Document:

Exhibit 4.12

 

THQ Inc. AMENDED AND
RESTATED 1997 STOCK OPTION PLAN

PERFORMANCE
ACCELERATED

RESTRICTED STOCK
AWARD AGREEMENT

 

 

	
  Holder:

  	
   

  
	
   

  	
   

  
	
  Number of
  Shares of Performance

  	
   

  
	
  Accelerated
  Restricted Stock Awarded:

  	
  *

  
	
   

  	
   

  
	
  Date of
  Grant:

  	
  *

  

 

* As set forth in the Notice of
Grant of Performance Accelerated Restricted Stock attached to this Performance
Accelerated Restricted Stock Award Agreement as Exhibit A (“your Notice”).

 

THIS PERFORMANCE
ACCELERATED RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”), dated as of
Date of Grant, is made between THQ INC., a Delaware corporation, currently
having its executive office at 27001 Agoura Road, Suite 325, Calabasas Hills,
California 91301 (the “Company”), and the holder identified above (“Holder”).

 

1.                                       Grant
of Award.  Pursuant to the THQ Inc.
Amended and Restated 1997 Stock Option Plan, a copy of which is attached hereto
as Exhibit B (the “Plan”), on the terms and subject to the conditions set forth
in this Agreement, and subject to Holder’s execution and return to the Company
of a copy of this Agreement, the Company hereby awards to Holder the Number of
Shares of Performance Accelerated Restricted Stock Awarded as set forth in your
Notice (the “Shares”), upon and subject to the restrictions, terms and
conditions set forth in this Agreement (this “Award”).

 

2.                                       Option
Subject to the Plan and Acceptance of Agreement.  Holder acknowledges and agrees that this Option is subject to the
terms and conditions set forth in the Plan. 
In the event of any conflict between the Plan and this Agreement, the
terms of the Plan shall take precedence. 
Further, Holder acknowledges that the Award shall be null and void
unless and until the Holder shall accept this Agreement by executing it in the
space provided below and returning such original execution copy to the
Company.  As soon as practicable after
the Holder has executed this Agreement and returned the same to the Company,
the Company shall cause to be issued in the Holder’s name a stock certificate
representing the total number of Shares subject to the Award.

 

3.                                       Rights
as a Stockholder.  The Holder shall
have the right to vote the Shares subject to the Award and to receive dividends
and other distributions thereon unless and until, and only to the extent, such
Shares are forfeited pursuant to Paragraph 5 hereof; provided, however, that a
dividend or other distribution with respect to the Shares (including, without
limitation, a stock dividend or stock split) shall be delivered to the Company
and shall be subject to the same restrictions as the Shares with respect to
which such dividend or other distribution was made.

 

4.                                       Custody
and Delivery of Certificates Representing Shares.  The Company shall hold the certificate or certificates
representing the Shares subject to the Award until such Award shall have
vested, in whole or in part, pursuant to Paragraph 5 hereof, and the Company
shall as soon thereafter as practicable, subject to Section 7.3, deliver the
certificate or certificates evidencing the vested Shares to the Holder.

 

5.                                       Restriction
Period and Vesting.  The Shares
subject to the Award shall vest at the times and in the amounts set forth in
your Notice, or (ii) earlier pursuant to Section 3.3 of the Plan or in
accordance with Section 5.8 of the Plan.

 

1

 

6.                                       Additional
Terms and Conditions of Award.

 

6.1                                 Nontransferability
of Award.  During the Restriction
Period, the Shares subject to the Award and not then vested may not be
transferred except to the extent permitted by Sections 5.4 and 5.11 of the
Plan.

 

6.2.                              Withholding
Taxes.  As a condition precedent to
the delivery to the Holder of any Shares subject to the Award, the Holder
shall, upon request by the Company, pay to the Company such amount of all
applicable federal, state, local or other laws or regulations as required by
and in accordance with Section 5.5 of the Plan.

