Document:

EX 10.1

    Exhibit
      10.1

    Execution
      Version

    Acquicor
      Technology Inc.

    $145,000,000

    8%
      Convertible Senior Notes due 2011

     

    PURCHASE
      AGREEMENT

     

    December
      18, 2006

     

    CRT
      Capital Group LLC

    Needham
      & Company, LLC

    c/o
      CRT
      Capital Group LLC

    262
      Harbor Drive

    Stamford,
      CT 06902

     

    Ladies
      and Gentlemen:

     

    Acquicor
      Technology Inc., a corporation organized under the laws of the State of Delaware
      (the “Company”),
      hereby confirms to CRT Capital Group LLC (“CRT”)
      and
      Needham & Company, LLC (“Needham”
and
      together with CRT, the “Initial
      Purchasers”),
      its
      agreement to issue and sell its 8% Convertible Senior Notes due 2011 to the
      Initial Purchasers, as set forth below.

     

    1.  The
      Transactions.

     

    (a)  Subject
      to the terms and conditions herein contained, the Company proposes to issue
      and
      sell to the Initial Purchasers $145,000,000 aggregate principal amount of its
      8%
      Convertible Senior Notes due 2011 (the “Firm
      Notes”).
      The
      Company also agrees to issue to the Initial Purchasers an option to purchase
      up
      to an additional $21,750,000 aggregate principal amount of its 8% Convertible
      Senior Notes due 2011 (the “Option
      Notes”
and,
      together with the Firm Notes, the “Notes”).
      The
      initial conversion rate of the Notes is 136.426 shares of common stock, $0.0001
      par value per share, of the Company (the “Common
      Stock”
or
      “Conversion
      Shares”)
      per
      each $1,000 principal amount of Notes, subject to adjustment in certain
      circumstances. The Notes will (i) have the terms and provisions which are
      described in the Offering Memorandum (as defined below) under the heading
“Description of Notes” and such other terms as are customary, and (ii) be issued
      pursuant to the provisions of the Indenture (the “Indenture”),
      to be
      dated as of December 19, 2006, between the Company and U.S. Bank National
      Association, as trustee (the “Trustee”)
      on a
      private placement basis pursuant to an exemption from registration under Section
      4(2) and Regulation D under the Securities Act of 1933, as amended (the
“Securities
      Act”).
      The
      Notes and the Conversion Shares are hereinafter referred to collectively as
      the
“Securities.”
The
      offer and sale of the Securities is hereinafter referred to as the “Offering.”
      Holders of the Securities will have the registration rights set forth in a
      registration rights agreement (the “Registration
      Rights Agreement”),
      to be
      dated as of December 19, 2006, among the Company and the Initial Purchasers,
      relating to the resale of the Securities under the Securities Act. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  Subject
      to approval by the Company’s stockholders, it is proposed that a wholly-owned
      subsidiary of the Company will merge with and into Jazz Semiconductor, Inc.
      (“Jazz”),
      pursuant to an Agreement and Plan of Merger (the “Merger
      Agreement”),
      dated
      as of September 26, 2006, by and among the Company, Joy Acquisition Corp.,
      Jazz
      and TC Group, L.L.C. as Jazz’s stockholders’ representative (the “Merger”),
      and
      the Company intends to use all or a portion of the proceeds of the Offering
      to
      effect the Merger. Pending the satisfaction of certain release conditions
      contained in an escrow agreement (the “Escrow
      Agreement”),
      to be
      dated as of December 19, 2006, among the Company, the Trustee and U.S. Bank
      National Association, as escrow agent (the “Escrow
      Agent”),
      the
      gross proceeds from the Offering, including the Initial Purchasers’ discount,
      will be placed in an escrow account (the “Escrow
      Account”)
      with
      the Escrow Agent. Pending (i) the release of the funds in the Escrow Account
      upon stockholder approval of the Merger and the Authorized Share Increase (as
      defined below) to pay the merger consideration in connection with the Merger
      upon the terms described in the Offering Memorandum (as defined below) and
      other
      costs payable in connection with the Merger and general purposes or (ii)
      application of the funds in the Escrow Account for payment of the redemption
      price in connection with a Special Mandatory Redemption (as defined in the
      Indenture), such funds will be invested by the Escrow Agent only in specified
      securities such as a money market fund meeting the criteria of Rule 2a-7 under
      the Investment Company Act of 1940, as amended, or in securities that are direct
      obligations of, or obligations guaranteed as to principal and interest by,
      the
      United States. The Escrow Agreement will provide that the Escrow Agent will
      release the funds as directed by the Trustee upon satisfaction of certain
      conditions and that the Merger will occur immediately after the release of
      the
      funds. If the Company’s stockholders have not approved the Merger and certain
      amendments to the Company’s certificate of incorporation on or before May 31,
      2007, or prior to such date the Company’s stockholders vote not to approve the
      Merger or certain amendments to the Company’s certificate of incorporation, the
      funds in the Escrow Account will be released to redeem all of the Notes at
      100%
      of the principal amount plus any interest income earned on the funds in the
      Escrow Account. While the gross proceeds from the Offering are held in the
      Escrow Account, the Trustee will have a perfected first priority security
      interest in the gross proceeds, pursuant to the terms of a Pledge and Security
      Agreement (the “Security
      Agreement”),
      to be
      dated as of December 19, 2006, between the Company and the Trustee, as
      collateral agent (the “Collateral
      Agent”),
      which
      security interest will have been perfected pursuant to a Control Agreement
      (the
“Control
      Agreement”)
      dated
      as of December 19, 2006 among the Company, the Collateral Agent, the Escrow
      Agent and U.S. Bank, National Association, as securities intermediary.

     

    (c)  In
      connection with the sale of the Securities, the Company has prepared and
      delivered to the Initial Purchasers an Offering Memorandum, dated December
      12,
      2006, in form and substance satisfactory to the Initial Purchasers and a
      Supplement to Offering Memorandum dated December 15, 2006 (together, the
“Offering
      Memorandum”),
      and a
      Preliminary Offering Memorandum, dated November 22, 2006, and Supplements to
      Preliminary Offering Memorandum dated December 7, 2006 and December 11, 2006,
      each in form and substance satisfactory to the Initial Purchasers (together,
      the
“Preliminary
      Offering Memorandum”),
      each
      setting forth information regarding the Company, the Securities and the terms
      of
      the Offering and the transactions contemplated by the Offering Documents (as
      defined below). The Preliminary Offering Memorandum and the Offering Memorandum
      each incorporates by reference the following filings by the Company:

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (i)  Registration
      Statement on Form S-1 filed with the Securities and Exchange Commission (the
      “Commission”)
      on
      March 9, 2006;

     

    (ii)  Post-Effective
      Amendment No. 1, filed March 15, 2006, to Registration Statement on Form
      S-1;

     

    (iii)  Prospectus
      dated March 15, 2006, filed with the Commission on March 16, 2006;

     

    (iv)  Current
      Reports on Form 8-K filed with the Commission on March 21, 2006, March 27,
      2006,
      April 14, 2006, September 29, 2006 and November 21, 2006;

     

    (v)  Quarterly
      Reports on Form 10-Q for the fiscal quarters ended March 31, 2006, June 30,
      2006
      and September 30, 2006, filed with the Commission on May 15, 2006, August 14,
      2006 and November 14, 2006, respectively; and

     

    (vi)  Preliminary
      Proxy Statement on Schedule 14A, filed with the Commission on November 20,
      2006
      (the “Proxy
      Statement”).

     

    (all
      such
      documents listed in clauses (i) through (vi) above (including any exhibits
      thereto that are expressly incorporated by reference therein) are referred
      to
      herein as the “Incorporated
      Documents”).
      Any
      references herein to the Offering Memorandum or the Preliminary Offering
      Memorandum shall be deemed to include, in each case, all amendments and
      supplements thereto as of the date of this Agreement and the Incorporated
      Documents and any amendments thereto made prior to the completion of the
      Offering, including without limitation the Current Report on Form 8-K filed
      with
      the Commission on December 15, 2006. The Company hereby confirms that it has
      authorized the use of the Offering Memorandum and the Preliminary Offering
      Memorandum in connection with the offering and resale of the Securities by
      the
      Initial Purchasers.

     

    (d)  This
      Agreement, the Securities, the Indenture, the Registration Rights Agreement,
      the
      Escrow Agreement and the Security Agreement are herein referred to as the
“Offering
      Documents.”

     

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

     

    
      
        
        

      

      
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    (a)  On
      the
      date hereof, the Offering Memorandum does not contain any untrue statement of a
      material fact, and does not omit to state a material fact necessary to make
      the
      statements therein, in the light of the circumstances under which they were
      made, not misleading, except that the representations and warranties set forth
      in this Section 2 do not apply to statements or omissions made in reliance
      upon
      and in conformity with information relating to the Initial Purchasers and
      furnished to the Company in writing by the Initial Purchasers expressly for
      use
      in the Offering Memorandum. No injunction or written order has been issued
      to
      the Company that either (i) asserts that any of the transactions contemplated
      by
      the Offering Documents is subject to the registration requirements of the
      Securities Act or (ii) would prevent or suspend the issuance or sale of any
      of
      the Securities or the use of the Offering Memorandum in any jurisdiction. The
      Company has not distributed, and will not distribute, prior to the later of
      the
      Closing Date (or any Additional Closing Date) and the completion of the Initial
      Purchasers’ distribution of the Securities, any offering material in connection
      with the offering and sale of the Securities other than the Preliminary Offering
      Memorandum and the Offering Memorandum.

     

    (b)  As
      of
      their respective filing dates, each of the Incorporated Documents complied
      in
      all material respects with the requirements of the Securities Act or the
      Exchange Act of 1934, as amended (the “Exchange
      Act”),
      as
      applicable, and the rules and regulations of the Commission thereunder
      applicable to the Incorporated Documents. Except as disclosed in the Offering
      Memorandum, as of their respective filing dates, the financial statements of
      each of the Company and Jazz included or incorporated by reference in the
      Offering Memorandum complied as to form in all material respects with then
      applicable accounting requirements and with the published rules and regulations
      of the Commission with respect thereto, were prepared in accordance with
      generally accepted accounting principles in the United States, applied
      consistently with the past practices of the Company or Jazz, as applicable,
      and
      as of their respective dates, fairly presented in all material respects the
      financial position of the Company or Jazz, as applicable, and the results of
      their respective operations as of the time and for the periods indicated therein
      (except as may be indicated in the notes thereto or, in the case of the
      unaudited statements, as permitted by Form 10-Q, and Regulations S-K and S-X
      of
      the Commission). The financial and statistical information included or
      incorporated by reference in the Offering Memorandum presents fairly the
      information included therein and, if so required, has been prepared on a basis
      consistent with that of the financial statements that are included in the
      Incorporated Documents and is derived from the books and records of the
      respective entities presented therein and, to the extent such information is
      a
      range, projection or estimate, is based on the good faith belief and estimates
      of the management of the Company. The assumptions used in preparing the pro
      forma financial statements included or incorporated by reference in the Offering
      Memorandum provide a reasonable basis for presenting the significant effects
      directly attributable to the transactions or events described therein, the
      related pro forma adjustments give appropriate effect to those assumptions,
      and
      the pro forma columns therein reflect the proper application of those
      adjustments to the corresponding historical financial statement
      amounts.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (c)  Subsequent
      to the respective dates as of which information is given in the Offering
      Memorandum, except as disclosed in the Offering Memorandum, the Company has
      not
      declared, paid or made any dividends or other distributions of any kind on
      or in
      respect of its capital stock and there has been no material adverse change
      or
      any development which could, individually or in the aggregate, have or result
      in
      a material adverse change, whether or not arising from transactions in the
      ordinary course of business, in or affecting (i) the business, condition
      (financial or otherwise), results of operations, properties or prospects of
      the
      Company and the Company’s subsidiary (the “Subsidiary”)
      taken
      as a whole; (ii) the long-term debt or capital stock of the Company and the
      Subsidiary taken as a whole; or (iii) the ability of the Company to consummate
      the Offering or any of the other transactions contemplated by the Offering
      Documents (any such change or development being a “Material
      Adverse Effect”).
      Since
      the date of the latest balance sheet included or incorporated by reference
      in
      the Offering Memorandum, neither the Company nor the Subsidiary has incurred
      or
      undertaken any liabilities or obligations, whether direct or indirect, accrued
      or absolute, liquidated or contingent, matured or unmatured, or entered into
      any
      transactions, including any acquisition or disposition of any business or asset,
      which are material to the Company and the Subsidiary, individually or taken
      as a
      whole, except for liabilities, obligations and transactions which are disclosed
      in the Offering Memorandum.

