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                                                                     EXHIBIT 4.2

                                     BYLAWS

                                       OF

                            FELCOR SUITE HOTELS, INC.

                                      *****

                                   ARTICLE I
                                    OFFICES

      Section 1.1. Resident Agent. The initial address of the resident agent
shall be 11 East Chase Street, Baltimore, Maryland 21202, and the name of the
initial registered agent of the corporation at such address shall be CSC-Lawyers
Incorporating Service Company.

      Section 1.2. Offices. The corporation may also have offices at such other
places both within and without the State of Maryland as the Board of Directors
may from time to time determine or the business of the corporation may require.

                                   ARTICLE II
                            MEETINGS OF STOCKHOLDERS

      Section 2.1. Annual Meetings. Annual meetings of stockholders shall be
held in the month of or at such other date and time as may be designated from
time to time by the Board of Directors and stated in the notice of the meeting,
at any place within the United States for the purpose of electing a Board of
Directors, and transacting such other business as properly may be brought before
the meeting.

      Section 2.2. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise provided by statute or by the Charter,
may be called at any time by the Chairman, the Chief Executive Officer or the
President and shall be called by the Secretary at the request in writing of a
majority of the Board of Directors, a majority of the "Independent Directors"
(as defined in Section E of Article VI of the Charter), or at the request in
writing of stockholders owning not less than 10% of the shares of the entire
capital stock of the corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice.

      Section 2.3. Notice of Meetings. Whenever stockholders are required or
permitted to take action at a meeting, a written notice of the meeting shall be
given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the written notice

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of any meeting shall be given not less than ten (10) nor more than sixty (60)
days before the date of the meeting, to each stockholder entitled to vote at
such meeting.

      Section 2.4. Quorum; Vote Required for Action. A majority of all votes
cast at a meeting of stockholders duly called at which a quorum is present shall
be sufficient to elect a director. There shall be no cumulative voting. Each
share of stock shall be voted for as many individuals as there are directors to
be elected and for whose election the share is entitled to be voted. Except as
otherwise provided by law or by the Charter or these Bylaws, the presence in
person or by proxy of the holders of a majority of the outstanding shares of
stock of the corporation entitled to vote thereat shall constitute a quorum at
each meeting of the stockholders and all questions shall be decided by a vote of
the holders of a majority of the shares so represented in person or by proxy at
the meeting and entitled to vote thereat. The stockholders present at any duly
organized meeting may continue to do business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Each
shareholder of record shall have the right, at every meeting of shareholders, to
one vote for each share held, except shares which are the subject of a
redemption notice as provided in the Charter.

      Section 2.5. Adjournments. Notwithstanding any other provisions of these
Bylaws, the holders of a majority of the shares of stock of the corporation
entitled to vote at any meeting, present in person or represented by proxy,
whether or not a quorum is present, shall have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, to a
date not more than 120 days after the original record date. At any such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting
originally called; provided, however, that if the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the adjourned meeting.

      Section 2.6. Voting Rights; Proxies. Unless otherwise provided by law or
by the Charter, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be valid no
more than eleven (11) months from its date, unless the proxy provides for a
longer period. Each proxy shall be revocable unless expressly provided therein
to be irrevocable or unless otherwise made irrevocable by law. The notice of
every meeting of the stockholders may be accompanied by a form of proxy approved
by the Board of Directors in favor of such person or persons as the Board of
Directors may select.

      Section 2.7. Consent of Stockholders in Lieu of Meeting. Any action
required to be taken at any annual or special meeting of stockholders of the
corporation, or any action which may be taken at any annual or special meeting
of the stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by each stockholder entitled to vote on the matter.

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Every written consent shall bear the date of signature of each stockholder who
signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the date
of the earliest dated consent delivered to the corporation, such written consent
or consents are delivered to the corporation by delivery to its registered
office in Maryland, its principal place of business, or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the resident agent of the
corporation shall be made by hand or by certified or registered mail, return
receipt requested.

      Section 2.8. List of Stockholders Entitled to Vote. The officer who has
charge of the stock ledger of the corporation shall prepare and make, at least
ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.

      Section 2.9. Record Date. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders, or
to receive payment of any dividend or other distribution or allotment of any
rights or to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date on
which the resolution fixing the record date is adopted and which record date
shall not be more than sixty (60) nor less than ten (10) days before the date of
any meeting of stockholders, nor more than sixty (60) days prior to the time for
such other action as hereinbefore described; provided, however, that if no
record date is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be the later of the close of business on the day on which notice is mailed or
the thirtieth (30th) day before the meeting, if notice is waived, at the close
of business on the day next preceding the day on which the meeting is held, and,
for determining stockholders entitled to receive payment of any dividend or
other distribution or allotment of rights or to exercise any rights of change,
conversion or exchange of stock or for any other purpose, the record date shall
be at the close of business on the day on which the Board of Directors adopts a
resolution relating thereto.

      A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.

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      Section 2.10. Inspectors. The Board of Directors may, and the Board of
Directors shall if required by statute, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If any of the inspectors so appointed shall fail to appear
or act, the chairman of the meeting shall, or if inspectors shall not have been
appointed, the chairman of the meeting may, appoint one or more inspectors. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares of capital stock of the Corporation
outstanding and the voting power of each, the number of shares represented at
the meeting, the validity of ballots and proxies and the existence of a quorum,
and shall receive votes, ballots or consents, determine and retain for a
reasonable period a record of the disposition of any challenges made to any
determination by the inspectors, count all votes, ballots or consents, determine
the results, certify their determination of the number of shares of capital
stock represented at the meeting and their count of all votes and ballots and do
such acts as are required by statute or are proper to conduct the election or
vote with fairness to all stockholders. The inspectors shall make a report in
writing of any challenge, request or matter determined by them and shall execute
a certificate of any fact found by them. No director or candidate for the office
of director shall act as an inspector of an election of directors. Inspectors
need not be stockholders.

                                   ARTICLE III
                               BOARD OF DIRECTORS

      Section 3.1. Number; Election. Subject to the provisions set forth in the
Charter, the number of directors shall be fixed in such manner as may be
determined by the vote of a majority of the directors then in office. The
directors of the corporation shall be classified as set forth in the Charter and
the directors of each such class shall be elected at the annual meeting of
stockholders held for the same year in which the term of such class expires as
set forth in the Charter. A majority of the directors may elect from its members
a chairman. The chairman, if any, shall hold this office until his successor
shall have been elected and qualified.

      Section 3.2. Independent Directors. Notwithstanding anything to the
contrary herein, the majority of the Board of Directors shall be comprised of
"Independent Directors" as set forth in Section E of Article VI of the Charter.

      Section 3.3. Vacancies. Any vacancy on the Board of Directors shall be
filled in accordance with Section D of Article VI of the Charter.

      Section 3.4. Powers. The Board of Directors shall be vested with the
powers set forth in Article X of the Charter.

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      Section 3.5. Resignations. Any director may resign at any time by written
notice to the corporation. Any such resignation shall take effect at the date of
receipt of such notice or at any later time specified therein, and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.

      Section 3.6. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such place or places within or without the State of Maryland,
at such hour and on such day as may be fixed by resolution of the Board of
Directors, without further notice of such meetings. The time and place of
holding regular meetings of the Board of Directors may be changed by the
Chairman, the Chief Executive Officer or the President by giving written notice
thereof as provided in Article III, Section 3.8 hereof.

      Section 3.7. Special Meetings. Special meetings of the Board of Directors
may be held whenever called by (i) the Chairman, the Chief Executive Officer or
the President; (ii) the Chairman, the Chief Executive Officer, the President or
the Secretary on the written request of a majority of the Board of Directors or
a majority of the Independent Directors then in office; or (iii) resolution
adopted by the Board of Directors. Special meetings may be held within or
without the State of Maryland as may be stated in the notice of the meeting.

      Section 3.8. Notice of Meetings. Written notice of the time, place and
general nature of the business to be transacted at all special meetings of the
Board of Directors, and written notice of any change in the time or place of
holding the regular meetings of the Board of Directors, must be given by written
notice delivered personally, telegraphed or mailed to each director at his
business or resident address. Personally delivered or telegraphed notices shall
be given at least two days prior to the meeting. Notice by mail shall be given
at least five days prior to the meeting. If mailed, such notice shall be deemed
to be given when deposited in the United States mail properly addressed, with
postage thereon prepaid. If given by telegram, such notice shall be deemed to be
given when the telegram is delivered to the telegraph company; provided,
however, that notice of any meeting need not be given to any director if waived
by him in writing, or if he shall be present at such meeting, except when the
director attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the grounds that
the meeting is not lawfully called or convened.

      Section 3.9. Quorum; Vote Required for Action. (a) At all meetings of the
Board of Directors, a majority of the directors then in office shall constitute
a quorum for the transaction of business and, except as otherwise provided by
law or these Bylaws, the act of a majority of the directors present at any
meeting at which there is a quorum shall be the act of the Board of Directors;
but a lesser number may adjourn the meeting from day to day, without notice
other than announcement at the meeting, until a quorum shall be present.

      (b) Notwithstanding anything in these Bylaws to the contrary, (i) any
action pertaining to a sale or other disposition of an "Initial Hotel," as
defined in the registration statement (the

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"Registration Statement") on Form S-11 (File No. 33-79214) of FelCor Suite
Hotels, Inc., previously a Delaware corporation prior to its merger with and
into the corporation ("FSHI Delaware"), as declared effective by the Securities
and Exchange Commission (the "SEC") in connection with FSHI Delaware's initial
public offering of common stock (the "Initial Public Offering") and (ii) any
other action pertaining to any transaction involving the corporation, including
the purchase, sale, lease, or mortgage of any real estate asset or any other
transaction, in which an advisor, director or officer of the corporation, or any
affiliate of any of the foregoing persons, has any direct or indirect interest
other than solely as a result of their status as a director, officer, or
shareholder of the corporation, must be approved by a majority of the directors,
including a majority of the Independent Directors, even if the Independent
Directors constitute less than a quorum.

      Section 3.10. Action by Unanimous Consent of Directors. Any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee of the Board of Directors may be taken without a meeting, if all
members of the Board of Directors or the committee of the Board of Directors, as
the case may be, consent thereto in writing, which may be in counterparts, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or the committee thereof. Such writing(s) shall be manually
executed if practicable, but if circumstances so require, effect shall be given
to written consent transmitted by telegraph, telex, telecopy or similar means of
visual data transmission.

      Section 3.11. Telephonic Meetings Permitted. Members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of such board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time, and
participation in a meeting pursuant to this Bylaw shall constitute presence in
person at such meeting.

      Section 3.12. Compensation. Independent Directors shall be entitled to
such compensation for their services as may be approved by the Board of
Directors, including, if so approved by resolution of the Board of Directors, a
fixed sum and expenses of attendance at each regular or special meeting or any
committee thereof. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.

      Section 3.13. Removal. Subject to the provisions set forth in the Charter,
any director or the entire Board of Directors may be removed for cause only by
the holders of a majority of the shares entitled to vote at an election of
directors. The notice calling such meeting shall state the intention to act upon
such matter, and the vacancy or vacancies, if any, caused by such removal shall
be filled at such meeting by a vote of the holders of a majority of the shares
entitled to vote at an election of directors.

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      Section 3.14. Policies and Resolutions. It shall be the duty of the Board
of Directors to ensure that the purchase, sale, retention and disposal of the
corporation's assets, the investment policies and the borrowing policies of the
corporation and the limitations thereon or amendment thereof are at all times:

            (a) consistent with such policies, limitations and restrictions as
are contained in these Bylaws, the Charter, and as described in the Registration
Statement or in the ongoing periodic reports of the corporation and the
previously filed periodic reports of FSHI Delaware filed with the SEC following
the Initial Public Offering, subject to revision from time to time at the
discretion of the Board of Directors without shareholder approval unless
otherwise required by law; and

            (b) in compliance with the restrictions applicable to real estate
investment trusts pursuant to the Internal Revenue Code of 1986, as amended.

      Section 3.15. Committees. The Board of Directors may appoint from among
its members an executive committee and other committees comprised of two or more
directors. A majority of the members of any committee so appointed, other than
the executive committee, shall be Independent Directors and the executive
committee, if appointed, may be composed of any two or more directors. The Board
of Directors shall appoint an audit committee comprised of not less than two
members, a majority of whom are Independent Directors. The Board of Directors
may delegate to any committee any of the powers of the Board of Directors except
the power to elect directors, declare dividends or distributions on stock,
recommend to the shareholders any action which requires shareholder approval,
amend or repeal these Bylaws, approve any merger or share exchange which does
not require shareholder approval, or issue stock. However, if the Board of
Directors has given general authorization for the issuance of stock, a committee
of the Board of Directors, in accordance with a general formula or method
specified by the Board of Directors by resolution or by adoption of a stock
option plan, may fix the terms of stock, subject to classification or
reclassification, and the terms on which any stock may be issued.

      Notice of committee meetings shall be given in the same manner as notice
for special meetings of the Board of Directors.

      One-third, but not less than two, of the members of any committee shall be
present in person at any meeting of such committee in order to constitute a
quorum for the transaction of business at such meeting, and the act of a
majority present shall be the act of such committee. The Board of Directors may
designate a chairman of any committee, and such chairman or any two members of
any committee may fix the time and place of its meetings unless the Board of
Directors shall otherwise provide. In the absence or disqualification of any
member of any such committee, the members thereof present at any meeting and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another director to act at the meeting in the place of such
absent or disqualified members;

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provided, however, that in the event of the absence or disqualification of an
Independent Director, such appointee shall be an Independent Director.

      Each committee shall keep minutes of its proceedings and shall report the
same to the Board of Directors at the meeting next succeeding, and any action by
the committees shall be subject to revision and alteration by the Board of
Directors, provided that no rights of third persons shall be affected by any
such revision or alteration.

      Subject to the provisions hereof, the Board of Directors shall have the
power at any time to change the membership of any committee, to fill all
vacancies, to designate alternative members to replace any absent or
disqualified member, or to dissolve any such committee.

                                   ARTICLE IV
                                    NOTICES

      Section 4.1. Notices. Except as otherwise provided herein, or in the
Charter, whenever, under the provisions of the Charter or these Bylaws, notice
is required to be given to any person, such notice must be in writing and may be
given in person, in writing or by mail, telegram, telecopy or other similar
means of visual communication, addressed to such person, at his address as it
appears on the records of the corporation, with postage or other transmittal
charges thereon prepaid. Such notice shall be deemed to be given (i) if by mail,
one day following the day when the same shall be deposited in the United States
mail, and (ii) otherwise, when such notice is transmitted.

      Section 4.2. Waiver of Notice. Whenever any notice is required to be given
under the provisions of the Charter or these Bylaws, a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent thereto.

                                    ARTICLE V
                                    OFFICERS

      Section 5.1. Election; Qualifications; Term of Office; Resignation;
Removal; Vacancies. The officers of the corporation shall be elected or
appointed by the Board of Directors and may include, at the discretion of the
Board of Directors, a Chairman, a President, a Chief Executive Officer, a Chief
Operating Officer, one or more vice Presidents, a Secretary, one or more
assistant secretaries, a Treasurer, one or more assistant treasurers, and other
officers as may be determined by the Board of Directors. Any number of offices
may be held by the same person, provided that no person may serve concurrently
as both president and vice-president. The officers of the corporation shall hold
office until their successors are chosen and qualified, except that any officer
may resign at any time by written notice to the corporation and the

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Board of Directors may remove any officer at any time at its discretion with or
without cause. Any vacancies occurring in any office of the corporation by
death, resignation, removal or otherwise may be filled for the unexpired portion
of the term by the Board of Directors, by resolution adopted by all of its
members, at any regular or special meeting.

      Section 5.2. Powers and Duties. The officers of the corporation shall have
such powers and duties as generally pertain to their offices, except as modified
herein or by the Board of Directors, as well as such powers and duties as shall
be determined from time to time by the Board of Directors. The Chairman, if one
is elected, and otherwise the President (or Chief Executive Officer), shall
preside at all meetings of the Board of Directors. The President (or Chief
Executive Officer) shall preside at all meetings of the stockholders.

                                   ARTICLE VI
                                      STOCK

      Section 6.1. Certificates. Every holder of stock in the corporation shall
be entitled to have a certificate, signed by, or in the name of the corporation
by, (i) the Chairman, the Chief Executive Officer, the President or a Vice
President, and (ii) the Treasurer or an assistant treasurer, or the Secretary or
an assistant secretary of the corporation, certifying the number of shares owned
by him in the corporation. If the corporation shall be authorized to issue more
than one class of stock, the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock thereof
and the qualification, limitations or restrictions of such preferences and/or
rights shall be set forth in full or summarized on the face or back of the
certificate which the corporation shall issue to represent such class or series
of stock, provided that, except as otherwise provided in Section 2-211 of the
Maryland General Corporation Law, in lieu of the foregoing requirements, there
may be set forth on the face or back of the certificate which the corporation
shall issue to represent such class or series of stock, a statement that the
corporation will furnish without charge to each stockholder who so requests the
powers, designations, preferences and relative, participating, optional or other
special rights of each class of stock thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.

      Section 6.2. Certificates. A stock certificate may not be issued until the
stock represented by it is fully paid.

      Section 6.3. Facsimile Signatures. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.

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      Section 6.4. Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.

      Section 6.5. Transfer Agents and Registrars. At such time as the
corporation lists its securities on a national securities exchange or qualifies
for trading in the over-the-counter market, the Board of Directors shall appoint
one or more banks or trust companies in such city or cities as the Board of
Directors may deem advisable, from time to time, to act as transfer agents
and/or registrars of the shares of stock of the corporation; and, upon such
appointments being made, no certificate representing shares shall be valid until
countersigned by one of such transfer agents and registered by one of such
registrars.

      Section 6.6. Transfer of Stock. No transfers of shares of stock of the
corporation shall be made if (i) void ab initio pursuant to any provision of the
corporation's Charter or (ii) the Board of Directors, pursuant to any provision
of the corporation's Charter, shall have refused to permit the transfer of such
shares. Permitted transfers of shares of stock of the corporation shall be made
on the stock records of the corporation only upon the instruction of the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent or
transfer clerk, and upon surrender of the certificate or certificates, if
issued, for such shares properly endorsed or accompanied by a duly executed
stock transfer power and the payment of all taxes thereon. Upon surrender to the
corporation or the transfer agent of the corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, as to any transfers not prohibited by any provision of
the corporation's Charter or by action of the Board of Directors thereunder, it
shall be the duty of the corporation to issue a new certificate to the person
entitled thereto cancel the old certificate and record the transaction upon its
books.

