrant Shares and (iii) any
      other securities issued or issuable with respect to or in exchange for
      Registrable Securities; provided, that, a security shall cease to be a
      Registrable Security upon (A) sale pursuant to a Registration Statement or
      Rule
      144 under the 1933 Act, or (B) such security becoming eligible for sale by
      the
      Investors pursuant to Rule 144(k).

     

    “Registration
      Statement” shall mean any registration statement of the Company filed under
      the 1933 Act that covers the resale of any of the Registrable Securities
      pursuant to the provisions of this Agreement, amendments and supplements to
      such
      Registration Statement, including post-effective amendments, all exhibits and
      all material incorporated by reference in such Registration
      Statement.

     

    “Required
      Investors” means the Investors holding a majority of the Registrable
      Securities.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “SEC”
      means the U.S. Securities and Exchange Commission.

     

    “Shares”
      means the shares of Common Stock issued pursuant to the Purchase
      Agreement.

     

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

     

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

     

    “Warrants”
      means, the warrants to purchase shares of Common Stock issued to the Investors
      pursuant to the Purchase Agreement, the form of which is attached to the
      Purchase Agreement as Exhibit A.

     

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

     

    2.      Registration.

     

      
      (a)               Registration
      Statements.

     

    (i)               Promptly
      following the closing of the purchase and sale of the securities contemplated
      by
      the Purchase Agreement (the “Closing Date”) but no later than thirty (30) days
      after the Closing Date (the “Filing Deadline”), the Company shall prepare and
      file with the SEC one Registration Statement on Form S-3 (or, if Form S-3 is
      not
      then available to the Company, on such form of registration statement as is
      then
      available to effect a registration for resale of the Registrable Securities),
      covering the resale of the Registrable Securities in an amount at least equal
      to
      the Shares and the Warrant Shares.  Subject to any SEC comments, such
      Registration Statement shall include the plan of distribution attached hereto
      as
Exhibit A.  Such Registration Statement also shall cover, to
      the extent allowable under the 1933 Act and the rules promulgated thereunder
      (including Rule 416), such indeterminate number of additional shares of Common
      Stock resulting from stock splits, stock dividends or similar transactions
      with
      respect to the Registrable Securities.  Such Registration Statement
      shall not include any shares of Common Stock or other securities for the account
      of any other holder without the prior written consent of the Required
      Investors.  The Registration Statement (and each amendment or
      supplement thereto, and each request for acceleration of effectiveness thereof)
      shall be provided in accordance with Section 3(c) to the Investors and their
      counsel prior to its filing or other submission.  If a Registration
      Statement covering the Registrable Securities is not filed with the SEC on
      or
      prior to the Filing Deadline, the Company will make pro rata payments to each
      Investor, as liquidated damages and not as a penalty, in an amount equal to
      1.0%
      of the aggregate amount invested by such Investor for each 30-day period or
      pro
      rata for any portion thereof following the Filing Deadline for which no
      Registration Statement is filed with respect to the Registrable
      Securities.  Such payments shall constitute the Investors’ exclusive
      monetary remedy for such events, but shall not affect the right of the Investors
      to seek injunctive relief.  Such payments shall be made to each
      Investor in cash.

     

    (ii)               Additional
      Registrable Securities.  Upon the written demand of any Investor
      and upon any change in the Warrant Price (as defined in the Warrant) such that
      additional shares of Common Stock become issuable upon the exercise of the
      Warrants (the “Additional Shares”), the Company shall prepare and file with the
      SEC one or more Registration

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    Statements
      on Form S-3 or amend the Registration Statement filed pursuant to clause (i)
      above, if such Registration Statement has not previously been declared effective
      (or, if Form S-3 is not then available to the Company, on such form of
      registration statement as is then available to effect a registration for resale
      of the Additional Shares) covering the resale of the Additional Shares, but
      only
      to the extent the Additional Shares are not at the time covered by an effective
      Registration Statement.  Subject to any SEC comments, such
      Registration Statement shall include the plan of distribution attached hereto
      as
Exhibit A.  Such Registration Statement also shall cover, to
      the extent allowable under the 1933 Act and the rules promulgated thereunder
      (including Rule 416), such indeterminate number of additional shares of Common
      Stock resulting from stock splits, stock dividends or similar transactions
      with
      respect to the Additional Shares.  Such Registration Statement shall
      not include any shares of Common Stock or other securities for the account
      of
      any other holder without the prior written consent of the Required
      Investors.  The Registration Statement (and each amendment or
      supplement thereto, and each request for acceleration of effectiveness thereof)
      shall be provided in accordance with Section 3(c) to the Investors and their
      counsel prior to its filing or other submission.  If a Registration
      Statement covering the Additional Shares is required to be filed under this
      Section 2(a)(ii) and is not filed with the SEC within 20 days of the request
      of
      any Investor or upon the occurrence of any of the events specified in this
      Section 2(a)(ii), the Company will make pro rata payments to each Investor,
      as
      liquidated damages and not as a penalty, in an amount equal to 1.0% of the
      aggregate amount invested by such Investor for each 30-day period or pro rata
      for any portion thereof following the date by which such Registration Statement
      should have been filed for which no Registration Statement is filed with respect
      to the Additional Shares.  Such payments shall constitute the
      Investors’ exclusive monetary remedy for such events, but shall not affect the
      right of the Investors to seek injunctive relief.  Such payments shall
      be made to each Investor in cash.

