Document:

Exhibit 4.1

THIS NOTE HAS NOT BEEN REGISTERED UNDER ANY SECURITIES
LAWS, AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF UNLESS THE COMPANY HAS
RECEIVED A WRITTEN OPINION FROM COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE COMPANY STATING THAT SUCH TRANSFER IS BEING MADE IN COMPLIANCE WITH ALL
APPLICABLE SECURITIES LAWS.

FERMAVIR PHARMACEUTICALS,
INC.

12% SENIOR SECURED PROMISSORY NOTE

	
  $

  	
   

  	
  New York, New York

  
	
   

  	
   

  	
  April 9, 2007

  

 

FOR VALUE
RECEIVED, the undersigned, FermaVir Pharmaceuticals, Inc., a Florida corporation (the “Company”),
hereby promises to pay to the order of Inhibitex, Inc., a Delaware corporation
(and together with its registered assigns, the “Holders”), the principal sum of            Dollars
($    ,000) on the Maturity Date (as defined below), with
interest on the principal amount of this Note from time to time as provided
herein.

1.                             Note
Purchase Agreement.  This Senior Secured
Promissory Note (this “Note”) is issued pursuant to the Note Purchase Agreement
(the “Note Purchase Agreement”), dated as of April 9, 2007, by and between the
Company and the Purchaser, and is subject to the terms thereof.  This Note, together with any promissory notes
issued pursuant to the Note Purchase Agreement or Sections 11 or 12 hereof, are
hereinafter referred to as the “Notes.” 
The Holders are entitled to the benefits of this Note and the Note
Purchase Agreement, as it relates to this Note, and may enforce the agreements
of the Company contained in this Note and the Note Purchase Agreement and
exercise the remedies provided for in this Note and the Note Purchase Agreement
or otherwise available in respect hereto and thereto.  Capitalized terms used herein and not defined
herein shall have the meanings ascribed to such terms in the Note Purchase
Agreement.  All amounts payable under
this Note shall be in United States dollars, unless otherwise agreed by the
parties.

2.                             Interest.

(a)  Generally.  The Company promises to pay interest (“Interest”)
on the principal amount of this Note at the rate of 12.00% per annum (the “Interest
Rate”).  Interest on this Note shall
accrue from and including             ,
2007 through and until repayment of the principal amount of this Note and
payment of all Interest in full and shall be computed on the basis of the
actual number of days elapsed over a year of 365 days.

(b)  Default Rate of Interest.  Upon
and during the occurrence of an Event of Default (as defined in the Note
Purchase Agreement), this Note shall bear interest, from the date of the
occurrence of such Event of Default until such Event of Default is cured or
waived, payable on demand in immediately available funds, at a rate equal to
the sum of (i) the Interest Rate and (ii) an additional 2.00% per annum (such
sum being referred to herein as the “Default Rate”).

(c)  No Usurious
Interest.  In the event that any
interest rate(s) provided for in this Section 2 shall be determined to be
unlawful, such interest rate(s) shall be computed at the highest rate permitted
by applicable law.  Any payment by the Company
of any interest amount in excess of that permitted by law shall be considered a
mistake, with the excess being applied to the principal amount of this Note
without prepayment premium or penalty; if no such principal amount is
outstanding, such excess shall be returned to the Company.

3.                             Principal.  The outstanding principal and accrued and
unpaid interest under this Note shall become due and payable on the Maturity
Date.  The “Maturity Date” shall mean the
earliest to occur of (a) December 31, 2007, (b) ninety (90) days after the
termination of the Merger Agreement by Parent (as defined therein) pursuant to
Section 7.1(f) thereof, (c) one hundred twenty (120) days after the termination
of the Merger Agreement by the Company pursuant to Section 7.1(e) thereof and
(d) the consummation of an Acquisition Proposal other than the one contemplated
by the Merger Agreement after termination of the Merger Agreement by Parent
pursuant to Section 7.1(c) thereof.

4.                             Redemption.  This Note as well as the rights and
obligations of the Company are subject to the redemption provisions contained
in Section 11.1 of the Note Purchase Agreement.

5.                             Amendment.  Amendments and modifications of this Note may
be made only in the manner provided in Section 12.5 of the Note Purchase
Agreement.

6.                             Security.  This Note shall at all times be secured by
certain collateral, pursuant to the terms of the Collateral Documents.  This Note and the obligations hereunder are
senior secured obligations of the Company and rank senior to all funded
indebtedness of the Company.

7.                             Use
of Proceeds.  The Company shall use
the principal amount of this Note in accordance with the permitted uses
described in Section 7.4 of the Note Purchase Agreement.

8.                             Suits
for Enforcement.  Subject to the provisions
of Article IX of the Note Purchase Agreement, upon the occurrence of any one or
more Events of Default, the Holder of this Note may proceed to protect and
enforce its rights hereunder by suit in equity, action at law or by other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in the Note Purchase Agreement or this Note or in aid of
the exercise of any power granted in the Note Purchase Agreement or this Note,
or may proceed to enforce the payment of this Note, or to enforce any other
legal or equitable right of the Holders of this Note.

9.                             Remedies
Cumulative.  No remedy herein
conferred upon the Holders is intended to be exclusive of any other remedy and
each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.

 2
 

10.                           Remedies
Not Waived.  No course of dealing
between the Company and the Holders or any delay on the part of the Holders in
exercising any rights hereunder shall operate as a waiver of any right.

11.                           Transfer.

(a)  The term “Holders”
as used herein shall also include any transferee of this Note whose name has
been recorded or is required to be recorded by the Company in the Note Register
(as defined below). Each transferee of this Note acknowledges that this Note
has not been registered under the Securities Act, and may be transferred only
pursuant to an effective registration under the Securities Act or pursuant to
an applicable exemption from the registration requirements of the Securities
Act and in accordance with the procedures provided in the Note Purchase
Agreement.

(b)  The Company shall
maintain a register (the “Note Register”) in its principal office for the
purpose of registering the Note and any transfer or partial transfer thereof,
which register shall reflect and identify, at all times, the ownership of
record of any interest in the Note. Upon the issuance of this Note, the Company
shall record the name and address of the initial purchasers of this Note in the
Note Register as the first Holders.  Upon
surrender for registration of transfer or exchange of this Note at the
principal offices of the Company, the Company shall, at its expense, execute
and deliver one or more new Notes of like tenor in accordance with and subject
to the procedures for transfer and exchange set forth in the Note Purchase
Agreement.

(c)  Subject to
Sections 11(a) and 11(b) hereof and the limitations contained in Section 12 of
the Note Purchase Agreement, this Note may be transferred or assigned, in whole
or in part, by the Holders only with the prior written consent of the Company,
which shall not be unreasonably withheld.

12.                           Replacement
of Note.  On receipt by the Company of
an affidavit of an authorized representative of the Holders stating the
circumstances of the loss, theft, destruction or mutilation of this Note (and
in the case of any such mutilation, on surrender and cancellation of such
Note), the Company, at the Holders’ expense, will promptly execute and deliver,
in lieu thereof, a new Note of like tenor.  If required by the Company, such Holders must
provide indemnity sufficient in the reasonable judgment of the Company to
protect the Company from any loss which the Company may suffer if a lost,
stolen or destroyed Note is replaced.

13.                           Covenants
Bind Successors and Assigns.  All the
covenants, stipulations, promises and agreements in this Note contained by or
on behalf of the Company shall bind its successors and assigns, whether so
expressed or not.  Each Holder shall be
deemed to have made in favor of the Company the representations and warranties
set forth in Article VI of the Note Purchase Agreement as of the date such
Holder acquires this Note for value.

14.                           Notices.  All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier
(with receipt confirmed), courier service or personal delivery at the addresses
and in the manner specified in Section 12.3 of the Note

 3
 

Purchase Agreement. All such notices and
communications shall be deemed to have been duly given: if personally
delivered, when delivered by hand; if delivered by commercial overnight courier
service, when delivered by courier; if mailed, five (5) Business Days after
being deposited in the mail, postage prepaid; or if telecopied, when receipt is
acknowledged.

15.                           GOVERNING
LAW. THIS NOTE SHALL BE GOVERNED BY, CONSTRUED IN ACCORDANCE WITH, AND
ENFORCED UNDER, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE (INCLUDING GIVING EFFECT TO
GENERAL OBLIGATIONS LAW SECTION 5-1401).

16.                           JURISDICTION,
JURY TRIAL WAIVER, ETC.

(a)  EACH PARTY TO
THIS NOTE HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS NOTE OR ANY AGREEMENTS OR TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND HEREBY
EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE
PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM
THAT SUCH COURTS ARE AN INCONVENIENT FORUM. 
EACH PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
ITS ADDRESS SET FORTH IN SECTION 13.2 OF THE NOTE PURCHASE AGREEMENT, SUCH
SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING.

(b)  EACH PARTY TO
THIS NOTE HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE OR ANY OF THE
OTHER INVESTMENT DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER
OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.  THE COMPANY (I) CERTIFIES THAT NEITHER THE HOLDERS
NOR ANY REPRESENTATIVE, AGENT OR ATTORNEY OF THE HOLDERS HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE HOLDERS WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS AND (II) ACKNOWLEDGES THAT THE HOLDERS HAVE
BEEN INDUCED TO PURCHASE THIS NOTE BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.

17.                           Severability.  If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the

 4
 

remaining
provisions hereof. The Company and the Holders further agree to replace such
invalid, illegal or unenforceable provision of this Note with a valid, legal
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid, illegal or unenforceable
provision.

18.                           Headings.  The headings in this Note are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

 5
 

IN WITNESS WHEREOF, the undersigned has executed this
Note as of the date first written above.