                                   ARTICLE VII
                               GENERAL PROVISIONS

      Section 7.1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the Charter, if any, may be declared
by resolution adopted by the Board of Directors at any regular or special
meeting, pursuant to law; provided, however, as permitted

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by law, it shall be the duty of the Board of Directors to declare such dividends
as may be necessary to cause the corporation to satisfy the requirements for
qualification as a Real Estate Investment Trust ("REIT") under the Internal
Revenue Code of 1986, as amended from time to time ("Code"). Dividends may be
paid in cash, in property, or in shares of the capital stock, subject to the
provisions of the Charter.

      Before payment of any dividend, subject to the provisions of the Charter
and continued qualification as a REIT under the Code, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.

      Section 7.2. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.

      Section 7.3. Amendments. These Bylaws may be altered, amended or repealed
or new Bylaws may be adopted from time to time in the manner prescribed in the
Charter.

                                  ARTICLE VIII
                                 INDEMNIFICATION

      Section 8.1. Indemnification. The corporation shall indemnify, and advance
litigation expenses (including attorneys' fees) to, any person entitled to
indemnity under the Maryland General Corporation Law as the same exists or may
hereafter be amended ("MGCL") to the fullest extent permitted by the MGCL;
provided, however, that the corporation shall not be permitted to indemnify, or
advance expenses to, any person in connection with any proceeding initiated by
such person, unless such proceeding is authorized by a majority of the directors
of the corporation.

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EXHIBIT 4.1

SECURITIES PURCHASE AGREEMENT

     
This Securities Purchase Agreement (this
“Agreement”) is made and entered into as
of August 9, 2005 (the “Execution
Date”), by and among Zix Corporation, a Texas
corporation (the “Company”), and each of
the purchasers listed on Schedule A attached hereto
(collectively, the “Purchasers” and
individually, a “Purchaser”).

RECITALS

     
WHEREAS, the Company desires to sell to the Purchasers, and the
Purchasers desire to purchase from the Company, up to an
aggregate of 10,503,862 units (each a
“Unit”), each Unit consisting of one
share of common stock, par value $.01 per share, of the
Company (“Common Stock”) and a five year
warrant (a “Warrant”) to purchase
one-third of one share of Common Stock, on the terms and
conditions set forth in this Agreement; and

     
WHEREAS, the Company and each Purchaser are executing and
delivering this Agreement in reliance upon an exemption from
securities registration afforded by Regulation D
(“Regulation D”) as promulgated by
the Securities and Exchange Commission (the
“SEC”) under the Securities Act of 1933,
as amended (the “Securities Act”).

     
NOW, THEREFORE, in consideration of the foregoing, the mutual
promises hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     
1. AGREEMENT TO PURCHASE AND SELL STOCK.

     
(a) Company Authorization. The Company’s
Board of Directors has authorized the issuance and sale,
pursuant to the terms and conditions of this Agreement, of up to
10,503,862 shares of Common Stock (the
“Purchased Shares”) and up to 3,466,274
Warrants, substantially in the form attached hereto as
Exhibit A. Each Warrant shall be exercisable to
purchase the number of shares of Common Stock set forth thereon
at a price of $3.04 per share of Common Stock (the
“Purchased Warrants” and together with
the Purchased Shares, the “Purchased
Securities”). Subject to their terms and
conditions, the Purchased Warrants shall be exercisable at any
time and from time to time from and after the six-month
anniversary of the Closing Date through and including
August 9, 2010.

     
(b) Agreement to Purchase and Sell Securities.

		
	 	     
    (i) Subject to the terms and conditions of this Agreement,
    each Purchaser, severally and not jointly, agrees to purchase,
    and the Company agrees to sell to each Purchaser, at the Closing
    (as defined below), that number of Units (including the Firm
    Units and Excess Units, each as defined below) set forth
    opposite such Purchaser’s name on Schedule A
    attached hereto. The purchase price of each Unit shall be $2.50
    (the “Per Unit Price”), except in the
    case of each Unit purchased by a director or officer of the
    Company which shall be $2.99 (the “Insider Per Unit
    Price”) and each shall be payable as hereafter set
    forth.
	 
	 	     
    (ii) Notwithstanding anything to the contrary in this
    Agreement, on the Closing Date, no more than 6,302,318 Units
    representing 6,302,318 shares of Common Stock (the
    “Firm Shares”) and associated Warrants
    (the “Firm Warrants”, and together with
    the Firm Shares, the “Firm Units”) shall
    be issued to the Purchasers prior to the Company obtaining
    shareholder approval to issue to the Purchasers the shares of
    Common Stock in excess of the Firm Units in accordance with the
    requirements of NASDAQ Rule 4350(i) and Section 5(d)
    hereto (the “Shareholder Approval”).
    Prior to obtaining the Shareholder Approval, the Units to be
    purchased by the Purchasers (including the Warrants thereto)
    representing Purchased Shares in excess of the Firm Units (the
    “Excess Units”) shall not be issued to
    the Purchasers and instead the proceeds in respect of such
    Excess Units (the “Excess Funds”) shall
    be deposited into

A-1

 

		
	 	
    escrow, in accordance with the terms of an escrow agreement,
    substantially in the form of Exhibit D hereto (the
    “Escrow Agreement”). The Excess Funds
    shall accrue interest from and including the day following the
    Closing Date to and excluding the date of release in accordance
    with the terms of the Escrow Agreement at a rate of
    7.0% per annum (computed on the basis of a 365-day year).
    If the Company obtains the Shareholder Approval prior to the
    Shareholder Approval Date (as defined below), the Excess Funds
    shall be released to the Company in accordance with the Escrow
    Agreement, and the Excess Units shall be issued to each of the
    Purchasers in the amounts set forth on Schedule A
    hereto, along with such Purchaser’s pro rata share of
    accrued interest on the Excess Funds to such date, which shall
    be payable in cash. If the Company does not obtain the
    Shareholder Approval prior to the Shareholder Approval Date (as
    defined below), the Excess Funds shall be returned to each of
    the Purchasers in accordance with the terms of the Escrow
    Agreement, along with such Purchaser’s pro rata share of
    accrued interest on the Excess Funds to such date. If the Excess
    Funds accrue earnings or interest in escrow at a rate less than
    the rate required by this Section 1(b)(ii), the
    Company shall promptly pay to the Purchasers any shortfall
    amount.

     
(c) Use of Proceeds. The Company intends to
use the net proceeds from the sale of the Purchased Securities
for working capital and general corporate purposes as determined
by the Company from time to time.

     
(d) Obligations Several, Not Joint. The
obligations of each Purchaser under this Agreement are several
and not joint with respect to the obligations of any other
Purchaser, and no Purchaser shall be responsible in any way for
the performance of the obligations of any other Purchaser under
this Agreement. The decision of each of the Purchasers to
purchase the Purchased Securities pursuant to this Agreement has
been made by such Purchaser independently of any other
Purchaser. Nothing contained herein, and no action taken by any
Purchaser pursuant hereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to
independently protect and enforce such Purchaser’s rights,
including, without limitation, the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such
purpose.

     
2. CLOSING. The purchase and sale of the
Purchased Securities shall take place at the offices of Baker
Botts L.L.P., 2001 Ross Avenue, Dallas, Texas 75201, at
2:00 p.m. Dallas, Texas time, on August 9, 2005, or at
such other time and place as the Company and Purchasers
representing a majority of the Purchased Securities to be
purchased, mutually agree upon (which time and place are
referred to in this Agreement as the
“Closing”). At the Closing, against
delivery of full payment for the Purchased Securities sold
hereunder by wire transfer of immediately available funds in
accordance with the Company’s instructions; the Company
shall issue and deliver to each Purchaser (i) one or more
stock certificates registered in the name of each Purchaser (or
in such nominee name(s) as designated by such Purchaser in the
Stock Certificate and Warrant Questionnaire, attached hereto as
Appendix I (the “Stock Certificate
Questionnaire”), representing the number of Firm
Shares set forth opposite the appropriate Purchaser’s name
on Schedule A hereto, and bearing the legend set
forth in Section 4(k)(i) herein and (ii) the
number of Firm Warrants set forth opposite the appropriate
Purchaser’s name on Schedule A hereto, and
bearing the legend set forth in Section 4(k)(ii);
provided, however, that the Company may furnish to each
Purchaser a facsimile copy of the warrant representing the Firm
Warrant and of the stock certificate(s) representing the Firm
Shares purchased by such Purchaser no later than the next
Business Day following the Closing Date, with the original
warrant and original stock certificate(s) to be delivered to
such Purchaser by overnight courier no later than the third
(3rd) Business Day following the Closing Date. Closing
documents, other than the warrants representing the Firm
Warrants and the stock certificates representing the Firm
Shares, may be delivered by facsimile on the Closing Date, with
original signature pages subsequently sent by overnight courier.

     
For purposes of this Agreement, “Closing
Date” means the date of the Closing, and
“Business Day” means any day except
Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which

A-2

 

banking institutions in the State of New York are authorized or
required by law or other governmental action to close.

     
3. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS
OF THE COMPANY. The Company hereby represents and
warrants to each Purchaser that, except as set forth in the SEC
Documents (as defined below) and in the Disclosure Letter
attached hereto as Exhibit B (the
“Disclosure Letter”):

     
(a) Organization Good Standing and
Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Texas and has all corporate power and authority
required to (i) own, operate and occupy its properties and
to carry on its business as presently conducted and
(ii) enter into this Agreement and the other agreements,
instruments and documents contemplated hereby, and to consummate
the transactions contemplated hereby and thereby. The Company is
qualified to do business and is in good standing in each
jurisdiction in which the failure to so qualify would have a
Material Adverse Effect. As used in this Agreement,
“Material Adverse Effect” means a
material adverse effect on, or a material adverse change in, the
business, operations, financial condition, results of
operations, assets or liabilities of the Company and the
Subsidiaries (as defined below), taken as a whole.

     
(b) Capitalization. The capitalization of the
Company is as follows:

		
	 	     
    (i) The authorized capital stock of the Company consists of
    175,000,000 shares of Common Stock, $.01 par value per
    share, and 10,000,000 shares of preferred stock, par value
    $1.00 per share (“Preferred Stock”).
	 
	 	     
    (ii) As of June 30, 2005, the issued and outstanding
    capital stock of the Company consisted of 32,424,929 shares
    of Common Stock and no shares of Preferred Stock. The shares of
    issued and outstanding capital stock of the Company have been
    duly authorized and validly issued, are fully paid and
    nonassessable and have not been issued in violation of or are
    not otherwise subject to any preemptive or other similar rights.
	 
	 	     
    (iii) As of June 30, 2005, the Company had
    10,110,617 shares of Common Stock reserved for issuance
    upon exercise of options granted under the Company’s stock
    option plans.
	 
	 	     
    (iv) As of June 30, 2005, the Company had outstanding
    options for 8,211,325 shares of Common Stock.
	 
	 	     
    (v) As of June 30, 2005, the Company had 3,755,370
    issued and outstanding warrants for the purchase of shares of
    Common Stock.

     
With the exception of the foregoing in this
Section 3(b), there are no outstanding
subscriptions, options, warrants, convertible or exchangeable
securities or other rights to purchase shares of Common Stock or
other securities of the Company, or rights that would trigger
any anti-dilution or similar adjustments to any securities of
the Company, granted to or by the Company, and there are no
commitments, plans or arrangements to issue any shares of Common
Stock or any security convertible into or exchangeable for
Common Stock.

     
(c) Subsidiaries. Except for the
Company’s subsidiaries listed in the SEC documents (the
“Subsidiaries”), the Company does not
own any capital stock of, assets comprising the business of,
obligations of, or any other interest (including any equity or
partnership interest) in, any person or entity. The Company
owns, directly or indirectly, all of the issued and outstanding
shares of stock in each of the Subsidiaries. Each of the
Subsidiaries is duly organized and validly existing in good
standing under the laws of its respective state of
incorporation. Each of the Subsidiaries has full power and
authority to own, operate and occupy its properties and to
conduct its business as presently conducted and is registered or
qualified to do business and in good standing in each
jurisdiction in which it owns or leases property or transacts
business and where the failure to be so qualified would have a
Material Adverse Effect.

     
(d) Due Authorization. All corporate actions
on the part of the Company necessary for the authorization,
execution, delivery and performance of all obligations of the
Company under this Agreement, including

A-3

 

the authorization, issuance, reservation for issuance and
delivery of all the Purchased Securities being sold under this
Agreement and the Common Stock issuable upon exercise of the
Purchased Warrants (the “Warrant
Shares”), have been taken and no further consent or
authorization of the Company, the Company’s board of
directors (the “Board of Directors”) or
the Company’s stockholders is required (other than the
Shareholder Approval), and this Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except (i) as may
be limited by (1) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to
or affecting the enforcement of creditors’ rights generally
and (2) the effect of rules of law governing the
availability of equitable remedies and (ii) as rights to
indemnity or contribution may be limited under federal or state
securities laws or by principles of public policy thereunder.

     
(e) Valid Issuance of the Purchased
Securities.

		
	 	     
    (i) Purchased Shares. The Purchased Shares
    have been duly authorized and, when issued and delivered to each
    Purchaser against payment therefor in accordance with the terms
    of this Agreement, will be validly issued, fully paid and
    non-assessable and will be free and clear from all liens, claims
    and encumbrances with respect to the issuance of such Purchased
    Shares and will not be subject to any pre-emptive rights or
    similar rights.
	 
	 	     
    (ii) Purchased Warrants. The Purchased
    Warrants to be issued pursuant to this Agreement have been duly
    authorized and, when issued and delivered to each Purchaser
    against payment therefor in accordance with the terms of this
    Agreement, will be validly issued and will be free and clear
    from all liens, claims and encumbrances with respect to the
    issuance of such Purchased Warrants and will not be subject to
    any pre-emptive rights or similar rights.
	 
	 	     
    (iii) Warrant Shares. The issuance of the
    Warrant Shares issued or issuable from time to time upon the
    exercise of the Purchased Warrants have been, and at all times
    prior to such exercise, will be, duly authorized and duly
    reserved for issuance upon such exercise and payment of the
    exercise price of the Purchased Warrants and, when issued and
    delivered to each Purchaser upon exercise against payment
    therefor in accordance with the terms of the Warrant, will be
    validly issued, fully paid and non-assessable and will be free
    and clear from all liens, claims and encumbrances with respect
    to the issuance of such Warrant Shares and will not be subject
    to any pre-emptive rights or similar rights.

     
(f) Compliance with Securities Laws. Subject
to the accuracy of the representations made by the Purchasers in
Section 4 hereof, the Purchased Securities will be
issued and sold to the Purchasers in compliance with
(i) the exemption in Rule 506 of Regulation D
promulgated under the Securities Act from the registration and
prospectus delivery requirements of the Securities Act and
(ii) applicable exemptions from the registration and
qualification requirements of all applicable securities laws of
the states of the United States.

     
(g) Governmental Consents. No consent,
approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, or
notice to, any federal, state or local governmental authority or
self regulatory agency on the part of the Company is required in
connection with the issuance and sale of the Purchased
Securities to the Purchasers by the Company or the consummation
of the other transactions contemplated by this Agreement, except
(i) such filings as have been made prior to the date
hereof, (ii) the filings under applicable securities laws
required to comply with the Company’s registration
obligations under Section 5(a) of this Agreement and
(iii) such additional post-Closing filings as may be
required to comply with applicable state and federal securities
laws, including, but not limited to, the filing of a Form D
relating to the sale of the Purchased Securities pursuant to
Regulation D.

     
(h) Non-Contravention. Assuming the accuracy
of the representations and warranties made by the Purchasers in
Section 4 hereof, the execution, delivery and
performance of this Agreement by the Company, and the
consummation by the Company of the transactions contemplated
hereby (including the issuance of the Purchased Securities and
the Warrant Shares), do not: (i) contravene or conflict
with the articles of incorporation, as amended (the
“Articles of Incorporation”), or bylaws,
as amended (the “Bylaws”), of the
Company or of any Subsidiary; (ii) constitute a violation
of any provision of any federal, state, local or foreign

A-4

 

law, rule, regulation, order or decree applicable to the Company
or any Subsidiary; or (iii) constitute a default (with or
without the passage of time or giving of notice or both) or
require any consent under, give rise to any right of
termination, cancellation or acceleration of, or result in the
creation or imposition of any lien, claim or encumbrance on any
asset of the Company or the Subsidiaries under, any material
contract to which the Company or the Subsidiaries is a party or
any permit, license or similar right relating to the Company or
the Subsidiaries or by which the Company or the Subsidiaries may
be bound or affected, except in the case of clauses (ii)
and (iii), for such violations, breaches or defaults as would
not be reasonably likely to have a Material Adverse Effect.

     
(i) Litigation. Except as set forth in the
SEC Documents, there is no action, suit, proceeding, claim,
arbitration or investigation (“Action”)
pending or, to the Company’s knowledge, threatened:
(i) against the Company or any Subsidiary, their properties
or assets, or any officer, director or employee of the Company
or any Subsidiary in connection with such officer’s,
director’s or employee’s relationship with, or actions
taken on behalf of, the Company or any Subsidiary, that would be
reasonably likely to have a Material Adverse Effect, or
(ii) that seeks to prevent, enjoin, alter, challenge or
delay the transactions contemplated by this Agreement. The
Company is not a party to, nor subject to the provisions of, any
order, writ, injunction, judgment or decree of any court or
government agency or instrumentality that would reasonably be
expected to prevent, enjoin, alter, challenge or delay the
consummation of the transactions contemplated by this Agreement
or would be reasonably likely to have a Material Adverse Effect.
The SEC has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the
Company under the Securities Act or the Securities Exchange Act
of 1934, as amended ( the “Exchange
Act”).

     
(j) Compliance with Law and Charter
Documents. The Company is not in violation or default of
any provisions of the Articles of Incorporation or the Bylaws.
The Company is currently in compliance with all applicable
statutes, laws, rules, regulations and orders of the United
States of America and all states thereof, foreign countries and
other governmental bodies and agencies having jurisdiction over
the Company’s business or properties, except for any
instance of non-compliance that has not had, and would not
reasonably be expected to have, a Material Adverse Effect.
Neither the Company nor any Subsidiary is in default (and there
exists no condition which, with or without the passage of time
or giving of notice or both, would constitute a default) in any
material respect in the performance of any bond, debenture, note
or any other evidence of indebtedness in any indenture,
mortgage, deed of trust or any other material agreement or
instrument to which the Company or any Subsidiary is a party or
by which the Company or any Subsidiary is bound or by which the
properties of the Company or any Subsidiary is bound, which
default would be reasonably likely to have a Material Adverse
Effect or which would be reasonably likely to have a Material
Adverse Effect on the transactions contemplated by this
Agreement.

     
(k) Material Non-Public Information. The
Company has not provided, and will not provide, to the
Purchasers any material non-public information other than
information related to the transactions contemplated by this
Agreement, all of which information shall be disclosed by the
Company pursuant to Section 9(m) hereof.