 

6.3.                              Investment
Representation.  The Holder hereby
represents and covenants that (a) any Share acquired upon the vesting of the
Award will be acquired for investment and not with a view to the distribution
thereof within the meaning of the Securities Act of 1933, as amended (the “Securities
Act”), unless such acquisition has been registered under the Securities Act
and any applicable state securities law; (b) any subsequent sale of any such
shares shall be made either pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws, or pursuant
to an exemption from registration under the Securities Act and such state
securities laws; and (c) if requested by the Company, the Holder shall submit a
written statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of acquisition of any
Shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable.  As a
further condition precedent to the delivery to the Holder of any Shares subject
to the Award, the Holder shall comply with all regulations and requirements of any
regulatory authority having control of or supervision over the issuance of the
Shares and, in connection therewith, shall execute any documents which the
Board or any committee authorized by the Board shall in its sole discretion
deem necessary or advisable.

 

6.4                                 Adjustment.   The Award shall be subject to adjustment as
set forth in Section 5.7 of the Plan.

 

6.5                                 Transaction.  In the event of a Transaction, the Committee
may, in its discretion, take such actions with respect to the Award as
described in Section 5.8 of the Plan.

 

6.6                                 Compliance
with Applicable Law.  The Award is
subject to the condition that if the listing, registration or qualification of
the Shares subject to the Award upon any securities exchange or under any law,
or the consent or approval of any governmental body, or the taking of any other
action is necessary or desirable as a condition of, or in connection with, the
vesting or delivery of Shares hereunder, the Shares subject to the Award shall
not vest or be delivered, in whole or in part, unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained, free of any conditions not acceptable to the Company.

 

6.7                                 Delivery
of Certificates.  Subject to Section
6.2, upon the vesting of the Award, in whole or in part, the Company shall
deliver or cause to be delivered one or more certificates representing the
number of vested Shares.  The Company
shall pay all original issue or transfer taxes and all fees and expenses
incident to such delivery, except as otherwise provided in Section 6.2.

 

6.8                                 Award
Confers No Rights to Continued Employment. 
In no event shall the granting of the Award or its acceptance by the
Holder give or be deemed to give the Holder any right to continued employment
by the Company or any affiliate of the Company.

 

6.9                                 Decisions
of Committee.  The Committee shall
have the right to resolve all questions which may arise in connection with the
Award.  Any interpretation,
determination or other action made or taken by the Committee regarding the Plan
or this Agreement shall be final, binding and conclusive.

 

6.10                           Agreement
Subject to the Plan.  This Agreement
is subject to the provisions of the Plan and shall be interpreted in accordance
therewith.  The Holder hereby
acknowledges receipt of a copy of the Plan.

 

2

 

7.                                       Miscellaneous
Provisions.

 

7.1                                 Meaning
of Certain Terms.

 

(a)                                  As
used herein, the term “vest” shall mean no longer subject to forfeiture.

 

(b)                                 As
used herein, employment shall mean an agency or independent contractor
relationship and references to employment by the Company shall also mean
employment by a Subsidiary.

 

(c)                                  References
in this Agreement to sections of the Code shall be deemed to refer to any
successor section of the Code or any successor internal revenue law.

 

7.2                                 Binding
Effect.  This Agreement shall be
binding upon and inure to the benefit of any successor or successors of the
Company and any person or persons who shall, upon the death of the Holder,
acquire any rights hereunder in accordance with this Agreement or the Plan.

 

7.3                                 Notices.  All notices, requests or other
communications provided for in this Agreement shall be made, if to the Company,
to THQ Inc., 27001 Agoura Road, Suite 325, Calabasas Hills, California 91301,
and if to the Holder, to the last known mailing address of the Holder contained
in the records of the Company.  All
notices, requests or other communications provided for in this Agreement shall
be made in writing either (a) by personal delivery to the party entitled
thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the
United States mails to the last known address of the party entitled thereto or
(d) by express courier service.  The
notice, request or other communication shall be deemed to be received upon
personal delivery, upon confirmation of receipt of facsimile transmission, or
upon receipt by the party entitled thereto if by United States mail or express
courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.

 

7.4                                 Governing
Law.  This Agreement, the Award and
all determinations made and actions taken pursuant hereto and thereto, to the
extent not otherwise governed by the laws of the United States, shall be
governed by the laws of the State of Delaware and construed in accordance
therewith without giving effect to conflicts of laws principles.

 

7.5                                 Counterparts.  This Agreement may be executed in two
counterparts each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.