	
  

  	
  FERMAVIR PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
       Name:

  	
   

  
	
   

  	
   

  	
       Title:

  	
   

  

 

 6Exhibit
10.1

 

NOTE PURCHASE AGREEMENT

by and between

FermaVir Pharmaceuticals, Inc.,

and

Inhibitex, Inc.

Dated as of April 9, 2007

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I.

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  Section 1.1

  	
  Definitions

  	
   

  	
  1

  
	
  Section 1.2

  	
  Accounting
  Terms; Financial Statements

  	
   

  	
  6

  
	
  Section 1.3

  	
  Knowledge of the
  Person

  	
   

  	
  6

  
	
  Section 1.4

  	
  Other
  Definitional Provisions

  	
   

  	
  6

  
	
  ARTICLE II.

  	
  PURCHASE AND SALE OF THE NOTES

  	
   

  	
  6

  
	
  Section 2.1

  	
  Purchase and
  Sale

  	
   

  	
  6

  
	
  Section 2.2

  	
  Closing

  	
   

  	
  7

  
	
  ARTICLE III.

  	
  CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER TO
  PURCHASE THE NOTES

  	
   

  	
  7

  
	
  Section 3.1

  	
  Conditions to
  the Initial Closing

  	
   

  	
  7

  
	
  Section 3.2

  	
  Conditions to
  Each Additional Closing

  	
   

  	
  8

  
	
  ARTICLE IV.

  	
  CONDITIONS TO THE OBLIGATION OF THE COMPANY TO ISSUE
  AND SELL THE NOTES

  	
   

  	
  10

  
	
  Section 4.1

  	
  Representations
  and Warranties

  	
   

  	
  10

  
	
  Section 4.2

  	
  Compliance with
  this Agreement

  	
   

  	
  10

  
	
  Section 4.3

  	
  No Litigation

  	
   

  	
  10

  
	
  ARTICLE V.

  	
  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

  	
   

  	
  10

  
	
  Section 5.1

  	
  Representations
  and Warranties of the Company

  	
   

  	
  10

  
	
  ARTICLE VI.

  	
  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

  	
   

  	
  12

  
	
  Section 6.1

  	
  Existence and
  Power

  	
   

  	
  12

  
	
  Section 6.2

  	
  Authorization;
  No Contravention

  	
   

  	
  12

  
	
  Section 6.3

  	
  Binding Effect

  	
   

  	
  12

  
	
  Section 6.4

  	
  Governmental
  Authorization; Third Party Consent

  	
   

  	
  12

  
	
  ARTICLE VII.

  	
  COVENANTS

  	
   

  	
  12

  
	
  Section 7.1

  	
  Financial
  Statements

  	
   

  	
  12

  
	
  Section 7.2

  	
  Business and
  Financial Information

  	
   

  	
  13

  
	
  Section 7.3

  	
  Corporate Existence;
  Franchises; Maintenance of Properties

  	
   

  	
  13

  
	
  Section 7.4

  	
  Use of Proceeds

  	
   

  	
  13

  
	
  Section 7.5

  	
  Compliance with
  Laws

  	
   

  	
  13

  
	
  Section 7.6

  	
  Payment of
  Obligations

  	
   

  	
  14

  
						

 

 i
 

 

	
  

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.7

  	
  Creation of
  Subsidiaries

  	
   

  	
  14

  
	
  Section 7.8

  	
  Insurance

  	
   

  	
  14

  
	
  Section 7.9

  	
  Maintenance of
  Books and Records

  	
   

  	
  14

  
	
  Section 7.10

  	
  Taxes

  	
   

  	
  14

  
	
  Section 7.11

  	
  Further
  Assurances

  	
   

  	
  14

  
	
  Section 7.12

  	
  Merger Agreement
  Covenants

  	
   

  	
  15

  
	
  ARTICLE VIII.

  	
  NEGATIVE COVENANTS

  	
   

  	
  15

  
	
  Section 8.1

  	
  Merger;
  Consolidation; Line of Business

  	
   

  	
  15

  
	
  Section 8.2

  	
  Indebtedness

  	
   

  	
  15

  
	
  Section 8.3

  	
  Liens

  	
   

  	
  15

  
	
  Section 8.4

  	
  Disposition of
  Assets; Investments

  	
   

  	
  16

  
	
  Section 8.5

  	
  Restricted
  Payments

  	
   

  	
  16

  
	
  Section 8.6

  	
  Transactions
  with Affiliates

  	
   

  	
  16

  
	
  Section 8.7

  	
  Issuance of
  Additional Capital Stock

  	
   

  	
  17

  
	
  Section 8.8

  	
  Fiscal Year

  	
   

  	
  17

  
	
  Section 8.9

  	
  Accounting
  Changes

  	
   

  	
  17

  
	
  Section 8.10

  	
  Inconsistent
  Agreements

  	
   

  	
  17

  
	
  ARTICLE IX.

  	
  EVENTS OF DEFAULT

  	
   

  	
  17

  
	
  Section 9.1

  	
  Events of
  Default

  	
   

  	
  17

  
	
  Section 9.2

  	
  Remedies on
  Default, Etc

  	
   

  	
  19

  
	
  Section 9.3

  	
  Other Remedies

  	
   

  	
  19

  
	
  Section 9.4

  	
  Notice by Holder

  	
   

  	
  20

  
	
  ARTICLE X.

  	
  INDEMNIFICATION

  	
   

  	
  20

  
	
  Section 10.1

  	
  Indemnification

  	
   

  	
  20

  
	
  Section 10.2

  	
  Procedure;
  Notification

  	
   

  	
  21

  
	
  ARTICLE XI.

  	
  REDEMPTION

  	
   

  	
  22

  
	
  Section 11.1

  	
  Redemption at
  the Option of the Company

  	
   

  	
  22

  
	
  ARTICLE XII.

  	
  MISCELLANEOUS

  	
   

  	
  22

  
	
  Section 12.1

  	
  Survival of
  Representations and Warranties

  	
   

  	
  22

  
	
  Section 12.2

  	
  Appointment of
  Collateral Agent

  	
   

  	
  22

  
						

 

 ii
 

 

	
  

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.3

  	
  Notices

  	
   

  	
  22

  
	
  Section 12.4

  	
  Successors and
  Assigns

  	
   

  	
  23

  
	
  Section 12.5

  	
  Amendment and
  Waiver

  	
   

  	
  24

  
	
  Section 12.6

  	
  Signatures;
  Counterparts

  	
   

  	
  24

  
	
  Section 12.7

  	
  Headings

  	
   

  	
  24

  
	
  Section 12.8

  	
  Determinations,
  Requests or Consents

  	
   

  	
  24

  
	
  Section 12.9

  	
  GOVERNING LAW

  	
   

  	
  25

  
	
  Section 12.10

  	
  JURISDICTION,
  JURY TRIAL WAIVER, ETC

  	
   

  	
  25

  
	
  Section 12.11

  	
  Severability

  	
   

  	
  25

  
	
  Section 12.12

  	
  Rules of
  Construction

  	
   

  	
  26

  
	
  Section 12.13

  	
  Entire Agreement

  	
   

  	
  26

  
	
  Section 12.14

  	
  Transfer and
  Exchange of Notes

  	
   

  	
  26

  
	
  Section 12.15

  	
  Further
  Assurances

  	
   

  	
  26

  
	
  Section 12.16

  	
  Cumulative
  Powers

  	
   

  	
  26

  
	
  Section 12.17

  	
  No Strict
  Construction

  	
   

  	
  27

  
	
  Section 12.18

  	
  Recovery of
  Litigation Costs

  	
   

  	
  27

  

 

 iii

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit 2.1(a) Form of Note

  	
   

  	
   

  

 

 i

NOTE PURCHASE AGREEMENT

NOTE PURCHASE AGREEMENT dated as of April 9, 2007, by
and between FermaVir Pharmaceuticals., Inc., a Florida corporation (the “Company”),
and Inhibitex, Inc., a Delaware corporation (the “Purchaser”).

W I T N E S S E T H:

WHEREAS, the Company, the Purchaser and Frost
Acquisition Corp., a Delaware corporation (“Merger Sub”) have entered into an
Agreement and Plan of Merger and Reorganization, dated as of the date hereof
(the “Merger Agreement”), pursuant to which the Purchaser intends to acquire
the Company by merging the Company with and into Merger Sub (the “Merger”);

WHEREAS. in order to finance the operations of the
Company through the consummation of the Merger, the Company wishes to sell to
the Purchaser, and the Purchaser wishes to purchase from the Company, senior
secured promissory notes, in the aggregate principal amount of up to One
Million Five Hundred Thousand Dollars ($1,500,000) (the “Notes”) upon the terms
and subject to the conditions hereinafter set forth;

WHEREAS, as security for the Notes, the Company is
willing to pledge to the Purchaser all of the Capital Stock (as hereinafter
defined) of its Subsidiary (as hereinafter defined) and grant to the Holders a
first priority security interest in all of its and its Subsidiaries’ assets;

NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:

ARTICLE
I.

DEFINITIONS

Section 1.1             Definitions.  As used in this Agreement, and unless the
context requires a different meaning, or such term is defined in the Merger
Agreement, in which case the term will have the meaning attributed to such term
in the Merger Agreement, the following terms have the meanings indicated:

“Additional Closing” shall have the meaning assigned
to that term in Section 2.2(b).