     

    (b)              Expenses.  The
      Company will pay all expenses associated with each registration, including
      filing and printing fees, the Company’s counsel and accounting fees and
      expenses, costs associated with clearing the Registrable Securities for sale
      under applicable state securities laws, listing fees, fees and expenses of
      one
      counsel to the Investors not to exceed $5,000 and the Investors’ reasonable
      expenses in connection with the registration, but excluding discounts,
      commissions, fees of underwriters, selling brokers, dealer managers or similar
      securities industry professionals with respect to the Registrable Securities
      being sold.

     

    (c)              Effectiveness.

     

       
      (i)               The
      Company shall use commercially reasonable efforts to have the Registration
      Statement declared effective as soon as practicable.  The Company
      shall notify the Investors by facsimile or e-mail as promptly as practicable,
      and in any event, within twenty-four (24) hours, after any Registration
      Statement is declared effective and shall simultaneously provide the Investors
      with copies of any related Prospectus to be used in connection with the sale
      or
      other disposition of the securities covered thereby.  If (A)(x) a
      Registration Statement covering the Registrable Securities is not declared
      effective by the SEC prior to the earlier of (i) five (5) Business Days after
      the SEC shall have informed the Company that no review of the Registration
      Statement will be made or that the SEC has no further comments on the
      Registration Statement or (ii) the 90th day after
      the
      Closing Date (the 120th day if
      the SEC
      reviews the Registration Statement) or (y) a Registration Statement covering
      Additional Shares is not

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    declared
      effective by the SEC within ninety (90) days following the time such
      Registration Statement was required to be filed pursuant to Section 2(a)(ii)
      (120 days if the SEC reviews the Registration Statement), or (B) after a
      Registration Statement has been declared effective by the SEC, sales cannot
      be
      made pursuant to such Registration Statement for any reason (including without
      limitation by reason of a stop order, or the Company’s failure to update the
      Registration Statement), but excluding any Allowed Delay (as defined below)
      or
      the inability of any Investor to sell the Registrable Securities covered thereby
      due to market conditions and except as excused pursuant to subparagraph (ii)
      below, then the Company will make pro rata payments to each Investor, as
      liquidated damages and not as a penalty, in an amount equal to 1.0% of the
      aggregate amount invested by such Investor for each 30- day period or pro rata
      for any portion thereof following the date by which such Registration Statement
      should have been effective (the “Blackout Period”).  Such payments
      shall constitute the Investors’ exclusive monetary remedy for such events, but
      shall not affect the right of the Investors to seek injunctive
      relief.  The amounts payable as liquidated damages pursuant to this
      paragraph shall be paid monthly within three (3) Business Days of the last
      day
      of each month following the commencement of the Blackout Period until the
      termination of the Blackout Period.  Such payments shall be made to
      each Investor in cash.

     

      
      (ii)               For
      not more than twenty (20) consecutive days or for a total of not more than
      forty-five (45) days in any twelve (12) month period, the Company may delay
      the
      disclosure of material non-public information concerning the Company, by
      suspending the use of any Prospectus included in any registration contemplated
      by this Section containing such information, the disclosure of which at the
      time
      is not, in the good faith opinion of the Company, in the best interests of
      the
      Company (an “Allowed Delay”); provided, that the Company shall promptly (a)
      notify the Investors in writing of the existence of (but in no event, without
      the prior written consent of an Investor, shall the Company disclose to such
      Investor any of the facts or circumstances regarding) material non-public
      information giving rise to an Allowed Delay, (b) advise the Investors in writing
      to cease all sales under the Registration Statement until the end of the Allowed
      Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay
      as promptly as practicable.

     

    3.      Company
      Obligations.  The Company will use commercially reasonable efforts
      to effect the registration of the Registrable Securities in accordance with
      the
      terms hereof, and pursuant thereto the Company will, as expeditiously as
      possible:

     

    (a)                use
      commercially reasonable efforts to cause such Registration Statement to become
      effective and to remain continuously effective for a period that will terminate
      upon the earliest of (i) the date on which all Registrable Securities covered
      by
      such Registration Statement as amended from time to time, have been sold, (ii)
      the date on which all Registrable Securities covered by such Registration
      Statement may be sold pursuant to Rule 144(k) and (iii) the third anniversary
      of
      the initial effective date (the “Effectiveness Period”) and advise the Investors
      in writing when the Effectiveness Period has expired;

     