 

8.                                       Electronic
Delivery.  Holder agrees and
consents to receiving delivery of any and all annual reports and proxy
statements of the Company by electronic means. 
Such electronic means shall include, but not be limited to, email
delivery of such documents or email notification of an Internet or intranet web
link for access to such documents. 
Provided, however, if the Holder requests physical delivery of such
documents, such request shall be made in writing in accordance with Section 7.3
of this Agreement and Company shall provide such documents within a reasonable
time of such request.

 

3

 

IN WITNESS WHEREOF, the
Company and Holder have executed this Agreement as of the date first set forth
above.

 

 

	
   

  	
   

  	
  THQ Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  
	
  Accepted
  this     day
  of            ,
  200   .

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Holder

  	
   

  	
   

  
						

 

4Exhibit 10.9

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of
July 12, 2004, among Kintera, Inc., a Delaware corporation (the “Company”),
and the investors identified on the signature pages hereto (each, an “Investor”
and collectively, the “Investors”).

 

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

 

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

 

ARTICLE I.

DEFINITIONS

 

1.1                                 Definitions. 
In addition to the terms defined elsewhere in this Agreement, for all
purposes of this Agreement, the following terms shall have the meanings
indicated in this Section 1.1:

 

“Action”
means any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or threatened
in writing against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, local or
foreign), stock market, stock exchange or trading facility.

 

“Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144.

 

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

 

“California
Courts” means the state and federal courts sitting in San
Diego, California.

 

“Closing”
means the closing of the purchase and sale of the Securities pursuant to
Article II.

 

“Closing
Date” means the Business Day immediately following the date
on which all of the conditions set forth in Sections 5.1 and 5.2 hereof are
satisfied, or such other date as the parties may agree.

 

1

 

“Commission”
means the Securities and Exchange Commission.

 

“Common
Stock” means the common stock of the Company, par value $.001
per share, and any securities into which such common stock may hereafter be
reclassified. 

 

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

 

“Company
Counsel” means Gray Cary Ware & Freidenrich LLP.

 

“Company
Deliverables” has the meaning set forth in Section 2.2(a).

 

“Disclosure
Materials” has the meaning set forth in Section 3.1(h).

 

“Effective
Date” means the date that the Registration Statement required
by Section 2(a) of the Registration Rights Agreement is first declared
effective by the Commission.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“GAAP”
means U.S. generally accepted accounting principles.

 

“Intellectual
Property Rights” has the meaning set forth in
Section 3.1(n).

 

“Investment
Amount” means, with respect to each Investor, the Investment
Amount indicated on such Investor’s signature page to this Agreement.

 

“Investor
Deliverables” has the meaning set forth in
Section 2.2(b).

 

“Investor
Party” has the meaning set forth in Section 4.7.

 

“Lien”
means any lien, charge, encumbrance, security interest, right of first refusal
or other restrictions of any kind.

 

“Material
Adverse Effect” means any of (i) a material and adverse
effect on the legality, validity or enforceability of any Transaction Document,
(ii) a material and adverse effect on the results of operations, assets,
business or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) an adverse impairment to the Company’s
ability to perform on a timely basis its obligations under any Transaction
Document.

 

“Per
Share Purchase Price” equals $8.00.

 

2

 

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

 

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

 

“Registration
Statement” means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale by the Investors of the Shares.

 

“Registration
Rights Agreement” means the Registration Rights Agreement,
dated as of the date of this Agreement, among the Company and the Investors, in
the form of Exhibit A hereto.

 

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

 

“SEC
Reports” has the meaning set forth in Section 3.1(h).

 

“Securities”
means the Shares.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Shares”
means the shares of Common Stock issued or issuable to the Investors pursuant
to this Agreement.

 

“Short
Sales” include, without limitation, all “short sales” as defined
in Rule 3b-3 of the Exchange Act and include all types of direct and indirect
stock pledges, forward sale contracts, options, puts, calls, short sales, swaps
and similar arrangements (including on a total return basis), and sales and
other transactions through non-US broker dealers or foreign regulated
brokers.  

 

“Subsidiary”
means any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation
S-X promulgated by the Commission under the Exchange Act.