“Affiliate” shall mean, as to any Person, any other
Person who directly or indirectly controls, is under common control with, is
controlled by or is a director or officer of such Person.  As used in this definition, “control”
(including its correlative meanings, “controlled by” and “under common control
with”) means possession, directly or indirectly, of the power to direct or
cause the direction of management or policies (whether through ownership of
voting securities or partnership or other ownership interests, by contract or
otherwise), provided that, in

any event, any Person who owns directly or indirectly
more than ten percent (10%) of the securities having ordinary voting power for
the election of the members of the board of directors or other governing body
of a corporation or more than ten percent (10%) of the partnership or other
ownership interests of any other Person (other than as a limited partner of
such other Person) will be deemed to control such corporation, partnership or
other Person.

“Agreement” shall mean this Note Purchase Agreement
dated as of April     , 2007, by and between the
Company and the Purchaser, including the exhibits and schedules attached
hereto, as the same may be amended, supplemented or modified in accordance with
the terms hereof.

“Business” shall mean the business of the Company and
its Subsidiaries conducted by the Company and its Subsidiaries immediately
prior to the Closing and the activities reasonably related thereto.

“Business Day” shall mean any day other than a
Saturday, Sunday or other day on which commercial banks in New York, New York
are authorized or required by law or executive order to close.

“Capital Lease Obligations” shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) immovable or real property or
movable or personal property, which obligations are required to be classified
and accounted for as a capital lease on a balance sheet of such Person under
GAAP and, for purposes of this Agreement, the amount of such obligations shall
be the capitalized amount thereof, determined in accordance with GAAP.

“Capital Stock” shall mean (i) with respect to any
Person that is a corporation, any and all shares, interests or equivalents in
capital stock (whether voting or nonvoting, and whether common or preferred) of
such corporation, and (ii) with respect to any Person that is not a
corporation, any and all partnership, membership, limited liability company or
other equity interests of such Person that confer on a Person the right to
receive a share of the profits and losses of, or the distribution of assets of,
the issuing Person; and in each case, any and all warrants, rights or options
to purchase, and all conversion or exchange rights, voting rights, calls or
rights of any character with respect to, any of the foregoing, including,
without limitation, any rights in respect of any change in the value of any of
the foregoing, including stock appreciation rights and similar interests.

“Closing” shall have the meaning assigned to that term
in Section 2.2(a).

“Closing Date” shall have the meaning assigned to that
term in Section 2.2(a).

“Code” shall mean the Internal Revenue Code of 1986,
as amended, or any successor statute thereto, and the regulations promulgated
thereunder.

“Collateral Documents” means the Security Agreement,
and all similar agreements entered into guaranteeing payment of, or granting a
Lien upon property as security for payment of, the Obligations.

 2
 

“Company” shall have the meaning assigned to that term
in the introduction.

“Constituent Documents” shall mean, in the case of a
corporation, the certificate of incorporation and by-laws of such corporation,
in the case of a limited liability company, the certificate of formation and
operating agreement of such limited liability company, and in the case of other
entities, analogous documents governing the existence and powers of such
entities, in each case as in effect on the Closing Date.

“Default” shall mean any event or condition that, with
the passage of time or giving of notice, or both, would constitute an Event of
Default.

“Default Rate” shall have the meaning assigned to that
term in Section 2(b) of the Note.

“Disposition” shall mean with respect to any property,
any sale, lease, sale and leaseback, assignment, conveyance, transfer or other
disposition thereof (other than any of the foregoing between the Company and
its Subsidiaries).  The terms “Dispose”
and “Disposed of” shall have correlative meanings.

“Event of Default” shall have the meaning assigned to
that term in Section 9.1.

“Holders” shall mean the Purchaser and any permitted
transferee of the Notes.

“Indebtedness” means, without duplication, for any
Person, (i) obligations for borrowed money, including obligations evidenced by
bonds, notes, debentures or other similar instruments; (ii) obligations under
financial guarantees, letters of credit or letters of guarantee or obligations
to financial institutions who issued such letters of credit or letters of
guarantee for the account of such Person; (iii) obligations under bankers’
acceptances; (iv) obligations representing the deferred purchase price of
property or services except trade accounts payable of such Person arising in
the ordinary course of business; (v) obligations, whether or not assumed,
secured by Liens on, or payable out of the proceeds or production from,
property owned by such Person; (vi) Capital Lease Obligations and obligations
under any other synthetic off-balance sheet financing; and (vii) guarantees of
any of the foregoing items referred to in (i) through (vi) above.

“Indemnified Party” shall have the meaning assigned to
that term in Section 10.1.

“Initial Closing” shall mean the initial Closing.

“Insolvency Event” shall with respect to any Person,
the occurrence of any of the following: (i) such Person shall be adjudicated
insolvent or bankrupt or institutes proceedings to be adjudicated insolvent or
bankrupt, or shall generally fail to pay or admit in writing its inability to
pay its debts as they become due, (ii) such Person shall seek dissolution or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for it or a substantial portion of its property, assets or business
or to effect a plan or other arrangement with its creditors, (iii) such Person
shall make a general assignment for the benefit of its creditors, or consent to
or acquiesce in the appointment of a receiver, trustee, custodian or liquidator
for a substantial portion of its property, assets or business, (iv) such Person
shall file a voluntary petition under any bankruptcy,

 3
 

insolvency or similar law, (v) such Person shall take
any corporate or similar act in furtherance of any of the foregoing, or (vi)
such Person, or a substantial portion of its property, assets or business,
shall become the subject of an involuntary proceeding or petition for (A) its dissolution
or reorganization or (B) the appointment of a receiver, trustee, custodian or
liquidator, and (I) such proceeding is not dismissed or stayed within sixty
days or (II) such receiver, trustee, custodian or liquidator is appointed.

“Investment Documents” shall mean (i) this Agreement,
(ii) the Notes, (iii) the Collateral Documents, and (v) all other instruments,
documents and agreements delivered or to be delivered by any one or more of the
parties to this Agreement in connection with the closing of, or pursuant to,
this Agreement.

“Investments” in any Person shall mean, as of the date
of determination thereof, (i) any payment or contribution, or commitment to
make a payment or contribution, by a Person including, without limitation,
property contributed or committed to be contributed by such Person for or in
connection with its acquisition of any stock, bonds, notes, debentures,
partnership or other ownership interest or any other security of the Person in
whom such Investment is made or (ii) any loan, advance or other extension of
credit by or guaranty of or other surety obligation for any Indebtedness of the
Person in whom the Investment is made.

“Liabilities” shall have the meaning assigned to that
term in Section 10.1.

“Lien” shall mean a
mortgage, prior claim, pledge, privilege, lien, charge or encumbrance, whether
fixed or floating, on, or any security interest in any property, whether
immovable or real, movable or personal, or mixed, tangible or intangible or a
pledge or hypothecation thereof or any conditional sale agreement or other
title retention agreement or equipment trust relating thereto or any lease
relating to property which would be required to be accounted for as a Capital
Lease Obligation on a balance sheet.

“Material Adverse Change” shall mean any material
adverse change in the condition (financial or otherwise), operations, business,
prospects, properties or assets of the Company and its Subsidiaries, taken as a
whole.

“Modification” shall mean any amendment, restatement,
replacement, renewal, refinancing, extension, or modification of an
agreement.  “Modified” shall have the
correlative meaning.

“Notes” shall have the meaning assigned to that term
in the recitals hereto.

“Obligations” shall mean all principal of and interest
(including, to the greatest extent permitted by law, post-petition interest) on
the Notes and all fees, expenses, indemnities and other obligations owing, due
or payable to the Holders at any time by the Company and/or its Subsidiaries or
any other Person entitled thereto, under this Agreement or any of the other
Investment Documents, in each case whether direct or indirect, joint or
several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, and whether existing by contract, operation
of law or otherwise.

 4
 

“Permitted Liens” shall mean (a) Liens held by Holders
to secure the Obligations, (b) Liens for unpaid taxes, assessments, or other
governmental charges or levies that either (i) are not yet delinquent, or (ii)
do not have priority over the Holders’ Liens, (c) the interests of lessors
under operating leases, (d) purchase money Liens or the interests of lessors
with respect to Capital Lease Obligations and (e) any interest or title of a
licensor, lessor, or sublicensor or sublessor under any lease or license (other
than with respect to Intellectual Property) permitted by this Agreement.

“Purchaser” shall have the meaning assigned to such
term in the introduction.

“Required Holders” shall mean, at any time, the
holders of the outstanding Notes representing a majority of the aggregate
principal amount of the Notes then outstanding.

“Restricted Payment” shall mean: (i) any dividend or
other distribution, direct or indirect, on account of any Capital Stock in the
Company now or hereafter outstanding, except a dividend payable solely in
shares of such Capital Stock to the holders of that class; (ii) any redemption,
conversion, exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any Capital Stock in the
Company now or hereafter outstanding other than ordinary course repurchases of
common stock of the Company pursuant to the Company’s equity incentive plan;
(iii) any prepayment of interest on, principal of, premium, if any, redemption,
conversion, exchange, purchase, retirement, defeasance, sinking fund or similar
payment with respect to, any Indebtedness subordinated to the Indebtedness
existing pursuant to the Notes and this Agreement; (iv) any payment made to retire,
or to obtain the surrender of, any outstanding warrants, options or other
rights to acquire shares of any Capital Stock of the Company now or hereafter
outstanding other than ordinary course repurchases of common stock of the
Company pursuant to the Company’s equity incentive plan; (v) every payment in
connection with any Investment; and (vi) every payment made by or on behalf of
the Company (whether as repayment or prepayment of principal or as interest or
otherwise) other than the intercompany loan payments permitted in accordance
with Section 8.2, on or with respect to (x) any obligation to repay
Indebtedness owing to any Affiliate of the Company or its Subsidiaries or to
any other holder of the Company’s Capital Stock or (y) any obligation to any Person
or any Affiliate of the Company or its Subsidiaries or of any other holder of
Capital Stock of the Company, with respect to which obligation the Company or
any of its Subsidiaries has a Contingent Obligation.