     

    (d)  Except
      as
      contemplated by this Agreement, the Offering Documents or as disclosed in the
      Offering Memorandum, since September 30, 2006, through the date immediately
      preceding the Closing Date, the Company has not (i) issued any stock, options,
      bonds or other corporate securities other than pursuant to the Company’s option
      plans, (ii) borrowed any amount or incurred or become subject to any liabilities
      (absolute, accrued or contingent), other than current liabilities incurred
      in
      the ordinary course of business and liabilities under contracts entered into
      in
      the ordinary course of business, (iii) discharged or satisfied any lien, charge,
      mortgage, pledge, security interest, claim, equity, trust or other encumbrance,
      preferential arrangement, defect or restriction of any kind whatsoever (any
      “Lien”)
      or
      adverse claim or paid any obligation or liability (absolute, accrued or
      contingent), other than current liabilities shown on the balance sheets of
      the
      Company and current liabilities incurred in the ordinary course of business,
      (iv) declared or made any payment or distribution of cash or other property
      to
      the stockholders of the Company or purchased or redeemed any securities of
      the
      Company, (v) mortgaged, pledged or subjected to any Lien or adverse claim any
      of
      its properties or assets, except for Liens for taxes not yet due and payable
      or
      otherwise in the ordinary course of business, (vi) sold, assigned or transferred
      any of its assets, tangible or intangible, except in the ordinary course of
      business or in an aggregate amount less than $250,000, (vii) suffered any
      extraordinary losses or waived any rights of material value other than in the
      ordinary course of business, (viii) made any capital expenditures or commitments
      therefor other than in the ordinary course of business or in an aggregate amount
      less than $250,000, (ix) entered into any other transaction other than in the
      ordinary course of business in an aggregate amount less than $250,000 or entered
      into any material transaction, whether or not in the ordinary course of
      business, (x) made any charitable contributions or pledges, (xi) suffered any
      damages, destruction or casualty loss, whether or not covered by insurance,
      affecting any of the properties or assets of the Company or any other properties
      or assets of the Company which could, individually or in the aggregate, have
      or
      result in a Material Adverse Effect, (xii) made any material change in the
      nature or operations of the business of the Company or (xiii) entered into
      any
      agreement or commitment to do any of the foregoing.

     

    
      
        
        

      

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

     

    (f)  The
      Common Stock (including the Conversion Shares) conforms to the descriptions
      thereof contained in the Offering Memorandum in all material respects. Except
      as
      disclosed in, and as of the date or dates disclosed in, the Offering Memorandum,
      neither the Company nor the Subsidiary has outstanding warrants, options to
      purchase, or any preemptive rights or other rights to subscribe for or to
      purchase, or any contracts or commitments to issue or sell, any Common Stock
      or
      other security of the Company or the Subsidiary or any security convertible
      into, or exercisable or exchangeable for, Common Stock or any other such
      security. 

     

    (g)  Upon
      the
      stockholders’ approval of a proposal to increase the Company’s authorized shares
      of Common Stock sufficient to allow for the issuance of the Conversion Shares
      (the “Authorized
      Share Increase”),
      the
      Conversion Shares will have been duly authorized and reserved, and if and when
      issued upon conversion of the Notes in accordance with their terms and the
      Indenture, will be validly issued, fully paid and non-assessable, free of any
      preemptive or similar rights and any Liens; and will not be subject to any
      restriction upon the voting or transfer thereof pursuant to applicable law
      or
      the Company’s certificate of incorporation, bylaws or governing documents or any
      agreement to which the Company or the Subsidiary is a party or by which any
      of
      them may be bound. 

     

    (h)  The
      Subsidiary is wholly-owned by the Company. The Subsidiary is the only subsidiary
      of the Company. All of the issued shares of capital stock of or other ownership
      interests in the Subsidiary have been duly and validly authorized and issued
      and
      are fully paid and non-assessable and are owned directly or indirectly by the
      Company free and clear of any Lien.

     

    (i)  Each
      of
      the Company and the Subsidiary has been duly organized and validly exists as
      a
      corporation in good standing under the laws of its jurisdiction of
      incorporation. Each of the Company and the Subsidiary has all requisite
      corporate power and authority to carry on its business as described in the
      Offering Memorandum, and to own, lease and operate its respective properties.
      Each of the Company and the Subsidiary is duly qualified to do business and
      is
      in good standing as a foreign corporation in each state in the United States
      in
      which the character or location of its properties (owned, leased or licensed)
      or
      the nature or conduct of its business makes such qualification necessary, except
      for those failures to be so qualified or in good standing which would not
      reasonably be expected to cause (individually and in the aggregate) a Material
      Adverse Effect.

     

    
      
        
        

      

      
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    (j)  The
      Company has the requisite power and authority to execute, deliver and perform
      its obligations under the Notes. The Notes have been duly and validly authorized
      by the Company for issuance and, when executed by the Company and authenticated
      by the Trustee in accordance with the provisions of the Indenture and when
      delivered to and paid for by the Initial Purchasers in accordance with the
      terms
      hereof, will have been duly executed, issued and delivered and will constitute
      valid and legally binding obligations of the Company free of any Liens, entitled
      to the benefits of the Indenture and enforceable against the Company in
      accordance with their terms except insofar as indemnification and contribution
      provisions may be limited by applicable law and except that the enforcement
      thereof may be limited by bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium or other similar laws now or hereafter in effect
      relating to or affecting creditors’ rights generally, and general principles of
      equity (regardless of whether such enforcement is considered in a proceeding
      at
      law or in equity) (the preceding exceptions, collectively, the “Enforceability
      Exceptions”)
      and
      will be convertible into the Conversion Shares in accordance with their terms.
      At the Closing Date, the Notes will be in the form contemplated by the Indenture
      in all material respects.

     

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

     

    (l)  The
      Company has the requisite power and authority to execute, deliver and perform
      its obligations under this Agreement, the Registration Rights Agreement, the
      Security Agreement and the Escrow Agreement. This Agreement, the Registration
      Rights Agreement, the Security Agreement and the Escrow Agreement have been
      duly
      and validly authorized by the Company and when executed and delivered by the
      Company (assuming the due authorization, execution and delivery by the other
      parties thereto), will constitute valid and legally binding agreements of the
      Company, enforceable against the Company in accordance with their respective
      terms, except that the enforcement thereof may be limited by the Enforceability
      Exceptions.

     

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

     

    
      
        
        

      

      
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    (n)  The
      execution, delivery, and performance of this Agreement, the Indenture, the
      Registration Rights Agreement, the Security Agreement and the Escrow Agreement
      and the consummation of the transactions contemplated by the Offering Documents
      do not and will not conflict with, require consent under or result in a breach
      of any of the terms and provisions of, or constitute a default (or an event
      which with notice or lapse of time, or both, would constitute a default) under
      or violate or result in the creation or imposition of any Lien upon any property
      or assets of the Company or the Subsidiary pursuant to, (i) any indenture,
      contract, lease, mortgage, deed of trust, note agreement, loan agreement or
      other agreement, obligation, condition, covenant, instrument, franchise, license
      or permit to which the Company or the Subsidiary is a party or by which the
      Company or the Subsidiary or their respective properties, operations or assets
      may be bound; (ii) any provision of the certificate or articles of
      incorporation, bylaws or other organizational documents of the Company or the
      Subsidiary; or (iii) any law, rule, regulation, ordinance, directive, judgment,
      decree or order of any judicial, regulatory or other legal or governmental
      agency or body, domestic or foreign, having jurisdiction over the Company,
      the
      Subsidiary or any of its or their properties; except, in the case of clauses
      (i)
      and (iii) above as have been or will be obtained, as may be required under
      Federal or state securities laws in connection with the filing and effectiveness
      of the Shelf Registration Statement as contemplated by the Registration Rights
      Agreement, under Federal or state securities laws in connection with the
      distribution of the Securities by the Initial Purchasers, in connection with
      the
      qualification of the Indenture under the TIA or in connection with the listing
      of the Conversion Shares on the American Stock Exchange, or could not reasonably
      be expected to have a Material Adverse Effect. 

     

    (o)  On
      the
      Closing Date, the Security Agreement will be effective to create, in favor
      of
      the Trustee for the benefit of the holders of the Notes as security for the
      Notes, a valid and enforceable security interest in the Collateral (as defined
      in the Security Agreement). Each of the Company and the Subsidiary is a
“registered organization” (as defined in Article 9 of the applicable Uniform
      Commercial Code) under the law of the state in which it is identified in the
      Indenture as being organized, and on the Closing Date all security interests
      granted under the Security Agreement will be duly perfected pursuant to Section
      9-314 of the New York Uniform Commercial Code upon execution and delivery of
      the
      Control Agreement. 

     

    (p)  Except
      as
      disclosed in the Offering Memorandum, each of the Company and the Subsidiary
      has
      such permits, licenses, consents, exemptions, franchises, authorizations and
      other approvals (each, a “Consent”)
      of,
      and has made all filings with and given all notices to, all governmental or
      regulatory authorities and self-regulatory organizations and all courts and
      other tribunals as are necessary to own, lease, license and operate its
      respective properties and to conduct its business, and, in all material respects
      complying therewith, except where the failure to have any such Consent or to
      make any such filing or notice would not, singly or in the aggregate, have
      a
      Material Adverse Effect. Each of the Company and the Subsidiary is in compliance
      in all material respects with the rules, regulations and applicable laws and
      orders of the authorities and governing bodies having jurisdiction with respect
      thereto; and to the knowledge of the Company no event has occurred (including),
      without limitation, the receipt of any written notice from any such authority
      or
      governing body) that would result in or, after notice or lapse of time or both,
      would result in, revocation, suspension or termination of any such Consent
      or
      would result in or, after notice or lapse of time or both, would result in
      any
      other impairment of the rights of the holder of any such Consent; except where
      such failure to be in compliance or the occurrence of any such event or the
      presence of any such restriction would not, singly or in the aggregate, have
      a
      Material Adverse Effect.