 

“Trading
Day” means (i) a day on which the Common Stock is traded on a
Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock
is not listed on a Trading Market (other than the OTC Bulletin Board), a day on
which the Common Stock is traded in the over-the-counter market, as reported by
the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any
Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices); provided, 

 

3

 

that in the event
that the Common Stock is not listed or quoted as set forth in (i), (ii) and
(iii) hereof, then Trading Day shall mean a Business Day.

 

“Trading
Market” means whichever of the New York Stock Exchange, the
American Stock Exchange, the NASDAQ National Market, the NASDAQ SmallCap Market
or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
on the date in question.

 

“Transaction
Documents” means this Agreement, the Registration Rights
Agreement, and any other documents or agreements executed in connection with
the transactions contemplated hereunder.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1                                 Closing. 
Subject to the terms and conditions set forth in this Agreement, at the
Closing the Company shall issue and sell to each Investor, and each Investor
shall, severally and not jointly, purchase from the Company, the Shares
representing such Investor’s Investment Amount.  The Closing shall take place at the offices of Bryan Cave LLP,
1290 Avenue of the Americas, New York, NY 10104 on the Closing Date or at such
other location or time as the parties may agree.

 

2.2                                 Closing Deliveries. 
(a)  At the Closing, the Company shall deliver or cause to be
delivered to each Investor the following (the “Company Deliverables”):

 

(i)                                     a
certificate evidencing a number of Shares equal to such Investor’s Investment
Amount divided by the Per Share Purchase Price, registered in the name of such
Investor;

 

(ii)                                  the
legal opinion of Company Counsel, in agreed form, addressed to the Investors;
and

 

(iii)                               the
Registration Rights Agreement, duly executed by the Company.

 

(b)                                 At
the Closing, each Investor shall deliver or cause to be delivered to the
Company the following (the “Investor Deliverables”):

 

(i)                                     its
Investment Amount, in United States dollars and in immediately available funds,
by wire transfer to an account designated in writing by the Company for such
purpose; and

 

(ii)                                  the
Registration Rights Agreement, duly executed by such Investor.

 

4

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1                                 Representations and Warranties of
the Company.  The Company hereby makes the following
representations and warranties to each Investor:

 

(a)                                  Subsidiaries.  The Company has no direct or indirect
Subsidiaries other than as specified in the SEC Reports.  The Company owns, directly or indirectly,
all of the capital stock of each Subsidiary free and clear of any and all
Liens, and all the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights.  Neither
the Company nor any Subsidiary is party to any material joint venture, nor has
any ownership interest in any other entity other than BNW Software, Inc. or as
disclosed in the SEC Reports.

 

(b)                                 Organization
and Qualification.  The Company and
each Subsidiary are duly incorporated or otherwise organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any
Subsidiary is in violation of any of the material provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents.  The Company and each
Subsidiary are duly qualified to conduct its respective businesses and are in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect.

 

(c)                                  Authorization;
Enforcement.  The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations thereunder. 
The execution and delivery of each of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated thereby have been
duly authorized by all necessary action on the part of the Company and no
further action is required by the Company in connection therewith.  Each Transaction Document has been (or upon
delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application. 

 

(d)                                 No
Conflicts.  The execution, delivery
and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated thereby do not and
will not (i) conflict with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws or other 

 

5

 

organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
to which the Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound, or (iii) result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii),
such as could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.

 

(e)                                  Filings,
Consents and Approvals.  The Company
is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filing with the Commission of one or
more Registration Statements in accordance with the requirements Registration
Rights Agreement, (ii) filings required by state securities laws, (iii) the
filing of a Notice of Sale of Securities on Form D with the Commission under
Regulation D of the Securities Act, (iv) the filings required in accordance
with Section 4.5, (v) the filing of any requisite notices with the Trading
Market, (vi) such consents or waivers as may be required under registration
rights agreements entered into in connection with business acquisitions
effected prior to the date of this Agreement, and (vii) those that have been
made or obtained prior to the date of this Agreement.

 

(f)                                    Issuance
of the Securities.  The Securities
have been duly authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens. 
The Company has reserved from its duly authorized capital stock the
shares of Common Stock issuable pursuant to this Agreement in order to issue
the Shares.