“Security Agreement” means the Security Agreement of
even date herewith entered into between the Purchaser and the Company.

“Solvent” when used with respect to any Person, means
that, as of the date as to which such Person’s solvency is to be measured: (i)
the fair saleable value of its assets in excess of the total amount of its
liabilities (including contingent, subordinated, absolute, fixed, matured,
unmatured, liquidated and unliquidated liabilities but excluding liabilities
owing by the Company to any of its Subsidiaries or any one of the Subsidiaries
of the Company to the Company or to another one of the Subsidiaries of the
Company); (ii) it has sufficient capital to conduct its business; and (ii) it
is able to meet its debts as they mature.

 5
 

“Subsidiary(ies)” shall mean, with respect to any Person,
a corporation, partnership, limited liability company or other entity of which
shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity
are at the time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by such
Person.

Section 1.2             Accounting Terms;
Financial Statements.  Unless otherwise defined or specified herein, all accounting
terms used in this Agreement shall be construed in accordance with GAAP as in
effect on the date hereof.  The financial
statements required to be delivered hereunder from and after the Closing Date,
and all financial records, shall be maintained in accordance with GAAP as in
effect at the time of delivery.

Section 1.3             Knowledge of the
Person.  All
references to the knowledge of any Person or to facts known by such Person
shall mean the knowledge or notice of the Responsible Officers of such Person
or any of its Subsidiaries.

Section 1.4             Other
Definitional Provisions.

(a)           As used herein and in any certificate or
other document made or delivered pursuant hereto or thereto, (i) the words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation” and (ii) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, Capital Stock, securities,
revenues, accounts, leasehold interests and contract rights.

(b)           The words “hereof”, “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.

(c)           The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such
terms.

ARTICLE
II.

PURCHASE AND SALE OF THE NOTES

Section 2.1             Purchase
and Sale.

(a)           Subject
to the terms and conditions herein set forth, the Company agrees that it will
issue and sell to the Purchaser, and the Purchaser agrees that it will acquire
from the Company, the Notes in the form attached hereto as Exhibit 2.1(a).

(b)           The Notes
shall be sold by the Company and purchased by the Purchaser initially on April
16, 2007 in the aggregate principal amount of $750,000 in Notes, an additional
aggregate principal amount of $500,000 in Notes on July 9, 2007 and a

 6
 

final additional aggregate amount of $250,000
in Notes on August 9, 2007, provided that the aggregate principal amount of the
Notes shall not be greater than One Million Five Hundred Thousand Dollars
($1,500,000).

Section 2.2             Closing.

(a)           The
purchase and issuance of Notes shall take place at one or more closings (each a
“Closing” and, collectively, the “Closings”) to be held at the offices of
Dechert LLP, 30 Rockefeller Plaza, New York, New York 10112 (each such date. a “Closing
Date”), unless another place is agreed to by the parties hereto, or remotely
via the exchange of executed documents.

(b)           The Initial Closing
with respect to the purchase of the Notes shall take place on April 16, 2007 or
such other date mutually agreed upon by the parties hereto (the “Initial
Closing Date”).  With respect to the sale
and purchase of additional Notes, the Company, upon five (5) days notice may
set additional Closings with respect to additional Notes to be sold hereunder
(each, an “Additional Closing”) on dates determined by the Company (each, an “Additional
Closing Date” and together, the “Additional Closing Dates”).  Interest shall be earned on the Notes from a
Closing Date with respect to the Notes purchased on that Closing Date.

(c)           At each Closing or
within two Business Days thereafter, the Company  shall deliver to the Purchaser the Notes being purchased, in
each case, dated as of the relevant Closing Date, against delivery by the
Purchaser to the Company  of the purchase price
therefor.  In each case, payment of such
purchase price shall be by wire transfer of immediately available funds to an
account or accounts previously designated in writing by the Company.

ARTICLE
III.

CONDITIONS TO THE OBLIGATIONS

OF THE PURCHASER TO PURCHASE THE NOTES

Section 3.1             Conditions to the
Initial Closing.  The obligation of the Purchaser to purchase the Notes, to
pay the purchase price therefor at the Initial Closing and to perform any
obligations hereunder shall be subject to the satisfaction of the following
conditions on or before the Initial Closing Date, as determined by, or waived
by, the Purchaser; provided, however, that any waiver of a
condition shall not be deemed a waiver of any breach of any representation,
warranty, agreement, term or covenant or of any misrepresentation by the
Company.

(a)           Representations and Warranties.  The representations
and warranties of the Company contained in Article IV shall be true, in all
material respects (without giving effect to any limitation as to “materiality”
or “Material Adverse Effect” set forth therein), at and as of the Initial
Closing Date.  There shall exist no
Default or Event of Default at the time of the issuance of the Notes.

 7
 

(b)           Compliance with this Agreement.  The Company shall
have performed and complied in all material respects with all of the agreements
and conditions set forth or contemplated herein or in the Merger Agreement that
are required to be performed or complied with by the Company on or before the
Initial Closing Date.

(c)           Purchase of Notes Permitted by Applicable
Laws.  The acquisition of and payment
for the Notes (a) shall not be prohibited by any Requirement of Law, (b) shall
not subject the Purchaser to any penalty under or pursuant to any Requirement
of Law, and (c) shall be permitted by all Laws to which any Purchaser is
subject.

(d)           Consents and Approvals.  All governmental and third-party consents and
approvals necessary in connection with the offer, sale and issuance of the
Notes shall have been obtained and remain in full force and effect and shall be
satisfactory to the Purchaser; and no Requirement of Law shall be applicable,
or event shall have occurred, that seeks to enjoin, restrain, restrict, set
aside or prohibit, or impose materially adverse conditions upon, the issuance
of the Notes.

(e)           No Material Judgment or Order.  There shall not be in effect on the Initial
Closing Date any judgment, injunction or order of a court of competent
jurisdiction or any ruling of any Governmental Entity or any condition imposed
under any Requirement of Law which, in the judgment of the Purchaser, would
prohibit the purchase of the Notes hereunder or subject the Purchaser to any
penalty under or pursuant to any Requirement of Law if the Notes were to be
purchased hereunder.

(f)            Material Adverse Change.  There shall not have occurred at any time
since January 31, 2007, any Material Adverse Change.

(g)           No Litigation.  No action, suit, proceeding or investigation
shall have been instituted or threatened before, and no order, injunction or
decree shall have been entered by, any Governmental Entity, in each case
seeking to enjoin, restrain, restrict, set aside or prohibit, to impose
material conditions upon, or to obtain substantial damages in respect of, the
issuance of the Notes.

(h)           Notes.  The Notes being purchased at the Initial
Closing shall have been duly executed and delivered by the Company.

(i)            Collateral Documents.  The Collateral Documents, substantially in
the form attached hereto as Exhibit 3.1(i), shall have been duly executed and
delivered by all of the parties thereto.

Section 3.2          Conditions to Each
Additional Closing.  The obligation of the Purchaser to purchase additional
Notes, to pay the purchase prices therefor at each Additional Closing and to
perform any obligations hereunder with respect to such purchase shall be
subject to the satisfaction of the following conditions on or before the relevant
Additional Closing Date, as determined by, or waived by, the Purchaser; provided,
however, that any waiver of a condition shall not be deemed a waiver of
any breach of any representation, warranty, agreement, term or covenant or of
any misrepresentation by the Company.

 8
 

(a)           Representations and Warranties; No
Default.  The
representations and warranties of the Company contained in Article IV shall be
true, in all material respects (without giving effect to any limitation as to “materiality”
or “Material Adverse Effect” set forth therein), at and as of such Additional
Closing Date.  There shall exist no
Default or Event of Default at the time of the issuance of the Notes.

(b)           Purchase of Notes Permitted by Applicable
Laws.  The acquisition of and payment
for the Notes (a) shall not be prohibited by any Requirement of Law, (b) shall
not subject the Purchaser to any penalty under or pursuant to any Requirement
of Law, and (c) shall be permitted by all Laws to which the Purchaser is
subject.

(c)           Consents and Approvals.  All governmental and third-party consents and
approvals necessary in connection with the offer, sale and issuance of the
Notes shall have been obtained and remain in full force and effect and shall be
satisfactory to the Purchaser; and no Requirement of Law shall be applicable,
or event shall have occurred, that seeks to enjoin, restrain, restrict, set
aside or prohibit, or impose materially adverse conditions upon, the issuance
of the Notes.

(d)           No Material Judgment or Order.  There shall not be in effect on the
Additional Closing Date any judgment, injunction or order of a court of
competent jurisdiction or any ruling of any Governmental Entity or any
condition imposed under any Requirement of Law which, in the judgment of the
Purchaser, would prohibit the purchase of the Notes hereunder or subject the
Purchaser to any penalty under or pursuant to any Requirement of Law if the
Notes were to be purchased hereunder.

(e)           Material Adverse Change.  There shall not have occurred at any time
since January 31, 2007, any Material Adverse Change.

(f)            No Change in Company Recommendation.  The Company Board shall not have failed to
make the Company Recommendation in accordance with Section 5.4 of the Merger
Agreement or withdrawn or adversely modified or changed, the Company
Recommendation.

(g)           No Litigation.  No action, suit, proceeding or investigation
shall have been instituted or threatened before, and no order, injunction or
decree shall have been entered by, any Governmental Entity, in each case
seeking to enjoin, restrain, restrict, set aside or prohibit, to impose
material conditions upon, or to obtain substantial damages in respect of, the
issuance of the Notes.

(h)           Notes.  The Notes being issued at the Additional
Closing shall have been duly executed and delivered by the Company.