    (b)                prepare
      and file with the SEC such amendments and post-effective amendments to the
      Registration Statement and the Prospectus as may be necessary to keep the
      Registration Statement effective for the Effectiveness Period and to comply
      with
      the provisions

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    of
      the
      1933 Act and the 1934 Act with respect to the distribution of all of the
      Registrable Securities covered thereby;

     

    (c)               provide
      copies to and permit counsel designated by the Investors to review each
      Registration Statement and all amendments and supplements thereto no fewer
      than
      three (3) Business Days prior to their filing with the SEC and not file any
      document to which such counsel reasonably objects and cause its officers and
      directors, counsel, and independent auditors to respond to such inquiries as
      shall be necessary, in the opinion of counsel to the Investors, to conduct
      a
      reasonable investigation within the meaning of the 1933 Act;

     

    (d)               furnish
      to the Investors and their legal counsel (i) promptly after the same is prepared
      and publicly distributed, filed with the SEC, or received by the Company (but
      not later than two (2) Business Days after the filing date, receipt date or
      sending date, as the case may be) one (1) copy of any Registration Statement
      and
      any amendment thereto, each preliminary prospectus and Prospectus and each
      amendment or supplement thereto, and each letter written by or on behalf of
      the
      Company to the SEC or the staff of the SEC, and each item of correspondence
      from
      the SEC or the staff of the SEC, in each case relating to such Registration
      Statement (other than any portion of any thereof which contains information
      for
      which the Company has sought confidential treatment), and (ii) such number
      of
      copies of a Prospectus, including a preliminary prospectus, and all amendments
      and supplements thereto and such other documents as each Investor may reasonably
      request in order to facilitate the disposition of the Registrable Securities
      owned by such Investor that are covered by the related Registration
      Statement;

     

    (e)               use
      commercially reasonable efforts to (i) prevent the issuance of any stop order
      or
      other suspension of effectiveness and, (ii) if such order is issued, obtain
      the
      withdrawal of any such order at the earliest possible moment;

     

    (f)                prior
      to any public offering of Registrable Securities, use commercially reasonable
      efforts to register or qualify or cooperate with the Investors and their counsel
      in connection with the registration or qualification of such Registrable
      Securities for offer and sale under the securities or blue sky laws of such
      jurisdictions requested by the Investors and do any and all other commercially
      reasonable acts or things necessary or advisable to enable the distribution
      in
      such jurisdictions of the Registrable Securities covered by the Registration
      Statement; provided, however, that the Company shall not
      be required in connection therewith or as a condition thereto to (i) qualify
      to
      do business in any jurisdiction where it would not otherwise be required to
      qualify but for this Section 3(f), (ii) subject itself to general taxation
      in
      any jurisdiction where it would not otherwise be so subject but for this Section
      3(f), or (iii) file a general consent to service of process in any such
      jurisdiction;

     

    (g)                 
          use commercially reasonable efforts to cause all
      Registrable Securities covered by a Registration Statement to be listed on
      each
      securities exchange, interdealer quotation system or other market on which
      similar securities issued by the Company are then listed;

     

    (h)               
            immediately notify the Investors, at any
      time prior to the end of the Effectiveness Period, upon discovery that, or
      upon
      the happening of any event as a result of

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    which,
      the Prospectus includes an untrue statement of a material fact or omits to
      state
      any material fact required to be stated therein or necessary to make the
      statements therein not misleading in light of the circumstances then existing,
      and promptly prepare, file with the SEC and furnish to such holder a supplement
      to or an amendment of such Prospectus as may be necessary so that such
      Prospectus shall not include an untrue statement of a material fact or omit
      to
      state a material fact required to be stated therein or necessary to make the
      statements therein not misleading in light of the circumstances then existing;
      and

     

    (i)                  
          otherwise use commercially reasonable efforts to comply
      with all applicable rules and regulations of the SEC under the 1933 Act and
      the
      1934 Act, including, without limitation, Rule 172 under the 1933 Act, file
      any
      final Prospectus, including any supplement or amendment thereof, with the SEC
      pursuant to Rule 424 under the 1933 Act, promptly inform the Investors in
      writing if, at any time during the Effectiveness Period, the Company does not
      satisfy the conditions specified in Rule 172 and, as a result thereof, the
      Investors are required to deliver a Prospectus in connection with any
      disposition of Registrable Securities and take such other actions as may be
      reasonably necessary to facilitate the registration of the Registrable
      Securities hereunder; and make available to its security holders, as soon as
      reasonably practicable, but not later than the Availability Date (as defined
      below), an earnings statement covering a period of at least twelve (12) months,
      beginning after the effective date of each Registration Statement, which
      earnings statement shall satisfy the provisions of Section 11(a) of the 1933
      Act, including Rule 158 promulgated thereunder (for the purpose of this
      subsection 3(i), “Availability Date” means the 45th day following the end of the
      fourth fiscal quarter that includes the effective date of such Registration
      Statement, except that, if such fourth fiscal quarter is the last quarter of
      the
      Company’s fiscal year, “Availability Date” means the 90th day after the end of
      such fourth fiscal quarter).