     

    
      
        
        

      

      
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    (q)  Except
      as
      disclosed in the Offering Memorandum, no Consent, filing, order, registration,
      approval, authorization qualification of, with or from any judicial, regulatory
      or other legal or governmental agency or body or any third party, foreign or
      domestic, is required by the Company for the execution, delivery and performance
      of this Agreement, the Indenture, the Registration Rights Agreement, the
      Security Agreement and the Escrow Agreement or consummation of the Offering
      and
      the other transactions contemplated by the Offering Documents, including the
      issuance, sale and delivery of the Notes (and the issuance of the Conversion
      Shares upon conversion of the Notes), except such Consents as may be required
      under the rules of the American Stock Exchange or state securities or “blue sky”
laws or the approval of the Commission of a resale registration statement as
      contemplated by the Registration Rights Agreement. No consent, approval or
      authorization of the stockholders of the Company is required in connection
      with
      the issuance of the Securities.

     

    (r)  Except
      as
      disclosed in the Offering Memorandum, there is no judicial, regulatory, arbitral
      or other legal or governmental proceeding or other claim, action, suit, inquiry,
      litigation, or arbitration, domestic or foreign, pending to which the Company
      or
      the Subsidiary is a party or of which any property, operations or assets of
      the
      Company or the Subsidiary is the subject which, individually or in the
      aggregate, if determined adversely to the Company or the Subsidiary, could
      reasonably be expected to have a Material Adverse Effect, and to the best of
      the
      Company’s knowledge, no such proceeding, claim, action, suit, litigation or
      arbitration is threatened or contemplated. The Company has delivered to the
      Initial Purchasers all comment letters received from the
      Commission.

     

    (s)  BDO
      Seidman, LLP, which examined the financial statements of the Company at December
      31, 2005 and the period from August 12, 2005 (inception) to December 31, 2005
      contained in the Incorporated Documents, is, to the best of the Company’s
      knowledge, an independent public accounting firm as required by the Securities
      Act and the Exchange Act. 

     

    (t)  The
      Company is subject to and in full compliance with the reporting requirements
      of
      Section 13 or 15(d) of the Exchange Act and files reports with the Commission
      on
      the EDGAR System. The Common Stock is registered pursuant to Section 12(b)
      of
      the Exchange Act and the outstanding shares of Common Stock are listed on the
      American Stock Exchange, and the Company has taken no action designed to, or
      likely to have the effect of, terminating the registration of the Common Stock
      under the Exchange Act or de-listing the Common Stock from the American Stock
      Exchange, nor has the Company received any written notification that the
      Commission or the American Stock Exchange is contemplating terminating such
      registration or listing or that the Company is not in compliance with the
      continuing listing or maintenance requirements of the American Stock
      Exchange.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    (u)  The
      Company and the Subsidiary have filed in a timely manner each document or report
      required to be filed by each pursuant to the Exchange Act, including, without
      limitation, the Incorporated Documents. The Company has provided the Initial
      Purchasers copies of all correspondence between the Company and the Commission
      regarding the Proxy Statement. 

     

    (v)  The
      Company and the Subsidiary maintain a system of internal accounting and other
      controls sufficient to provide reasonable assurances that (i) transactions
      are
      executed in accordance with management’s general or specific authorizations,
      (ii) transactions are recorded as necessary to permit preparation of financial
      statements in conformity with United States generally accepted accounting
      principles and to maintain accountability for assets, (iii) access to assets
      is
      permitted only in accordance with management’s general or specific
      authorization, and (iv) the recorded accounting for assets is compared with
      existing assets at reasonable intervals and appropriate action is taken with
      respect to any differences.

     

    (w)  To
      the
      extent required by the Exchange Act, the Company and the Subsidiary has
      established and maintains and evaluates “disclosure controls and procedures” (as
      such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act) and
      “internal control over financial reporting” (as such term is defined in Rule
      13a-15 and 15d-15 under the Exchange Act); such disclosure controls and
      procedures and internal control over financial reporting are designed to ensure
      that material information relating to the Company, including its consolidated
      subsidiaries, is made known to each of the Company’s chief executive officer and
      chief financial officer by others within the Company, and such disclosure
      controls and procedures and internal control over financial reporting are
      effective to perform the functions for which they were established; the
      Company’s independent auditors and audit committee have been advised of: (i) all
      significant deficiencies, if any, in the design or operation of internal control
      over financial reporting which could adversely affect the Company’s ability to
      record, process, summarize and report financial data and (ii) all fraud, if
      any,
      whether or not material, that involves management or other employees who have
      a
      role in the Company’s internal control over financial reporting; all material
      weaknesses, if any, in internal control over financial reporting have been
      identified to the Company’s independent auditors and audit committee; since the
      date of the most recent evaluation of such disclosure controls and procedures
      and internal control over financial reporting, there have been no significant
      changes in internal control over financial reporting or in other factors that
      could significantly affect internal control over financial reporting, except
      for
      any corrective actions with regard to significant deficiencies and material
      weaknesses disclosed in the Offering Memorandum; the principal executive
      officers (or their equivalents) and principal financial officers (or their
      equivalents) of the Company have made all certifications required by the
      Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
      Act”)
      and
      any related rules and regulations promulgated by the Commission, and the
      statements contained in each such certification are complete and correct; and
      the Company, the Subsidiary and the Company’s board of directors and officers
      are each in compliance in all material respects with all applicable effective
      provisions of the Sarbanes-Oxley Act and the rules and regulations of the
      Commission promulgated thereunder. 

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    (x)  None
      of
      the Company, the Subsidiary or any of their affiliates or any person acting
      on
      its or their behalf (i) has, within the six-month period prior to the date
      hereof, offered or sold in the United States or to any U.S. person (as such
      terms are defined in Regulation S) the Securities or any security of the same
      class or series of the Securities or (ii) has offered or will offer or sell
      the
      Securities (A) in the United States by means of any form of general solicitation
      or general advertising within the meaning of Rule 502(c) under the Securities
      Act or (B) with respect to any such securities sold in reliance on Rule 903
      of
      Regulation S under the Securities Act, by means of any directed selling efforts
      within the meaning of Rule 902(c) of Regulation S. Neither the Company nor
      the
      Subsidiary has entered or will enter into any contractual arrangement with
      respect to the distribution of the Securities except for this Agreement and
      the
      Registration Rights Agreement.

     

    (y)  The
      proceeds to the Company from the offering of the Securities will not be used
      to
      purchase or carry any security in violation of Regulation T, U and X of the
      Board of Governors of the Federal Reserve System. 

     

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

     

    (aa)  Except
      as
      described in the Offering Memorandum, no holder of any Relevant Security has
      any
      rights to require registration of any Relevant Security as part or on account
      of, or otherwise in connection with the Offering and any of the other
      transactions contemplated by the Offering Documents.

     

    (bb)  The
      Company is not and, immediately after the sale of the Securities as contemplated
      hereunder will not be an “investment company” within the meaning of the
      Investment Company Act of 1940, as amended, and the rules and regulations of
      the
      Commission thereunder.

     

    (cc)  Except
      as
      disclosed in the Offering Memorandum, no relationship, direct or indirect,
      exists between or among the Company or any affiliate of the Company, on the
      one
      hand, and any director, officer, stockholder, customer or supplier of the
      Company or any affiliate of the Company, on the other hand, which is required
      by
      the Exchange Act to be described in the Company’s periodic reports, which is not
      so described as required in such reports.

     

    (dd)  Each
      of
      the Company and the Subsidiary owns or leases all such properties as are
      necessary to the conduct of their respective businesses as presently operated
      and as proposed to be operated as described in the Offering Memorandum. The
      Company and the Subsidiary have good and marketable title in fee simple to
      all
      real property and good and marketable title to all personal property owned
      by
      them, in each case free and clear of all Liens except such as are described
      in
      the Offering Memorandum or such as could not reasonably be expected to have
      a
      Material Adverse Effect; and any real property and buildings held under lease
      or
      sublease by the Company and the Subsidiary are held by them under valid,
      subsisting and enforceable leases or subleases with such exceptions as are
      not
      material to, and do not interfere with, the use made and proposed to be made
      of
      such property and buildings by the Company and the Subsidiary.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    (ee)  The
      Company and the Subsidiary each owns, licenses or possesses all patents, patent
      rights, licenses, inventions, copyrights, know-how (including trade secrets
      and
      other unpatented and/or unpatentable proprietary or confidential information,
      systems or procedures), trademarks, service marks and trade names currently
      employed by them in the connection with the business now operating by them
      that
      are necessary for the conduct of the business (“Intellectual
      Property”)
      of the
      Company and the Subsidiary, except where failure to own, license or possess
      or
      otherwise to be able to acquire such intellectual property would not singly,
      or
      in the aggregate, have a Material Adverse Effect. To the knowledge of the
      Company, the Intellectual Property does not infringe on or conflict with the
      rights or intellectual property of third parties, and neither the Company nor
      the Subsidiary has received any notice of infringement of or conflict with
      asserted rights of others with respect to any intellectual property that, singly
      or in the aggregate, if the subject of unfavorable decision, ruling or finding,
      would have a Material Adverse Effect, in each case except as described in the
      Offering Memorandum.

     

    (ff)  Each
      of
      the Company and the Subsidiary has prepared and timely filed all federal, state,
      local, foreign and other material tax returns that are required to be filed
      by
      it and has paid or made provision for the payment of all taxes, assessments,
      governmental or other similar charges, including, without limitation, all
      material sales and use taxes and all taxes which the Company or the Subsidiary
      is obligated to withhold from amounts owing to employees, creditors and third
      parties, with respect to the periods covered by such tax returns (whether or
      not
      such amounts are shown as due on any tax return). There is no tax Lien, whether
      imposed by any federal, state, local, foreign or other taxing authority,
      outstanding against the assets, properties or business of the Company or the
      Subsidiary.