     
(l) SEC Documents.

		
	 	     
    (1) Reports. The Company has filed in a
    timely manner all reports, schedules, forms, statements and
    other documents required to be filed by it with the Securities
    and Exchange Commission (the “SEC”)
    pursuant to the reporting requirements of the Exchange Act and
    the rules and regulations promulgated thereunder. The Company
    has made available to the Purchasers prior to the date hereof
    copies of its Annual Report on Form 10-K for the fiscal
    year ended December 31, 2004, as amended (the
    “Form 10-K”), its quarterly report
    on Form 10-Q for the fiscal quarter ended March 31,
    2005 (the “Form 10-Q”), and any
    Current Report on Form 8-K for events occurring since
    December 31, 2004
    (“Form 8-Ks”) filed or furnished by
    the Company with the SEC (the Form 10-K, the Form 10-Q
    and the Form 8-Ks are collectively referred to herein as
    the “SEC Documents”). Each of the SEC
    Documents, as of the respective dates thereof (or, if amended or
    superseded by a filing or submission, as the case may be, prior
    to the Closing Date, then on the date of such filing or
    submission, as the case may be), (1) did not contain any
    untrue statement of a material fact nor omit to state a material
    fact

A-5

 

		
	 	
    necessary in order to make the statements made therein, in light
    of the circumstances under which they were made, not misleading
    and (2) complied in all material respects with the
    requirements of the Exchange Act and the rules and regulations
    of the SEC promulgated thereunder applicable to such SEC
    Document.
	 
	 	     
    (2) Sarbanes-Oxley. The Chief Executive
    Officer and the Chief Financial Officer of the Company have
    signed, and the Company has furnished to the SEC, all
    certifications required by Sections 302 and 906 of the
    Sarbanes-Oxley Act of 2002. Such certifications contain no
    qualifications or exceptions to the matters certified therein
    (other than such qualifications or exceptions that are permitted
    under the Exchange Act and the rules promulgated thereunder) and
    have not been modified or withdrawn; and neither the Company nor
    any of its officers has received notice from any governmental
    entity questioning or challenging the accuracy, completeness,
    form or manner of filing or submission of such certifications.
    Without limiting the foregoing, the Company is in compliance
    with any applicable requirements of the Sarbanes-Oxley Act of
    2002 and the rules and regulations promulgated thereunder, as
    amended, that are currently in effect.
	 
	 	     
    (3) Financial Statements. The consolidated
    financial statements of the Company included in the SEC
    Documents (1) comply as to form in all material respects
    with the rules and regulations of the SEC with respect thereto
    as were in effect at the time of filing and (2) present
    fairly, in all material respects, in accordance with United
    States generally accepted accounting principles
    (“GAAP”), consistently applied, the
    consolidated financial position of the Company as of the dates
    indicated therein, and the consolidated results of its
    operations and cash flows for the periods therein specified,
    subject, in the case of unaudited consolidated financial
    statements for interim periods, to normal, immaterial year-end
    audit adjustments.

     
(m) Absence of Certain Changes Since the Balance
Sheet Date. Except as disclosed in the SEC Documents,
since the filing of the Company’s most recent
Form 10-K with the SEC, the business and operations of the
Company and the Subsidiaries have been conducted in the ordinary
course consistent with past practice, and there has not been:

		
	 	     
    (i) any declaration, setting aside or payment of any
    dividend or other distribution of the assets of the Company with
    respect to any shares of capital stock of the Company or any
    repurchase, redemption or other acquisition by the Company or
    any Subsidiary of the Company of any outstanding shares of the
    Company’s capital stock;
	 
	 	     
    (ii) any damage, destruction or loss to the Company’s
    or any Subsidiary’s business or assets, whether or not
    covered by insurance, except for such occurrences, individually
    and collectively, that have not had, and would not reasonably be
    expected to have, a Material Adverse Effect;
	 
	 	     
    (iii) any waiver by the Company or any Subsidiary of a
    valuable right or of a material debt owed to it, except for such
    waivers, individually and collectively, that have not had, and
    would not reasonably be expected to have, a Material Adverse
    Effect;
	 
	 	     
    (iv) any material change or amendment to, or any waiver of
    any material right under a material contract or arrangement by
    which the Company, any Subsidiary or any of their assets or
    properties is bound or subject;
	 
	 	     
    (v) any transaction between the Company or any Subsidiary,
    on the one hand, and any of its officers or directors, on the
    other hand, that would be required to be disclosed pursuant to
    Item 404(a), (b) or (c) of Regulation S-K of
    the SEC;
	 
	 	     
    (vi) any change by the Company in its accounting
    principles, methods or practices or in the manner in which it
    keeps its accounting books and records, except any such change
    required by a change in GAAP or by the SEC; or
	 
	 	     
    (vii) any other event or condition, either individually or
    collectively, that has had, or would be reasonably likely to
    have, a Material Adverse Effect.

A-6

 

     
(n) Intellectual Property. The Company and
its Subsidiaries own or possess sufficient rights to use all
patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names, licenses, copyrights or
other information (collectively, “Intellectual
Property”) which are used to conduct their
businesses as currently conducted, except where the failure to
own or possess such sufficient rights would not reasonably be
expected to result, either individually or in the aggregate, in
a Material Adverse Effect. Neither the Company nor any
Subsidiary has received any written notice of, and has no actual
knowledge of, any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property
which, either individually or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would reasonably
be expected to have a Material Adverse Effect, and to the
Company’s and each of the Subsidiaries’ knowledge,
none of the patent rights owned or licensed by the Company or
the Subsidiaries are unenforceable or invalid.

     
(o) Registration Rights. Except as provided
in Section 5 herein, effective upon the Closing, the
Company is not currently subject to any agreement providing any
person or entity any rights (including piggyback registration
rights) to have any securities of the Company registered with
the SEC or registered or qualified with any other governmental
authority that have not previously been satisfied.

     
(p) Title to Property and Assets. The
properties and assets of the Company and the Subsidiaries are
owned by the Company or the Subsidiaries free and clear of all
mortgages, deeds of trust, liens, charges, encumbrances and
security interests, except for (i) statutory liens for the
payment of current taxes that are not yet delinquent and
(ii) liens, encumbrances and security interests that arise
in the ordinary course of business and do not in any material
respect affect the business of the Company and the Subsidiaries
as currently conducted. With respect to the property and assets
it leases, each of the Company and the Subsidiaries is in
compliance with such leases in all material respects.

     
(q) Taxes. The Company and the Subsidiaries
have filed or have valid extensions of the time to file all
necessary federal, state, and foreign income and franchise tax
returns due prior to the date hereof or have requested
extensions thereof (except in any case in which the failure to
so file would not reasonably be expected to have a Material
Adverse Effect) and has paid or accrued all taxes due.

     
(r) Internal Accounting Controls. The Company
and each of the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with
management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and
to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with
respect to any differences.

     
(s) Market. The Company has not taken and
will not take, directly or indirectly, any action designed to,
or that might reasonably be expected to cause or result in,
stabilization or manipulation of the price of the Common Stock
of the Company to facilitate the sale or resale of the Purchased
Securities.

     
(t) Investment Company. The Company is not an
“investment company” within the meaning of such term
under the Investment Company Act of 1940, as amended.

     
(u) Application of Anti-Takeover Provisions.
There is no control share acquisition, business combination,
poison pill or other similar anti-takeover provision under the
Company’s Articles of Incorporation (or similar charter
documents) that would become applicable to the Purchasers as a
result of the issuance of the Company Shares and Warrant Shares.

     
(v) General Solicitation. Neither the Company
nor any other Person (as defined below) authorized by the
Company to act on its behalf has engaged in a general
solicitation or general advertising (within the meaning of
Regulation D) of investors with respect to offers or sales
of the Purchased Securities. For purposes of this Agreement,
“Person” means an individual or
corporation, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity
of any kind.

A-7

 

     
(w) Registration Statement Matters. The
Company currently meets the eligibility requirements for use of
a Form S-3 Registration Statement for the resale of the
Registrable Shares (as defined below) by the Purchasers.
Assuming the completion and timely delivery of the Registration
Statement/ Suitability Questionnaire, attached hereto as
Appendix II (the “Registration Statement
Questionnaire”), by each Purchaser to the Company,
the Company is not aware of any facts or circumstances that
would prohibit or delay the preparation and filing of a
registration statement with respect to the Registrable Shares.

     
(x) No Integrated Offering. Neither the
Company, nor any Affiliate (as hereafter defined) of the
Company, nor any person acting on its behalf has, directly or
indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances
that would cause this offering of the Purchased Securities to be
integrated with prior offerings by the Company for purposes of
the Securities Act, any applicable state securities laws or any
applicable stockholder approval provisions, nor will the Company
take any action or steps that would cause the offering of the
Purchased Securities to be integrated with other offerings.

     
For purposes of this Agreement, an
“Affiliate” of any specified Person
means any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with
such specified Person. For purposes of this definition,
“control” means the power to direct the
management and policies of such person or firm, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise.

     
(y) Trading and Registration Matters. The
Common Stock of the Company is eligible for trading on The
NASDAQ National Market under the ticker symbol “ZIXI”.
The Company has taken no action designed to terminate, or likely
to have the effect of terminating, the listing of the Common
Stock on the NASDAQ National Market.

     
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS
OF THE PURCHASERS. Each Purchaser, severally and not
jointly, hereby represents and warrants to the Company, and
agrees that:

     
(a) Organization. Such Purchaser has all
corporate, limited liability company, partnership, trust or
individual, as the case may be, power and authority required to
enter into this Agreement and the other agreements, instruments
and documents contemplated hereby, and to consummate the
transactions contemplated hereby and thereby.

     
(b) Due Authorization. All corporate, limited
liability company, partnership, trust or individual, as the case
may be, action on the part of such Purchaser necessary for the
authorization, execution, delivery of and the performance of all
obligations of such Purchaser under this Agreement have been
taken and no further consent or authorization of such Purchaser
is necessary, and this Agreement constitutes such
Purchaser’s legal, valid and binding obligation,
enforceable in accordance with its terms, except (i) as may
be limited by (1) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to
or affecting the enforcement of creditors’ rights generally
and (2) the effect of rules of law governing the
availability of equitable remedies and (ii) as rights to
indemnity or contribution may be limited under federal or state
securities laws or by principles of public policy thereunder.

     
(c) Non-Contravention. The execution,
delivery and performance of this Agreement by such Purchaser,
and the consummation by such Purchaser of the transactions
contemplated hereby, do not: (i) contravene or conflict
with the organizational documents of such Purchaser; or
(ii) constitute a violation of any provision of any
federal, state, local or foreign law, rule, regulation, order or
decree applicable to such Purchaser, except in the case of
clause (ii), for such violations, breaches or defaults as
would not be reasonably likely to have a material adverse effect
on such Purchaser.

     
(d) Litigation. There is no Action pending to
which such Purchaser is a party that is reasonably likely to
prevent, enjoin, alter or delay the transactions contemplated by
this Agreement.

     
(e) Purchase for Own Account. The Purchased
Securities are being acquired for investment for such
Purchaser’s own account, not as a nominee or agent, in the
ordinary course of business, and not with a view to the public
resale or distribution thereof within the meaning of the
Securities Act. Such Purchaser also

A-8

 

represents that it has not been formed for the specific purpose
of acquiring the Purchased Securities. Such Purchaser does not
have any agreement or understanding, direct or indirect, with
any other Person to sell or otherwise distribute the Purchased
Securities. Notwithstanding the foregoing, the parties hereto
acknowledge such Purchaser’s right at all times to sell or
otherwise dispose of all or any part of such securities in
compliance with applicable federal and state securities laws and
as otherwise contemplated by this Agreement.

     
(f) Investment Experience. Such Purchaser
understands that the purchase of the Purchased Securities
involves substantial risk. Such Purchaser has experience as an
investor in securities of companies and acknowledges that it can
bear the economic risk of its investment in the Purchased
Securities and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and
risks of this investment in the Purchased Securities and
protecting its own interests in connection with this investment.

     
(g) Accredited Purchaser Status. Such
Purchaser is an “accredited investor” within the
meaning of Regulation D promulgated under the Securities
Act.

     
(h) Reliance Upon Purchaser’s
Representations. Such Purchaser understands that the
sale of the Purchased Securities to it will not be registered
under the Securities Act on the ground that such issuance and
sale will be exempt from registration under the Securities Act,
and that the Company’s reliance on such exemption is based
on each Purchaser’s representations set forth herein.

     
(i) Receipt of Information. Such Purchaser
has (i) had access to the Company’s SEC Documents and
(ii) has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of
the sale of the Purchased Securities and the business,
properties, prospects and financial condition of the Company and
to obtain any additional information requested and has received
and considered all information it deems relevant to make an
informed decision to purchase the Purchased Securities.

     
(j) Restricted Securities and Restrictions on
Transfer.

		
	 	     
    (i) Such Purchaser understands that the Purchased
    Securities and the Warrant Shares have not been registered under
    the Securities Act and will not sell, offer to sell, assign,
    pledge, hypothecate or otherwise transfer any of the Purchased
    Securities or the Warrant Shares (except as permitted in
    Section 4(k) below) unless (A) pursuant to an
    effective registration statement under the Securities Act,
    (B) such Purchaser provides a reasonably acceptable legal
    opinion to the Company, to the effect that a sale, assignment,
    pledge, hypothecation or other transfer of the Purchased
    Securities or the Warrant Shares, as the case may be, may be
    made without registration under the Securities Act and the
    transferee agrees to be bound by the terms and conditions of
    this Agreement, (C) such Purchaser provides the Company a
    “no action” letter from the SEC to the effect that the
    transfer of the Purchased Securities or the Warrant Shares, as
    the case may be, without registration will not result in a
    recommendation by the Staff of the SEC that enforcement action
    by taken with respect thereto, (D) such Purchaser provides
    the Company with reasonable assurances (in the form of seller
    and broker representation letters) that the Purchased Securities
    or the Warrant Shares, as the case may be, can be sold pursuant
    to Rule 144 promulgated under the Securities Act
    (“Rule 144”), (E) such
    Purchaser provides the Company with reasonable assurances (in
    the form of seller representation letters) that the Purchased
    Securities or the Warrant Shares, as the case may be, can be
    sold pursuant to Rule 144(k) promulgated under the
    Securities Act following the applicable holding period or
    (F) pursuant to any other exception contained in the
    Securities Act provided that the Purchaser provides a reasonably
    acceptable legal opinion to the Company. Notwithstanding
    anything to the contrary contained in this Agreement, including
    but not limited to in Section 5(c)(i) below, such
    Purchaser may transfer the Purchased Securities or the Warrant
    Shares to its Affiliates provided that (X) such Purchaser
    provides the Company with a reasonably acceptable legal opinion,
    (Y) such Affiliate is an “accredited investor”
    within the meaning of Regulation D and (Z) each such
    Affiliate agrees to be bound by the terms and conditions of this
    Agreement, and in particular, confirms to the Company that all
    of the representations set forth in Section 4 of
    this Agreement are true and correct as to such Affiliate as of
    the date of the transfer to such Affiliate.

A-9

 

		
	 	     
    (ii) Prior to any proposed transfer pursuant to
    clause (B), (C), (D), (E) or (F) in
    Section 4(j)(i) above, such Purchaser shall give
    written notice to the Company of such Purchaser’s intention
    to effect such transfer. Each such notice shall describe the
    manner and circumstances of the proposed transfer in sufficient
    detail, and shall be accompanied by the applicable legal
    opinion, “no action” letter or seller and broker
    representation letters.
	 
	 	     
    (iii) Notwithstanding the foregoing provisions of this
    Section 4(j), no registration statement, legal
    opinion or “no action” letter shall be necessary for a
    transfer of the Purchased Securities or the Warrant Shares
    (A) by a Purchaser that is a partnership to a partner of
    such partnership or a retired partner of such partnership who
    retires after the date of this Agreement, (B) by a
    Purchaser that is a limited liability company to a member of
    such limited liability company, (C) by a Purchaser that is
    a partnership or limited liability company to the estate of any
    partner, retired partner, or member thereof or (D) by any
    partner or member of a Purchaser that is a partnership or
    limited liability company by gift, will or intestate succession
    to such partner or member’s spouse or to the siblings,
    lineal descendants, ancestors of such partner or member or his
    or her spouse.

     
(k) Legends.

		
	 	     
    (i) Such Purchaser agrees that, to the extent necessary,
    the certificates for the Purchased Shares and the Warrant Shares
    shall bear the following legend:

		
	 	
    “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
    BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
    (THE “SECURITIES ACT”) OR ANY APPLICABLE STATE
    SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS
    (I) A REGISTRATION STATEMENT COVERING SUCH SECURITIES IS
    EFFECTIVE UNDER THE SECURITIES ACT OR (II) THE TRANSACTION
    IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND, IF THE
    COMPANY REQUESTS, AN OPINION SATISFACTORY TO THE COMPANY TO SUCH
    EFFECT HAS BEEN RENDERED BY COUNSEL.”

     
Certificates evidencing the Purchased Shares and the Warrant
Shares shall not contain any legend, (i) while a
registration statement (including the Registration Statement)
covering the resale of such security is effective under the
Securities Act, (ii) following any sale of such Purchased
Shares or the Warrant Shares pursuant to Rule 144,
(iii) if such Purchased Shares or the Warrant Shares are
eligible for sale under Rule 144(k) or (iv) if such
legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the SEC). The Company
shall cause its counsel to issue a legal opinion to the
Company’s transfer agent promptly after the date on which
the Registration Statement is declared effective (the
“Effective Date”) if such legal opinion
is required by the Company’s transfer agent to effect the
removal of the legend hereunder. If all or any portion of a
Purchased Warrant is exercised at a time when there is an
effective registration statement to cover the resale of the
Warrant Shares, such Warrant Shares shall be issued free of all
legends. The Company agrees that following the Effective Date or
at such time as such legend is no longer required under this
Section 4(k), it will, no later than five
(5) Business Days following the delivery by a Purchaser to
the Company or to the Company’s transfer agent of a
certificate representing Purchased Shares or the Warrant Shares,
as the case may be, issued with a restrictive legend, deliver or
cause to be delivered to such Purchaser a certificate
representing such Purchased Shares or the Warrant Shares, as the
case may be, that is free from all restrictive and other
legends. The Company may not make any notation on its records or
give instructions to any transfer agent of the Company that
enlarge the restrictions on transfer set forth in
Section 4(j) or this Section 4(k).

     
Each Purchaser, severally and not jointly with the other
Purchasers, agrees that the removal of the restrictive legend
from certificates representing the Purchased Shares or the
Warrant Shares as set forth in this Section 4(k) is
predicated upon such Purchaser’s covenant that such
Purchaser only will sell any Purchased Shares or Warrant Shares
pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom.