     

     
       
(j)                  
    With a view to making available to the Investors the
      benefits of Rule 144 (or its successor rule) and any other rule or regulation
      of
      the SEC that may at any time permit the Investors to sell shares of Common
      Stock
      to the public without registration, the Company covenants and agrees
      to:  (i) make and keep public information available, as those terms
      are understood and defined in Rule 144, until the earlier of (A) six months
      after such date as all of the Registrable Securities may be resold pursuant
      to
      Rule 144(k) or any other rule of similar effect (assuming a cashless exercise
      of
      the Warrants) or (B) such date as all of the Registrable Securities shall have
      been resold; (ii) file with the SEC in a timely manner all reports and other
      documents required of the Company under the 1934 Act; and (iii) furnish to
      each
      Investor upon request, as long as such Investor owns any Registrable Securities,
      (A) a written statement by the Company that it has complied with the reporting
      requirements of the 1934 Act, (B) a copy of the Company’s most recent Annual
      Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other
      information as may be reasonably requested in order to avail such Investor
      of
      any rule or regulation of the SEC that permits the selling of any such
      Registrable Securities without registration.

    

    4.      Due
      Diligence Review; Information.  The Company shall make available,
      during normal business hours, for inspection and review by the Investors,
      advisors to and representatives of the Investors (who may or may not be
      affiliated with the Investors and who are reasonably acceptable to the Company),
      all financial and other records, all SEC Filings (as defined in the Purchase
      Agreement) and other filings with the SEC, and all other corporate

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    documents
      and properties of the Company as may be reasonably necessary for the purpose
      of
      such review, and cause the Company’s officers, directors and employees, within a
      reasonable time period, to supply all such information reasonably requested
      by
      the Investors or any such representative, advisor or underwriter in connection
      with such Registration Statement (including, without limitation, in response
      to
      all questions and other inquiries reasonably made or submitted by any of them),
      prior to and from time to time after the filing and effectiveness of the
      Registration Statement for the sole purpose of enabling the Investors and such
      representatives, advisors and underwriters and their respective accountants
      and
      attorneys to conduct initial and ongoing due diligence with respect to the
      Company and the accuracy of such Registration Statement.

     

    The
      Company shall not disclose material
      nonpublic information to the Investors, or to advisors to or representatives
      of
      the Investors, unless prior to disclosure of such information the Company
      identifies such information as being material nonpublic information and provides
      the Investors, such advisors and representatives with the opportunity to accept
      or refuse to accept such material nonpublic information for review and any
      Investor wishing to obtain such information enters into an appropriate
      confidentiality agreement with the Company with respect thereto.

     

    5.      Obligations
      of the Investors.

     

    (a)                     Each
      Investor shall furnish in writing to the Company such information regarding
      itself, the Registrable Securities held by it and the intended method of
      disposition of the Registrable Securities held by it, as shall be reasonably
      required to effect the registration of such Registrable Securities and shall
      execute such documents in connection with such registration as the Company
      may
      reasonably request.  At least five (5) Business Days prior to the
      first anticipated filing date of any Registration Statement, the Company shall
      notify each Investor of the information the Company requires from such Investor
      if such Investor elects to have any of the Registrable Securities included
      in
      the Registration Statement.  An Investor shall provide such
      information to the Company at least two (2) Business Days prior to the first
      anticipated filing date of such Registration Statement if such Investor elects
      to have any of the Registrable Securities included in the Registration
      Statement.

     

    (b)                     Each
      Investor, by its acceptance of the Registrable Securities agrees to cooperate
      with the Company as reasonably requested by the Company in connection with
      the
      preparation and filing of a Registration Statement hereunder, unless such
      Investor has notified the Company in writing of its election to exclude all
      of
      its Registrable Securities from such Registration Statement.

     

    (c)                     Each
      Investor agrees that, upon receipt of any notice from the Company of either
      (i)
      the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the
      happening of an event pursuant to Section 3(h) hereof, such Investor will
      immediately discontinue disposition of Registrable Securities pursuant to the
      Registration Statement covering such Registrable Securities, until the Investor
      is advised by the Company that such dispositions may again be made.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    6.      Indemnification.