 

(g)                                 Capitalization.  The number of shares and type of all
authorized, issued and outstanding capital stock of the Company, and all shares
of Common Stock reserved for issuance under the Company’s various option and
incentive plans as of June 11, 2004, is specified in the SEC Reports.  Except as specified in the SEC Reports, no
securities of the Company are entitled to preemptive or similar rights, and no
Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. 
Except as specified in the SEC Reports, there are no outstanding
options, warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock,
or securities or rights convertible or exchangeable into shares of Common
Stock.  The 

 

6

 

issue and sale of the
Securities will not, immediately or with the passage of time, obligate the
Company to issue shares of Common Stock or other securities to any Person
(other than the Investors) and will not result in a right of any holder of
Company securities to adjust the exercise, conversion, exchange or reset price
under such securities.

 

(h)                                 SEC
Reports; Financial Statements.  The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the twelve months preceding the date hereof (or such shorter
period as the Company was required by law to file such reports) (the foregoing
materials being collectively referred to herein as the “SEC Reports” and, together
with the Schedules to this Agreement (if any), the “Disclosure Materials”) on a
timely basis or has timely filed a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared
in accordance with GAAP applied on a consistent basis during the periods
involved, except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated Subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal year-end audit
adjustments. 

 

(i)                                     Material
Changes.  Since the date of the
latest audited financial statements included within the SEC Reports, except as
specifically disclosed in the SEC Reports, (i) there has been no event,
occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables, accrued
expenses and other liabilities incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or required to be disclosed
in filings made with the Commission, (iii) the Company has not altered its
method of accounting or the identity of its auditors, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock (other than in connection with
repurchases of unvested stock issued to employees of the Company), and (v) the
Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock option plans. 

 

(j)                                     Litigation.  There is no Action which (i) adversely
affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) except as specifically
disclosed in the SEC Reports, could, if there were an unfavorable 

 

7

 

decision, individually or
in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect.  Neither the Company nor
any Subsidiary, nor any director or officer thereof (in his or her capacity as
such), is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of
fiduciary duty, except as specifically disclosed in the SEC Reports.  There has not been, and to the knowledge of
the Company, there is not pending any investigation by the Commission involving
the Company or any current or former director or officer of the Company (in his
or her capacity as such).  The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.

 

(k)                                  Compliance.  Neither the Company nor any Subsidiary (i)
is in default under or in violation of (and no event has occurred that has not
been waived that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of, or in receipt of notice that it is in violation of, any order of
any court, arbitrator or governmental body, or (iii) is or has been in
violation of, or in receipt of notice that it is in violation of, any statute,
rule or regulation of any governmental authority, including without limitation
all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety,
employment and labor matters and, to its knowledge, privacy, except in each
case as could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect. The Company is in compliance
with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended,
and the rules and regulations thereunder, that are applicable to it, except
where such noncompliance could not have or reasonably be expected to result in
a Material Adverse Effect. 

 

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

 

(m)                               Title
to Assets.  The Company and the
Subsidiaries have good and marketable title in fee simple to all real property
owned by them that is material to their respective businesses and good and
marketable title in all personal property owned by them that is material to
their respective businesses, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries. Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them under leases
valid, subsisting and enforceable against the Company and the Subsidiaries, and
the 

 

8

 

Company and the
Subsidiaries are in compliance with such leases, except as could not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect.

 

(n)                                 Patents
and Trademarks.  The Company and the
Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
licenses and other similar rights that are necessary or material for use in
connection with their respective businesses as described in the SEC Reports and
which the failure to so have could, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect (collectively,
the “Intellectual
Property Rights”).  Neither
the Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or any Subsidiary violates or
infringes upon the rights of any Person, and the Company has no knowledge of
any such violation or infringement. 
Except as set forth in the SEC Reports, to the knowledge of the Company,
all such Intellectual Property Rights are enforceable.

 

(o)                                 Insurance.  The Company and the Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary for enterprises of
similar size and stage of development in the businesses in which the Company
and the Subsidiaries are engaged.  The
Company has no reason to believe that it will not be able to renew its and the
Subsidiaries’ existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business on terms consistent with market for the Company’s and
such Subsidiaries’ respective lines of business.

 

(p)                                 Transactions
With Affiliates and Employees. 
Except as set forth in the SEC Reports, none of the officers or
directors of the Company and, to the knowledge of the Company, none of the
employees of the Company is presently a party to any transaction with the
Company or any Subsidiary required to be disclosed in the SEC Reports (other
than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.