     

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

     

    (hh)  No
      “prohibited transaction” (as defined in either Section 406 of the Employee
      Retirement Income Security Act of 1974, as amended, including the regulations
      and published interpretations thereunder (“ERISA”),
      or
      Section 4975 of the Internal Revenue Code of 1986, as amended from time to
      time
      (the “Code”)), “accumulated funding deficiency” (as defined in Section 302 of
      ERISA) or other event of the kind described in Section 4043(b) of ERISA (other
      than events with respect to which the 30-day notice requirement under Section
      4043 of ERISA has been waived) has occurred with respect to any employee benefit
      plan (as defined in Section 3(3) of ERISA) for which the Company or the
      Subsidiary would have any liability; each employee benefit plan (as defined
      in
      Section 3(3) of ERISA) for which the Company or the Subsidiary would have
      any liability is in compliance in all material respects with applicable law,
      including, without limitation, ERISA and the Code; the Company has not incurred
      and does not expect to incur material liability under Title IV of ERISA with
      respect to the termination of, or withdrawal from, any “pension plan” (as
      defined in Section 3(2)); and each pension plan (as defined in Section 3(2))
      for
      which the Company would have any material liability that is intended to be
      qualified under Section 401(a) of the Code is so qualified and, to the Company’s
      knowledge, nothing has occurred, whether by action or by failure to act, which
      could cause the loss of such qualification.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    (ii)  Each
      of
      the Company and the Subsidiary is in compliance in all material respects with
      all rules, laws and regulations relating to the use, treatment, storage and
      disposal of toxic substances and protection of health or the environment
      (“Environmental
      Law”)
      which
      are applicable to its business; (ii) neither the Company nor the Subsidiary
      has received any written notice from any governmental authority or third party
      of an asserted claim under Environmental Laws; (iii) each of the Company
      and the Subsidiary has received all permits, licenses and other approvals
      required of it under applicable Environmental Laws to conduct its business
      and
      is in compliance with all terms and conditions of any such permit, license
      or
      approval; (iv) to the Company’s knowledge, no facts currently exist that will
      require the Company or the Subsidiary to make future material capital
      expenditures to comply with Environmental Laws; and (v) no property which
      is or has been owned, leased or occupied by the Company or the Subsidiary has
      been designated as a Superfund site pursuant to the Comprehensive Environmental
      Response, Compensation of Liability Act of 1980, as amended (42 U.S.C. Section
      9601, et seq.) (the “CERCLA
      1980”)
      or
      otherwise designated as a contaminated site under applicable state or local
      law.
      Neither the Company nor the Subsidiary has been named as a “potentially
      responsible party” under the CERCLA 1980. In the ordinary course of its
      business, the Company periodically reviews the effect of Environmental Laws
      on
      the business, operations and properties of the Company and the Subsidiary,
      in
      the course of which the Company identifies and evaluates associated costs and
      liabilities (including, without limitation, any capital or operating
      expenditures required for clean-up, closure of properties or compliance with
      Environmental Laws, or any permit, license or approval, any related constraints
      on operating activities and any potential liabilities to third parties). On
      the
      basis of such review, the Company has reasonably concluded that such associated
      costs and liabilities would not, singly or in the aggregate, have a Material
      Adverse Effect.

     

    (jj)  The
      Company and the Subsidiary maintain insurance of the types, against such losses
      and in the amounts and with such insurers as are customary in the Company’s
      industry and otherwise reasonably prudent, including risks customarily insured
      against by similarly situated companies, all of which insurance is in full
      force
      and effect, except where failure of the Company or the Subsidiary to maintain
      such insurance or failure of such insurance to be in full force and effect
      would
      not reasonably be expected to have, singly or in the aggregate, a Material
      Adverse Effect. 

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    (kk)  All
      material agreements to which the Company and the Subsidiary are parties and
      which are required to have been filed by the Company pursuant to the Securities
      Act, the Exchange Act, and the rules and regulations thereunder have been filed
      by the Company with the Commission. As of the date hereof, except as disclosed
      in the Incorporated Documents, except for those agreements that by their terms
      are no longer in effect and except as would not, singly or in the aggregate,
      reasonably be expected to have a Material Adverse Effect, each such agreement
      is
      in full force and effect and is binding on the Company and, to the Company’s
      knowledge, is binding upon such other parties, in each case in accordance with
      its terms, and neither the Company nor, to the Company’s knowledge, any other
      party thereto is in breach of or default under any such agreement. Except as
      disclosed in the Incorporated Documents, the Company has not received any
      written notice regarding the termination of any such agreements.

     

    (ll)  Neither
      the Company nor the Subsidiary (i) is in violation of its certificate of
      incorporation, bylaws, or other organizational documents, or (ii) is in default
      under, and no event has occurred which, with notice or lapse of time or both,
      would constitute a default under or result in the creation or imposition of
      any
      Lien upon any of its property or assets pursuant to, any indenture, contract,
      lease, mortgage, deed of trust, note agreement, loan agreement or other
      agreement, obligation, condition, covenant, instrument, franchise, license
      or
      permit to which it is a party or by which it is bound or to which any of its
      property or assets is subject, or has received a notice or claim of any such
      default or has knowledge of any breach of such contracts by the other party
      or
      parties thereto, except where the consequences of such violation would not
      reasonably be expected to have a Material Adverse Effect, and except (in the
      case of clause (ii) above) defaults or Liens disclosed in the Offering
      Memorandum.

     

    (mm)  The
      certificates for the shares of Common Stock (including the Conversion Shares)
      conform to the requirements of the American Stock Exchange and the General
      Corporation Law of the State of Delaware.

     

    (nn)  Except
      as
      described in the Offering Memorandum, the Company and the Subsidiary have
      complied with and established such boards and policies as required by the
      Sarbanes-Oxley Act of 2002. The Company is subject to and is in compliance
      with
      all of the requirements of the American Stock Exchange.

     

    (oo)  Other
      than CRT or Needham (as the Initial Purchasers), no finder, broker, agent,
      financial person or other intermediary has acted on behalf of the Company in
      connection with the sale of the Securities to the Initial Purchasers, the resale
      of the Notes by the Initial Purchasers or the consummation of this Agreement
      or
      any of the transactions contemplated hereby.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    (pp)  The
      Merger Agreement is in full force and effect, and there has been no amendment
      to
      the Merger Agreement or waiver thereunder. To the Company’s knowledge, the
      representations and warranties made in the Merger Agreement by each of the
      Company and Jazz were true and complete as of the date made and are true and
      complete as of the date hereof (except for any representation or warranty that
      speaks as of a specific date, which representation or warranty is true and
      complete as of such date). There are no actions pending or, to the Company’s
      knowledge, threatened, before any court or governmental agency in which it
      is
      sought to restrain or prohibit, or obtain material damages or other relief
      in
      connection with, the Merger Agreement or the transaction contemplated
      therein.

     

    (qq)  Assuming
      the accuracy of the Initial Purchasers’ representations and warranties in
      Section 4 hereof and their compliance with their agreements in Section 4 hereof,
      the offer and sale of the Securities in the manner contemplated by this
      Agreement will be exempt from the registration requirements of the Securities
      Act by reason of Section 4(2) and Regulation D thereof; and except in connection
      with the registration contemplated by the Registration Rights Agreement, it
      is
      not necessary to qualify an indenture in respect of the Securities under the
      TIA. 

     

    The
      Company acknowledges that the Initial Purchasers and, for purposes of the
      opinions to be delivered to the Initial Purchasers pursuant to Section 7 hereof,
      counsel to the Company and counsel to the Initial Purchasers will rely upon
      the
      accuracy and truth of the foregoing representations and hereby consents to
      such
      reliance.

     

    3.  Purchase,
      Sale and Delivery of the Securities

     

    (a)  On
      the
      basis of the representations, warranties, agreements and covenants herein
      contained and subject to the terms and conditions herein set forth, the Company
      agrees to issue and sell to the Initial Purchasers, and the Initial Purchasers
      agree, severally and not jointly, to purchase from the Company, at 100% of
      their
      principal amount (subject to Section 3(c) hereof), the respective aggregate
      principal amount of the Firm Notes set forth opposite the Initial Purchasers’
names on Schedule
      1
      hereto;
provided,
      however,
      that
      upon satisfaction of certain release conditions contained in the Escrow
      Agreement, 3.5% of the principal amount of the Firm Notes set forth opposite
      an
      Initial Purchaser’s name on Schedule
      1
      hereto
      will be released to such Initial Purchaser.

     

    (b)  In
      addition, on the basis of the representations, warranties, agreements and
      covenants contained herein, and subject to the terms and conditions herein
      set
      forth, the Company hereby grants an option to the Initial Purchasers to
      purchase, severally and not jointly, up to $21,750,000 in aggregate principal
      amount Option Notes from the Company at the same price as the purchase price
      to
      be paid by the Initial Purchasers for the Firm Notes. The option granted
      hereunder may be exercised at any time, regardless of whether any of the Firm
      Notes have been converted or repurchased by the Company, on or after the Closing
      Date to and including the forty-fifth (45th) day following the Closing Date
      upon
      written or telegraphic notice by the Initial Purchasers to the Company, which
      notice may be given from time to time on one or more occasion. Such notice
      shall
      set forth (i) the amount (which shall be an integral multiple of $1,000 in
      aggregate principal amount at issuance) of Option Notes as to which the Initial
      Purchasers are exercising the option, and (ii) the time, date and place at
      which
      such Option Notes will be delivered. Such time and date of delivery is called
      the “Additional Closing
      Date.”
The
      Additional Closing Date must not be later than eight (8) full business days
      after the Initial Purchasers exercise the option, with the actual date
      determined by the Initial Purchasers. If any Option Notes are to be purchased
      (x) each Initial Purchaser agrees, severally and not jointly, to purchase the
      respective aggregate principal amount of Option Notes that bears the same
      proportion to the total aggregate principal amount of Option Notes to be
      purchased as the aggregate principal amount of Firm Notes set forth on
Schedule
      1
      hereto
      opposite the name of such Initial Purchaser bears to the total aggregate
      principal amount of Firm Notes and (y) the Company agrees to sell such Option
      Notes to the Initial Purchasers. The Initial Purchasers may cancel the option
      at
      any time prior to its expiration by giving written notice of such cancellation
      to the Company.

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    (c)  Delivery
      of and payment for the Notes shall be made at the offices of Bingham McCutchen
      LLP, at 150 Federal Street, Boston, MA 02110, on December 19, 2006, or such
      other date as the Initial Purchasers and the Company shall mutually agree,
      at
      such time and date being herein referred to as the “Closing
      Date.”
The
      Notes shall be delivered on the Closing Date against payment of the purchase
      price therefore by wire transfer of immediately available funds to an account
      specified in writing to the Initial Purchasers by the Company. If requested
      by
      the Initial Purchasers, one or more global securities representing the Notes
      shall be registered by the Trustee in the name of Cede & Co., the nominee of
      The Depository Trust Company (“DTC”),
      and
      credited to such accounts as the Initial Purchasers shall request, upon notice
      to the Company at least 48 hours prior to the Closing Date.

     

    (d)  Notwithstanding
      anything to the contrary herein, to the extent that any subsequent purchaser
      of
      the Notes from the Initial Purchasers identified in a list to be delivered
      by
      the Initial Purchasers on the date hereof (a “Subsequent
      Purchaser”)
      has
      withdrawn its commitment, as set forth in such list, to purchase all or a
      portion of the Notes, or such Subsequent Purchaser has actually made or has
      threatened to make any amendments, alterations, modifications, withdrawals,
      waivers or breaches of commitment to purchase Notes or fails to perform in
      any
      under its commitment to purchase Notes, the Initial Purchasers’ obligation to
      purchase the Notes under this Agreement shall be terminated or adjusted downward
      on a dollar for dollar basis accordingly, at the sole discretion of the Initial
      Purchasers.

     

    (e)  Delivery
      to the Initial Purchasers of and payment for the Option Notes shall be made
      on
      the Additional Closing Date in the same manner as payment for the Firm
      Notes.