(i)            Solvency.  Each of the Company and its Subsidiaries is
Solvent and will be Solvent upon the completion of all transactions
contemplated to occur at the Additional Closing.

 9
 

(j)            Certificate.  The Company shall have delivered to the
Purchaser a certificate executed by the Chief Executive Officer of the Company
confirming that the conditions set forth in Section 3.2(a), 3.2(b), 3.2(c),
3.2(d), 3.2(e) and 3.2(f) have been duly satisfied.

ARTICLE
IV.

CONDITIONS TO THE OBLIGATION 

OF THE COMPANY TO ISSUE AND SELL THE NOTES

The obligations of the Company to issue and sell the
Notes and to perform its other obligations hereunder relating thereto shall be
subject to the reasonable satisfaction as determined by, or waived by, the
Company of the following conditions on or before each Closing Date:

Section 4.1             Representations
and Warranties.  The representations
and warranties of the Purchaser contained in Article VI shall be true, in all
material respects, at and as of such Closing Date.

Section 4.2             Compliance
with this Agreement.  The Purchaser
shall have performed and complied with all of its agreements and conditions set
forth or contemplated herein that are required to be performed or complied with
by the Purchaser on or before such Closing Date.

Section 4.3             No
Litigation.  No action, suit,
proceeding or investigation shall have been instituted or threatened before,
and no order, injunction or decree shall have been entered by, any Governmental
Entity, in each case seeking to enjoin, restrain, restrict, set aside or
prohibit, to impose material conditions upon, or to obtain, substantial damages
in respect of, the issuance of the Notes.

ARTICLE
V.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Section 5.1             Representations
and Warranties of the Company.  The
Company represents and warrants to the Purchaser as of the Initial Closing Date
(except as set forth in the disclosure schedules attached to this Agreement) as
follows:

(a)           Authority.  The Company and each of its Subsidiaries has
the requisite power and authority to execute, deliver and perform its
obligations under this Agreement and each of the Investment Documents to which
it is a party.  All action necessary
(including the consent of equity holders where required) for the execution, delivery
and performance by the Company of this Agreement and by the Company and each of
its Subsidiaries of each Investment Document to which it is a party.

(b)           Enforceability.  This Agreement and each of the Investment
Documents are and, when executed and delivered, will be, the legal, valid and
binding obligation of the Company and its Subsidiaries signatory to such
documents, enforceable in accordance with their respective terms, except as
enforceability may be limited by

 10
 

(i) bankruptcy, insolvency or similar laws affecting creditors’ rights
generally and (ii) general principles of equity.

(c)           No Conflict.  The execution, delivery and performance by
the Company and each of its Subsidiaries of this Agreement and each Investment
Document to which it is a party do not and will not contravene (i) any of its
Constituent Documents, (ii) any Requirement of Law or (iii) any Material
Contract, and will not result in the imposition of any Liens upon any of its
properties, except in the case of (ii) and (iii) above, to the extent that such
contravention or imposition would not reasonably be expected to have a Material
Adverse Effect.

(d)           Consents and Filings.  No consent, authorization or approval of, or
filing with or other act by, any equity holder of the Company, any Governmental
Entity or any other Person is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement, the
consummation of the transactions contemplated hereby or the continuing
operations of the Company or any of its Subsidiaries following such
consummation, except as will be or have been previously obtained by the Company
or which the failure to obtain would not be reasonably expected to have a
Material Adverse Effect.

(e)           Solvency.  Each of the Company and its Subsidiaries is
Solvent and will be Solvent upon the completion of all transactions
contemplated to occur on or before the Initial Closing Date.

(f)            No Judgments or Litigation.  There is not now pending or, to the knowledge
of the Company, after due inquiry, threatened litigation, contested claim,
investigation, arbitration, or governmental proceeding by or against the
Company or any of its Subsidiaries that (i) individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect or (ii) purports
to affect the legality, validity or enforceability of this Agreement or the
Notes or the consummation of the transactions contemplated hereby or thereby.

(g)           Private Offering.  No form of general solicitation or general
advertising, including, without limitation, advertisements, articles, notices
or other communications, published in any newspaper, magazine or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising,
was used by the Company or any of its Subsidiaries, any of the representatives
of the Company or its Subsidiaries, or, any other Person acting on behalf of
the Company or its Subsidiaries, in connection with the offering of the
Notes.  Neither the Company nor any of
its Subsidiaries, nor any Person acting on the Company’s behalf has directly or
indirectly offered the Notes, or any part thereof or any other similar
securities, for sale to, or sold or solicited any offer to buy any of the same
from, or otherwise approached or negotiated in respect thereof with any Person
or Persons other than the Purchaser and other investors who the Company
reasonably believed had such knowledge and experience in financial and business
matters that they were capable of evaluating the merits and risks of purchasing
the Notes.

 11
 

(h)           Merger Agreement Representations and
Warranties.  The representations and
warranties set forth in Article IV of the Merger Agreement, which are
incorporated herein by reference, are true and correct as of each Closing Date.

ARTICLE
VI.

REPRESENTATIONS AND

WARRANTIES OF THE PURCHASER

The Purchaser hereby represents and warrants, as
follows:

Section 6.1             Existence
and Power.  The Purchaser (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and (b) has the power and authority to
execute, deliver and perform its obligations under each Investment Document to
which it is or will be a party.

Section 6.2             Authorization;
No Contravention.  The execution,
delivery and performance by the Purchaser of this Agreement: (a) is within its
power and authority and has been duly authorized by all necessary action; (b)
does not contravene the terms of its organizational documents or any amendment
thereof; and (c) will not violate, conflict with or result in any breach or
contravention of any of its material contractual obligations, or any order or
decree directly relating to it.

Section 6.3             Binding
Effect.  This Agreement has been duly
executed and delivered by the Purchaser and this Agreement constitutes its
legal, valid and binding obligation, enforceable against the Purchaser in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors’ rights generally or by equitable principles relating to
enforceability.

Section 6.4             Governmental
Authorization; Third Party Consent. 
No approval, consent, compliance, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Entity or any other
Person in respect of any Requirement of Law, and no lapse of a waiting period
under a Requirement of Law, is necessary or required in connection with the
execution, delivery or performance by the Purchaser or enforcement against it
of this Agreement or the transactions contemplated hereby.

ARTICLE
VII.

COVENANTS

Until the payment by the Company in full of the
Obligations, the Company hereby covenants and agrees with the Holders as
follows:

Section 7.1             Financial
Statements.  The Company will use
commercially reasonable best efforts to timely file each period report required
pursuant to the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder (the

 12
 

“Exchange Act”).  Each such filing shall comply in all material
respects with the requirements of the Exchange Act.

Section 7.2             Business
and Financial Information.  The
Company will deliver to the Holders, upon a Responsible Officer of the Company
obtaining knowledge thereof, written notice of any of the following:

(a)           Notice of Defaults.  Promptly, and in any event within two (2)
Business Days after becoming aware of the occurrence of a Default or Event of
Default, a certificate of a Responsible Officer specifying the nature thereof
and the Company’s proposed response thereto, each in reasonable detail.

(b)           Proceedings or Changes.  Promptly, and in any event within two (2)
Business Days after (i) becoming aware of the filing or commencement of any
action, suit, investigation or proceeding against or affecting the Company or
any of its Subsidiaries, including any such investigation or proceeding by any
Governmental Entity (other than routine periodic inquiries, investigations or
reviews), that would, if adversely determined, be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect or (ii) the
receipt by the Company or any of its Subsidiaries from any Governmental Entity
of (A) any notice asserting any failure by the Company or any of its
Subsidiaries to be in compliance with applicable Law or that threatens the
taking of any action against the Company or any of its Subsidiaries or sets
forth circumstances that, if taken or adversely determined, would be reasonably
likely to have a Material Adverse Effect, or (B) any notice of any actual or
threatened suspension, limitation or revocation of, failure to renew, or
imposition of any restraining order, escrow or impoundment of funds in
connection with, any license, permit, accreditation or authorization of the
Company or any of its Subsidiaries, where such action would be reasonably
likely to have a Material Adverse Effect.

Section 7.3       Corporate Existence; Franchises; Maintenance
of Properties.  The Company will, and
will cause each of its Subsidiaries to, (i) maintain and preserve in full force
and effect its legal existence, (ii) obtain, maintain and preserve in full
force and effect all other rights, franchises, licenses, permits,
certifications, approvals and authorizations required by Governmental Entities
and necessary to the ownership, occupation or use of its properties or the
conduct of its business, except to the extent the failure to do so would not be
reasonably likely to have a Material Adverse Effect, and (iii) keep all
material properties in good working order and condition (normal wear and tear
excepted) and from time to time make all necessary repairs to and renewals and
replacements of such properties, except to the extent that any of such
properties are obsolete or are being replaced.

Section 7.4             Use
of Proceeds.  The Company will use
the proceeds of the sale of the Notes in accordance with the budget previously
delivered to the Purchaser.

Section 7.5             Compliance
with Laws.  The Company will, and
will cause each of its Subsidiaries to, comply with all Law applicable in
respect of the conduct of its

 13
 

business and the ownership and operation of its properties, except to
the extent the failure to so comply would not be reasonably likely to have a
Material Adverse Effect.

Section 7.6             Payment
of Obligations.  The Company will
duly and punctually pay the principal of, and interest on the Notes when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise).

Section 7.7             Creation
of Subsidiaries.  The Company will
not, and will cause each of its Subsidiaries not to, create any additional
Subsidiaries.

Section 7.8             Insurance.
The Company will, and will cause each
of its Subsidiaries to maintain with financially sound and reputable insurance
companies insurance with respect to its assets, properties and business,
against such hazards and liabilities, of such types and in such amounts, as is
customarily maintained by companies in the same or similar businesses similarly
situated.