 

(q)                                 Internal
Accounting Controls.  The Company
and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.  The Company has established
disclosure controls and procedures (as defined in Exchange Act rules 13a-14 and
15d-14) for the Company and designed such disclosure controls and procedures to

 

9

 

ensure that material
information relating to the Company, including its Subsidiaries, is made known
to the certifying officers by others within those entities.  The Company’s certifying officers have
evaluated the effectiveness of the Company’s controls and procedures in
accordance with Item 307 of Regulation S-K under the Exchange Act for the
fiscal quarter ended March 31, 2004 (such date, the “Evaluation Date”).  The Company presented in its most recently
filed Form 10-Q the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. 
Since the Evaluation Date, there have been no significant changes in the
Company’s internal controls (as such term is defined in Item 308(c) of
Regulation S-K under the Exchange Act) or, to the Company’s knowledge, in other
factors that could significantly affect the Company’s internal controls which
was required to be disclosed in the SEC Reports and was not so disclosed.

 

(r)                                    Certain
Fees.  Roth Capital Partners, LLC
will receive brokerage or finder’s fees or commissions payable by the Company
with respect to the transactions contemplated by this Agreement.  The Investors shall have no obligation with
respect to any fees or with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by such
Investor which fees or commissions shall be the sole responsibility of such
Investor) made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions
contemplated by this Agreement.  

 

(s)                                  Investment
Company.  The Company is not, and is
not an Affiliate of, and immediately following the Closing will not have
become, an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.

 

(t)                                    Certain
Registration Matters. Assuming the accuracy of the Investors’
representations and warranties set forth in Section 3.2(b)-(e), no
registration under the Securities Act is required for the offer and sale of the
Shares by the Company to the Investors under the Transaction Documents.  Except as specified on Schedule 3.1(t)
and pursuant to the Registration Rights Agreement, the Company has not granted
or agreed to grant to any Person any rights (including “piggy-back” registration
rights) to have any securities of the Company registered with the Commission or
any other governmental authority that have not been satisfied.

 

(u)                                 Listing
and Maintenance Requirements. 
Except as specified in the SEC Reports, the Company has not, in the two
years preceding the date hereof, received notice from any Trading Market to the
effect that the Company is not in compliance with the listing or maintenance
requirements thereof.  The Company is,
and has no reason to believe that it will not in the foreseeable future
continue to be, in compliance with the listing and maintenance requirements for
continued listing of the Common Stock on the Trading Market on which the Common
Stock is currently listed or quoted. 
The issuance and sale of the Securities under the Transaction Documents
does not contravene the rules and regulations of the Trading Market on which
the Common Stock is currently listed or quoted, and no approval of the
shareholders of the Company thereunder is required for the Company to issue and
deliver to the Investors the Securities contemplated by Transaction Documents.

 

10

 

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

 

(w)                               No
Additional Agreements.  The Company
does not have any agreement or understanding with any Investor with respect to
the transactions contemplated by the Transaction Documents other than as
specified in the Transaction Documents.

 

(x)                                   Disclosure.  The Company understands and confirms that
the Investors will rely on the foregoing representations and covenants in
effecting transactions in securities of the Company.  All disclosure provided to the Investors regarding the Company,
its business and the transactions contemplated hereby, furnished by or on
behalf of the Company (including the Company’s representations and warranties
set forth in this Agreement) are true and correct and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.

 

3.2                                 Representations and Warranties of
the Investors.  Each Investor hereby, for itself and for no
other Investor, represents and warrants to the Company as follows:

 

(a)                                  Organization;
Authority.  Such Investor is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the applicable Transaction Documents and otherwise
to carry out its obligations thereunder. The execution, delivery and
performance by such Investor of the transactions contemplated by this Agreement
has been duly authorized by all necessary corporate or, if such Investor is not
a corporation, such partnership, limited liability company or other applicable
like action, on the part of such Investor. 
Each of this Agreement and the Registration Rights Agreement has been
duly executed by such Investor, and when delivered by such Investor in
accordance with terms hereof, will constitute the valid and legally binding
obligation of such Investor, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of, creditors’ rights and remedies
or by other equitable principles of general application.