     

    4.  Offering
      by the Initial Purchasers; Representations and Warranties of the Initial
      Purchasers.
      

     

    (a)  The
      Initial Purchasers propose to make an offering of the Notes at the price and
      upon the terms set forth in the Offering Memorandum as soon as practicable
      after
      the date of this Agreement and as in the judgment of the Initial Purchasers
      is
      advisable.

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    (b)  Each
      of
      the Initial Purchasers, severally and not jointly, represents and warrants
      (as
      to itself only) that:

     

    (i)  It
      is a
      Qualified Institutional Buyer as defined in Rule 144A under the Securities
      Act
      (a “QIB”)
      and it
      will offer the Notes for resale only upon the terms and conditions set forth
      in
      this Agreement and in the Offering Memorandum.

     

    (ii)  It
      is not
      acquiring the Notes with a view to any distribution thereof that would violate
      the Securities Act or the securities laws of any state of the United States
      or
      any other applicable jurisdiction. It will solicit offers to buy the Notes
      only
      from, and will offer and sell the Notes only to persons reasonably believed
      by
      it to be, QIBs; provided,
      however,
      that in
      purchasing such Notes, such persons are deemed to have represented and agreed
      as
      provided under the caption “Transfer Restrictions” contained in the Preliminary
      Offering Memorandum and the Offering Memorandum.

     

    (iii)  No
      form
      of general solicitation or general advertising in violation of the Securities
      Act has been or will be used nor will any offers in any manner involving a
      public offering within the meaning of Section 4(2) of the Securities Act.

     

    5.  Certain
      Covenants.
      For the
      purposes of this Section 5, “Closing
      Date”
shall
      refer to the Closing Date for the Firm Notes and any Additional Closing Date
      for
      the Option Notes.

     

    (a)  The
      Company covenants and agrees with the Initial Purchasers that:

     

    (i)  The
      Company shall use the proceeds of the Offering in the manner described in the
      Offering Memorandum under the heading “Use of Proceeds.”

     

    (ii)  The
      Company will not amend or supplement the Offering Memorandum or any amendment
      or
      supplement thereto of which the Initial Purchasers shall not previously have
      been advised and furnished a copy for a reasonable period of time prior to
      the
      proposed amendment or supplement and as to which the Initial Purchasers shall
      not have given their consent, which consent shall not be unreasonably withheld
      or delayed, other than by filing documents under the Exchange Act that are
      incorporated by reference therein, without notice to the Initial Purchasers.
      The
      Company will promptly, upon the reasonable request of the Initial Purchasers
      or
      counsel to the Initial Purchasers, make any amendments or supplements to the
      Offering Memorandum that may be reasonably necessary or advisable in connection
      with the resale of the Notes by the Initial Purchasers. As soon as the Company
      is advised thereof, the Company will notify the Initial Purchasers and their
      counsel, and confirm the notice in writing, of any order preventing or
      suspending the use of the Offering Documents, or the suspension of the
      qualification or registration of the Securities for offering or the suspension
      of any exemption for such qualification or registration of the Securities for
      offering in any jurisdiction, or of the institution or threatened institution
      of
      any proceedings for any of such purposes, and the Company will use its best
      efforts to prevent the issuance of any such order and, if issued, to obtain
      as
      soon as reasonably possible the lifting thereof. 

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    (iii)  In
      connection with the Offering, until the Initial Purchasers shall have notified
      the Company of the completion of the resale of the Notes, neither the Company
      nor any of its affiliates has or will, either alone or with one or more other
      persons, bid for or purchase for any account in which it or any of its
      affiliates has a beneficial interest any Notes or attempt to induce any person
      to purchase any Notes; and neither the Company nor any of its affiliates will
      make bids or purchases for the purpose of creating actual, or apparent, active
      trading in, or of raising the price of, the Notes. 

     

    (iv)  For
      a
      period of 90 days after the date of the initial offering of the Notes by the
      Initial Purchasers, the Company will not offer, sell, contract to sell, pledge
      or otherwise dispose of, directly or indirectly, any securities of the Company
      that are substantially similar to the Securities, including but not limited
      to
      any securities that are convertible into or exchangeable for, or that represent
      the right to receive, Common Stock or any such substantially similar securities,
      except with the consent of the Initial Purchasers (which consent shall not
      be
      unreasonably withheld) and except the filing of a shelf registration statement
      covering the Securities and the filing of a registration statement, or
      post-effective amendment to the Registration Statement filed on March 9, 2006,
      covering the issuance of Common Stock upon exercise of the Company’s outstanding
      warrants and the issuance of units upon exercise of the Company’s outstanding
      unit purchase options, issuances of securities pursuant to the conversion or
      exchange of convertible or exchangeable securities or the exercise of warrants
      or options, in each case outstanding on the date hereof, grants of employee
      stock options or restricted stock pursuant to the terms of a plan approved
      by
      the Company’s stockholders, or issuances of securities pursuant to the exercise
      of such options or the exercise of any other employee stock options outstanding
      on the date hereof. The Company will not at any time offer, sell, contract
      to
      sell, pledge or otherwise dispose of, directly or indirectly, any securities
      under circumstances where such offer, sale, pledge, contract or disposition
      would cause the exemption afforded by Section 4(2) of the Securities Act to
      cease to be applicable to the offer and sale of the Notes, except with the
      consent of the Initial Purchasers (which consent will not be unreasonably
      withheld).

     

    (v)  The
      Company will use its best efforts to qualify or exempt the Notes for offer
      and
      sale under the securities or “blue sky” laws of such jurisdictions as the
      Initial Purchasers may reasonably designate and the Company will make such
      applications and furnish information as may be required for such purposes,
      and
      will continue any such qualifications or exemptions in effect for as long as
      may
      be reasonably necessary to complete the distribution of the Securities by the
      Initial Purchasers; provided,
      however,
      that in
      connection therewith the Company shall not be required to qualify as a foreign
      corporation or to execute a general consent to service of process in any
      jurisdiction or to take any other action that would subject it to general
      service of process or to taxation in respect of doing business in any
      jurisdiction in which it is not otherwise subject.

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

    (x)  The
      Company will cause the Notes to be eligible for clearance and settlement through
      DTC.

     

    (xi)  The
      Company will use its best efforts to effect the inclusion of the Securities
      in
      the PORTAL Market.

     

    (xii)  The
      Company will list the Conversion Shares for quotation on the American Stock
      Exchange as promptly as possible after the Merger and, in any event, no later
      than the effectiveness of the Shelf Registration Statement as contemplated
      by
      the Registration Rights Agreement.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    (xiii)  After
      the
      Merger, the Company will, at all times, authorize, reserve and keep available,
      free of preemptive rights, enough shares of Common Stock for the purpose of
      enabling the Company to satisfy its obligations to issue the Conversion Shares
      upon conversion of the Notes.

     

    (xiv)  Prior
      to
      the Closing, the Company will not incur any material indebtedness or dispose
      of
      any material assets or make any material acquisition or change in its business
      or operations, except with the Initial Purchasers’ consent, which consent shall
      not be unreasonably withheld or delayed. The Company shall not, during the
      period commencing on the date hereof and ending on the Closing Date, issue
      any
      press release or other public communication, or hold any press conference with
      respect to the Company’s financial condition, results of operations or the
      Offering, without the prior consent of the Initial Purchasers, which consent
      shall not be unreasonably withheld or delayed, subject to the Company’s
      obligation to comply with applicable laws.

     

    (xv)  The
      Company shall use its reasonable best efforts to cause the Conversion Shares
      to
      be issued in compliance with all applicable federal, state and foreign
      securities laws and to cause the Conversion Shares not to be issued in violation
      of or subject to any preemptive or similar right that does or will entitle
      any
      person to acquire any Relevant Security from the Company upon issuance or sale
      of the Notes or the Conversion Shares.

     

    6.  Expenses.
      Whether
      or not the Offering is consummated or this Agreement is terminated (pursuant
      to
      Section 11 or otherwise), the Company agrees to pay the following costs and
      expenses and all other costs and expenses incident to the performance by the
      Company of its obligations hereunder: (a) the negotiation, preparation,
      printing, typing, reproduction, execution and delivery of this Agreement and
      of
      the other Offering Documents, any amendment or supplement to or modification
      of
      any of the foregoing and any and all other documents furnished pursuant hereto
      or thereto or in connection herewith or therewith; (b) the preparation, printing
      or reproduction of the Preliminary Offering Memorandum and the Offering
      Memorandum and each amendment or supplement; (c) the delivery (including
      postage, air freight charges and charges for counting and packaging) to the
      Initial Purchasers of such copies of each of the Preliminary Offering Memorandum
      and the Offering Memorandum and all amendments or supplements to any of them
      as
      may be reasonably requested for use in connection with the offer and sale of
      the
      Notes; (d) the preparation, printing, authentication, issuance and delivery
      of
      certificates for the Notes and the Conversion Shares, including any stamp taxes
      in connection with the original issuance and sale of the Securities; (e) the
      exemption from, or registration or qualification of the Securities for offer
      and
      sale under, the securities or “blue sky” laws of the several states (including
      filing fees and the reasonable fees, expenses and disbursements of counsel
      to
      the Initial Purchasers relating to such registration and qualification); (f)
      the
      transportation and other expenses incurred by or on behalf of Company
      representatives in connection with presentations to and related communications
      with prospective purchasers of the Notes; (g) the fees and expenses of counsel
      (including local and special counsel, if any) for the Company; (h) fees and
      expenses of the Trustee, including fees and expenses of their counsel; (i)
      fees
      and expenses of the Escrow Agent and the collateral agent under the Security
      Agreement, including fees and expenses of its counsel; and (j) all expenses
      and
      listing fees incurred in connection with the application for listing for
      quotation of the Common Stock on the American Stock Exchange. Except as set
      forth above, the Initial Purchasers will pay all of their own costs and
      expenses, including without limitation, the fees and disbursements of their
      counsel and transfer taxes on any resales of the Securities offered by
      them.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

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

     

    (A)  The
      Initial Purchasers shall have received an opinion, in substantially the form
      of
Exhibit
      A
      attached
      hereto, dated the Closing Date, of Cooley Godward Kronish LLP, counsel to the
      Company.

     

    (B)  The
      Initial Purchasers shall have received a comfort letter, in form and substance
      satisfactory to the Initial Purchasers, in their sole discretion, dated December
      12, 2006, of BDO Seidman, LLP, registered independent auditor of the
      Company.

     

    (C)  With
      respect to the comfort letter of BDO Seidman, LLP referred to in the preceding
      subsection, the Initial Purchasers shall have received a “bring-down” letter of
      BDO Seidman, LLP, in form and substance satisfactory to the Initial Purchasers,
      in their sole discretion, dated the Closing Date.

     

    (D)  The
      Initial Purchasers shall have received a comfort letter, in form and substance
      satisfactory to the Initial Purchasers, in their sole discretion, dated December
      11, 2006, of Ernst & Young LLP, registered independent auditor of Jazz.

     

    (E)  With
      respect to the comfort letter of Ernst & Young LLP referred to in the
      preceding subsection, the Initial Purchasers shall have received a “bring-down”
letter of Ernst & Young LLP, in form and substance satisfactory to the
      Initial Purchasers, in their sole discretion, dated the Closing
      Date.