     

    (a)                     Indemnification
      by the Company.  The Company will indemnify and hold harmless each
      Investor and its officers, directors, members, employees and agents, successors
      and assigns, and each other person, if any, who controls such Investor within
      the meaning of the 1933 Act, against any losses, claims, damages or liabilities,
      joint or several, to which they may become subject under the 1933 Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon: (i) any untrue statement or
      alleged untrue statement of any material fact contained in any Registration
      Statement, any preliminary Prospectus or final Prospectus, or any amendment
      or
      supplement thereof; (ii) any blue sky application or other document executed
      by
      the Company specifically for that purpose or based upon written information
      furnished by the Company filed in any state or other jurisdiction in order
      to
      qualify any or all of the Registrable Securities under the securities laws
      thereof (any such application, document or information herein called a “Blue Sky
      Application”); (iii) the omission or alleged omission to state in a Blue Sky
      Application a material fact required to be stated therein or necessary to make
      the statements therein not misleading; (iv) any violation by the Company or
      its
      agents of any rule or regulation promulgated under the 1933 Act applicable
      to
      the Company or its agents and relating to action or inaction required of the
      Company in connection with such registration; or (v) any failure to register
      or
      qualify the Registrable Securities included in any such Registration Statement
      in any state where the Company or its agents has affirmatively undertaken or
      agreed in writing that the Company will undertake such registration or
      qualification on an Investor’s behalf and will reimburse such Investor, and each
      such officer, director or member and each such controlling person for any legal
      or other expenses reasonably incurred by them in connection with investigating
      or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and
      to
      the extent that any such loss, claim, damage or liability arises out of or
      is
      based upon an untrue statement or alleged untrue statement or omission or
      alleged omission so made in conformity with information furnished by such
      Investor or any such controlling person in writing specifically for use in
      such
      Registration Statement or Prospectus.

     

    (b)                     Indemnification
      by the Investors.  Each Investor agrees, severally but not
      jointly, to indemnify and hold harmless, to the fullest extent permitted by
      law,
      the Company, its directors, officers, employees, stockholders and each person
      who controls the Company (within the meaning of the 1933 Act) against any
      losses, claims, damages, liabilities and expense (including reasonable attorney
      fees) resulting from any untrue statement of a material fact or any omission
      of
      a material fact required to be stated in the Registration Statement or
      Prospectus or preliminary Prospectus or amendment or supplement thereto or
      necessary to make the statements therein not misleading, to the extent, but
      only
      to the extent that such untrue statement or omission is contained in any
      information furnished in writing by such Investor to the Company specifically
      for inclusion in such Registration Statement or Prospectus or amendment or
      supplement thereto.  In no event shall the liability of an Investor be
      greater in amount than the dollar amount of the proceeds (net of all expense
      paid by such Investor in connection with any claim relating to this Section
      6
      and the amount of any damages such Investor has otherwise been required to
      pay
      by reason of such untrue statement or omission) received by such Investor upon
      the sale of the Registrable Securities included in the Registration Statement
      giving rise to such indemnification obligation.

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    (c)                     Conduct
      of Indemnification Proceedings.  Any person entitled to
      indemnification hereunder shall (i) give prompt notice to the indemnifying
      party
      of any claim with respect to which it seeks indemnification and (ii) permit
      such
      indemnifying party to assume the defense of such claim with counsel reasonably
      satisfactory to the indemnified party; provided that any person entitled
      to indemnification hereunder shall have the right to employ separate counsel
      and
      to participate in the defense of such claim, but the fees and expenses of such
      counsel shall be at the expense of such person unless (a) the indemnifying
      party
      has agreed to pay such fees or expenses, or (b) the indemnifying party shall
      have failed to assume the defense of such claim and employ counsel reasonably
      satisfactory to such person or (c) in the reasonable judgment of any such
      person, based upon written advice of its counsel, a conflict of interest exists
      between such person and the indemnifying party with respect to such claims
      (in
      which case, if the person notifies the indemnifying party in writing that such
      person elects to employ separate counsel at the expense of the indemnifying
      party, the indemnifying party shall not have the right to assume the defense
      of
      such claim on behalf of such person); and provided, further, that
      the failure of any indemnified party to give notice as provided herein shall
      not
      relieve the indemnifying party of its obligations hereunder, except to the
      extent that such failure to give notice shall materially adversely affect the
      indemnifying party in the defense of any such claim or litigation.  It
      is understood that the indemnifying party shall not, in connection with any
      proceeding in the same jurisdiction, be liable for fees or expenses of more
      than
      one separate firm of attorneys at any time for all such indemnified
      parties.  No indemnifying party will, except with the consent of the
      indemnified party, consent to entry of any judgment or enter into any settlement
      that does not include as an unconditional term thereof the giving by the
      claimant or plaintiff to such indemnified party of a release from all liability
      in respect of such claim or litigation.

     

    (d)                     Contribution.  If
      for any reason the indemnification provided for in the preceding paragraphs
      (a)
      and (b) is unavailable to an indemnified party or insufficient to hold it
      harmless, other than as expressly specified therein, then the indemnifying
      party
      shall contribute to the amount paid or payable by the indemnified party as
      a
      result of such loss, claim, damage or liability in such proportion as is
      appropriate to reflect the relative fault of the indemnified party and the
      indemnifying party, as well as any other relevant equitable
      considerations.  No person guilty of fraudulent misrepresentation
      within the meaning of Section 11(f) of the 1933 Act shall be entitled to
      contribution from any person not guilty of such fraudulent
      misrepresentation.  In no event shall the contribution obligation of a
      holder of Registrable Securities be greater in amount than the dollar amount
      of
      the proceeds (net of all expenses paid by such holder in connection with any
      claim relating to this Section 6 and the amount of any damages such holder
      has
      otherwise been required to pay by reason of such untrue or alleged untrue
      statement or omission or alleged omission) received by it upon the sale of
      the
      Registrable Securities giving rise to such contribution obligation.