A-10

 

     
In addition, such Purchaser agrees that the Company may place
stop transfer orders with its transfer agent with respect to
such certificates in order to implement the restrictions on
transfer set forth in this Agreement. The appropriate portion of
the legend and the stop transfer orders will be removed promptly
upon delivery to the Company of such satisfactory evidence as
reasonably may be required by the Company that such legend or
stop transfer orders are not required to ensure compliance with
the Securities Act.

		
	 	     
    (ii) Such Purchaser agrees that the Purchased Warrants
    shall bear the following legend:

		
	 	
    “THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE
    HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
    1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY
    APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
    TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT COVERING
    SUCH SECURITIES IS EFFECTIVE UNDER THE SECURITIES ACT OR
    (II) THE TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE
    SECURITIES ACT AND, IF THE COMPANY REQUESTS, AN OPINION
    SATISFACTORY TO THE COMPANY TO SUCH EFFECT HAS BEEN RENDERED BY
    COUNSEL.”

     
(l) Questionnaires. Such Purchaser has
completed or caused to be completed the Stock Certificate
Questionnaire and the Registration Statement Questionnaire for
use in preparation of the Registration Statement (as defined in
Section 5(a) below), and the answers to such
questionnaires are true and correct as of the date of this
Agreement; provided, that such Purchaser shall be
entitled to update such information by providing written notice
thereof to the Company before the effective date of the
Registration Statement.

     
(m) Restrictions on Short Sales. Neither such
Purchaser nor any Affiliate of such Purchaser which (i) had
knowledge of the transactions contemplated hereby, (ii) has
or shares discretion relating to such Purchaser’s
investments or trading or information concerning such
Purchaser’s investments, including in respect of the
Purchased Securities, or (iii) is subject to such
Purchaser’s review or input concerning such
Affiliate’s investments or trading, has or will, directly
or indirectly, during the period beginning on the date on which
C.E. Unterberg, Towbin, financial advisor to the Company, first
contacted such Purchaser regarding the transactions contemplated
by this Agreement until the time of the filing of the Current
Report of Form 8-K required by Section 9(m),
engage in (1) any “short sales” (as such term is
defined in Rule 3b-3 promulgated under the Exchange Act) of
the Common Stock, including, without limitation, the maintaining
of any short position with respect to, establishing or
maintaining a “put equivalent position” (within the
meaning of Rule 16a-1(h) under the Exchange Act) with
respect to, entering into any swap, derivative transaction or
other arrangement (whether any such transaction is to be settled
by delivery of Common Stock, other securities, cash or other
consideration) that transfers to another, in whole or in part,
any economic consequences or ownership, or otherwise dispose of,
any of the Purchased Securities or the Warrant Shares by such
Purchaser or (2) any hedging transaction which establishes
a net short position with respect to the Purchased Securities
(clauses (1) and (2) together, a “Short
Sale”); except for (A) Short Sales by such
Purchaser or Affiliate of such Purchaser which was, prior to the
date on which such Purchaser was first contacted by C.E.
Unterberg, Towbin regarding the transactions contemplated by
this Agreement, a market maker for the Common Stock, provided
that such Short Sales are in the ordinary course of business of
such Purchaser or Affiliate of such Purchaser and are in
compliance with the Securities Act, the rules and regulations of
the Securities Act and such other securities laws as may be
applicable, (B) Short Sales by such Purchaser or an
Affiliate of such Purchaser which by virtue of the procedures of
such Purchaser are made without knowledge of the transactions
contemplated by this Agreement or (C) Short Sales by the
Purchaser or an Affiliate of such Purchaser to the extent that
such Purchaser or Affiliate of such Purchaser is acting in the
capacity of a broker-dealer executing unsolicited third-party
transactions.

     
(n) Independent Investment. Such Purchaser
has not agreed to act with any other Purchaser for the purpose
of acquiring, holding or disposing of any of the Purchased
Securities or the Warrant Shares for purposes of
Section 13(d) of the Exchange Act, and such Purchaser is
acting independently with respect to its investment in the
Purchased Securities.

     
(o) Confidentiality. Such Purchaser agrees to
use any information it receives in the course of and in
connection with the transactions contemplated under this
Agreement for the sole purpose of evaluating a

A-11

 

possible investment in the Purchased Securities and such
Purchaser hereby acknowledges that it is prohibited from
reproducing or distributing any such information, this
Agreement, or any other offering materials provided by the
Company or any of its Affiliates in connection with such
Purchaser’s consideration of its investment in the Company,
in whole or in part, or divulging or discussing any of their
contents except to its advisors and representatives for the
purpose of evaluating such investment. The foregoing agreements
shall not apply to any information that (i) is or becomes
publicly available through no fault of such Purchaser,
(ii) was already known to such Purchaser prior to its
disclosure by the Company or any of its Affiliates to the
Purchaser, as evidenced by documentation or other evidence
reasonably satisfactory to the Company, (iii) is or becomes
available to such Purchaser on a non-confidential basis from a
source other than the Company or any of its Affiliates (so long
as such Purchaser is not aware such disclosure is in breach of a
confidentiality obligation to the Company), (iv) is
independently developed by such Purchaser’s personnel
without access to or use of the confidential information
received from the Company or any of its Affiliates, as evidenced
by documentation or other evidence reasonably satisfactory to
the Company or (v) is legally required to be disclosed by
such Purchaser under operation of law or judicial or other
governmental order; provided, however, that if the
Purchaser is requested or ordered to disclose any such
information pursuant to any court or other governmental order or
any other applicable legal procedure, it shall provide the
Company with reasonably prompt notice of any such request or
order to enable the Company to seek an appropriate protective
order and shall provide the Company with reasonable assistance
in obtaining such protective order at the Company’s sole
expense.

     
5. FORM D FILING; REGISTRATION; COMPLIANCE WITH THE
SECURITIES ACT; NO NASDAQ REQUIREMENTS.

     
(a) Form D Filing; Registration of the Purchased
Securities and Warrant Shares. The Company hereby agrees
that it shall:

		
	 	     
    (i) file in a timely manner a Form D relating to the
    sale of the Purchased Securities under this Agreement, pursuant
    to Regulation D;
	 
	 	     
    (ii) prepare and file with the SEC as soon as practicable
    and in no event later than thirty (30) days following the
    Closing Date the (“Required Filing
    Date”), a registration statement on Form S-3
    or such other form that is available to the Company under the
    Securities Act (the “Registration
    Statement”), to enable the resale of the Purchased
    Shares and the Warrant Shares (together with any shares of
    Common Stock issued as a dividend or other distribution with
    respect to, or in exchange for, or in replacement of, the
    Purchased Shares or the Warrant Shares, the
    “Registrable Shares”) by the Purchasers
    from time to time. The Company shall use its commercially
    reasonable efforts to cause the Registration Statement
    (x) to be declared effective as promptly as possible after
    filing, but in any event, no later than the 120th day
    following the Closing Date (the “Required Effective
    Date”), and (y) to remain continuously
    effective until the earlier of (1) the second anniversary
    of the effective date of the Registration Statement,
    (2) the date on which all Registrable Shares purchased by
    the Purchasers pursuant to this Agreement have been sold
    thereunder or (3) the date on which the Registrable Shares
    become eligible for resale pursuant to Rule 144(k)
    promulgated under the Securities Act (the
    “Registration Period”); provided,
    however, that if any Purchaser is an “affiliate”
    of the Company (as defined in Rule 144(a)(1) of the
    Securities Act) on the second anniversary of the effective date
    of the Registration Statement, the applicable time period for
    purposes of clause (1) above shall be the third anniversary
    of the effective date of the Registration Statement. If the
    Company receives notification from the SEC that the Registration
    Statement will receive no action or review from the SEC, then
    the Company will use its commercially reasonable efforts to
    cause the Registration Statement to become effective within five
    (5) Business Days after such SEC notification;
	 
	 	     
    (iii) prepare and file with the SEC such amendments
    (including post-effective amendments) and supplements to the
    Registration Statement and the Prospectus (as defined below)
    used in connection therewith as may be necessary to keep the
    Registration Statement effective at all times until the end of
    the Registration Period;

A-12

 

		
	 	     
    (iv) furnish to the Purchasers, with respect to the
    Registrable Shares registered under the Registration Statement,
    such reasonable number of copies of any prospectus in conformity
    with the requirements of the Securities Act and such other
    documents as the Purchasers may reasonably request in writing,
    in order to facilitate the public sale or other disposition of
    all or any of the Registrable Shares by the Purchasers;
	 
	 	     
    (v) use its commercially reasonable efforts to file
    documents required of the Company for normal blue sky clearance
    in states specified in writing by the Purchasers; provided,
    however, that the Company shall not be required to qualify
    to do business or consent to service of process in any
    jurisdiction in which it is not now so qualified or has not so
    consented;
	 
	 	     
    (vi) promptly notify the Purchasers in writing of the
    effectiveness of the Registration Statement on the same day the
    Registration Statement has been declared effective;
	 
	 	     
    (vii) promptly notify the Purchasers in writing of the
    existence of any fact or the happening of any event, during the
    Registration Period (but not as to the substance of any such
    fact or event), that makes any statement of a material fact made
    in the Registration Statement, the Prospectus, any amendment or
    supplement thereto, or any document incorporated by reference
    therein untrue, or that requires the making of any additions to
    or changes in the Registration Statement or the Prospectus in
    order to make such statements not misleading; provided,
    however, that no notice by the Company shall be required
    pursuant to this subsection (vii) in the event that
    the Company either contemporaneously files a prospectus
    supplement to update the Prospectus or, if applicable, a Current
    Report on Form 8-K or other appropriate Exchange Act report
    that is incorporated by reference into the Registration
    Statement, which, in either case, contains the requisite
    information with respect to such material event that results in
    such Registration Statement no longer containing any such untrue
    or misleading statements;
	 
	 	     
    (viii) furnish to each Purchaser upon written request, from
    the date of this Agreement until the end of the Registration
    Period, one copy of its periodic reports filed with the SEC
    pursuant to the Exchange Act and the rules and regulations
    promulgated thereunder; and
	 
	 	     
    (ix) bear all expenses in connection with the procedures
    described in paragraphs (i) through (viii) of
    this Section 5(a) and the registration of the
    Registrable Shares pursuant to the Registration Statement, other
    than fees and expenses, if any, of legal counsel or other
    advisers to the Purchasers or underwriting discounts, brokerage
    fees and commissions incurred by the Purchasers, if any.

     
It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this
Section 5(a) with respect to Registrable Shares held
by a Purchaser that such Purchaser shall timely furnish to the
Company a completed Registration Statement Questionnaire on or
before the Closing Date and such other written information
regarding such Purchaser, the Registrable Shares to be sold by
such Purchaser and the intended method of disposition of the
Registrable Shares as the Company may deem necessary or
advisable to effect the registration of the Registrable Shares.
The Purchasers shall update such information as and when
necessary by written notice to the Company.

     
(b) Liquidated Damages.

		
	 	     
    (i) Delay in Filing or Effectiveness of Registration
    Statement. In the event that the Registration Statement
    is not (A) filed by the Required Filing Date or
    (B) declared effective by the Required Effective Date, the
    Company shall pay to each Purchaser (except for any Purchaser
    whose failure to provide information as required hereunder
    causes a delay in filing or obtaining effectiveness) liquidated
    damages (in addition to the rights and remedies available to
    each Purchaser under applicable law and this Agreement), at a
    rate equal to one percent (1%) per month (pro rata on a 30-day
    basis) of the total purchase price of the Purchased Securities
    purchased by such Purchaser pursuant to this Agreement for the
    period from and including the first day following the Required
    Filing Date or Required Effective Date, as the case may be,
    until, but excluding, the actual filing date or the date the SEC
    declares the Registration Statement effective, as the case may
    be. Such liquidated damages shall be payable in cash within ten
    (10) days of the end of each one (1) month anniversary
    of the Required Filing Date or Required Effective Date, as the
    case may be.

A-13

 

		
	 	     
    (ii) Lapse in Effectiveness of Registration
    Statement. In the event that the Registration Statement
    is filed and declared effective but, during the Registration
    Period, the Registration Statement ceases to be effective or
    useable or the prospectus included in the Registration Statement
    (the “Prospectus”, as amended or
    supplemented by any prospectus supplement and by all other
    amendments thereto and all material incorporated by reference in
    such Prospectus) ceases to be usable, in either case, in
    connection with resales of Registrable Shares, without such
    lapse being cured within fifteen (15) Business Days (the
    “Cure Period”) by a post-effective
    amendment to the Registration Statement, a supplement to the
    Prospectus or a report filed with the SEC pursuant to
    Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that
    cures such lapse, then the Company shall pay to each Purchaser
    liquidated damages (in addition to the rights and remedies
    available to each Purchaser under applicable law and this
    Agreement), for the period from and including the first day
    following the expiration of the Cure Period until, but
    excluding, the earlier of (1) the date on which such
    failure is cured and (2) the date on which the Registration
    Period expires, at a rate equal to one percent (1%) per month
    (pro rata on a 30-day basis) of the total purchase price of the
    Purchased Securities purchased and still held by such Purchaser
    pursuant to this Agreement. Such liquidated damages shall be
    payable in cash within ten (10) days of the end of each one
    (1) month anniversary of the expiration of the Cure Period.

     
(c) Transfer of Registrable Shares After
Registration; Suspension.

		
	 	     
    (i) The Purchasers agree that they will not offer to sell
    or make any sale, assignment, pledge, hypothecation or other
    transfer with respect to the Registrable Shares that would
    constitute a sale within the meaning of the Securities Act
    except pursuant to either (1) the Registration Statement in
    the manner described in the “Plan of Distribution”
    therein, (2) Rule 144 of the Securities Act or
    (3) any other exemption from registration under the
    Securities Act, and that they will promptly notify the Company
    of any changes in the information set forth in the Registration
    Statement after it is prepared regarding the Purchaser or its
    plan of distribution to the extent required by applicable law.
	 
	 	     
    (ii) In addition to any suspension rights under
    paragraph (iii) below, upon the happening of any
    pending corporate development, public filing with the SEC or
    similar event that, in the good faith judgment of the Board of
    Directors, renders it advisable to suspend the use of the
    Prospectus or upon the reasonable request by an underwriter in
    connection with an underwritten public offering of the
    Company’s securities, the Company may suspend use of the
    Prospectus on written notice to each Purchaser (which notice
    will not disclose the content of any material non-public
    information and will indicate the date of the beginning and end
    of the intended period of suspension, if known), in which case
    each Purchaser shall discontinue any disposition of Registrable
    Shares covered by the Registration Statement or Prospectus until
    copies of a supplemented or amended Prospectus are distributed
    to the Purchasers or until the Purchasers are advised in writing
    by the Company that sales of Registrable Shares under the
    applicable Prospectus may be resumed and have received copies of
    any additional or supplemental filings that are incorporated or
    deemed incorporated by reference in any such Prospectus. Any
    such suspension under this paragraph (ii) shall not
    exceed sixty (60) days in any one hundred-eighty
    (180) day period or ninety (90) days in any
    twelve-month period. The suspension and notice thereof described
    in this Section 5(c)(ii) shall be held by each
    Purchaser in strictest confidence and shall not be disclosed by
    such Purchaser.
	 
	 	     
    (iii) Subject to paragraph (iv) below, in the
    event of: (1) any request by the SEC or any other federal
    or state governmental authority during the Registration Period
    for amendments or supplements to a Registration Statement or
    related prospectus or for additional information; (2) the
    issuance by the SEC or any other federal or state governmental
    authority of any stop order suspending the effectiveness of a
    Registration Statement or the initiation of any proceedings for
    that purpose; (3) the receipt by the Company of any
    notification with respect to the suspension of the qualification
    or exemption from qualification of any of the Registrable Shares
    for sale in any jurisdiction or the initiation of any proceeding
    for such purpose; or (4) any event or circumstance which
    necessitates the making of any changes in the Registration
    Statement or Prospectus, or any document incorporated or deemed
    to be incorporated therein by reference, so that, in the case of
    the Registration Statement, it will not contain any untrue
    statement of a material fact or any omission to state a material
    fact required to be stated

A-14

 

		
	 	
    therein or necessary to make the statements therein not
    misleading, and that in the case of the Prospectus, it will not
    contain any untrue statement of a material fact or any omission
    to state a material fact required to be stated therein or
    necessary to make the statements therein, in the light of the
    circumstances under which they were made, not misleading, then
    the Company shall deliver a certificate in writing to the
    Purchasers (the “Suspension Notice”) to
    the effect of the foregoing (which notice will not disclose the
    content of any material non-public information and will indicate
    the date of the beginning and end of the intended period of
    suspension, if known), and, upon receipt of such Suspension
    Notice, the Purchasers will discontinue disposition of
    Registrable Shares covered by to the Registration Statement or
    Prospectus (a “Suspension”) until the
    Purchasers’ receipt of copies of a supplemented or amended
    Prospectus prepared and filed by the Company, or until the
    Purchasers are advised in writing by the Company that the
    current Prospectus may be used and have received copies of any
    additional or supplemental filings that are incorporated or
    deemed incorporated by reference in any such prospectus. In the
    event of any Suspension, the Company will use its commercially
    reasonable efforts to cause the use of the Prospectus so
    suspended to be resumed as soon as possible after delivery of a
    Suspension Notice to the Purchasers. The Suspension and
    Suspension Notice described in this
    Section 5(c)(iii) shall be held in strictest
    confidence by each Purchaser and shall not be disclosed by such
    Purchaser.
	 
	 	     
    (iv) Provided that a Suspension is not then in effect, the
    Purchasers may sell Registrable Shares under the Registration
    Statement, provided that the selling Purchaser arranges for
    delivery of a current Prospectus to the transferee of such
    Registrable Shares to the extent such delivery is required by
    applicable law.
	 
	 	     
    (v) In the event of a sale of Registrable Shares by a
    Purchaser, such Purchaser must also deliver to the
    Company’s transfer agent, with a copy to the Company, a
    certificate of subsequent sale reasonably satisfactory to the
    Company, so that ownership of the Registrable Shares may be
    properly transferred. The Company will cooperate to facilitate
    the timely preparation and delivery of certificates (unless
    otherwise required by applicable law) representing Registrable
    Shares sold.