Section 7.9             Maintenance
of Books and Records.  The Company
will, and will cause each of its Subsidiaries to (i) maintain adequate books,
accounts and records, in which full, true and correct entries shall be made of
all financial transactions in relation to its business and properties, and
prepare all financial statements required under this Agreement, in each case in
accordance with GAAP and in compliance with the requirements of any
Governmental Entity having jurisdiction over it and (ii) maintain adequate
accounts and reserves for all taxes (including income taxes), depreciation,
depletion, obsolescence and amortization of its respective properties,
contingencies, and other reserves.

Section 7.10           Taxes.  The Company will, and will cause each of its
Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments and other
governmental charges (other than taxes, assessments and other governmental
charges imposed by foreign jurisdictions that in the aggregate are not material
to the business or assets of the Company on an individual basis or the Company
and its Subsidiaries on a consolidated basis) imposed upon them and their real
properties, sales and activities, or any part thereof, or upon the income or
profits therefrom.

Section 7.11           Further
Assurances.  The Company will, and
will cause each of its Subsidiaries to, make, execute, endorse, acknowledge and
deliver any amendments, modifications or supplements hereto and restatements
hereof and any other agreements, instruments or documents, and take any and all
such other actions, as may from time to time be reasonably requested by the
Purchaser to effect, confirm or further assure or protect and preserve the
interests, rights and remedies of the Holders under this Agreement and the
other Investment Documents.  For greater
certainty, the Company shall, and shall cause each of its Subsidiaries to, take
all commercially reasonable action necessary to ensure that the Liens granted
to the Holders pursuant to the Collateral Documents will at all times be fully
perfected first priority Liens in and to the collateral described therein,
subject to any Permitted Liens.

 14
 

Section 7.12           Merger
Agreement Covenants.  At all times
prior to the earlier of (i) consummation of the Merger and (ii) termination of
the Merger Agreement in accordance with its terms, the Company shall comply
with all of its covenants set forth in the Merger Agreement.

ARTICLE
VIII.

NEGATIVE COVENANTS

Until the payment by the Company in full of the
Obligations, the Company hereby covenants and agrees with the Holders as
follows:

Section 8.1             Merger;
Consolidation; Line of Business. 
Except as contemplated in the Merger Agreement, the Company will not,
and will not permit its Subsidiaries to, liquidate, wind up or dissolve, or
enter into any consolidation, merger or other combination other than solely
among the Company and its Subsidiaries or acquire a new Person or make any
material change in the lines of its business as carried on at the date hereof
or enter into any new line of business, except for lines of the business
reasonably related thereto, or agree to do any of the foregoing.

Section 8.2             Indebtedness.  The Company will not, and will not permit its
Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness
other than:

(a)           Indebtedness of the Company under this
Agreement or the Notes;

(b)           Indebtedness of the Company and its
Subsidiaries existing on the Initial Closing Date and set forth on Schedule 8.2(b);
provided, however, that (A) except as otherwise contemplated
hereunder, the Company may only make regularly scheduled payments of principal
and interest in respect of such Indebtedness in accordance with the terms of
the agreement or instrument evidencing or giving rise to such Indebtedness as
in effect on the date hereof, (B) the Company shall not, directly or
indirectly, (1) amend, modify, alter or change the terms of such Indebtedness
or any agreement, document or instrument related thereto as in effect on the
date hereof except, that, the Company may, after prior written
notice to the Holders, amend, modify, alter or change the terms thereof so as
to extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (2) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose, and (C) the Company shall furnish to the Holders all notices
or demands in connection with such Indebtedness either received by or on behalf
of the Company, promptly after the receipt thereof, or sent by or on behalf of
the Company, concurrently with the sending thereof, as the case may be; and

(c)           Indebtedness constituting intercompany
loans.

 15

Section 8.3             Liens.

(a)           The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, at any time create, incur,
assume or suffer to exist any Lien on or with respect to any assets (other than
equity interests), other than (i) Liens created under the Collateral Documents
and (ii) Permitted Liens.

(b)           The Company will not, and will not permit
any of its subsidiaries to, create, incur, assume or suffer to exist any Liens
with respect to the equity interests of any of its Subsidiaries or any equity
interests of any investments held by the Company or any of its Subsidiaries to
any third party, other than Liens created under the Collateral Documents.

(c)           The Company will not, and will not permit
any of its Subsidiaries to, become a party to any agreement, note, indenture or
instrument or take any other action, that would prohibit the creation of a Lien
on any of its properties or other assets in favor of the Holders, as additional
collateral for the Obligations, except operating leases, Capital Leases or
licenses which prohibit Liens upon the assets that are subject thereto.

Section 8.4             Disposition
of Assets; Investments.

(a)           The Company will not and will not permit any
of its Subsidiaries to, sell, assign, lease, convey, transfer or otherwise
Dispose of (whether in one or a series of transactions) all or any material
portion of its assets, Business, investments or properties (including, without
limitation, cash, cash equivalents or any Capital Stock of any of its
Subsidiaries), or agree to do any of the foregoing.

(b)           The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, at any time make any
Investment in any Person other than its current Subsidiaries (whether in cash,
securities or other property of any kind).

Section 8.5             Restricted
Payments.  The Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly declare or
make any Restricted Payment, except that (a)the Company and its Subsidiaries
may make intercompany loans; and (b) any Subsidiary may pay dividends and make
distributions to the Company.

Section 8.6             Transactions
with Affiliates.  The Company will
not, and will not permit any of its Subsidiaries to, enter into any transaction
(including, without limitation, any loan, purchase, sale, lease or exchange of
property or the rendering of any service) with any officer, director,
stockholder or other Affiliate of the Company or its Subsidiaries, except as
approved by the Audit Committee of its Board of Directors and upon fair and
reasonable terms that are no less favorable to the Company or its Subsidiaries
than such entity would obtain in a comparable arm’s length transaction with a
Person other than an Affiliate of the Company and with respect to which notice
has been given to the Purchaser promptly after the approval thereof; provided,
however, that nothing contained in this Section 8.6 shall prohibit (a)
transactions otherwise expressly permitted under this Agreement and (b)
advances to its employees on an arm’s length

 16
 

basis in the ordinary course of business consistent with past practices
for travel and entertainment expenses and similar purposes.

Section 8.7             Issuance
of Additional Capital Stock.  Other
than the shares issuable (a) under any stock incentive plan established by the
Company, and (b) upon the exercise of warrants or options outstanding as of the
Initial Closing Date, the Company will not authorize, issue, increase the
authorized amount of, or sell any class or series of Capital Stock at any time,
unless the Company has obtained the prior written consent of the Required
Holders and the proceeds thereof are used to repay the Obligations then
outstanding.

Section 8.8             Fiscal
Year.  The Company will not, and will
not permit any of its Subsidiaries to, change the ending date of its fiscal
year to a date other than April 30.

Section 8.9             Accounting
Changes.  Other than as permitted
pursuant to Section 1.2, the Company will not, and will not permit any of its
Subsidiaries to, make or permit any material change in its accounting policies
or reporting practices, except as may be required by GAAP.

Section 8.10           Inconsistent
Agreements.  The Company will not,
and will not permit any of its Subsidiaries to, enter into any agreement
containing any provision that would be violated or breached by the performance
of its obligations under this Agreement or any other Investment Document or the
performance of which would cause a violation or breach of its obligations under
this Agreement or any other Investment Document.

ARTICLE
IX.

EVENTS OF DEFAULT.

Section 9.1             Events
of Default.  The occurrence (whether
such occurrence shall be voluntary or involuntary or come about or be effected
by operation of law or otherwise) and continuation for any reason whatsoever of
any of the following events shall constitute an “Event of Default”:

(a)           Payment Defaults.  The Company fails to make payment of the
principal and accrued interest on the Notes when the same shall become due and
payable whether at maturity or by acceleration or otherwise.

(b)           Default in Other Agreements.  The breach or default of the Company or any
of its Subsidiaries with respect to any Indebtedness, if the effect of such
breach or default is to cause such Indebtedness having an amount, in excess of
$50,000 in the aggregate, to become or be declared due or to be prepaid,
redeemed, purchased or defeased prior to their stated maturity by acceleration
or otherwise.

(c)           Breach of Certain Provisions.  The failure of the Company to materially
perform or comply with any term or condition contained in (i) Section 7.3(i) or

 17
 

Article VIII or (ii) any other term or condition contained in this
Agreement or the Notes and, in the case of clause (ii), such failure is not
remedied or waived within ten (10) days after the receipt by the Company of
notice from the Purchaser of any such failure (other than occurrences described
in other provisions of this Article IX for which a different grace or cure
period is specified or which constitute immediate Events of Default).

(d)           Breach of Warranty.  Any representation, warranty, certification
or other statement made by the Company or any of its Subsidiaries in any
Investment Document or in any statement or certificate at any time given by
such Person in writing pursuant or in connection with any Investment Document
is false in any material respect on the date made (without regard to
materiality or “Material Adverse Effect” qualifiers contained therein).

(e)           Involuntary Bankruptcy; Appointment of
Receiver, Etc.  (i) A court enters a
decree or order for relief with respect to the Company or any of its
Subsidiaries, in an involuntary case under any applicable bankruptcy,
insolvency or other similar law, which decree or order is not stayed or other
similar relief is not granted under any applicable federal or state law; or
(ii) the continuance of any of the following events: (A) an involuntary case is
commenced against any such party, under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect which is not dismissed within five
(5) Business Days; or (B) a decree or order of a court for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over any such party, or over all or a substantial part of its
property, is entered; or (C) an interim receiver, trustee or other custodian is
appointed without the consent of any such party, for all or a substantial part
of the property of any such party.