     

    7.      Miscellaneous.

     

    (a)                     Amendments
      and Waivers.  This Agreement may be amended only by a writing
      signed by the Company and the Required Investors.  The Company may
      take any action herein prohibited, or omit to perform any act herein required
      to
      be performed by it, only if the Company shall have obtained the written consent
      to such amendment, action or omission to act, of the Required
      Investors.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    (b)                     Notices.  All
      notices and other communications provided for or permitted hereunder shall
      be
      made as set forth in Section 9.4 of the Purchase Agreement.

     

    (c)                     Assignments
      and Transfers by Investors.  The provisions of this Agreement
      shall be binding upon and inure to the benefit of the Investors and their
      respective successors and assigns.  An Investor may transfer or
      assign, in whole or from time to time in part, to one or more persons its rights
      hereunder in connection with the transfer of Registrable Securities by such
      Investor to such person, provided that such Investor complies with all laws
      applicable thereto and provides written notice of assignment to the Company
      promptly after such assignment is effected.

     

    (d)                     Assignments
      and Transfers by the Company.  This Agreement may not be assigned
      by the Company (whether by operation of law or otherwise) without the prior
      written consent of the Required Investors, provided, however, that the Company
      may assign its rights and delegate its duties hereunder to any surviving or
      successor corporation in connection with a merger or consolidation of the
      Company with another corporation, or a sale, transfer or other disposition
      of
      all or substantially all of the Company’s assets to another corporation, without
      the prior written consent of the Required Investors, after notice duly given
      by
      the Company to each Investor.

     

    (e)                     Benefits
      of the Agreement.  The terms and conditions of this Agreement
      shall inure to the benefit of and be binding upon the respective permitted
      successors and assigns of the parties.  Nothing in this Agreement,
      express or implied, is intended to confer upon any party other than the parties
      hereto or their respective successors and assigns any rights, remedies,
      obligations, or liabilities under or by reason of this Agreement, except as
      expressly provided in this Agreement.

     

    (f)                     Counterparts;
      Faxes.  This Agreement may be executed in two or more
      counterparts, each of which shall be deemed an original, but all of which
      together shall constitute one and the same instrument.  This Agreement
      may also be executed via facsimile (including via electronic transmission of
      scanned documents), which shall be deemed an original.

     

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

     

    (h)                     Severability.  Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof but shall be interpreted as if it were written so as to be
      enforceable to the maximum extent permitted by applicable law, and any such
      prohibition or unenforceability in any jurisdiction shall not invalidate or
      render unenforceable such provision in any other jurisdiction.  To the
      extent permitted by applicable law, the parties hereby waive any provision
      of
      law which renders any provisions hereof prohibited or unenforceable in any
      respect.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    (i)                     Further
      Assurances.  The parties shall execute and deliver all such
      further instruments and documents and take all such other actions as may
      reasonably be required to carry out the transactions contemplated hereby and
      to
      evidence the fulfillment of the agreements herein contained.

     

    (j)                     Entire
      Agreement.  This Agreement is intended by the parties as a final
      expression of their agreement and intended to be a complete and exclusive
      statement of the agreement and understanding of the parties hereto in respect
      of
      the subject matter contained herein.  This Agreement supersedes all
      prior agreements and understandings between the parties with respect to such
      subject matter.

     

    (k)                     Governing
      Law; Consent to Jurisdiction; Waiver of Jury Trial.  This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of New York without regard to the choice of law principles
      thereof.  Each of the parties hereto irrevocably submits to the
      exclusive jurisdiction of the courts of the State of New York located in New
      York County and the United States District Court for the Southern District
      of
      New York for the purpose of any suit, action, proceeding or judgment relating
      to
      or arising out of this Agreement and the transactions contemplated
      hereby.  Service of process in connection with any such suit, action
      or proceeding may be served on each party hereto anywhere in the world by the
      same methods as are specified for the giving of notices under this
      Agreement.  Each of the parties hereto irrevocably consents to the
      jurisdiction of any such court in any such suit, action or proceeding and to
      the
      laying of venue in such court.  Each party hereto irrevocably waives
      any objection to the laying of venue of any such suit, action or proceeding
      brought in such courts and irrevocably waives any claim that any such suit,
      action or proceeding brought in any such court has been brought in an
      inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
      REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
      REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
      WAIVER.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties have
      executed this Agreement or caused their duly authorized officers to execute
      this
      Agreement as of the date first above written.

     

    
      	
              The
                Company:

            	
              TERABEAM,
                INC.