     
(d) Shareholder Vote; Filing of Proxy
Statement. The Company shall seek, and use its best
efforts to obtain, the Shareholder Approval on or before the
105th day following the Closing Date (the
“Shareholder Approval Date”). The
Company shall call a special meeting of its shareholders (the
“Shareholder Meeting”), shall prepare
and file with the SEC as soon as practical, but in no event
later than thirty (30) days after the Closing Date,
preliminary proxy materials that meet the requirements of
Section 14 of the Exchange Act and the SEC’s rules and
regulations thereunder and which shall set forth a proposal to
seek the Shareholder Approval. The Board of Directors shall
recommend approval thereof by the Company’s shareholders.
The Purchasers may not vote any of the Firm Shares on the
proposal to obtain the Shareholder Approval. The Company shall
mail and distribute its proxy materials for the Shareholder
Meeting to its stockholders at least 30 days prior to the
date of the Shareholder Meeting, shall actively solicit proxies
to vote for the Shareholder Approval and, prior to mailing such
proxy materials to its stockholders, shall retain a proxy
solicitation firm of recognized national standing to assist in
the solicitation. The Company shall furnish (which may be by
e-mail) to the Purchasers and its legal counsel a copy of its
definitive proxy materials for the Shareholder Meeting and any
amendments or supplements thereto promptly after the same are
first used, mailed to shareholders or filed with the SEC, shall
inform the Purchasers of the progress of solicitation of proxies
for such meeting, shall inform the Purchasers of any adjournment
of the Shareholder Meeting and shall report the result of the
vote of stockholders on such proposition at the conclusion of
the Shareholder Meeting.

     
(e) Indemnification. For the purpose of this
Section 5(e), the term “Registration
Statement” shall include any preliminary or final
Prospectus, exhibit, supplement or amendment included in or
relating to the Registration Statement referred to in
Section 5(a).

		
	 	     
    (i) Indemnification by the Company. The
    Company agrees to indemnify and hold harmless each of the
    Purchasers, their respective officers, directors, agents and
    employees, and each person, if any, who controls any Purchaser
    within the meaning of the Securities Act, against any losses,
    claims, damages, liabilities or expenses, joint or several, to
    which such Purchasers, such officers, directors, agents or
    employees, or such controlling persons may become subject, under
    the Securities Act, the Exchange Act

A-15

 

		
	 	
    or any other federal or state statutory law or regulation, or at
    common law or otherwise (including in settlement of any
    litigation, if such settlement is effected with the written
    consent of the Company, which consent shall not be unreasonably
    withheld), insofar as such losses, claims, damages, liabilities
    or expenses (or actions in respect thereof as contemplated
    below) arise out of or are based upon any untrue statement or
    alleged untrue statement of any material fact contained in the
    Registration Statement, the Prospectus, or any amendment or
    supplement to the Registration Statement or Prospectus, or arise
    out of or are based upon the omission or alleged omission to
    state in any of them a material fact required to be stated
    therein or necessary to make the statements in any of them, in
    light of the circumstances under which they were made, not
    misleading, and will reimburse each Purchaser, each of its
    respective directors, officers, agents and employees, and each
    such controlling person for any reasonable out-of-pocket legal
    and other expenses incurred by such Purchaser, such directors,
    officers, agents or employees, or such controlling persons in
    connection with investigating, defending, settling, compromising
    or paying any such loss, claim, damage, liability, expense or
    action; provided, however, that the Company will not be
    liable for any such case to the extent that any such loss,
    claim, damage, liability, expense or action arises out of or is
    based upon (1) an untrue statement or alleged untrue
    statement or omission or alleged omission in the Registration
    Statement, the Prospectus or any amendment to or supplement of
    the Registration Statement or the Prospectus made in reliance
    upon and in conformity with written information furnished to the
    Company by or on behalf of the Purchaser demanding such
    indemnification expressly for use in the Registration Statement
    or the Prospectus, (2) the failure of such Purchaser to
    comply with the covenants and agreements contained in this
    Agreement respecting resale of the Purchased Securities or the
    Warrant Shares or (3) any untrue statement or omission of a
    material fact required to make such statement not misleading in
    any Prospectus that is corrected in any subsequent Prospectus
    that was delivered to such Purchaser before the pertinent sale
    or sales by such Purchaser.
	 
	 	     
    (ii) Indemnification by each Purchaser. Each
    Purchaser agrees, severally and not jointly, to indemnify and
    hold harmless the Company, each of the Company’s directors,
    officers, agents and employees, and each person, if any, who
    controls the Company within the meaning of the Securities Act,
    against any losses, claims, damages, liabilities or expenses to
    which the Company, the Company’s directors, officers,
    agents or employees, or any controlling persons may become
    subject, under the Securities Act, the Exchange Act, or any
    other federal or state statutory law or regulation, or at common
    law or otherwise (including in settlement of any litigation, if
    such settlement is effected with the written consent of such
    Purchaser, which consent shall not be unreasonably withheld)
    insofar as such losses, claims, damages, liabilities or expenses
    (or actions in respect thereof as contemplated below) arise out
    of or are based upon any untrue or alleged untrue statement of
    any material fact contained in the Registration Statement, the
    Prospectus, or any amendment or supplement thereto, or the
    omission or alleged omission to state therein a material fact
    required to be stated therein or necessary to make the
    statements therein not misleading, in each case to the extent,
    but only to the extent, that such untrue statement or alleged
    untrue statement or omission or alleged omission was made in the
    Registration Statement, the Prospectus, or any amendment or
    supplement thereto, in reliance upon and in conformity with
    written information furnished to the Company by or on behalf of
    such Purchaser expressly for use therein, and such Purchaser
    will reimburse the Company, each of its directors, officers,
    agents and employees, and any controlling persons for any
    reasonable legal and other expenses incurred by the Company, its
    directors, officers, agents or employees, or any controlling
    persons in connection with investigating, defending, settling,
    compromising or paying any such loss, claim, damage, liability,
    expense or action; provided, however, that such Purchaser
    shall not be liable for any such untrue or alleged untrue
    statement or omission or alleged omission with respect to which
    such Purchaser has delivered to the Company in writing a
    correction of such untrue or alleged untrue statement or
    omission or alleged omission, before the occurrence of the event
    from which such loss, claim, damage, liability or expense was
    incurred. Notwithstanding the provisions of this
    Section 5(e), such Purchaser shall not be liable for
    any indemnification obligation under this Agreement in excess of
    the aggregate amount of net proceeds received by such Purchaser
    from the sale of the Registrable Shares pursuant to the
    Registration Statement.

A-16

 

		
	 	     
    (iii) Indemnification Procedure.

		
	 	     
    (1) Promptly after receipt by an indemnified party under
    this Section 5(e) of notice of the threat or
    commencement of any action, such indemnified party will, if a
    claim in respect thereof is to be made against an indemnifying
    party under this Section 5(e), promptly notify the
    indemnifying party in writing of the claim and provide to the
    indemnifying party copies of all written documents relating to
    such threatened or commenced action; but the omission so to
    notify the indemnifying party will not relieve it from any
    liability which it may have to any indemnified party for
    contribution or otherwise under the indemnity agreement
    contained in this Section 5(e) or otherwise, to the
    extent it is not prejudiced as a result of such failure.
	 
	 	     
    (2) In case any such action is brought against any
    indemnified party and such indemnified party seeks or intends to
    seek indemnity from an indemnifying party, the indemnifying
    party will be entitled to participate in, and, to the extent
    that it may wish, jointly with all other indemnifying parties
    similarly notified, to assume the defense thereof with counsel
    reasonably satisfactory to such indemnified party; provided,
    however, that if the defendants in any such action include
    both the indemnified party and the indemnifying party and
    counsel to the indemnified party shall have reasonably concluded
    that there may be a conflict between the positions of the
    indemnifying party and the indemnified party in conducting the
    defense of any such action or that there may be legal defenses
    available to it or other indemnified parties that are different
    from or additional to those available to the indemnifying party,
    the indemnified party or parties shall have the right to select
    separate counsel to assume such legal defenses and to otherwise
    participate in the defense of such action on behalf of such
    indemnified party or parties. Upon receipt of notice from the
    indemnifying party to such indemnified party of its election so
    to assume the defense of such action and approval by the
    indemnified party of counsel, the indemnifying party will not be
    liable to such indemnified party under this
    Section 5(e) for any legal or other expenses
    subsequently incurred by such indemnified party in connection
    with the defense thereof unless:

		
	 	     
    a) the indemnified party shall have employed such counsel
    in connection with the assumption of legal defenses in
    accordance with the proviso to the preceding sentence (it being
    understood, however, that the indemnifying party shall not be
    liable for the expenses of more than one separate counsel,
    reasonably approved by such indemnifying party, representing all
    of the indemnified parties who are parties to such
    action); or
	 
	 	     
    b) the indemnifying party shall not have employed counsel
    reasonably satisfactory to the indemnified party to represent
    the indemnified party within a reasonable time after notice of
    commencement of the action against the indemnified party,

		
	 	
    in each of which cases the reasonable out-of-pocket fees and
    expenses of counsel for the indemnified party shall be at the
    expense of the indemnifying party.

		
	 	     
    (iv) Contribution. If the indemnification
    provided for in this Section 5(e) is required by its
    terms but is for any reason held to be unavailable to, or is
    otherwise insufficient to hold harmless, an indemnified party
    under this Section 5(e) with respect to any losses,
    claims, damages, liabilities or expenses referred to in this
    Agreement, then each indemnifying party shall contribute to the
    amount paid or payable by such indemnified party as a result of
    any losses, claims, damages, liabilities or expenses referred to
    in this Agreement:

		
	 	     
    (1) in such proportion as is appropriate to reflect the
    relative faults of the Company and the Purchasers in connection
    with the statements or omissions or inaccuracies in the
    representations and warranties in this Agreement that resulted
    in such losses, claims, damages, liabilities or expenses, as
    well as any other relevant equitable considerations, or
	 
	 	     
    (2) if the allocation provided by clause (1) above is
    not permitted by applicable law, in such proportion as is
    appropriate to reflect not only the relative faults referred to
    in clause (1) above but also the relative benefits received
    by the Company and the Purchasers from the sale of the Purchased
    Securities.

A-17

 

     
The respective relative benefits received by the Company on the
one hand and each Purchaser on the other shall be deemed to be
in the same proportion as the amount to which the consideration
paid by such Purchaser to the Company pursuant to this Agreement
for the Registrable Shares purchased by such Purchaser that were
sold pursuant to the Registration Statement bears to the
difference (the “Difference”) between
the amount such Purchaser paid for the Registrable Shares that
were sold pursuant to the Registration Statement and the amount
received by such Purchaser from such sale. The relative fault of
the Company and each Purchaser 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 by such Purchaser and the parties’ relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid
or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in
Section 5(e)(iii), any reasonable legal or other
fees or expenses incurred by such party in connection with
investigating or defending any such action or claim. The
provisions set forth in Section 5(e)(iii) with
respect to the notice of the threat or commencement of any
threat or action shall apply if a claim for contribution is to
be made under this Section 5(e)(iv); provided,
however, that no additional notice shall be required with
respect to any threat or action for which notice has been given
under Section 5(e)(iii) for purposes of
indemnification. The Company and each Purchaser agree that it
would not be just and equitable if contribution pursuant to this
Section 5(e)(iv) were determined solely by pro rata
allocation (even if the Purchasers were treated as one entity
for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred
to in this paragraph. Notwithstanding the provisions of this
Section 5(e)(iv), no Purchaser shall be required to
contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages that such Purchaser
has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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 is not guilty of
such fraudulent misrepresentation. The Purchasers’
obligations to contribute pursuant to this
Section 5(e)(iv) are several and not joint.

     
(f) Rule 144 Information. For two years
after the date of this Agreement, the Company shall file in a
timely manner all reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder and shall take such further
action to the extent required to enable the Purchasers to sell
the Purchased Securities pursuant to Rule 144 under the
Securities Act (as such rule may be amended from time to time).

     
(g) Substitution of Escrow Agent. If the
Company (i) gives notice of removal to the Escrow Agent (as
defined in the Escrow Agreement) or (ii) receives a notice
of resignation from the Escrow Agent, the Company will promptly
provide notice of such removal or resignation to the Purchasers.
If the Escrow Agent is removed or resigns as Escrow Agent under
the Escrow Agreement, the Company agrees to appoint a nationally
recognized banking or financial institution, having a trust
office in Houston, Texas or New York, New York, as the successor
escrow agent under the Escrow Agreement.

     
6. ADVISORY FEE. The Purchasers acknowledge
that the Company intends to pay to C.E. Unterberg, Towbin, as
financial advisor, a fee in respect of the sale of the Purchased
Securities. Each of the parties to this Agreement hereby
represents that, on the basis of any actions and agreements by
it, there are no other brokers or finders entitled to
compensation in connection with the sale of the Purchased
Securities to the Purchasers. The Company shall indemnify and
hold harmless the Purchasers from and against all fees,
commission or other payments owing by the Company to C.E.
Unterberg, Towbin or any other Person acting on behalf of the
Company hereunder. Each Purchaser shall, severally and not
jointly, indemnify and hold harmless the Company from and
against all fees, commission or other payments owing by such
Purchasers to any Person, other than C.E. Unterberg, Towbin,
acting on behalf of the Purchasers hereunder.

A-18

 

     
7. CONDITIONS TO THE PURCHASERS’ OBLIGATIONS AT
CLOSING. The obligations of the Purchasers to consummate
the transactions contemplated herein are subject to the
fulfillment or waiver, on or before the Closing, of each of the
following conditions:

     
(a) Representations and Warranties True. Each
of the representations and warranties of the Company contained
in Section 3 shall be true and correct in all
material respects on and as of the date hereof (provided,
however, that such qualification shall only apply to
representation or warranties not otherwise qualified by
materiality) and on and as of the Closing Date with the same
effect as though such representations and warranties had been
made as of the Closing (except for representations and
warranties that speak as of a specific date).

     
(b) Performance. The Company shall have
performed and complied in all material respects with all
agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by
it on or before the Closing and shall have obtained all
approvals, consents and qualifications necessary to complete the
purchase and sale described herein; provided, however, as
provided in Section 2 hereof, the Company may
furnish to each Purchaser a facsimile copy of the warrant
representing the Purchased Warrant and of the stock
certificate(s) representing the Purchased Shares purchased by
such Purchaser no later than the next Business Day following the
Closing Date, with the original stock certificate(s) to be
delivered to such Purchaser by overnight courier no later than
the third (3rd) Business Day following the Closing Date.

     
(c) Company Compliance Certificate. The
Company will have delivered to the Purchasers a certificate
signed on its behalf by its Chief Executive Officer or Chief
Financial Officer, dated as of the Closing Date, certifying that
the conditions specified in Sections 7(a) and
7(b) hereof have been fulfilled.

     
(d) Agreements. The Company shall have
executed and delivered to the Purchasers this Agreement and the
Escrow Agreement.

     
(e) Securities Exemptions. The offer and sale
of the Purchased Securities to the Purchasers pursuant to this
Agreement shall be exempt from the registration requirements of
the Securities Act and the registration and/or qualification
requirements of all applicable state securities laws.

     
(f) Good Standing Certificate. The Company
shall have delivered to the Purchasers a certificate of the
Secretary of State of the State of Texas, dated as of a date
within five days of the date of the Closing, with respect to the
good standing of the Company.

     
(g) Secretary’s Certificate. The Company
shall have delivered to the Purchasers a certificate of the
Company executed by the Company’s Secretary, dated as of
the Closing Date, attaching and certifying to the truth and
correctness of (1) the Articles of Incorporation,
(2) the Bylaws and (3) the resolutions adopted by the
Company’s Board of Directors in connection with the
transactions contemplated by this Agreement.

     
(h) Opinion of Company Counsel. The
Purchasers will have received opinions, on behalf of the
Company, substantially in the form attached hereto as
Exhibit C and dated as of the Closing Date, from
(i) Baker Botts L.L.P., counsel to the Company, and
(ii) Ron Woessner, the Company’s General Counsel.

     
(i) No Statute or Rule Challenging
Transaction. No statute, rule, regulation, executive
order, decree, ruling, injunction, action, proceeding or
interpretation shall have been enacted, entered, promulgated,
endorsed or adopted by any court or governmental authority of
competent jurisdiction or any self-regulatory organization or
the staff of any of the foregoing, having authority over the
matters contemplated hereby which questions the validity of, or
challenges or prohibits the consummation of, any of the
transactions contemplated by this Agreement.

     
(j) Other Actions. The Company shall have
executed such certificates, agreements, instruments and other
documents, and taken such other actions as shall be customary or
reasonably requested by the Purchasers in writing in connection
with the transactions contemplated hereby.

A-19

 

     
8. CONDITIONS TO THE COMPANY’S OBLIGATIONS AT
CLOSING. The obligations of the Company to consummate
the transactions contemplated herein are subject to the
fulfillment or waiver, on or before the Closing, of each of the
following conditions:

     
(a) Representations and Warranties True. Each
of the representations and warranties of the Purchasers
contained in Section 4shall be true and correct in
all material respects on and as of the date hereof and on and as
of the Closing Date with the same effect as though such
representations and warranties had been made as of the Closing
(except for representations and warranties that speak as of a
specific date).

     
(b) Performance. The Purchasers shall have
performed and complied in all material respects with all
agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by
them on or before the Closing and shall have obtained all
approvals, consents and qualifications necessary to complete the
purchase and sale described herein.

     
(c) Agreements. Each Purchaser shall have
executed and delivered to the Company this Agreement and
Appendix I and II hereto.

     
(d) Securities Exemptions. The offer and sale
of the Purchased Securities to the Purchasers pursuant to this
Agreement shall be exempt from the registration requirements of
the Securities Act and the registration and/or qualification
requirements of all applicable state securities laws.

     
(e) Payment of Purchase Price. The Purchasers
shall have delivered to the Company by wire transfer of
immediately available funds, full payment of the purchase price
for the Purchased Securities as specified in
Section 1(b).

     
(f) No Statute or Rule Challenging
Transaction. No statute, rule, regulation, executive
order, decree, ruling, injunction, action, proceeding or
interpretation shall have been enacted, entered, promulgated,
endorsed or adopted by any court or governmental authority of
competent jurisdiction or any self-regulatory organization or
the staff of any of the foregoing, having authority over the
matters contemplated hereby which questions the validity of, or
challenges or prohibits the consummation of, any of the
transactions contemplated by this Agreement.

     
(g) Other Actions. The Purchasers shall have
executed such certificates, agreements, instruments and other
documents, and taken such other actions as shall be customary or
reasonably requested by the Company in connection with the
transactions contemplated hereby.

     
9. MISCELLANEOUS.

     
(a) Successors and Assigns. The terms and
conditions of this Agreement will inure to the benefit of and be
binding upon the respective successors and permitted assigns of
the parties. The Company shall not assign this Agreement or any
rights or obligations hereunder without the prior written
consent of each Purchaser holding Purchased Shares and Warrant
Shares (excluding any Purchased Shares or Warrant Shares sold to
the public pursuant to Rule 144 or otherwise). Any
Purchaser may assign its rights under this Agreement to any
person to whom such Purchaser assigns or transfers any of the
Purchased Securities, provided that such transferee agrees in
writing to be bound by the terms and provisions of this
Agreement, and such transfer is in compliance with the terms and
provisions of this Agreement and permitted by federal and state
securities laws.