     

    (F)  The
      Initial Purchasers shall have received an opinion, in form and substance
      satisfactory to the Initial Purchasers, in their sole discretion, dated the
      Closing Date, of Bingham McCutchen LLP, counsel to the Initial
      Purchasers.

     

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

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    (H)  The
      representations and warranties made in the Merger Agreement by each of the
      Company and Jazz shall be true and complete (in the case of representations
      and
      warranties qualified as to materiality) or true and correct in all material
      respects (in the case of all other representations and warranties) on and as
      of
      the Closing Date (except for any representation or warranty that speaks as
      of a
      specific date, which representation or warranty shall be true and complete
      in
      all material respects as of such date). 

     

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

     

    (J)  Subsequent
      to the date of this Agreement and since the date of the most recent financial
      statements in the Offering Memorandum, there shall not have occurred any change,
      or any development involving a prospective change in, or affecting the business,
      condition (financial or other), properties or results of operations of, the
      Company or the Subsidiary or Jazz not disclosed in the Offering Memorandum
      that
      is, in the judgment of the Initial Purchasers, so material and adverse as to
      make it impracticable or inadvisable to proceed with the Offering on the terms
      and in the manner contemplated by the Offering Memorandum.

     

    (K)  The
      Initial Purchasers shall have received certificates, dated the Closing Date
      and
      signed by the Chairman and Chief Executive Officer and the President, Chief
      Operating Officer, Chief Financial Officer and Secretary of the Company, to
      the
      effect that to the best of their knowledge:

     

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

     

    (ii)  The
      representations and warranties made by the Company and Jazz in the Merger
      Agreement are true and correct (in the case of representations and warranties
      qualified as to materiality) or true and correct in all material respects (in
      the case of all other representations and warranties) on and as of the Closing
      Date (except for any such representation or warranty that speaks as of a
      specific date, which representation or warranty is true and complete in all
      material respects as of such date). 

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    (iii)  No
      event
      has occurred and is continuing, as a result of which the Offering Memorandum
      including all exhibits and attachments thereto would contain an untrue statement
      of a material fact or omit to state a material fact required to be stated
      therein or necessary to make the statements therein, in the light of the
      circumstances existing at the time it is delivered to the Initial Purchasers,
      not misleading.

     

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

     

    (v)  Subsequent
      to the date of this Agreement and since the date of the most recent financial
      statements in the Offering Memorandum, there has not occurred (1) any change,
      or
      any development involving a prospective change, in or affecting the business,
      condition (financial or other), properties or results of operations of the
      Company or the Subsidiary, not contemplated by the Offering Memorandum, except
      for any change or prospective change that would not reasonably be expected
      to
      result in a Material Adverse Effect upon the Company, (2) any change, or any
      development involving a prospective change, in or affecting the business,
      condition (financial or other), properties or results of operations of Jazz,
      not
      contemplated by the Offering Memorandum, except for any change or prospective
      change that would not reasonably be expected to result in a Material Adverse
      Effect upon Jazz, or (3) any event or development relating to or involving
      the
      Company or the Subsidiary or any of their respective officers or directors
      that
      makes any statement made in the Offering Memorandum untrue in any material
      respect or that requires the making of any addition to or change in the Offering
      Memorandum in order to state a material fact necessary in order to make the
      statements made therein not misleading.

     

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

     

    (L)  Each
      of
      the Offering Documents and each other agreement or instrument executed in
      connection with the transactions contemplated thereby shall be reasonably
      satisfactory in form and substance to the Initial Purchasers and shall have
      been
      executed and delivered by all the respective parties thereto (other than the
      Initial Purchasers) and shall be in full force and effect, and there shall
      have
      been no material amendments, alterations, modifications or waivers of any
      provision thereof since the date of this Agreement.

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

    (M)  The
      Initial Purchasers shall have confirmed sales to the Subsequent Purchasers
      agreeing to fund a total of $145,000,000, none of the Subsequent Purchasers
      shall have actually made or threatened to make any amendments, alterations,
      modifications, withdrawals, waivers or breaches with respect to its commitment
      to purchase Notes, and the Initial Purchasers shall have no reasonable good
      faith belief that such commitments or purchases will not be funded.

     

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

     

    (O)  The
      Notes
      shall be eligible for clearance on DTC.

     

    (P)  At
      the
      Closing Date, the Company and the Trustee shall have entered into the Indenture,
      in form and substance satisfactory to the Initial Purchasers, in their sole
      discretion, and the Initial Purchasers shall have received counterparts, dated
      the Closing Date and executed by each of the parties thereto and the Notes
      shall
      have been duly executed and delivered by the Company and duly authenticated
      by
      the Trustee. 

     

    (Q)  At
      the
      Closing Date, each of the Registration Rights Agreement, the Escrow Agreement,
      the Security Agreement and the Control Agreement shall have been executed and
      delivered by all parties thereto. 

     

    (R)  Except
      as
      disclosed in the Offering Memorandum, there are no pending or threatened legal
      or governmental proceedings to which the Company or the Subsidiary or Jazz
      is a
      party or of which any property of the Company or the Subsidiary is the subject,
      which, the Initial Purchasers believe, in their sole discretion, if determined
      adversely to the Company or the Subsidiary, would individually or in the
      aggregate have a Material Adverse Effect on the financial position or results
      of
      operations of the Company and the Subsidiary taken as a whole; and

     

    (S)  The
      Company shall have received Limited Waivers in the form of Exhibit
      B
      hereto
      from the parties named therein.

     

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

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    8.  Indemnification.

     

    (a)  The
      Company shall indemnify and hold harmless (i) each Initial Purchaser, (ii)
      each
      person, if any, who controls an Initial Purchaser within the meaning of Section
      15 of the Securities Act or Section 20 of the Exchange Act, and (iii) the
      respective members, officers, directors, partners, employees, and agents of
      the
      Initial Purchasers or any controlling person, from and against any and all
      losses, liabilities, claims, damages and expenses whatsoever as incurred
      (including, but not limited to, reasonable attorneys’ fees and any and all
      expenses whatsoever incurred in investigating, preparing or defending against
      any investigation or litigation, commenced or threatened, or any claim
      whatsoever, and any and all amounts paid in settlement of any claim or
      litigation), joint or several, to which they or any of them may become subject
      under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
      liabilities, claims, damages or expenses (or actions in respect thereof) arise
      out of or are based upon (x) any untrue statement or alleged untrue statement
      of
      a material fact contained in the Preliminary Offering Memorandum or the Offering
      Memorandum or the omission or alleged omission to state in the Preliminary
      Offering Memorandum or the Offering Memorandum a material fact necessary to
      make
      the statements therein in light of the circumstances under which they were
      made
      not misleading, or (y) any breach by the Company or the Subsidiary of their
      respective representations, warranties or agreements set forth herein or of
      applicable law; provided,
      however,
      that
      the Company will not be liable pursuant to clause (x) above in any such case
      to
      the extent, but only to the extent, that any such loss, liability, claim, damage
      or expense arises out of or is based upon any such untrue statement or alleged
      untrue statement or omission or alleged omission made therein in reliance upon
      and in conformity with written information furnished to the Company by or on
      behalf of the Initial Purchasers expressly for use in the section entitled
“Plan
      of Distribution” therein. The parties acknowledge and agree that such
      information provided by or on behalf of the Initial Purchasers consists solely
      of the material identified in Section 15 hereof. This indemnity agreement will
      be in addition to any liability that the Company may otherwise have, including
      under this Agreement. In addition, with respect to any untrue statement or
      alleged untrue statement in, or omission or alleged omission from, the
      Preliminary Offering Memorandum, the Company shall not be liable to any Initial
      Purchaser (or its directors and officers or any person controlling such Initial
      Purchaser within the meaning of Section 15 of the Securities Act or Section
      20
      of the Exchange Act) from whom the person asserting any such loss, claims,
      damages or liabilities purchased the Notes concerned as part of the initial
      placement of the Notes by the Initial Purchasers hereunder, to the extent that
      any such loss, claims damages or liabilities asserted by such person results
      from the fact that there was not sent or given to such person, at or prior
      to
      the Closing, a copy of the Offering Memorandum, as amended or supplemented,
      if
      the Company had previously furnished copies thereof to such Initial Purchaser.
      Any amounts advanced by the Company to an indemnified party pursuant to this
      Agreement shall be returned to the Company if it shall be finally determined
      by
      a court of competent jurisdiction, not subject to appeal, that such indemnified
      party was not entitled to indemnification by the Company.

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

    (b)  Each
      Initial Purchaser, severally and not jointly, shall indemnify and hold harmless
      (i) the Company, (ii) each person, if any, who controls the Company within
      the
      meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
      and (iii) the officers, directors, partners, employees, representatives and
      agents of the Company, from and against any and all losses, liabilities, claims,
      damages and expenses whatsoever as incurred (including, but not limited to,
      attorneys’ fees and any and all expenses whatsoever incurred in investigating,
      preparing or defending against any investigation or litigation, commenced or
      threatened, or any claim whatsoever and any and all amounts paid in settlement
      of any claim or litigation), joint or several, to which they or any of them
      may
      become subject under the Securities Act, the Exchange Act or otherwise, insofar
      as such losses, liabilities, claims, damages or expenses (or actions in respect
      thereof) arise out of or are based upon any untrue statement or alleged untrue
      statement of a material fact provided by such Initial Purchasers and contained
      in the section entitled “Plan of Distribution” of the Offering Memorandum, or
      arise out of or are based upon the omission or alleged omission to state in
      the
      section entitled “Plan of Distribution” of the Offering Memorandum a material
      fact necessary to make the statements therein in light of the circumstances
      under which they were made not misleading, in each case to the extent, but
      only
      to the extent, that any such loss, liability, claim, damage or expense arises
      out of or is based upon any untrue statement or alleged untrue statement or
      omission or alleged omission made therein in reliance upon and in conformity
      with written information furnished to the Company by or on behalf of such
      Initial Purchasers expressly for use therein; provided,
      however,
      that in
      no case shall either Initial Purchaser be liable or responsible for any amount
      in excess of the discounts and commissions actually received by such Initial
      Purchaser in connection with the sale of the Securities. The parties acknowledge
      and agree that such information provided by or on behalf of an Initial Purchaser
      consists solely of the material identified in Section 15 hereof. This indemnity
      will be in addition to any liability that an Initial Purchaser may otherwise
      have, including under this Agreement.