 

(b)                                 Investment
Intent.  Such Investor is acquiring
the Securities as principal for its own account for investment purposes only
and not with a view to or for distributing or reselling such Securities or any
part thereof, without prejudice, however, to such Investor’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.  Subject to the immediately preceding sentence, 

 

11

 

nothing contained herein
shall be deemed a representation or warranty by such Investor to hold the
Securities for any period of time.  Such
Investor is acquiring the Securities hereunder in the ordinary course of its
business. Such Investor does not have any agreement or understanding, directly
or indirectly, with any Person to distribute any of the Securities.

 

(c)                                  Investor
Status.  Such Investor is, and at
the Closing will be, an “accredited investor” as defined in Rule 501(a) under
the Securities Act.  Such Investor is
not a registered broker-dealer under Section 15 of the Exchange Act.

 

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

 

(e)                                  Access
to Information.  Such Investor
acknowledges that it has reviewed the Disclosure Materials and has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Shares and the merits and risks of
investing in the Securities; (ii) access to information about the Company and
the Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. 
Neither such inquiries nor any other investigation conducted by or on
behalf of such Investor or its representatives or counsel shall modify, amend
or affect such Investor’s right to rely on the truth, accuracy and completeness
of the Disclosure Materials and the Company’s representations and warranties
contained in the Transaction Documents. 

 

(f)                                    Certain
Trading Activities.  Such Investor
covenants that neither it nor any Person acting on its behalf or pursuant to
any understanding with it will engage in any transactions in the securities of
the Company (including Short Sales) prior to the time that the transactions
contemplated by this Agreement are publicly disclosed by the Company.  Such Investor has maintained, and covenants
that until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company such Investor will maintain, the confidentiality of
all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).

 

(g)                                 Limited
Ownership.  The purchase by such
Investor of the Securities issuable to it at the Closing will not result in
such Investor (individually or together with other Person with whom such
Investor has identified, or will have identified, itself as part of a “group”
in a public filing made with the Commission involving the Company’s securities)
acquiring, or obtaining the right to acquire, in excess of 19.999% of the
outstanding shares of Common Stock or the voting power of the Company on a post
transaction basis that assumes that the Closing shall have occurred.  Such Investor does not presently intend to,
alone or together with others, make a public filing with the Commission to
disclose that it has (or that it together with such 

 

12

 

other Persons have)
acquired, or obtained the right to acquire, as a result of the Closing (when
added to any other securities of the Company that it or they then own or have
the right to acquire), in excess of 19.999% of the outstanding shares of Common
Stock or the voting power of the Company on a post transaction basis that
assumes that the Closing shall have occurred.

 

(h)                                 Independent
Investment Decision.  Such Investor
has independently evaluated the merits of its decision to purchase Securities
pursuant to the Transaction Documents, and such Investor confirms that it has
not relied on the advice of any other Investor’s business and/or legal counsel
in making such decision.  Such Investor
has not relied on the business or legal advice of Roth Capital Partners, LLC or
any of its agents, counsel or Affiliates in making its investment decision
hereunder, and confirms that none of such Persons has made any representations
or warranties to such Investor in connection with the transactions contemplated
by the Transaction Documents.

 

The Company acknowledges
and agrees that no Investor has made or makes any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in this Section 3.2.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1                                 (a)                                  Securities may only be disposed of
in compliance with state and federal securities laws.  In connection with any transfer of the Securities other than
pursuant to an effective registration statement, to the Company, to an
Affiliate of an Investor or in connection with a pledge as contemplated in
Section 4.1(b), the Company may require the transferor thereof to provide
to the Company an opinion of counsel selected by the transferor, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such transferred
Securities under the Securities Act. 

 

(b)                                 Certificates
evidencing the Securities will contain the following legend, until such time as
they are not required under Section 4.1(c):

 

THESE SHARES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY 

 

13

 

ACCEPTABLE TO THE COMPANY. 
THESE SHARES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT SECURED BY SUCH SECURITIES.