     
(b) Governing Law. This Agreement will be
governed by and construed and enforced under the internal laws
of the State of New York, without reference to principles of
conflict of laws or choice of laws. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

     
(c) Survival. The representations and
warranties of the Company contained in Section 3 of
this Agreement and of the Purchasers contained in
Section 4 of this Agreement shall survive until the
second (2nd) anniversary of the Closing Date.

A-20

 

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

     
(e) Headings. The headings and captions used
in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement. All
references in this Agreement to sections, paragraphs, exhibits
and schedules will, unless otherwise provided, refer to sections
and paragraphs hereof and exhibits and schedules attached
hereto, all of which exhibits and schedules are incorporated
herein by reference.

     
(f) Notices. Any notices and other
communications required or permitted under this Agreement shall
be in writing and shall be delivered (i) personally by hand
or by courier, (ii) mailed by United States first-class
mail, postage prepaid or (iii) sent by facsimile directed
(A) if to any Purchaser, at such Purchaser’s address
or facsimile number set forth on Schedule A to this
Agreement, or at such address or facsimile number as such
Purchaser may designate by giving at least ten
(10) days’ advance written notice to the Company or
(b) if to the Company, to its address or facsimile number
set forth below, or at such other address or facsimile number as
the Company may designate by giving at least ten
(10) days’ advance written notice to the Purchasers.
All such notices and other communications shall be deemed given
upon (i) receipt or refusal of receipt, if delivered
personally, (ii) three days after being placed in the mail,
if mailed, or (iii) confirmation of facsimile transfer, if
faxed.

     
If to the Company:

		
	 	
    Zix Corporation
	 	
    2711 N. Haskell Avenue
	 	
    Suite 2300, LB36
	 	
    Dallas, Texas 75204-2960
	 	
    Attn: Ronald A. Woessner, General Counsel
	 	
    Facsimile: 214.515.7385

     
with a copy to:

		
	 	
    Baker Botts L.L.P.
	 	
    2001 Ross Avenue
	 	
    Dallas, Texas 75201
	 	
    Attn: Sarah Rechter
	 	
    Facsimile: 214.661.4419

     
(g) Amendments and Waivers. This Agreement
may be amended and the observance of any term of this Agreement
may be waived only with the written consent of the Company and
the Purchasers holding at least a majority of the total
aggregate number of the Purchased Shares and Warrant Shares then
outstanding (excluding any shares then already sold to the
public pursuant to Rule 144 or otherwise); provided,
however, that if the amendment or waiver would materially
change or adversely affect the rights or obligations of any
Purchaser under this Agreement, the written consent of the
Company and each Purchaser holding Purchased Shares and Warrant
Shares (excluding any Purchased Shares or Warrant Shares sold to
the public pursuant to Rule 144 or otherwise) shall be
required to effect such amendment or waiver. Any amendment
effected in accordance with this Section 9(g) will
be binding upon the Purchasers, the Company and their respective
successors and assigns.

     
(h) Severability. If any provision of this
Agreement is held to be unenforceable under applicable law, such
provision will be excluded from this Agreement and the balance
of the Agreement will be interpreted as if such provision were
so excluded and will be enforceable in accordance with its terms.

     
(i) Entire Agreement. This Agreement,
together with all exhibits and schedules hereto, constitute the
entire agreement and understanding of the parties with respect
to the subject matter hereof and supersede any and all prior
negotiations, correspondence, agreements, understandings, duties
or obligations between the parties with respect to the subject
matter hereof.

A-21

 

     
(j) Further Assurances. From and after the
date of this Agreement, upon the request of the Company or the
Purchasers, the Company and the Purchasers will execute and
deliver such instruments, documents or other writings, and take
such other actions, as may be reasonably necessary or desirable
to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.

     
(k) Meaning of Include and Including.
Whenever in this Agreement the word “include” or
“including” is used, it shall be deemed to mean
“include, without limitation” or “including,
without limitation,” as the case may be, and the language
following “include” or “including” shall not
be deemed to set forth an exhaustive list.

     
(l) Fees, Costs and Expenses. Except as
otherwise provided for in this Agreement, all fees, costs and
expenses (including attorneys’ fees and expenses) incurred
by any party hereto in connection with the preparation,
negotiation and execution of this Agreement and the exhibits and
schedules hereto and the consummation of the transactions
contemplated hereby and thereby (including the costs associated
with any filings with, or compliance with any of the
requirements of any governmental authorities), shall be the sole
and exclusive responsibility of such party.

     
(m) 8-K Filing and Publicity. As soon as
practicable following the execution of this Agreement, but in no
event later than 8:30 a.m., eastern time, on the day
following the Execution Date, the Company shall file a Current
Report on Form 8-K with the SEC describing the terms of the
transactions contemplated by this Agreement and attaching this
Agreement and the press release referred to below as exhibits to
such filing (the “8-K Filing” including
all attachments). Neither the Company nor any Purchaser shall
issue any press releases or any other public statements (other
than any filings required pursuant to applicable securities
laws) with respect to the transactions contemplated by this
Agreement; provided, however, that the Company shall be
entitled, without the prior approval of any Purchaser, to issue
any press release or make any other public disclosure (including
a press release (concerning the offering of the Purchased
Securities) pursuant to Rule 135(c) under the Securities
Act) with respect to such transactions (i) in substantial
conformity with the 8-K Filing and (ii) as is required
by applicable laws and regulations; and, provided further, that
no such release may identify a Purchaser unless such Purchaser
has consented thereto in writing, or as required by law.

     
(n) Waivers. No waiver by any party to this
Agreement of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to it
thereafter.

     
(o) Stock Splits, Dividends and other Similar
Events. The provisions of this Agreement shall be
appropriately adjusted to reflect any stock split, stock
dividend, reorganization or other similar event that may occur
with respect to the Company after the date hereof.

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

[Remainder of page intentionally left blank.]

A-22

 

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

		
	 	
    ZIX CORPORATION

			
	 	By: 	
    /s/ Brad Almond

		
	 	
     

	 	
    Name: Brad Almond
	 	
    Title:   Chief Financial Officer

[PURCHASER SIGNATURE PAGES TO FOLLOW]

Signature Page to Securities Purchase Agreement

A-23

 

SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT

DATED AS OF AUGUST 9, 2005

BY AND AMONG

ZIX CORPORATION

AND EACH PURCHASER NAMED THEREIN

     
The undersigned hereby executes and delivers to Zix Corporation,
the Securities Purchase Agreement (the
“Agreement”) to which this signature
page is attached effective as of the date of the Agreement,
which Agreement and signature page, together with all
counterparts of such Agreement and signature pages of the other
Purchasers named in such Agreement, shall constitute one and the
same document in accordance with the terms of such Agreement.

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    250,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    82,500
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    250,000
	 	 	 	 	 
	 	 	
    Schottenfeld Qualified Associates, L.P.	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Richard Schottenfeld	 	 
	 	 	 
	 	 	
    Name:	 	
    Richard Schottenfeld	 	 
	 	 	 
	 	 	
    Title:	 	
    Managing Member	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    100,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    33,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    100,000
	 	 	 	 	 
	 	 	
    Cranshire Capital, L.P.	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Mitchell P. Kopin	 	 
	 	 	 
	 	 	
    Name:	 	
    Mitchell P. Kopin	 	 
	 	 	 
	 	 	
    Title:	 	
    President of Downshire Capital, Inc.,
	 	 	 
	 	 	 	 	
    the General Partner of the Purchaser
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    80,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    26,400
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    80,000
	 	 	 	 	 
	 	 	
    Nite Capital LP	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Keith A. Goodman	 	 
	 	 	 
	 	 	
    Name:	 	
    Keith A. Goodman	 	 
	 	 	 
	 	 	
    Title:	 	
    Manager of the General	 	 
	 	 	 
	 	 	 	 	
    Partner of the Purchaser
	 	 	 

A-24

 

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    100,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    33,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    100,000
	 	 	 	 	 
	 	 	
    Bluegrass Growth Fund, LP	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Brian Shatz	 	 
	 	 	 
	 	 	
    Name:	 	
    Brian Shatz	 	 
	 	 	 
	 	 	
    Title:	 	
    Managing Member – Bluegrass
	 	 	 
	 	 	 	 	
    Growth Fund, LLC
	 	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    80,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    26,400
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    80,000
	 	 	 	 	 
	 	 	
    Alpha Capital AG	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Konrad Ackermann	 	 
	 	 	 
	 	 	
    Name:	 	
    Konrad Ackermann	 	 
	 	 	 
	 	 	
    Title:	 	
    Director	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    260,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    85,800
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    260,000
	 	 	 	 	 
	 	 	
    Gryphon Master Fund, L.P.	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ E.B. Lyon IV	 	 
	 	 	 
	 	 	
    Name:	 	
    E.B. Lyon IV	 	 
	 	 	 
	 	 	
    Title:	 	
    Authorized Agent	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    140,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    46,200
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    140,000
	 	 	 	 	 
	 	 	
    GSSF Master Fund, LP	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ E.B. Lyon IV	 	 
	 	 	 
	 	 	
    Name:	 	
    E.B. Lyon IV	 	 
	 	 	 
	 	 	
    Title:	 	
    Authorized Agent	 	 
	 	 	 

A-25

 

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    115,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    37,950
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    115,000
	 	 	 	 	 
	 	 	
    Precept Capital Master Fund, G.P.	 	 
	 	 	 
	 	 	
    “Purchaser”	 	 	 	 
	 	 	
    By:	 	
    its agent & attorney in fact, Precept Capital Management, LP
	 	 	
    By:	 	
    its General Partner, Precept Management LLC
	 	 	
    Signature:	 	
    /s/ D. Blair Baker	 	 
	 	 	 
	 	 	
    Name:	 	
    D. Blair Baker	 	 
	 	 	 
	 	 	
    Title:	 	
    President and CEO	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    200,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    66,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    200,000
	 	 	 	 	 
	 	 	
    JMG Capital Partners, LP	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Jonathan Glaser	 	 
	 	 	 
	 	 	
    Name:	 	
    Jonathan Glaser	 	 
	 	 	 
	 	 	
    Title:	 	
    Member Manager of the GP	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    200,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    66,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    200,000
	 	 	 	 	 
	 	 	
    JMG Triton Offshore Fund, Ltd.	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Jonathan Glaser	 	 
	 	 	 
	 	 	
    Name:	 	
    Jonathan Glaser	 	 
	 	 	 
	 	 	
    Title:	 	
    Member Manager of the
	 	 	 
	 	 	 	 	
    Investment Manager
	 	 	 

A-26

 

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    600,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    198,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    600,000
	 	 	 	 	 
	 	 	
    Heartland Group, Inc. solely on behalf of the Heartland Value
    Plus Fund
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Nicole J. Best	 	 
	 	 	 
	 	 	
    Name:	 	
    Nicole J. Best	 	 
	 	 	 
	 	 	
    Title:	 	
    Treasurer and Principal
	 	 	 
	 	 	 	 	
    Accounting Officer
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    100,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    33,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    100,000
	 	 	 	 	 
	 	 	
    Diamond Opportunity Fund, LLC	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Rob Rubin	 	 
	 	 	 
	 	 	
    Name:	 	
    Rob Rubin	 	 
	 	 	 
	 	 	
    Title:	 	
    Principal	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    2,000,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    660,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    2,000,000
	 	 	 	 	 
	 	 	
    Andrew J. Hoff	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Andrew J. Hoff	 	 
	 	 	 
	 	 	
    Name:	 	
    Andrew J. Hoff	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    800,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    264,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    800,000
	 	 	 	 	 
	 	 	
    George W. Haywood	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ George W. Haywood	 	 
	 	 	 
	 	 	
    Name:	 	
    George W. Haywood	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 

A-27

 

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    400,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    132,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    400,000
	 	 	 	 	 
	 	 	
    Superius Securities GP Profit Sharing Plan
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ James Hudgins	 	 
	 	 	 
	 	 	
    Name:	 	
    James Hudgins	 	 
	 	 	 
	 	 	
    Title:	 	
    Trustee	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    22,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    7,260
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    22,000
	 	 	 	 	 
	 	 	
    Arthur R. Puglia	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Arthur R. Puglia	 	 
	 	 	 
	 	 	
    Name:	 	
    Arthur R. Puglia	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    20,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    6,600
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    20,000
	 	 	 	 	 
	 	 	
    Manickam Ganesh	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Manickam Ganesh	 	 
	 	 	 
	 	 	
    Name:	 	
    Manickam Ganesh	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    20,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    6,600
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    20,000
	 	 	 	 	 
	 	 	
    William McCauley	 	 
	 	 	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ William McCauley	 	 
	 	 	 
	 	 	
    Name:	 	
    William McCauley	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 

A-28

 

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    40,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    13,200
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    40,000
	 	 	 	 	 
	 	 	
    Alapatt P. Thomas, MD	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Alapatt P. Thomas, MD	 	 
	 	 	 
	 	 	
    Name:	 	
    Alapatt P. Thomas, MD	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    22,600
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    7,458
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    22,600
	 	 	 	 	 
	 	 	
    Hersey Norris	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Hersey Norris	 	 
	 	 	 
	 	 	
    Name:	 	
    Hersey Norris	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    37,400
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    12,342
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    37,400
	 	 	 	 	 
	 	 	
    Howard Raphaelson	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Howard Raphaelson	 	 
	 	 	 
	 	 	
    Name:	 	
    Howard Raphaelson	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    20,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased	 	
    6,600
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    20,000
	 	 	 	 	 
	 	 	
    Ronald S. Carvalho	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Ronald S. Carvalho	 	 
	 	 	 
	 	 	
    Name:	 	
    Ronald S. Carvalho	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 

A-29

 

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    30,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    9,900
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    30,000
	 	 	 	 	 
	 	 	
    William Leggio	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ William Leggio	 	 
	 	 	 
	 	 	
    Name:	 	
    William Leggio	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    139,600
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    46,068
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    139,600
	 	 	 	 	 
	 	 	
    Capra Global Managed Assets, Ltd.	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ James R. Capra	 	 
	 	 	 
	 	 	
    Name:	 	
    James R. Capra	 	 
	 	 	 
	 	 	
    Title:	 	
    Director	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    60,400
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    19,932
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    60,400
	 	 	 	 	 
	 	 	
    CGMA Special Accounts, LLC	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ James R. Capra	 	 
	 	 	 
	 	 	
    Name:	 	
    James R. Capra	 	 
	 	 	 
	 	 	
    Title:	 	
    Director	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    200,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    66,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    200,000
	 	 	 	 	 
	 	 	
    Antonio R. Sanchez, Jr.	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Antonio R. Sanchez, Jr.	 	 
	 	 	 
	 	 	
    Name:	 	
    Antonio R. Sanchez, Jr.	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 

A-30

 

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    200,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    66,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    200,000
	 	 	 	 	 
	 	 	
    Con Egan	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Con Egan	 	 
	 	 	 
	 	 	
    Name:	 	
    Con Egan	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    150,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    49,500
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    150,000
	 	 	 	 	 
	 	 	
    Conor O’Driscoll	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Conor O’Driscoll	 	 
	 	 	 
	 	 	
    Name:	 	
    Conor O’Driscoll	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    120,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    39,600
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    120,000
	 	 	 	 	 
	 	 	
    Fulvio Dobrich	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Fulvio Dobrich	 	 
	 	 	 
	 	 	
    Name:	 	
    Fulvio Dobrich	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    100,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    33,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    100,000
	 	 	 	 	 
	 	 	
    John M. Craig	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    John M. Craig	 	 
	 	 	 
	 	 	
    Name:	 	
    John M. Craig	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 

A-31

 

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    60,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    19,800
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    60,000
	 	 	 	 	 
	 	 	
    Anthony J. Pannella	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Anthony J. Pannella	 	 
	 	 	 
	 	 	
    Name:	 	
    Anthony J. Pannella	 	 
	 	 	 
	 	 	
    Title:	 	 	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    60,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    19,800
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    60,000
	 	 	 	 	 
	 	 	
    Stephen D. Baska	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Stephen D. Baska	 	 
	 	 	 
	 	 	
    Name:	 	
    Stephen D. Baska	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    33,446
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    11,037
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    33,446
	 	 	 	 	 
	 	 	
    Antonio R. Sanchez, III	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Antonio R. Sanchez, III	 	 
	 	 	 
	 	 	
    Name:	 	
    Antonio R. Sanchez, III	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    40,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    13,200
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    40,000
	 	 	 	 	 
	 	 	
    Robert P. Janke and Debbie Hansman	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Robert P. Janke /s/ Debbie Hansman
	 	 	 
	 	 	
    Name:	 	
    Robert P. Janke    Debbie Hansman
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 

A-32

 

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    16,724
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    5,519
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    16,724
	 	 	 	 	 
	 	 	
    Richard D. Spurr	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Richard D. Spurr	 	 
	 	 	 
	 	 	
    Name:	 	
    Richard D. Spurr	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    3,346
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    1,104
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    3,346
	 	 	 	 	 
	 	 	
    Bradley C. Almond	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Bradley C. Almond	 	 
	 	 	 
	 	 	
    Name:	 	
    Bradley C. Almond	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    3,346
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    1,104
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    3,346
	 	 	 	 	 
	 	 	
    Charles N. Kahn III	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Charles N. Kahn III	 	 
	 	 	 
	 	 	
    Name:	 	
    Charles N. Kahn III	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    100,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    33,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    100,000
	 	 	 	 	 
	 	 	
    Anthony V. Milone	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Anthony V. Milone	 	 
	 	 	 
	 	 	
    Name:	 	
    Anthony V. Milone	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 

A-33

 

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    50,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    16,500
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    50,000
	 	 	 	 	 
	 	 	
    Sapphire Capital Partners, L.P.	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Matthew Buten	 	 
	 	 	 
	 	 	
    Name:	 	
    Matthew Buten	 	 
	 	 	 
	 	 	
    Title:	 	
    Managing Member	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    80,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    26,400
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    80,000
	 	 	 	 	 
	 	 	
    Reuben Taub	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Reuben Taub	 	 
	 	 	 
	 	 	
    Name:	 	
    Reuben Taub	 	 
	 	 	 
	 	 	
    Title:	 	
    N/A	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    400,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    132,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    400,000
	 	 	 	 	 
	 	 	
    C.E. Unterberg, Towbin Capital Partners I, L.P.
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Andrew Arno	 	 
	 	 	 
	 	 	
    Name:	 	
    Andrew Arno	 	 
	 	 	 
	 	 	
    Title:	 	
    Managing Member of the GP	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    23,920
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    7,894
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    23,920
	 	 	 	 	 
	 	 	
    SRB Greenway Capital, L.P.	 	 
	 	 	 