     

    (c)  Promptly
      after receipt by an indemnified party under subsection (a) or (b) above of
      notice of the commencement of any action, such indemnified party shall, if
      a
      claim in respect thereof is to be made against the indemnifying party under
      such
      subsection, notify each party against whom indemnification is to be sought
      in
      writing of the commencement thereof (but the failure so to notify an
      indemnifying party shall not relieve it from any liability which it may have
      under this Section 8, except to the extent the defense of such claim or action
      has been materially prejudiced by such failure). In case any such action is
      brought against any indemnified party, and it notifies an indemnifying party
      of
      the commencement thereof, the indemnifying party will be entitled to
      participate, at its own expense in the defense of such action, and to the extent
      it may elect by written notice delivered to the indemnified party promptly
      after
      receiving the aforesaid notice from such indemnified party, to assume the
      defense thereof with counsel satisfactory to such indemnified party;
provided,
      however,
      that
      counsel to the indemnifying party shall not (except with the written consent
      of
      the indemnified party) also be counsel to the indemnified party. Notwithstanding
      the foregoing, the indemnified party or parties shall have the right to employ
      its or their own counsel in any such case, but the fees and expenses of such
      counsel shall be at the expense of such indemnified party or parties unless
      (i)
      the employment of such counsel shall have been authorized in writing by one
      of
      the indemnifying parties in connection with the defense of such action, (ii)
      the
      indemnifying parties shall not have employed counsel to take charge of the
      defense of such action within a reasonable time after notice of commencement
      of
      the action, (iii) the indemnifying party does not diligently defend the action
      after assumption of the defense, or (iv) such indemnified party or parties
      shall
      have reasonably concluded that there may be defenses available to it or them
      which are different from or additional to those available to one or all of
      the
      indemnifying parties (in which case the indemnifying party or parties shall
      not
      have the right to direct the defense of such action on behalf of the indemnified
      party or parties), in any of which events such fees and expenses of one such
      counsel and any local counsel shall be borne by the indemnifying parties. No
      indemnifying party shall, without the prior written consent of the indemnified
      parties, effect any settlement or compromise of, or consent to the entry of
      judgment with respect to, any pending or threatened claim, investigation, action
      or proceeding in respect of which indemnity or contribution may be or could
      have
      been sought by an indemnified party under this Section 8 or Section 9
      hereof (whether or not the indemnified party is an actual or potential party
      thereto), unless (x) such settlement, compromise or judgment (A) includes an
      unconditional release of the indemnified party from all liability arising out
      of
      such claim, investigation, action or proceeding, and (B) does not include a
      statement as to or an admission of fault, culpability or any failure to act,
      by
      or on behalf of the indemnified party, and (y) the indemnifying party confirms
      in writing its indemnification obligations hereunder with respect to such
      settlement, compromise or judgment.

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

    9.  Contribution.
      In
      order to provide for contribution in circumstances in which the indemnification
      provided for in Section 8 is for any reason held to be unavailable from an
      indemnifying party or is insufficient to hold harmless a party indemnified
      thereunder, the Company, on the one hand, and the Initial Purchasers, on the
      other hand, shall contribute to the aggregate losses, liabilities, claims,
      damages and expenses of the nature contemplated by such indemnification
      provision (including any investigation, legal and other expenses incurred in
      connection with, and any amount paid in settlement of, any action, suit or
      proceeding or any claims asserted, but after deducting in the case of losses,
      liabilities, claims, damages and expenses suffered by the Company, any
      contribution received by the Company from persons, other than the Initial
      Purchasers, who may also be liable for contribution, including persons who
      control the Company within the meaning of Section 15 of the Securities Act
      or
      Section 20 of the Exchange Act) to which the Company and the Initial Purchasers
      may be subject, in such proportion as is appropriate to reflect the relative
      benefits received by the Company, on the one hand, and the Initial Purchasers,
      on the other hand, from the offering of the Securities or, if such allocation
      is
      not permitted by applicable law in such proportion as is appropriate to reflect
      not only the relative benefits referred to above but also the relative fault
      of
      the Company, on the one hand, and the Initial Purchasers, on the other hand,
      in
      connection with the statements or omissions which resulted in such losses,
      liabilities, claims, damages or expenses, as well as any other relevant
      equitable considerations. The relative benefits received by the Company, on
      the
      one hand, and the Initial Purchasers, on the other hand, shall be deemed to
      be
      in the same proportion as (a) the total proceeds from the offering of the
      Securities (net of discounts but before deducting expenses) received by the
      Company bear to (b) the discounts and commissions actually received by the
      Initial Purchasers, respectively. The relative fault of the Company, on the
      one
      hand, and the Initial Purchasers, on the other hand, shall be determined by
      reference to, among other things, whether the untrue or alleged untrue statement
      of a material fact or the omission or alleged omission to state a material
      fact
      relates to information supplied by the Company or the Initial Purchasers and
      the
      parties’ relative intent, knowledge, access to information and opportunity to
      correct or prevent such statement or omission. The Company and the Initial
      Purchasers agree that it would not be just and equitable if contribution
      pursuant to this Section 9 were determined by pro
      rata
      allocation (even if the Initial Purchasers were treated as one entity for such
      purpose) or by any other method of allocation which does not take into account
      the equitable considerations referred to above. The aggregate amount of losses,
      liabilities, claims, damages and expenses incurred by an indemnified party
      and
      referred to above in Section 8 shall be deemed to include any legal or
      other expenses reasonably incurred by such indemnified party in investigating,
      preparing or defending against any litigation, or any investigation or
      proceeding by any judicial, regulatory or other legal or governmental agency
      or
      body, commenced or threatened, or any claim whatsoever based upon any such
      untrue or alleged untrue statement or omission or alleged omission.
      Notwithstanding the provisions of this Section 9, (i) in no case shall
      either of the Initial Purchasers be required to contribute any amount in excess
      of the amount by which the discounts and commissions actually received by such
      Initial Purchaser in respect of the Notes resold by the Initial Purchaser in
      the
      initial placement of such Notes exceeds the amount of any damages which such
      Initial Purchaser has otherwise been required to pay by reason of any untrue
      or
      alleged untrue statement or omission, or alleged omission, and (ii) no
      person guilty of fraudulent misrepresentation (within the meaning of
      Section 11(f) of the Securities Act) shall be entitled to contribution from
      any person who was not guilty of such fraudulent misrepresentation. For purposes
      of this Section 9, (A) each person, if any, who controls either of the
      Initial Purchasers within the meaning of Section 15 of the Securities Act
      or Section 20 of the Exchange Act, and (B) the respective officers, directors,
      partners, employees, representatives and agents of the Initial Purchasers or
      any
      controlling person shall have the same rights to contribution as such Initial
      Purchasers, and (C) each person, if any, who controls any Company within the
      meaning of Section 15 of the Securities Act or Section 20 of the
      Exchange Act, and (D) the officers, directors, employees, representatives and
      agents of the Company shall have the same rights to contribution as the Company,
      subject in each case to clauses (i) and (ii) of this Section 9. Any party
      entitled to contribution will, promptly after receipt of notice of commencement
      of any action, suit or proceeding against such party in respect of which a
      claim
      for contribution may be made against another party or parties under this
      Section 9, notify such party or parties from whom contribution may be
      sought, but the failure to so notify such party or parties shall not relieve
      the
      party or parties from whom contribution may be sought from any obligation it
      or
      they may have under this Section 9 or otherwise. No party shall be liable for
      contribution with respect to any action or claim settled without its prior
      written consent, provided
      that
      such written consent shall not be unreasonably withheld or delayed.

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    10.  Survival
      Clause.
      The
      respective representations, warranties, agreements, covenants and indemnities
      of
      the Company and the Initial Purchasers set forth in this Agreement shall remain
      in full force and effect, regardless of (a) any investigation made by or on
      behalf of officers, directors, partners, employees, agents, representatives
      or
      controlling persons referred to in Sections 8 and 9 hereof, and (b) delivery
      of
      and payment for the Notes, and shall, subject to Section 13 hereof, be binding
      upon and shall, subject to Section 13 hereof, inure to the benefit of, any
      successors, permitted assigns, heirs and legal representatives of the Company,
      the Initial Purchasers and the indemnified parties referred to in Section 8
      hereof. The respective agreements, covenants and indemnities set forth in
      Sections 6 and 8-20 hereof shall remain in full force and effect, regardless
      of
      any termination of this Agreement.

     

    11.  Termination.
      (a)
      This Agreement may be terminated in the sole discretion of the Initial
      Purchasers by notice to the Company if (i)  any conditions to be satisfied
      or obligations to be performed hereunder by the Company, including but not
      limited to those set forth in Section 7, or for which the Company is
      responsible, have not been satisfied or performed in all respects on or prior
      to
      the Closing Date, or (ii) at or prior to the Closing Date or at prior to the
      Additional Closing Date, as the case may be:

     

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

     

    (B)  trading
      on the New York Stock Exchange, the American Stock Exchange or the Nasdaq Stock
      Market shall have been suspended or made subject to material limitations, or
      minimum or maximum prices for trading shall have been fixed, or maximum ranges
      for prices for securities shall have been required, on the New York Stock
      Exchange, the American Stock Exchange or the Nasdaq Stock Market, or by order
      of
      the Commission or other regulatory body or governmental authority having
      jurisdiction;

     

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

     

    (D)(1)
      there shall have occurred any outbreak or escalation of hostilities or acts
      of
      terrorism involving the United States or there is a declaration of a national
      emergency or war by the United States, or (2) there shall have been any other
      calamity or crisis or any change in political, financial or economic conditions
      if the effect of any such event in (1) or (2), in the opinion of the Initial
      Purchasers, makes it impracticable or inadvisable to proceed with the offering,
      sale and delivery of the Notes on the terms and in the manner contemplated
      by
      the Offering Memorandum; or

     

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

     

    (c)  If
      this
      Agreement shall be terminated pursuant to any of the provisions hereof, or
      if
      the sale of the Notes provided for herein is not consummated because any
      condition to the obligations of the Initial Purchasers set forth herein is
      not
      satisfied or because of any refusal, inability or failure on the part of the
      Company to perform any agreement herein or comply with any provision hereof,
      the
      Company will be responsible for expenses as provided in Section 6
      herein.

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

    12.  Notices.
      All
      notices and other communications provided for or permitted hereunder shall
      be
      made in writing, shall be delivered by hand delivery, by telecopier, by courier
      guaranteeing overnight delivery or by first-class mail, return receipt
      requested, and shall be deemed given (i) when made, if made by hand delivery,
      (ii) upon confirmation, if made by telecopier (provided notice is also given
      by
      some other means permitted by this Section 12), (iii) one business day after
      being deposited with such courier, if made by overnight courier, or (iv) on
      the
      date indicated on the notice of receipt, if made by first-class mail, to the
      parties as follows: to the Initial Purchasers c/o CRT Capital Group LLC, 262
      Harbor Drive, Stamford, CT 06902, Attention: Christopher Chase, facsimile
      number: (203) 569-6890, and with a copy to Bingham McCutchen LLP, 150 Federal
      Street, Boston, MA 02110, Attention: John R. Utzschneider, Esq., facsimile
      number: (617) 951-8736, and if sent to the Company, to Acquicor Technology
      Inc.,
      4910 Birch Street, #102, Newport Beach, CA 92660, Attention: Secretary,
      facsimile number: (949) 266-9020, and with a copy to Cooley Godward Kronish
      LLP,
      101 California Street, 5th Floor, San Francisco, CA 94111, Attention:
      Gian-Michele aMarca, facsimile number: (415) 693-2222.