(f)            Voluntary Bankruptcy; Appointment of
Receiver, Etc.  (A) An order for relief
is entered with respect to the Company or any of its Subsidiaries, or the
Company or any of its Subsidiaries commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law, or consents to the
entry of an order for relief in an involuntary case or to the conversion of an
involuntary case to a voluntary case under any such law or consents to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or (B) the Company or any of its
Subsidiaries makes any assignment for the benefit of creditors; or (C) the
board of directors (or analogous governing body) of the Company or any of its
Subsidiaries adopts any resolution or otherwise authorizes action to approve any
of the actions referred to in this subsection.

(g)           Governmental. One or more liens,
levies or assessments exceeding $50,000 in the aggregate is filed or recorded
with respect to or otherwise imposed upon all or any material part of the
assets of the Company or its Subsidiaries by any Governmental Entity (other
than Permitted Liens).

(h)           Judgment and Attachments.  A final non-appealable judgment or order for
the payment of money in excess of $50,000 rendered against the Company or any
of its Subsidiaries, which judgment or order shall continue unsatisfied and
unstayed (or

 18
 

shall not have been vacated) for a period of five (5) consecutive
Business Days unless such judgment or order would not reasonably be expected to
have a Material Adverse Effect.

(i)            Dissolution.  Any order, judgment or decree is entered
against the Company or any of its Subsidiaries decreeing the dissolution of the
Company or any of its Subsidiaries and such order remains undischarged or
unstayed for a period in excess of five (5) Business Days.

(j)            Injunction.  The Company or any of its Subsidiaries is
enjoined, restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business and, such order continues for more than five (5) Business Days and
has a Material Adverse Effect.

(k)           Licenses and Permits.  The loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by the
Company or its Subsidiaries, or any other action shall be taken by any
Governmental Entity in response to any alleged failure by the Company or its
Subsidiaries to be in compliance with applicable Law if such loss, suspension,
revocation or failure to renew or action, individually or in the aggregate, has
a Material Adverse Effect.

Section 9.2             Remedies
on Default, Etc.

(a)           If an Event of Default (other than an Event
of Default described in 9.1(e) or Section 9.1(f)) has occurred and is
continuing, the Required Holders may at any time at their option, by notice or
notices to the Company, declare that the aggregate principal amount of the
Notes then outstanding, together with all interest accrued pursuant to the
terms of the Notes and unpaid as of the date of such Event of Default, due and payable.

(b)           If an Event of Default described in Section
9.1(e) or Section 9.1(f) has occurred and is continuing, then the aggregate
principal amount of the Notes then outstanding, together with all interest
accrued pursuant to the terms of the Notes and unpaid as of the date of such
Event of Default, shall automatically become immediately due and payable.

(c)           Upon the Notes becoming due and payable
under this Section 9.2, whether automatically or by declaration, such Notes
will forthwith mature and the entire aggregate principal amount of the Notes
then outstanding, together with all interest accrued pursuant to the terms of
the Notes and unpaid as of the date of such Event of Default (such interest to
accrue at the Default Rate with respect to any overdue payment), shall all be
immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived.

Section 9.3             Other
Remedies.  If any Event of Default
shall occur and be continuing, any Holder may proceed to protect and enforce
its rights under this Agreement or the Collateral Documents by exercising such
remedies as are available under applicable law, either by suit in equity or by
action at law, or both, whether for specific performance of any covenant or
other agreement contained in this Agreement or

 19
 

the Collateral Documents or in aid of the exercise of any power granted
in this Agreement or the Collateral Documents. 
No remedy conferred in this Agreement upon the Purchaser or any Holder
is intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and in addition to every other remedy conferred herein or
now or hereafter existing at law or in equity or by statute or otherwise.  Notwithstanding any provision of this
Agreement to the contrary, no Holder may exercise any remedy under this Section
9.3 or otherwise, unless such action is taken or approved in writing by the
Required Holders at the time of such action or unless the Required Holders have
waived such requirement in whole or in part with respect to such Holder.

Section 9.4             Notice
by Holder.  Each Holder, prior to
taking any action pursuant to Section 9.2(a) or (b), shall use commercially
reasonable efforts to advise each other Holder not participating in the taking
of, or who has not previously been apprised of such Holder’s intention to take,
such action of such Holder’s intention to take such action; provided, however,
that such Holder shall not be obligated to take such action after so advising such
other Holders; provided, further, that the failure of such Holder
to provide such notice to such other Holders shall not void or otherwise effect
the validity of such action.

ARTICLE
X.

INDEMNIFICATION

Section 10.1           Indemnification.  In addition to all other sums due hereunder
or provided for in this Agreement, the Company agrees to indemnify and hold
harmless, and cause each of its Subsidiaries to indemnify and hold harmless,
the Holders and each of their respective officers, directors, agents, employees,
Subsidiaries, partners, members, attorneys, accountants and controlling persons
(each, an “Indemnified Party”) to the fullest extent permitted by law from and
against any and all losses, claims, damages, expenses (including, without
limitation, reasonable fees, disbursements and other charges of counsel and
costs of investigation incurred by an Indemnified Party in any action or
proceeding between such Indemnified Party or Indemnified Parties and any third
party or otherwise) or other liabilities, losses, or diminution in value
(collectively, “Liabilities”) resulting from or arising out of any legal,
administrative or other actions (including, without limitation, actions brought
by any holders of equity or indebtedness of the Company or derivative actions
brought by any Person claiming through or in the name of the Company),
proceedings or investigations (whether formal or informal), or written threats
thereof, based upon, relating to or arising out of the Investment Documents, or
any Indemnified Party’s role therein; provided, however, that
neither the Company nor any of its Subsidiaries shall be liable under this
Section 10.1 to an Indemnified Party to the extent that it is finally
judicially determined that such Liabilities resulted primarily from the willful
misconduct or gross negligence of such Indemnified Party; provided, further,
that if and to the extent that such indemnification is unenforceable for any
reason, the Company shall, and shall cause its Subsidiaries to, make the
maximum contribution to the payment and satisfaction of such Liabilities that
shall be permissible under applicable Law. 
In connection with the obligation of the

 20
 

Company to indemnify for expenses as set forth above, the Company
further agrees, upon presentation of appropriate invoices containing reasonable
detail, to reimburse, or cause its Subsidiaries to reimburse, without
duplication, each Indemnified Party for all such expenses (including, without
limitation, fees, disbursements and other charges of counsel and costs of investigation
incurred by an Indemnified Party in any action or proceeding between an
Indemnified Party (or Indemnified Parties) and any third party) as they are
incurred by such Indemnified Party; provided, however, that if an
Indemnified Party is reimbursed hereunder for any expenses, such reimbursement
of expenses shall be refunded to the extent it is finally judicially determined
that the Liabilities in question resulted primarily from the willful misconduct
or gross negligence of such Indemnified Party.

Section 10.2           Procedure;
Notification.  Each Indemnified Party
under this Article X shall, promptly after the receipt of written notice of the
commencement of any action, investigation, claim or other proceeding against
such Indemnified Party in respect of which indemnity may be sought from the
Company under this Article X, notify the Company in writing of the commencement
thereof.  The omission of any Indemnified
Party so to notify the Company of any such action shall not relieve the Company
from any liability which it may have to such Indemnified Party unless, and only
to the extent that, such omission results in the Company being materially
prejudiced thereby.  In case any such
action, claim or other proceeding shall be brought against any Indemnified
Party and it shall notify the Company of the commencement thereof, the Company
shall be entitled to assume, or cause its Subsidiaries to assume, the defense
thereof at its or their own expense, with counsel satisfactory to such
Indemnified Party in its reasonable judgment; provided, however,
that any Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense. 
Notwithstanding the foregoing, in any action, claim or proceeding in
which the Company, on the one hand, and an Indemnified Party, on the other
hand, is, or is reasonably likely to become, a party, such Indemnified Party
shall have the right to employ separate counsel at the expense of the Company
and to control its own defense of such action, claim or proceeding if, in the
reasonable opinion of counsel to such Indemnified Party, a conflict or
potential conflict exists between the Company, on the one hand, and such
Indemnified Party, on the other hand, that would make such separate
representation advisable; provided, however, that in no event
shall the Company be required to pay fees and expenses under this Article X for
more than one firm of attorneys (plus local counsel) in any jurisdiction in any
one legal action or group of related legal actions.  The Company agrees that it will not, without
the prior written consent of the Holders, settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated hereby (if any Indemnified Party is a
party thereto or has been actually threatened to be made a party thereto)
unless such settlement, compromise or consent includes an unconditional release
of such Indemnified Party from all liability arising or that may arise out of
such claim, action or proceeding.  The
Company shall not be liable for any settlement of any claim, action or
proceeding effected against an Indemnified Party without its written consent,
which consent shall not be unreasonably withheld, delayed or conditioned.  The rights accorded to the Indemnified
Parties hereunder shall be in addition to any rights that any Indemnified Party
may have at common law, by separate agreement or otherwise.

 21
 

ARTICLE
XI.