	 	 	
    “Purchaser” By:	 	
    

    SRB Management, L.P., General Partner
	 	 	 
	 	 	
    By:	 	
    BC Advisors, L.L.C., General Partner
	 	 	 
	 	 	
    Signature:	 	
    /s/ Stephen R. Becker	 	 
	 	 	 
	 	 	
    Name:	 	
    Stephen R. Becker	 	 
	 	 	 
	 	 	
    Title:	 	
    Member	 	 
	 	 	 

A-34

 

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    162,680
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    53,684
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    162,680
	 	 	 	 	 
	 	 	
    SRB Greenway Capital (QP), L.P.	 	 
	 	 	 
	 	 	
    “Purchaser”	 	 	 	 
	 	 	 
	 	 	
    By:	 	
    SRB Management, L.P., General Partner
	 	 	 
	 	 	
    By:	 	
    BC Advisors, L.L.C., General Partner
	 	 	 
	 	 	
    Signature:	 	
    /s/ Stephen R. Becker	 	 
	 	 	 
	 	 	
    Name:	 	
    Stephen R. Becker	 	 
	 	 	 
	 	 	
    Title:	 	
    Member	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    13,400
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    4,422
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    13,400
	 	 	 	 	 
	 	 	
    SRB Greenway Offshore Operating Fund, L.P.
	 	 	 
	 	 	
    “Purchaser”	 	 	 	 
	 	 	 
	 	 	
    By:	 	
    SRB Management, L.P., General Partner
	 	 	 
	 	 	
    By:	 	
    BC Advisors, L.L.C., General Partner
	 	 	 
	 	 	
    Signature:	 	
    /s/ Steve Becker	 	 
	 	 	 
	 	 	
    Name:	 	
    Steve Becker	 	 
	 	 	 
	 	 	
    Title:	 	
    Member	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    200,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    66,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    200,000
	 	 	 	 	 
	 	 	
    Shea Ventures, LLC	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ John C. Morrissey	 	 
	 	 	 
	 	 	
    Name:	 	
    John C. Morrissey	 	 
	 	 	 
	 	 	
    Title:	 	
    Vice President	 	 
	 	 	 

A-35

 

	 	 	 	 	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    2,250,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    742,500
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    2,250,000
	 	 	 	 	 
	 	 	
    Amulet Limited	 	 
	 	 	 
	 	 	
    “Purchaser”	 	 	 	 
	 	 	 
	 	 	
    By:	 	
    Amaranth Advisors L.L.C., its Trading Advisor
	 	 	 
	 	 	
    Signature:	 	
    /s/ Karl J. Wachter	 	 
	 	 	 
	 	 	
    Name:	 	
    Karl J. Wachter	 	 
	 	 	 
	 	 	
    Title:	 	
    Authorized Signatory	 	 
	 	 	 
	 	 	
    Number of Purchased Shares Purchased:	 	
    400,000
	 	 	 	 	 
	 	 	
    Number of Purchased Warrants Purchased:	 	
    132,000
	 	 	 	 	 
	 	 	
    Total Number of Units Purchased:	 	
    400,000
	 	 	 	 	 
	 	 	
    Omicron Master Trust	 	 
	 	 	 
	 	 	
    “Purchaser” Signature:	 	
    

    /s/ Oliver Morali	 	 
	 	 	 
	 	 	
    Name:	 	
    Oliver Morali	 	 
	 	 	 
	 	 	
    Title:	 	
    Managing Partner, Investment Advisor
	 	 	 

A-36

 

SCHEDULE A

SCHEDULE OF PURCHASERS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total	 	 	 	 	 	 	Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	 	 	 	 	 	 	 	 	Total Purchase	 
	Name and Address	 	Shares	 	 	Shares	 	 	Shares	 	 	Warrants	 	 	Warrants	 	 	Warrants	 	 	Firm Funds	 	 	Excess Funds	 	 	Price	 
	Schottenfeld Qualified
	 	 	250,000	 	 	 	150,000	 	 	 	100,000	 	 	 	82,500	 	 	 	49,500	 	 	 	33,000	 	 	 	375,000.00	 	 	 	250,000.00	 	 	 	625,000.00	 
	Associates, L.P.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	800 Third Avenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10th Floor
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, New York 10022
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Richard Schottenfeld
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cranshire Capital, L.P.
	 	 	100,000	 	 	 	60,000	 	 	 	40,000	 	 	 	33,000	 	 	 	19,800	 	 	 	13,200	 	 	 	150,000.00	 	 	 	100,000.00	 	 	 	250,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	666 Dundee Road, Suite 1901
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Northbrook, IL 60062
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Mitchell Kopin
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Nite Capital LP
	 	 	80,000	 	 	 	48,000	 	 	 	32,000	 	 	 	26,400	 	 	 	15,840	 	 	 	10,560	 	 	 	120,000.00	 	 	 	80,000.00	 	 	 	200,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	100 East Cook Avenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 201
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Libertyville, IL 60048
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Keith A. Goodman
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bluegrass Growth Fund, LP
	 	 	100,000	 	 	 	60,000	 	 	 	40,000	 	 	 	33,000	 	 	 	19,800	 	 	 	13,200	 	 	 	150,000.00	 	 	 	100,000.00	 	 	 	250,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	122 E. 42nd Street
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 2606
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10168
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Brian Shatz
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total	 	 	 	 	 	 	Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	 	 	 	 	 	 	 	 	Total Purchase	 
	Name and Address	 	Shares	 	 	Shares	 	 	Shares	 	 	Warrants	 	 	Warrants	 	 	Warrants	 	 	Firm Funds	 	 	Excess Funds	 	 	Price	 
	Alpha Capital AG
	 	 	80,000	 	 	 	48,000	 	 	 	32,000	 	 	 	26,400	 	 	 	15,840	 	 	 	10,560	 	 	 	120,000.00	 	 	 	80,000.00	 	 	 	200,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o LH Financial
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	160 Central Park South
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 2701
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10019
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Joseph Hammer
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gryphon Master Fund, L.P.
	 	 	260,000	 	 	 	156,000	 	 	 	104,000	 	 	 	85,800	 	 	 	51,480	 	 	 	34,320	 	 	 	390,000.00	 	 	 	260,000.00	 	 	 	650,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	100 Crescent Court
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 490
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dallas, Texas 75201
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Mr. Tim Stobaugh
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GSSF Master Fund, LP
	 	 	140,000	 	 	 	84,000	 	 	 	56,000	 	 	 	46,200	 	 	 	27,720	 	 	 	18,480	 	 	 	210,000.00	 	 	 	140,000.00	 	 	 	350,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	100 Crescent Court
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 490
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dallas, Texas 75201
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Mr. Tim Stobaugh
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Precept Capital Master Fund, G.P.
	 	 	115,000	 	 	 	69,000	 	 	 	46,000	 	 	 	37,950	 	 	 	22,770	 	 	 	15,180	 	 	 	172,500.00	 	 	 	115,000.00	 	 	 	287,500.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	100 Crescent Court
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 850
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dallas, Texas 75201
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: John Bateman
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	JMG Capital Partners, LP
	 	 	200,000	 	 	 	120,000	 	 	 	80,000	 	 	 	66,000	 	 	 	39,600	 	 	 	26,400	 	 	 	300,000.00	 	 	 	200,000.00	 	 	 	500,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	11601 Wilshire Blvd.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 2180
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Los Angeles, CA 90025
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Mr. Jonathan Glaser
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total	 	 	 	 	 	 	Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	 	 	 	 	 	 	 	 	Total Purchase	 
	Name and Address	 	Shares	 	 	Shares	 	 	Shares	 	 	Warrants	 	 	Warrants	 	 	Warrants	 	 	Firm Funds	 	 	Excess Funds	 	 	Price	 
	JMG Triton Offshore Fund, Ltd.
	 	 	200,000	 	 	 	120,000	 	 	 	80,000	 	 	 	66,000	 	 	 	39,600	 	 	 	26,400	 	 	 	300,000.00	 	 	 	200,000.00	 	 	 	500,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	11601 Wilshire Blvd.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 2180
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Los Angeles, CA 90025
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Mr. Jonathan Glaser
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Heartland Value Plus Fund c/o
	 	 	600,000	 	 	 	360,000	 	 	 	240,000	 	 	 	198,000	 	 	 	118,800	 	 	 	79,200	 	 	 	900,000.00	 	 	 	600,000.00	 	 	 	1,500,000.00	 
	Brown Brothers Harriman & Co.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o Heartland Group, Inc.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	789 N. Water St., Suite 500
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Milwaukee, WI 53202
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Nicole J. Best
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Diamond Opportunity Fund, LLC
	 	 	100,000	 	 	 	60,000	 	 	 	40,000	 	 	 	33,000	 	 	 	19,800	 	 	 	13,200	 	 	 	150,000.00	 	 	 	100,000.00	 	 	 	250,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	500 Skokie Blvd.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 310
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Northbrook, IL 60062
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Richard Marks
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Andrew J. Hoff
	 	 	2,000,000	 	 	 	1,200,000	 	 	 	800,000	 	 	 	660,000	 	 	 	396,000	 	 	 	264,000	 	 	 	3,000,000.00	 	 	 	2,000,000.00	 	 	 	5,000,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	731 N. Jackson Street
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 812
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Milwaukee, WI 53202
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	George W. Haywood
	 	 	800,000	 	 	 	480,000	 	 	 	320,000	 	 	 	264,000	 	 	 	158,400	 	 	 	105,600	 	 	 	1,200,000.00	 	 	 	800,000.00	 	 	 	2,000,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3023 Q. Street, N.W.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Washington, D.C. 20007
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Superius Securities GP Profit
	 	 	400,000	 	 	 	240,000	 	 	 	160,000	 	 	 	132,000	 	 	 	79,200	 	 	 	52,800	 	 	 	600,000.00	 	 	 	400,000.00	 	 	 	1,000,000.00	 
	Sharing Plan
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	94 Grand Avenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Englewood, NJ 07631
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Mr. James Hudgins
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total	 	 	 	 	 	 	Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	 	 	 	 	 	 	 	 	Total Purchase	 
	Name and Address	 	Shares	 	 	Shares	 	 	Shares	 	 	Warrants	 	 	Warrants	 	 	Warrants	 	 	Firm Funds	 	 	Excess Funds	 	 	Price	 
	Arthur R. Puglia
	 	 	22,000	 	 	 	13,200	 	 	 	8,800	 	 	 	7,260	 	 	 	4,356	 	 	 	2,904	 	 	 	33,000.00	 	 	 	22,000.00	 	 	 	55,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	23499 Columbus Rd.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(4,400 /	 	 	 	(2,640 /	 	 	 	(1,760 /	 	 	 	 	 	 	 	 	 	 	 	 	 
	Columbus, NJ 08022
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2,860)	*	 	 	1,716)	*	 	 	1,144)	*	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Manickam Ganesh
	 	 	20,000	 	 	 	12,000	 	 	 	8,000	 	 	 	6,600	 	 	 	3,960	 	 	 	2,640	 	 	 	30,000.00	 	 	 	20,000.00	 	 	 	55,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5 Eccleston Court
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(4,000 /	 	 	 	(2,400 /	 	 	 	(1,600 /	 	 	 	 	 	 	 	 	 	 	 	 	 
	Montville, NJ 07045
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2,600)	*	 	 	1,560)	*	 	 	1,040)	*	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	William McCauley
	 	 	20,000	 	 	 	12,000	 	 	 	8,000	 	 	 	6,600	 	 	 	3,960	 	 	 	2,640	 	 	 	30,000.00	 	 	 	20,000.00	 	 	 	55,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	492 Ackerson Avenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(4,000 /	 	 	 	(2,400 /	 	 	 	(1,600 /	 	 	 	 	 	 	 	 	 	 	 	 	 
	Wyckoff, NJ 07481
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2,600)	*	 	 	1,560)	*	 	 	1,040)	*	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Alapatt P. Thomas, MD
	 	 	40,000	 	 	 	24,000	 	 	 	16,000	 	 	 	13,200	 	 	 	7,920	 	 	 	5,280	 	 	 	60,000.00	 	 	 	40,000.00	 	 	 	100,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	9 Manor Drive
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(8,000 /	 	 	 	(4,800 /	 	 	 	(3,200 /	 	 	 	 	 	 	 	 	 	 	 	 	 
	Warren, NJ 07059
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5,200)	*	 	 	3,120)	*	 	 	2,080)	*	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Hersey Norris
	 	 	22,600	 	 	 	13,560	 	 	 	9,040	 	 	 	7,458	 	 	 	4,475	 	 	 	2,983	 	 	 	33,900.00	 	 	 	22,600.00	 	 	 	56,500.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	8553 Caratoke Hwy, US Hwy 158
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(4,458 /	 	 	 	(2,712 /	 	 	 	(1,746 /	 	 	 	 	 	 	 	 	 	 	 	 	 
	Harbinger, NC 27941
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3,000)	*	 	 	1,763)	*	 	 	1,237)	*	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Howard Raphaelson
	 	 	37,400	 	 	 	22,440	 	 	 	14,960	 	 	 	12,342	 	 	 	7,405	 	 	 	4,937	 	 	 	56,100.00	 	 	 	37,400.00	 	 	 	93,500.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10 Chauncey Place
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(7,342 /	 	 	 	(4,488 /	 	 	 	(2,854 /	 	 	 	 	 	 	 	 	 	 	 	 	 
	Woodbury, NY 11797
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5,000)	*	 	 	2,917)	*	 	 	2,083)	*	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ronald S. Carvalho
	 	 	20,000	 	 	 	12,000	 	 	 	8,000	 	 	 	6,600	 	 	 	3,960	 	 	 	2,640	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	107 Osborne Place
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(4,000 /	 	 	 	(2,400 /	 	 	 	(1,600 /	 	 	 	30,000.00	 	 	 	20,000.00	 	 	 	55,000.00	 
	Cranford, NJ 07016
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2,600)	*	 	 	1,560)	*	 	 	1,040)	*	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	William R. Leggio
	 	 	30,000	 	 	 	18,000	 	 	 	12,000	 	 	 	9,900	 	 	 	5,940	 	 	 	3,960	 	 	 	45,000.00	 	 	 	30,000.00	 	 	 	75,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2 Charlton Street
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(6,000 /	 	 	 	(3,600 /	 	 	 	(2,400 /	 	 	 	 	 	 	 	 	 	 	 	 	 
	Apt. 11K
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3,900)	*	 	 	2,340)	*	 	 	1,560)	*	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10014
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total	 	 	 	 	 	 	Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	 	 	 	 	 	 	 	 	Total Purchase	 
	Name and Address	 	Shares	 	 	Shares	 	 	Shares	 	 	Warrants	 	 	Warrants	 	 	Warrants	 	 	Firm Funds	 	 	Excess Funds	 	 	Price	 
	Capra Global Managed Assets, Ltd.
	 	 	139,600	 	 	 	83,760	 	 	 	55,840	 	 	 	46,068	 	 	 	27,641	 	 	 	18,427	 	 	 	209,400.00	 	 	 	139,600.00	 	 	 	349,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o Walkers SPV Limited
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	P.O. Box 908GT, Walker House
Mary Street, Georgetown
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grand Cayman, Cayman Islands
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Mr. John Briggs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CGMA Special Accounts, LLC
	 	 	60,400	 	 	 	36,240	 	 	 	24,160	 	 	 	19,932	 	 	 	11,959	 	 	 	7,973	 	 	 	90,600.00	 	 	 	60,400.00	 	 	 	151,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o Walkers SPV Limited
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	P.O. Box 908GT, Walker House
Mary Street, Georgetown
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grand Cayman, Cayman Islands
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Mr. John Briggs
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Antonio R. Sanchez, Jr.
	 	 	200,000	 	 	 	120,000	 	 	 	80,000	 	 	 	66,000	 	 	 	39,600	 	 	 	26,400	 	 	 	300,000.00	 	 	 	200,000.00	 	 	 	500,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1920 Sandman Street
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Laredo, Texas 78041
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Con Egan
	 	 	200,000	 	 	 	120,000	 	 	 	80,000	 	 	 	66,000	 	 	 	39,600	 	 	 	26,400	 	 	 	300,000.00	 	 	 	200,000.00	 	 	 	500,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	225 East 70th
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Penthouse B
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10021
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Conor O’Driscoll
	 	 	150,000	 	 	 	90,000	 	 	 	60,000	 	 	 	49,500	 	 	 	29,700	 	 	 	19,800	 	 	 	225,000.00	 	 	 	150,000.00	 	 	 	375,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	355 Locust Avenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Rye, NY 10580
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fulvio Dobrich
	 	 	120,000	 	 	 	72,000	 	 	 	48,000	 	 	 	39,600	 	 	 	23,760	 	 	 	15,840	 	 	 	180,000.00	 	 	 	120,000.00	 	 	 	300,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o Galileo Asset Management
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	570 Lexington Avenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	24th Floor
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10022
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total	 	 	 	 	 	 	Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	 	 	 	 	 	 	 	 	Total Purchase	 
	Name and Address	 	Shares	 	 	Shares	 	 	Shares	 	 	Warrants	 	 	Warrants	 	 	Warrants	 	 	Firm Funds	 	 	Excess Funds	 	 	Price	 
	John M. Craig
	 	 	100,000	 	 	 	60,000	 	 	 	40,000	 	 	 	33,000	 	 	 	19,800	 	 	 	13,200	 	 	 	150,000.00	 	 	 	100,000.00	 	 	 	250,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	46 Cheese Spring Road
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Wilton, CT 06897
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Anthony J. Pannella
	 	 	60,000	 	 	 	36,000	 	 	 	24,000	 	 	 	19,800	 	 	 	11,880	 	 	 	7,920	 	 	 	90,000.00	 	 	 	60,000.00	 	 	 	150,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Wilentz, Goldman & Spitzer PA
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	90 Woodbridge Center Drive
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Woodbridge, NJ 07095
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stephen D. Baksa
	 	 	60,000	 	 	 	36,000	 	 	 	24,000	 	 	 	19,800	 	 	 	11,880	 	 	 	7,920	 	 	 	90,000.00	 	 	 	60,000.00	 	 	 	150,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2 Woods Lane
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Chatham, NJ 07928
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Antonio R. Sanchez, III†
	 	 	33,446	 	 	 	20,068	 	 	 	13,378	 	 	 	11,037	 	 	 	6,623	 	 	 	4,414	 	 	 	60,003.32	 	 	 	40,000.22	 	 	 	100,003.54	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1111 Bagby
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 1600
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Houston, Texas 77002
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Robert P. Janke and Debbie Hansman
	 	 	40,000	 	 	 	24,000	 	 	 	16,000	 	 	 	13,200	 	 	 	7,920	 	 	 	5,280	 	 	 	60,000.00	 	 	 	40,000.00	 	 	 	100,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	121 Highland Blvd.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bozeman, MT 59715
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Richard D. Spurr†
	 	 	16,724	 	 	 	10,034	 	 	 	6,690	 	 	 	5,519	 	 	 	3,312	 	 	 	2,207	 	 	 	30,001.66	 	 	 	20,003.10	 	 	 	50,004.76	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2711 North Haskell
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 2200, LB 36
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dallas, Texas 75204
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bradley Christian Almond†
	 	 	3,346	 	 	 	2,008	 	 	 	1,338	 	 	 	1,104	 	 	 	663	 	 	 	441	 	 	 	6,003.92	 	 	 	4,000.62	 	 	 	10,004.54	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1541 El Campo
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dallas, Texas 75218
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total	 	 	 	 	 	 	Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	 	 	 	 	 	 	 	 	Total Purchase	 
	Name and Address	 	Shares	 	 	Shares	 	 	Shares	 	 	Warrants	 	 	Warrants	 	 	Warrants	 	 	Firm Funds	 	 	Excess Funds	 	 	Price	 
	Charles N. Kahn, III†
	 	 	3,346	 	 	 	2,008	 	 	 	1,338	 	 	 	1,104	 	 	 	663	 	 	 	441	 	 	 	6,003.92	 	 	 	4,000.62	 	 	 	10,004.54	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4545 Glebe Road
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Arlington, VA 22207
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Anthony V. Milone
	 	 	100,000	 	 	 	60,000	 	 	 	40,000	 	 	 	33,000	 	 	 	19,800	 	 	 	13,200	 	 	 	150,000.00	 	 	 	100,000.00	 	 	 	250,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o HAN
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1305 Maroneck Avenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	White Plains, NY 10605
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Sapphire Capital Partners, L.P.
	 	 	50,000	 	 	 	30,000	 	 	 	20,000	 	 	 	16,500	 	 	 	9,900	 	 	 	6,600	 	 	 	75,000.00	 	 	 	50,000.00	 	 	 	125,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	527 Madison Avenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7th Floor
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10013
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Mr. Matthew Buton
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reuben Taub
	 	 	80,000	 	 	 	48,000	 	 	 	32,000	 	 	 	26,400	 	 	 	15,840	 	 	 	10,560	 	 	 	120,000.00	 	 	 	80,000.00	 	 	 	200,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	607 West End Avenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Apartment 4A
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10024
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	C.E. Unterberg, Towbin Capital
	 	 	400,000	 	 	 	240,000	 	 	 	160,000	 	 	 	132,000	 	 	 	79,200	 	 	 	52,800	 	 	 	600,000.00	 	 	 	400,000.00	 	 	 	1,000,000.00	 
	Partners I, L.P.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o C.E. Unterberg, Towbin
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	350 Madison Avenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10017
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Andrew Arno
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SRB Greenway Capital, L.P.
	 	 	23,920	 	 	 	14,352	 	 	 	9,568	 	 	 	7,894	 	 	 	4,736	 	 	 	3,158	 	 	 	35,880.00	 	 	 	23,920.00	 	 	 	59,800.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	300 Crescent Court
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 1111
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dallas, Texas 75201
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Joe Worsham
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total	 	 	 	 	 	 	Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	 	 	 	 	 	 	 	 	Total Purchase	 
	Name and Address	 	Shares	 	 	Shares	 	 	Shares	 	 	Warrants	 	 	Warrants	 	 	Warrants	 	 	Firm Funds	 	 	Excess Funds	 	 	Price	 
	SRB Greenway Capital (QP), L.P.
	 	 	162,680	 	 	 	97,608	 	 	 	65,072	 	 	 	53,684	 	 	 	32,211	 	 	 	21,473	 	 	 	244,020.00	 	 	 	162,680.00	 	 	 	406,700.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	300 Crescent Court
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 1111
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dallas, Texas 75201
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Joe Worsham
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SRB Greenway Offshore Operating
	 	 	13,400	 	 	 	8,040	 	 	 	5,360	 	 	 	4,422	 	 	 	2,653	 	 	 	1,769	 	 	 	20,100.00	 	 	 	13,400.00	 	 	 	33,500.00	 
	Fund, L.P.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	300 Crescent Court
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Suite 1111
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dallas, Texas 75201
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Joe Worsham
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Shea Ventures, LLC
	 	 	200,000	 	 	 	120,000	 	 	 	80,000	 	 	 	66,000	 	 	 	39,600	 	 	 	26,400	 	 	 	300,000.00	 	 	 	200,000.00	 	 	 	500,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	655 Brea Canyon Road
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Walnut, CA 91789
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Mr. Edmund H. Shea, Jr.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Amulet Limited
	 	 	2,250,000	 	 	 	1,350,000	 	 	 	900,000	 	 	 	742,500	 	 	 	445,500	 	 	 	297,000	 	 	 	3,375,000.00	 	 	 	2,250,000.00	 	 	 	5,625,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o Dundee Leeds Management
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Services (Cayman) Ltd.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	28N. Church Street, Waterfront
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Centre, George Town, Grand Cayman,
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cayman Islands, British West Indies
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	with copies to:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o Amaranth Advisors L.L.C.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	One American Lane
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Greenwich, CT 06831
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: General Counsel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total	 	 	 	 	 	 	Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	Purchased	 	 	Firm	 	 	Excess	 	 	 	 	 	 	 	 	 	 	Total Purchase	 
	Name and Address	 	Shares	 	 	Shares	 	 	Shares	 	 	Warrants	 	 	Warrants	 	 	Warrants	 	 	Firm Funds	 	 	Excess Funds	 	 	Price	 
	Omicron Master Trust
	 	 	400,000	 	 	 	240,000	 	 	 	160,000	 	 	 	132,000	 	 	 	79,200	 	 	 	52,800	 	 	 	600,000.00	 	 	 	400,000.00	 	 	 	1,000,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c/o Omicron Capital, L.P.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	650 Fifth Avenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	24th Floor
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New York, NY 10019
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Brian Daly
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total:
	 	 	10,503,862	 	 	 	6,302,318	 	 	 	4,201,544	 	 	 	3,466,274	 	 	 	2,079,767	 	 	 	1,386,507	 	 	 	15,772,512.82	 	 	 	10,515,004.56	 	 	 	26,287,517.38	 