     

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

     

    14.  No
      Waiver; Modifications in Writing.
      No
      failure or delay on the part of the Company or the Initial Purchasers in
      exercising any right, power or remedy hereunder shall operate as a waiver
      thereof, nor shall any single or partial exercise of any such right, power
      or
      remedy preclude any other or further exercise thereof or the exercise of any
      other right, power or remedy. The remedies provided for herein are cumulative
      and are not exclusive of any remedies that may be available to the Company
      or
      the Initial Purchasers at law or in equity or otherwise. No waiver of or consent
      to any departure by the Company or the Initial Purchasers from any provision
      of
      this Agreement shall be effective unless signed in writing by the party entitled
      to the benefit thereof; provided
      that
      notice of any such waiver shall be given to each party hereto as set forth
      below. Except as otherwise provided herein, no amendment, modification or
      termination of any provision of this Agreement shall be effective unless signed
      in writing by or on behalf of the Company and the Initial Purchasers. Any
      amendment, supplement or modification of or to any provision of this Agreement,
      any waiver of any provision of this Agreement, and any consent to any departure
      by the Company or the Initial Purchasers from the terms of any provision of
      this
      Agreement shall be effective only in the specific instance and for the specific
      purpose for which made or given. Except where notice is specifically required
      by
      this Agreement, no notice to or demand on the Company in any case shall entitle
      the Company to any other or further notice or demand in similar or other
      circumstances.

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

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

     

    16.  Default
      by an Initial Purchaser.
      If
      either Initial Purchaser shall breach its obligations to purchase the Notes
      that
      it has agreed to purchase hereunder on the Closing Date or any Additional
      Closing Date, then the other Initial Purchaser may, but shall not be required
      to, purchase such Notes or may make arrangements satisfactory to the Company
      for
      the purchase of the Notes by other persons. If such non-defaulting Initial
      Purchaser does not elect to purchase such Notes and arrangements satisfactory
      to
      the Company for the purchase of such Notes are not made within 36 hours after
      such default, this Agreement shall terminate without liability on the part
      of
      the non-defaulting Initial Purchaser or the Company. Nothing herein shall
      relieve the defaulting Initial Purchaser from liability for its
      default.

     

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

     

    18.  No
      Fiduciary Obligations.
      The
      Company acknowledges and agrees that (i) the purchase and sale of the Notes
      pursuant to this Agreement, including the determination of the public offering
      price of the Notes and any related discounts and commissions and the conversion
      rate and other terms for the Notes, is an arm’s-length commercial transaction
      between the Company, on the one hand, and the Initial Purchasers, on the other
      hand, (ii) in connection with the offering contemplated hereby and the process
      leading to such transaction, each Initial Purchaser is and has been acting
      solely as a principal and is not the agent or fiduciary of the Company or their
      respective stockholders, creditors, employees or any other party, (iii) the
      Initial Purchasers have not assumed or will not assume an advisory or fiduciary
      responsibility in favor of the Company with respect to the offering contemplated
      hereby or the process leading thereto (irrespective of whether the Initial
      Purchasers have advised or are currently advising the Company or on other
      matters) and the Initial Purchasers have no obligation to the Company with
      respect to the offering contemplated hereby except the obligations expressly
      set
      forth in this Agreement, (iv) the Initial Purchasers and their respective
      affiliates may be engaged in a broad range of transactions that involve
      interests that differ from those of the Company, and (v) the Initial Purchasers
      have not provided any legal, accounting, regulatory or tax advice with respect
      to the offering contemplated hereby and the Company and have consulted their
      own
      legal, accounting, regulatory and tax advisors to the extent they deemed
      appropriate.

     

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

     

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

     

    

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

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

     

    
      	 	 	 
	 	
              Very
                truly yours,

               

              ACQUICOR TECHNOLOGY INC.
a Delaware
                corporation

            
	 
 	 
 	 
 
	 	By:  	/s/ Gilbert
              F. Amelio
	 	
              
Name:
Gilbert
              F.
              Amelio                                  
              
	 	Title:  Chairman
              and Chief Executive Officer

    

     

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

     

    CRT
      CAPITAL GROUP LLC

     

    By:
      /s/
      Christopher
      Chase                             

         
      Name: Christopher
      Chase                       

         
      Title: Managing
      Director                       

     

    NEEDHAM
      & COMPANY, LLC

     

    By:
      /s/
      Joseph
      Dews                                     

    Name:
      Joseph
      Dews                            
 

    Title:
      Managing
      Director                     
 
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      1

    

    

    
      	
               

               

              Initial
                Purchasers

            	 	
              Aggregate
                Principal Amount of Firm Notes to be Purchased

            	 
	
              CRT
                Capital Group LLC

            	 	
              $

            	
              116,000,000

            	 
	
              Needham
                & Company, LLC

            	 	 	
              29,000,000

            	 
	 	 	
              $

            	
              145,000,000EX-4.1 2005 STOCK OPTION PLAN OF THE REGISTRANT

 

EXHIBIT 4.1

2005 Stock Option Plan

Types of Grants and Eligibility

     The 2005 Plan is designed to provide an incentive to employees (including key employees such
as officers and directors) of the Company and to consultants and directors who are not employees of
the Company and its subsidiary companies and to offer an additional inducement in obtaining the
services of such individuals.

Shares Subject to the 2005 Stock Option Plan

     The aggregate number of Shares for which options may be granted under the 2005 Plan may not
exceed 1,000,000 shares; such Shares may consist either in whole or in part of authorized but
unissued shares of common stock or shares of common stock held in the treasury of the Company.
Shares of common stock subject to an option which expires, or for any reason is cancelled or is
terminated, unexercised, or which ceases for any reason to be exercisable may again become
available for the granting of options under the 2005 Plan.

Administration of the 2005 Plan

     The 2005 Plan is administered by the Company’s Compensation Committee (“Committee”).

     Subject to the express provisions of the 2005 Plan, the Committee has the authority, in its
sole discretion, with respect to options, to determine, among other things: the key employees,
consultants and advisors who are to receive options; the times when they may receive options; the
number of shares of common stock to be subject to each option; the term of each option; the date
each option is to become exercisable; whether an option is to be exercisable in whole, in part or
in installments, and, if in installments, the number of shares of common stock to be subject to
each installment; whether the installments are to be cumulative; the date each installment is to
become exercisable and the term of each installment; whether to accelerate the date of exercise of
any installment; whether shares of common stock may be issued on exercise of an option as partly
paid, and, if so, the dates when future installments of the exercise price are to become due and
the amounts of such installments; the exercise price of each option; the form of payment of the
exercise price; whether to restrict the sale or other disposition of the shares of common stock
acquired upon the exercise of an option and to waive any such restriction; and whether to subject
the exercise of all or any portion of an option to the fulfillment of contingencies as specified in
an applicable stock option contract. With respect to all options, the Committee has such discretion
to determine the amount, if any, necessary to satisfy the Company’s obligation to withhold taxes;
with the consent of the optionee, to cancel or modify an option, provided such option as modified
would be permitted to be granted on such date under the terms of the 2005 Plan; to prescribe, amend
and rescind rules and regulations relating to the 2000 Plan; and to make all other determinations
necessary or advisable for administering the 2005 Plan. The Board of Directors has the authority
described above with respect to the granting of director options.

Exercise Price

     The exercise price of the shares of common stock under each option is to be determined by the
Committee at the time of the grant. The exercise price of the shares of common stock is to be equal
to the fair market value of the common stock subject to such option on the date of grant.

Term

     The term of each option granted pursuant to the 2005 Plan is established by the Committee, in
its sole discretion, at or before the time such option is granted. Subject to early termination,
the option of each non-employee director option is exercisable for term of ten years from the date
of grant.

Exercise

     An option (or any part or installment thereof), to the extent then exercisable, is to be
exercised by giving written notice to the Company at its principal office. Payment in full of the
aggregate exercise price may be made (a) in cash or by certified check, or (b) if the applicable
stock option contract at the time of grant so permits, with the authorization of the Committee,
with previously acquired shares of common stock having an aggregate fair market value, on the date
of exercise, equal to the aggregate exercise price of all options being exercised, or (c) with any
combination of cash, certified check or shares of common stock.

7

 

     The Committee may, in its discretion, permit payment of the exercise price of an option by
delivery by the optionee of a properly executed exercise notice, together with a copy of his
irrevocable instructions to a broker acceptable to the Committee to deliver promptly to the Company
the amount of sale or loan proceeds sufficient to pay such exercise price.

Termination of Relationship

     Any employee holder of an option whose employment or relationship with the Company (and its
parent and subsidiaries) has terminated for any reason other than his death or disability may
exercise such option, to the extent exercisable on the date of such termination, at any time within
three months after the date of termination, but not thereafter and in no event after the date the
option would otherwise have expired; provided, however, that if his employment is terminated either
(a) for cause, or (b) without the consent of the Company, said option terminates immediately.
Options granted to employees under the 2005 Plan are not affected by any change in the status of
the holder so long as he or she continues to be a full-time employee of the Company, its parent or
any of its subsidiaries (regardless of having been transferred from one corporation to another).

Death or Disability

     If an optionee dies (a) while he is an employee or consultant to, the Company, its parent or
any of its subsidiaries, (b) within three months after the termination of such relationship (unless
such termination was for cause or without the consent of the Company), or (c) within one year
following the termination of such relationship by reason of disability, an option may be exercised,
to the extent exercisable on the date of death, by an executor, administrator or other person at
the time entitled by law the rights of the optionee, at any time within one year after death, but
not thereafter and in no event after the date the option would otherwise have expired.

     Any optionee whose relationship has terminated by reason of disability may exercise his
option, to the extent exercisable upon the effective date of such termination, at any time within
one year after such date, but not thereafter and in no event after the date the option would
otherwise have expired.

Adjustments Upon Changes in Common Stock

     Notwithstanding any other provisions of the 2005 Plan, in the event of any change in the
outstanding Common Stock by reason of a share dividend, recapitalization, merger or consolidation
in which the Company is the surviving corporation, split-up, combination or exchange of shares or
the like, the aggregate number and kind of shares subject to the 2005 Plan, the aggregate number
and kind of shares subject to each outstanding option and the exercise price thereof will be
appropriately adjusted by the Board of Directors, whose determination will be conclusive.

     In the event of (a) the liquidation or dissolution of the Company or (b) a merger or
consolidation in which the Company is not the surviving corporation, any outstanding options will
terminate, unless other provision is made therefor in the transaction.

Amendments and Termination of the 2005 Stock Option Plan

     No option may be granted under the 2005 Plan after October 20, 2015. The Board of Directors,
without further approval of the Company’s stockholders, may at any time suspend or terminate the
2005 Plan, in whole or in part, or amend it from time to time in such respects as it may deem
advisable, including, without limitation, to comply with the provisions of certain rules and
regulations promulgated by the Securities and Exchange Commission, among other things; provided,
however, that no amendment may be effective without the requisite prior or subsequent stockholder
approval which would (a) except as required for anti-dilution adjustments, increase the maximum
number of shares of common stock for which options may be granted under the 2005 Plan, (b)
materially increase the benefits to participants under the 2005 Plan, or (c) change the eligibility
requirements for individuals entitled to receive options under the 2005 Plan.

Non-Transferability of Options

     No option granted under the 2005 Plan may be transferable otherwise than by will or the laws
of descent and distribution, and options may be exercised, during the lifetime of the holder
thereof, only by such holder or such holder’s legal representatives. Except to the extent provided
above, options may not be assigned, transferred, pledged, hypothecated or disposed of in any way
(whether by operation of law or otherwise) and may not be subject to execution, attachment or
similar process.

8

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