            
	 	 
	 	 
	 	 
	 	
              By:
                /s/ Robert E. Fitzgerald

            
	 	
              Name:
                Robert E. Fitzgerald

            
	 	
              Title:
                Chief Executive Officer

            

    

    

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    

    
      	 	
              The
                Investors:

            
	 	 
	 	
              SRB
                GREENWAY CAPITAL, L.P.

            
	 	 
	 	
              By:  SRB
                Management, L.P., General Partner

            
	 	 
	 	
              By:  BC
                Advisors, L.L.C., General Partner

            
	 	 
	 	 
	 	 
	 	
              By:  /s/
                Steven R. Becker

            
	 	
              Name:  Steven
                R. Becker

            
	 	
              Title:  Member

            
	 	 
	 	 
	 	
              SRB
                GREENWAY CAPITAL (Q.P.), L.P.

            
	 	 
	 	
              By:  SRB
                Management, L.P., General Partner

            
	 	 
	 	
              By:  BC
                Advisors, L.L.C., General Partner

            
	 	 
	 	 
	 	 
	 	
              By:  /s/
                Steven R. Becker

            
	 	
              Name:  Steven
                R. Becker

            
	 	
              Title:  Member

            
	 	 
	 	 
	 	
              SRB
                GREENWAY OFFSHORE

            
	 	
              OPERATING
                FUND, L.P.

            
	 	 
	 	
              By:  SRB
                Management, L.P., General Partner

            
	 	 
	 	
              By:  BC
                Advisors, L.L.C., General Partner

            
	 	 
	 	 
	 	 
	 	
              By:  /s/
                Steven R. Becker

            
	 	
              Name:  Steven
                R. Becker

            
	 	
              Title:  Member

            
	 	
               

            

    

    

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    

    

    
      	 	
              Lloyd
                I. Miller, III

               

               

              /s/
                Lloyd I. Miller, III

            
	 	
              Lloyd
                I. Miller, III

            
	 	 
	 	 
	 	
              MILFAM
                II, LP

            
	 	 
	 	
              By:
                Milfam LLC, its General Partner

            
	 	 
	 	 
	 	 
	 	
              By:
                /s/ Lloyd I. Miller, III

            
	 	
              Name:  Lloyd
                I. Miller, III

            
	 	
              Title:  Manager

            

    

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    

    
      	 	
              CLARION
                CAPITAL CORP.

            
	 	 
	 	 
	 	 
	 	
              By:
                /s/ Morton A. Cohen

            
	 	
              Name:  Morton
                A. Cohen

            
	 	
              Title:  Chairman

            
	 	 
	 	
              CLARION
                WORLD OFFSHORE FUND, LTD.

            
	 	 
	 	 
	 	 
	 	
              By:
                /s/ Morton A. Cohen

            
	 	
              Name:  Morton
                A. Cohen

            
	 	
              Title:  Investment
                Manager

            
	 	 
	 	
              THE
                AMENDED & RESTATED DECLARATION OF

            
	 	
              TRUST
                OF MORTON A. COHEN, DATED MAY 9, 2005

            
	 	 
	 	 
	 	 
	 	
              By:
                /s/ Morton A. Cohen

            
	 	
              Name:  Morton
                A. Cohen

            
	 	
              Title:  Trustee

            
	 	 
	 	
              SHAKER
                INVESTMENTS TOWER, L.P.

            
	 	 
	 	 
	 	 
	 	
              By:
                /s/ Edward Hemmelgarn

            
	 	
              Name:  Edward
                Hemmelgarn

            
	 	
              Title:  Managing
                Member

            

    

    

    

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    Exhibit
      A

    

    Plan
      of Distribution

    

    The
      selling stockholders, which as used
      herein includes donees, pledgees, transferees or other successors-in-interest
      selling shares of common stock or interests in shares of common stock received
      after the date of this prospectus from a selling stockholder as a gift, pledge,
      partnership distribution or other transfer, may, from time to time, sell,
      transfer or otherwise dispose of any or all of their shares of common stock
      or
      interests in shares of common stock on any stock exchange, market or trading
      facility on which the shares are traded or in private
      transactions.  These dispositions may be at fixed prices, at
      prevailing market prices at the time of sale, at prices related to the
      prevailing market price, at varying prices determined at the time of sale,
      or at
      negotiated prices.

    

    The
      selling stockholders may use any
      one or more of the following methods when disposing of shares or interests
      therein:

    

    -
      ordinary brokerage transactions and
      transactions in which the broker-dealer solicits purchasers;

    

    -
      block trades in which the
      broker-dealer will attempt to sell the shares as agent, but may position and
      resell a portion of the block as principal to facilitate the
      transaction;

    

    -
      purchases by a broker-dealer as
      principal and resale by the broker-dealer for its account;

    

    -
      an exchange distribution in
      accordance with the rules of the applicable exchange;

    

    -
      privately negotiated
      transactions;

    

    -
      short sales effected after the date
      the registration statement of which this Prospectus is a part is declared
      effective by the SEC, subject to the restrictions on short selling contained
      in
      the purchase agreement relating to the placement of the shares covered
      hereby;

    

    -
      through the writing or settlement of
      options or other hedging transactions, whether through an options exchange
      or
      otherwise;

    

    -
      broker-dealers may agree with the
      selling stockholders to sell a specified number of such shares at a stipulated
      price per share; and

    

    -
      a combination of any such methods of
      sale.