REDEMPTION

Section 11.1           Redemption
at the Option of the Company.  The
Company may, at any time, redeem the principal amount of the Notes, in whole or
in part, by paying to the Holders thereof an amount equal to the 100% of the
principal amount of the Notes to be redeemed (the “Optional Redemption Price”)
as of the date fixed for such redemption, together, with respect to the Notes
being redeemed, with all interest accrued pursuant to the terms of the Notes
and unpaid (including default interest to the extent applicable) as of the date
of such payment and all reasonable out-of-pocket costs and expenses (including,
without limitation, reasonable fees, charges and disbursements of counsel), if
any, incurred by the Holders and associated with such payment; provided,
however, that in the event that the Company redeems a portion and not all of
the principal amount of the outstanding Notes, the Company shall redeem (a) not
less than $250,000 in principal amount of the outstanding Notes or (b) in the
event that less than $250,000 in principal amount of the Notes remains
outstanding, not less than the remaining principal amount of the outstanding
Notes.  The Company shall give written
notice of redemption of the Notes pursuant to this Section 11.1 at least five
(5) days and not more than ten (10) days prior to the date fixed for such
redemption.  Such notice of redemption
shall be delivered in the manner specified in Section 12.3 hereof.  Upon delivery of such notice of redemption,
the Company, as the case may be, covenants and agrees that it will redeem the
Notes, on the date specified in such notice, at the applicable Optional
Redemption Price, together with interest accrued pursuant to the terms of the
Notes and unpaid as of the date fixed for such redemption and the costs and
expenses referred to in the preceding sentence.

ARTICLE
XII.

MISCELLANEOUS

Section 12.1           Survival
of Representations and Warranties. 
All of the representations and warranties made herein shall survive the
execution and delivery of this Agreement for a period of one year.

Section 12.2           Appointment
of Collateral Agent.  Any Holder of
notes other than the Purchaser hereby designates and appoints Inhibitex, Inc.
as agent on behalf of the Holder, to serve as the collateral agent under this
Agreement and the Investment Documents until the Holders have received payment
in full in cash of all amounts due or to become due on or in respect of all
Obligations with respect to the Notes.

Section 12.3           Notices.  All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier
(with receipt confirmed), nationally recognized overnight courier service or
personal delivery:

 22
 

(a)           if to the Company:

FermaVir Pharmaceuticals,
Inc.

420 Lexington Avenue,
Suite 445

New York, New York 10170

Attention: Chief
Executive Officer

Fax: (646) 723-2744

with a copy to:

Sichenzia Ross Friedman
Ference LLP

61 Broadway, 32nd Floor

New York, NY  10006

Attention: Jeffrey J.
Fessler

Fax: (212) 930-9725

(b)           if to the Purchaser,

Inhibitex, Inc.

9005 Westside Parkway

Alpharetta, GA 30004

Attention: Chief
Executive Officer

Fax: (678) 746-1299

with a copy to:

Dechert LLP

30 Rockefeller Plaza

New York, NY  10012

Attention: David S.
Rosenthal

Fax: (212) 698-3599

, or to such other address, with respect to any party, as such party
shall give notice of in accordance with this Section 12.3.

All such notices and communications shall be deemed to
have been duly given: when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial overnight courier service; if
mailed, three (3) Business Days after being deposited in the mail, postage
prepaid; or if telecopied, when receipt is acknowledged.

Section 12.4           Successors
and Assigns.  This Agreement shall
inure to the benefit of and be binding upon the successors and permitted
assigns of the parties hereto.  Subject
to applicable Law and the terms of this Agreement, the Purchaser may assign its
rights under this Agreement or any of the Investment Documents to any Person
and any holder of the Notes may assign, in whole or in part, the Notes to any
Person, subject to the provisions of this Agreement.  The Company may not assign any of its
respective rights, or delegate any of its respective obligations, under this
Agreement without the prior written consent of the Required Holders, other than
as set forth herein, and any such purported assignment by the Company without
the written consent of the Required Holders shall be void and of no effect.

 23
 

Section 12.5           Amendment
and Waiver.

(a)           No failure or delay on the part of any of
the parties hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.  The remedies provided for in this Agreement
are cumulative and are not exclusive of any remedies that may be available to
the parties hereto at law, in equity or otherwise.

(b)           Any amendment, supplement or modification of
or to any provision of this Agreement or the Notes, any waiver of any provision
of this Agreement or the Notes and any consent to any departure by any party
from the terms of any provision of this Agreement or the Notes shall be
effective only if it is made or given in writing and signed by the Company and
the Required Holders; provided, however, that no such amendment,
supplement, modification or waiver may, without the written consent of all of
the Holders of the Notes at the time outstanding affected thereby (A) change
the amount or time of any payment or prepayment of principal of, or reduce the
rate or change the time of payment or method of computation of interest on, the
Notes, (B) change the percentage of the principal amount of the Notes the
Holders of which are required to consent to any such amendment, supplement,
modification or waiver or (C) amend any provision of Section 9.1(a), Section
9.2, Section 9.3 and Article X.

(c)           Any amendment or waiver consented to as
provided in this Section 12.5 is binding upon each future holder of any
Security and upon the Company without regard to whether such Security has been
marked to indicate such amendment or waiver. 
No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, default or Event of Default not expressly amended or
waived or impair any right consequent thereon. 
No course of dealing between the Company and any Holder nor any delay in
exercising any rights hereunder or under any Security shall operate as a waiver
of any rights of any Holder.

Section 12.6           Signatures;
Counterparts.  Facsimile
transmissions of any executed original document and/or retransmission of any
executed facsimile transmission shall be deemed to be the same as the delivery
of an executed original.  At the request
of any party hereto, the other parties hereto shall confirm facsimile
transmissions by executing duplicate original documents and delivering the same
to the requesting party or parties.  This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.

Section 12.7           Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

Section 12.8           Determinations,
Requests or Consents.  All
determinations, requests, consents, waivers or amendments to be made by the
Holders in their respective

 24
 

opinions or judgments or with their approval or otherwise pursuant to
the Investment Documents shall be made with respect to each Security by the
Holder thereof.

Section 12.9           GOVERNING
LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED IN ACCORDANCE WITH, AND
ENFORCED UNDER, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE (INCLUDING GIVING EFFECT TO
GENERAL OBLIGATIONS LAW SECTION 5-1401).

Section 12.10         JURISDICTION,
JURY TRIAL WAIVER, ETC.

(a)           EACH PARTY TO THIS
AGREEMENT HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY AGREEMENTS OR
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK AND HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION AND VENUE
OF SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF
IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM.  EACH PARTY HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 11.2, SUCH SERVICE TO
BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.

(b)           THE COMPANY HEREBY
WAIVES ITS RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING
OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE
OTHER INVESTMENT DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER
OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.  THE COMPANY (I) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE PURCHASER HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT THE PURCHASER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (II) ACKNOWLEDGES THAT THE PURCHASER HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT, AND THE OTHER INVESTMENT DOCUMENTS TO
WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
CONTAINED HEREIN.

Section 12.11         Severability.  If any one or more of the provisions
contained in this Agreement, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way
impaired, unless the provisions held invalid, illegal or unenforceable shall
substantially impair the benefits of the remaining provisions of this
Agreement.  The parties hereto further
agree to replace such invalid, illegal or unenforceable provision of this
Agreement with a valid, legal and enforceable provision

 25
 

that will achieve, to the extent possible, the economic, business and
other purposes of such invalid, illegal or unenforceable provision.

Section 12.12         Rules
of Construction.  Unless the context
otherwise requires, “or” is not exclusive, and references to sections or
subsections refer to sections or subsections of this Agreement.

Section 12.13         Entire
Agreement.  This Agreement, together
with the exhibits and schedules hereto and the other Investment Documents, 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 and
therein.  There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein or therein.  This Agreement,
together with the exhibits and schedules hereto, and the other Investment
Documents supersede all prior agreements and understandings between the parties
with respect to such subject matter.

Section 12.14         Transfer
and Exchange of Notes.  Upon
surrender of a Note at the principal executive office of the Company for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer, accompanied by a written instrument of transfer duly
executed by the registered Holder of such Note or his or her attorney duly
authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and
deliver, at its expense (except as provided below), one or more new Notes (as
requested by the Holder thereof) in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the surrendered Note,
subject to the limitations of Section 12.4. 
Each such new Note shall be payable to such Person as such holder may
request and shall be substantially in the form of Exhibit 2.1(a).  Each such new Note shall be dated and bear
interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon.  The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of the Note.  Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have
made the representations set forth in Article VI.

Section 12.15         Further
Assurances.  Each of the parties
shall execute such documents and perform such further acts (including, without
limitation, obtaining any consents, exemptions, authorizations, or other
actions by, or giving any notices to, or making any filings with, any Governmental
Entity or any other Person) as may be reasonably required or desirable to carry
out or to perform the provisions of this Agreement, including without
limitation, any post-closing assignment(s) by the Holders of a portion of the
Notes to a Person not currently a party hereto.

Section 12.16         Cumulative
Powers.  No remedy herein conferred
upon a Holder or any holder of Notes is intended to be exclusive of any other
remedy, and each such remedy shall be cumulative and in addition to every other
remedy given hereunder or now or hereafter existing at law, or in equity or by
statute or otherwise.

 26
 

Section 12.17         No
Strict Construction.  The parties
hereto have participated jointly in the negotiation and drafting of this
Agreement and the other Investment Documents. 
In the event an ambiguity or question of intent or interpretation arises
under any provision of this Agreement or any Investment Document, this
Agreement or such other Investment Document shall be construed as if drafted
jointly by the parties thereto, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement or any other Investment Document.  No knowledge of, or investigation, including
without limitation, due diligence investigation, conducted by, or on behalf of,
any Holder shall limit, modify or affect the representations set forth in
Article V of this Agreement or the right of any Holder to rely thereon.

Section 12.18         Recovery
of Litigation Costs.  If any legal
action or other proceeding is brought for the enforcement of this Agreement or
the Notes, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement or
the Notes, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys’ fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled.

[Remainder of page
intentionally left blank]

 27

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

	
  

  	
   

  	
  FERMAVIR PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Geoffrey W. Henson

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Geoffrey W. Henson

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INHIBITEX, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Russell H. Plumb

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Russell H. Plumb

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

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