 

			
	†	 	Denotes Purchaser purchasing at Insider Per Unit Price
	 
	*	 	Denotes portion of total (issued to Purchaser/ issued to Mr. Kayvan Karoon)

 

 

APPENDIX I

STOCK CERTIFICATE AND WARRANT QUESTIONNAIRE

     Pursuant to Section 4(l) of the Agreement, please provide us with the following
information:

     1. The exact name that the Purchaser’s Purchased Shares and Purchased Warrant are to be
registered in (this is the name that will appear on your stock certificate(s)). A nominee name may
be used if appropriate:

 

 

     2. The relationship between the Purchaser of the Purchased Shares and the Purchased Warrant
and the Registered Holder listed in response to Item 1 above:

 

 

     3. The mailing address of the Registered Holder listed in response to Item 1 above:

 

 

 

 

     4. The Social Security Number or Tax Identification Number of the Registered Holder listed in
response to Item 1 above:

 

 

 

 

APPENDIX II

REGISTRATION STATEMENT/SUITABILITY QUESTIONNAIRE

Pursuant to Section 4(l) of the Agreement, please provide the information below. All
capitalized terms not defined in this Appendix II shall have the meanings assigned to them in the
Agreement.

PART A

In connection with the preparation of the Registration Statement, please provide us with the
following information:

     Pursuant to the “Selling Stockholder” section of the Registration Statement, please state the
Purchaser’s name exactly as it should appear in the Registration Statement:

 

     Please provide the number of shares of Common Stock that the Purchaser will own immediately
after Closing, including those Shares purchased by the Purchaser pursuant to the Agreement and
those shares purchased by the Purchaser through other transactions:

 

     Please explain the nature of the beneficial ownership of the shares of Common Stock owned by
the Purchaser organization, including any shares of Common Stock not held of record by the
Purchaser:

 

 

 

 

 

 

     If the Purchaser is not a natural person, please identify each natural person who will
exercise sole or shared voting and/or dispositive power with respect to the shares of Common Stock
owned by the Purchaser immediately after the Closing. Please also specify in what capacity such
person(s) will exercise their voting and/or dispositive power with respect to such shares.

 

 

	 	 	 
	Natural Person(s)	 	Relationship to Purchaser
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 

     Disclose the details of any rights to acquire shares of Common Stock that the Purchaser may
have:

 

 

 

 

 

 

     Has the Purchaser had any material relationship within the past three years with the Company
or its affiliates?

     Yes  ̈ No  ̈

     If yes, please indicate the nature of any such relationships below:

 

 

 

 

 

 

     Is the Purchaser a broker-dealer registered with the SEC?

Yes  ̈ No  ̈

     Is the Purchaser affiliated with any registered broker-dealer?

Yes  ̈ No  ̈

 

 

     If yes, please identify such broker-dealer and explain the relationship that such
registered broker-dealer has with the Purchaser (including details of any affiliation or
other relationship).

	 	 	 
	Registered Broker-Dealer	 	Relationship to Purchaser
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 

PART B

Pursuant to Section 4 of the Agreement, please provide us with the following information,
and we will use the Purchaser’s responses to qualify the Purchaser for purposes of federal and
state securities laws:

 

IDENTIFICATION

			
	Name:	 	 

Address of principal place of business:

 

 

 

 

			
	State (or Country) of formation or incorporation:	 	 

			
	Contact Person:	 	 

			
	Telephone Number:	 	 

			
	Facsimile Number:	 	 

			
	Email Address:	 	 

			
	Type of Entity (corporation, partnership, trust, etc.):	 	 

			
	Social Security or Taxpayer or Employer Identification Number:	 	 

 

 

     STATUS AS AN ACCREDITED INVESTOR

Please confirm that the Purchaser is an “accredited investor” as defined under the Securities Act
of 1933, as amended (the “Act”), by checking all applicable boxes to indicate the exemption
qualifying you as an accredited investor, as provided in Rule 501(a) under the Securities Act of
1933, as amended.

 ̈ a corporation, organization described in Section 501(c)(3) of the Internal Revenue Code, a
Massachusetts or similar business trust or a partnership, in each case, not formed for the purpose
of this investment, with total assets in excess of $5,000,000;

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

 ̈ a Small Business Investment Company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of 1958;

 ̈ an investment company registered under the Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act;

 ̈ a bank as defined in Section 3(a)(2) or a savings and loan association or other institution
defined in Section 3(a)(5)(A) of the Act acting in either an individual or fiduciary capacity;

 ̈ an insurance company as defined in Section 2(13) of the Securities Act;

 ̈ an employee benefit plan within the meaning of Title I of the Employee Retirement Income
Security Act of 1974 whose investment decision is made by a fiduciary which is either a bank,
savings and loan association, insurance company, or registered investment advisor, or whose total
assets exceed $5,000,000, or, if a self-directed plan, a plan whose investment decisions are made
solely by persons who are accredited investors;

 ̈ a director, executive officer or general partner of the issuer of the securities being
offered or sold;

 ̈ a natural person whose individual net worth, or joint net worth with your spouse, at the
time of purchase exceeds $1,000,000;

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

 ̈ a trust with total assets in excess of $5,000,000, not formed for the specific purpose of
acquiring the securities offered, purchase is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) of the Securities Act;

 ̈ an entity in which all the equity owners are accredited investors; or

 

 

	o	 	other – Please describe:

 

 

 

RESIDENCE INFORMATION

               Please indicate the jurisdiction in which the Purchaser resides, if the Purchaser is a natural
person, or in which the Purchaser is chartered and the jurisdiction in which it maintains its
principal offices:

 

INVESTMENT REPRESENTATION

Is the Purchaser purchasing the securities offered for its and for investment purposes only?

      Yes  ̈       No  ̈

If no, please state for whom is the Purchaser investing and/or the reason for investing.

 

 

 

SIGNATURE

The above information is true and correct in all material respects and the undersigned
recognizes that the Company and its counsel are relying on the truth and accuracy of such
information in reliance on the exemption under the Securities Act. The undersigned agrees to
notify the Company promptly of any changes in the foregoing information which may occur
prior to the investment.

	 	 	 
	Executed at                                                                  ,
                                                                  on                               , 2005.
	 

	 	 
	Name of Entity:
	 	 
	 

	 	 

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	(Signature)	 	 
	 
	 	 	 	 
	 	 	 
	(Name and title of signatory)	 	 

IF THE INVESTMENT WILL BE MADE BY MORE THAN ONE ENTITY, WHETHER OR
NOT AFFILIATED, PLEASE COMPLETE A COPY OF THIS QUESTIONNAIRE FOR
EACH ENTITY.

 

 

EXHIBIT A

FORM OF WARRANT

Filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on August 9, 2005.

 

 

EXHIBIT B

DISCLOSURE LETTER

 

 

EXHIBIT C

FORM OF OPINION

     1. The Company is a corporation validly existing and in good standing under the laws of the
State of Texas.

     2. The Company has the corporate power required (i) to own and operate its property and assets
and carry on its business as presently conducted as described in its Annual Report on Form 10-K, as
amended, for the year ended December 31, 2004 and (ii) to execute, deliver and perform its
obligations under each of the Transaction Documents.

     3. The Purchased Shares have been duly authorized and will be validly issued, fully paid and
non-assessable when such shares have been duly delivered against payment therefor as contemplated
by the Purchase Agreement and, to our knowledge, are not subject to any pre-emptive
rights or similar rights, except for pre-emptive rights which on the Closing Date are being
exercised or for which the time period for exercise has expired.

     4. The issuance of the Purchased Warrants has been duly authorized and, to our knowledge, is
not subject to any pre-emptive rights or similar rights, except for pre-emptive rights which on the
Closing Date are being exercised or for which the time period for exercise has expired, and the
Purchased Warrants will be validly issued when duly delivered against payment therefor as
contemplated by the Purchase Agreement. 

     5. The Warrant Shares have been duly authorized and reserved for issuance, and will be validly
issued, fully paid and non-assessable when such shares have been duly delivered upon exercise of
the Purchased Warrants against payment therefor in accordance with the terms of the Purchased
Warrants and, to our knowledge, are not subject to any pre-emptive rights or similar rights, except
for pre-emptive rights which on the Closing Date are being exercised or for which the time period
for exercise has expired.

     6. The Company has taken all corporate action necessary to authorize the execution, delivery
and performance of each of the Transaction Documents and has duly executed and delivered each of
the Transaction Documents.

     7. Each of the Transaction Documents constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with the terms of each such Transaction
Document.

     8. The execution and delivery by the Company of the Transaction Documents and the consummation
of the transactions contemplated thereby by the Company, does not: (i) result in the violation of
the Articles of Incorporation or By-laws of the Company, as amended or (ii) result in the violation
of any Texas or federal law.

     9. The execution and delivery by the Company of the Transaction Documents and the consummation
by the Company of the transactions contemplated thereby, does not require

 

 

approval from or any filings with any governmental authority under Texas or federal law,
except for (i) approvals or filings contemplated by the Transaction Documents and (ii) approvals or
filings as have been filed, obtained or made.

     10. The authorized capital of the stock of the Company consists of 175,000,000 shares of
Common Stock and 10,000,000 shares of Preferred Stock.

     11. The Company is not an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.

     12. Assuming the accuracy of the representations and warranties of each of the Purchasers in
Section 4 of the Purchase Agreement and assuming the compliance by each Purchaser with its
covenants set forth therein, the issuance and sale of the Purchased Securities under the
circumstances contemplated by the Transaction Documents does not require registration under the
Securities Act of 1933, as amended.

     The foregoing opinions are further subject to the following assumptions, limitations and
qualifications:

     A. With respect to the opinion expressed in Paragraph 1, we have relied solely on a
certificate of good standing, a copy of which has been furnished to you.

     B. The opinion expressed in Paragraph 7 is qualified (i) by the effects of applicable laws
relating to bankruptcy, insolvency, and other similar laws relating to or affecting the rights and
remedies of creditors generally, (ii) with respect to the remedies of specific performance and
injunctive and other forms of equitable relief, by the availability of equitable defenses and the
discretion of the court before which any enforcement thereof may be brought and (iii) by general
principles of equity, including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether considered in a proceeding in equity or at law).

     C. We express no opinion as to the validity, binding effect or enforceability of (i)
provisions that purport to establish evidentiary standards, (ii) provisions relating to
severability, indemnity, contribution, set off, delay or omission of enforcement of rights or
remedies, (iii) provisions purporting to waive rights or defenses, (iv) provisions that purport to
restrict available remedies or establish remedies, (v) provisions relating to consent to
jurisdiction, choice of forum or choice of law, (vi) provisions under which any consent may be
unreasonably withheld or (vii) any provision if and to the extent that such provision (x) is a
liquidated damages provision, to the extent that such provision constitutes a penalty or forfeiture
or is otherwise contrary to public policy, or (y) provides a remedy for breach that may be deemed
to be disproportionate to actual damages or may be deemed to be a penalty.

     D. With respect to the opinion expressed in Paragraph 7, we have assumed that each party to
the Transaction Documents (other than the Company) (i) has the power and, in the case of natural
persons, the legal capacity to execute, deliver and perform its respective obligations under the
Transaction Documents to which it is a party and (ii) has duly authorized, executed and delivered
each of the Transaction Documents and that each of the Transaction Documents constitutes the valid
and binding obligation of such party, enforceable against such party in

 

 

accordance with its terms. We have also assumed for the purposes of our opinion in Paragraph
7, that the laws of the State of New York are the same as the laws of the State of Texas regarding
the enforceability of a document.

     E. We are not passing upon, and assume no responsibility for, the accuracy, completeness or
fairness of the representations, warranties or covenants of the Company contained in each of the
Transaction Documents.

     F. As used in this opinion letter, “our knowledge,” or similar phrases, shall mean the
current, actual knowledge, without independent investigation or verification, of those attorneys
who are currently members or associates of, or counsel to, our firm who have directly participated
in this engagement.

     G. With respect to matters relating to the Company’s compliance with Nasdaq regulations
relating to shareholder approval, we have relied solely on the letter of The Nasdaq Stock Market,
Inc. to the Company dated August 8, 2005 and on telephonic advice from The Nasdaq Stock Market,
Inc. to attorneys in our firm.

 

 

EXHIBIT D

FORM OF ESCROW AGREEMENT

Filed as Exhibit 4.3 to Amendment No. 1 to the Registrant’s Form S-3 (File No. 333-128186)

filed on October 6, 2005.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}]]