    

    The
      selling stockholders may, from time
      to time, pledge or grant a security interest in some or all of the shares of
      common stock owned by them and, if they default in the performance of their
      secured obligations, the pledgees or secured parties may offer and sell the
      shares of common stock, from time to time, under this prospectus, or under
      an
      amendment to this prospectus under Rule 424(b)(3) or other applicable provision
      of the Securities Act amending the

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    list
      of
      selling stockholders to include the pledgee, transferee or other successors
      in
      interest as selling stockholders under this prospectus.  The selling
      stockholders also may transfer the shares of common stock in other
      circumstances, in which case the transferees, pledgees or other successors
      in
      interest will be the selling beneficial owners for purposes of this
      prospectus.

    

    In
      connection with the sale of our
      common stock or interests therein, the selling stockholders may enter into
      hedging transactions with broker-dealers or other financial institutions, which
      may in turn engage in short sales of the common stock in the course of hedging
      the positions they assume.  The selling stockholders may also sell
      shares of our common stock short and deliver these securities to close out
      their
      short positions, or loan or pledge the common stock to broker-dealers that
      in
      turn may sell these securities.  The selling stockholders may also
      enter into option or other transactions with broker-dealers or other financial
      institutions or the creation of one or more derivative securities which require
      the delivery to such broker-dealer or other financial institution of shares
      offered by this prospectus, which shares such broker-dealer or other financial
      institution may resell pursuant to this prospectus (as supplemented or amended
      to reflect such transaction).

    

    The
      aggregate proceeds to the selling
      stockholders from the sale of the common stock offered by them will be the
      purchase price of the common stock less discounts or commissions, if
      any.  Each of the selling stockholders reserves the right to accept
      and, together with their agents from time to time, to reject, in whole or in
      part, any proposed purchase of common stock to be made directly or through
      agents.  We will not receive any of the proceeds from this offering.
      Upon any exercise of the warrants by payment of cash, however, we will receive
      the exercise price of the warrants.

    

    The
      selling stockholders also may
      resell all or a portion of the shares in open market transactions in reliance
      upon Rule 144 under the Securities Act of 1933, provided that they meet the
      criteria and conform to the requirements of that rule.

    

    The
      selling stockholders and any
      underwriters, broker-dealers or agents that participate in the sale of the
      common stock or interests therein may be "underwriters" within the meaning
      of
      Section 2(11) of the Securities Act.  Any discounts, commissions,
      concessions or profit they earn on any resale of the shares may be underwriting
      discounts and commissions under the Securities Act.  Selling
      stockholders who are "underwriters" within the meaning of Section 2(11) of
      the
      Securities Act will be subject to the prospectus delivery requirements of the
      Securities Act.

    

    To
      the extent required, the shares of
      our common stock to be sold, the names of the selling stockholders, the
      respective purchase prices and public offering prices, the names of any agents,
      dealer or underwriter, any applicable commissions or discounts with respect
      to a
      particular offer will be set forth in an accompanying prospectus supplement
      or,
      if appropriate, a post-effective amendment to the registration statement that
      includes this prospectus.

    

    In
      order to comply with the securities
      laws of some states, if applicable, the common stock may be sold in these
      jurisdictions only through registered or licensed brokers or
      dealers.  In addition, in some states the common stock may not be sold
      unless it has been registered or

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    qualified
      for sale or an exemption from registration or qualification requirements is
      available and is complied with.

    

    We
      have advised the selling
      stockholders that the anti-manipulation rules of Regulation M under the Exchange
      Act may apply to sales of shares in the market and to the activities of the
      selling stockholders and their affiliates.  In addition, to the extent
      applicable we will make copies of this prospectus (as it may be supplemented
      or
      amended from time to time) available to the selling stockholders for the purpose
      of satisfying the prospectus delivery requirements of the Securities
      Act.  The selling stockholders may indemnify any broker-dealer that
      participates in transactions involving the sale of the shares against certain
      liabilities, including liabilities arising under the Securities
      Act.

    

    We
      have agreed to indemnify the selling
      stockholders against liabilities, including liabilities under the Securities
      Act
      and state securities laws, relating to the registration of the shares offered
      by
      this prospectus.

    

    We
      have agreed with the selling
      stockholders to keep the registration statement of which this prospectus
      constitutes a part effective until the earlier of (1) such time as all of the
      shares covered by this prospectus have been disposed of pursuant to and in
      accordance with the registration statement, (2) the date on which the shares
      may
      be sold pursuant to Rule 144(k) of the Securities Act and (3) the third
      anniversary of the initial effective date of the registration statement of
      which
      this prospectus constitutes a part.

    

     

    -18-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]