 

The Company
acknowledges and agrees that an Investor may from time to time pledge, and/or
grant a security interest in some or all of the Securities pursuant to a bona
fide margin agreement in connection with a bona fide margin account and, if
required under the terms of such agreement or account, such Investor may
transfer pledged or secured Securities to the pledgees or secured parties.  Such a pledge or transfer would not be
subject to approval or consent of the Company and no legal opinion of legal
counsel to the pledgee, secured party or pledgor shall be required in
connection with the pledge, but such legal opinion may be required in
connection with a subsequent transfer following default by the Investor
transferee of the pledge.  No notice
shall be required of such pledge.  At
the appropriate Investor’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities
including the preparation and filing of any required prospectus supplement
under Rule 424(b)(3) of the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders
thereunder.

 

(c)                                  Certificates
evidencing the Shares shall not contain any legend (including the legend set
forth in Section 4.1(b)): (i) following a sale or transfer of such
Securities pursuant to an effective registration statement (including the
Registration Statement), or (ii) following a sale or transfer of such Shares
pursuant to Rule 144 (assuming the transferor is not an Affiliate of the
Company), or (iii) while such Shares are eligible for sale under Rule
144(k).  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 this Section.

 

4.2                                 Furnishing of Information. 
As long as any Investor owns the Securities, the Company covenants to
timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act. 
As long as any Investor owns Securities, if the Company is not required
to file reports pursuant to such laws, it will prepare and furnish to the
Investors and make publicly available in accordance with Rule 144(c) such
information as is required for the Investors to sell the Shares under Rule 144.
The Company further covenants that it will take such further action as any
holder of Securities may reasonably request, all to the extent required from
time to time to enable such Person to sell the Shares without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144.

 

4.3                                 Integration. 
The Company shall not, and shall use its best efforts to ensure that no
Affiliate of the Company shall, sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2
of the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Investors, or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market in a manner that would require stockholder
approval of the sale of the securities to the Investors.

 

14

 

4.4                                 Subsequent Registrations. 
Other than pursuant to the Registration Statement, prior to the
Effective Date, the Company may not file any registration statement (other than
on Form S-8) with the Commission with respect to any securities of the Company.

 

4.5                                 Securities Laws Disclosure;
Publicity.  By 9:00 a.m. (New York time) on the Trading
Day following the execution of this Agreement, and by 9:00 a.m. (New York time)
on the Closing Date, the Company shall issue press releases disclosing the
transactions contemplated hereby and the Closing.  On the Trading Day following the execution of this Agreement the
Company will file a Current Report on Form 8-K disclosing the material terms of
the Transaction Documents (and attach as exhibits thereto the Transaction
Documents), and on the Closing Date the Company will file an additional Current
Report on Form 8-K to disclose the Closing. 
In addition, the Company will make such other filings and notices in the
manner and time required by the Commission and the Trading Market on which the
Common Stock is listed.  Notwithstanding
the foregoing, the Company shall not publicly disclose the name of any Investor,
or include the name of any Investor in any filing with the Commission (other
than the Registration Statement and any exhibits to filings made in respect of
this transaction in accordance with periodic filing requirements under the
Exchange Act) or any regulatory agency or Trading Market, without the prior
written consent of such Investor, except to the extent such disclosure is
required by law or Trading Market regulations.

 

4.6                                 Limitation on Issuance of Future
Priced Securities.  During the six months following the Closing
Date, the Company shall not issue any “Future Priced Securities” as such term
is described by NASD IM-4350-1.

 

4.7                                 Indemnification of Investors. 
In addition to the indemnity provided in the Registration Rights
Agreement, the Company will indemnify and hold the Investors and their
directors, officers, shareholders, partners, employees, affiliates and agents
(each, an “Investor
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation (collectively, “Losses”) that any such Investor Party may
suffer or incur as a result of or relating to any misrepresentation, breach or
inaccuracy of any representation, warranty, covenant or agreement made by the
Company in any Transaction Document.  In
addition to the indemnity contained herein, the Company will reimburse each
Investor Party for its reasonable legal and other expenses (including the cost
of any investigation, preparation and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred. 

 

4.8                                 Non-Public Information. 
The Company covenants and agrees that neither it nor any other Person
acting on its behalf will provide any Investor or its agents or counsel with
any information that the Company believes constitutes material non-public
information, unless prior thereto such Investor shall have executed a written
agreement regarding the confidentiality and use of such information.  The Company understands and confirms that
each Investor shall be relying on the foregoing representations in effecting
transactions in securities of the Company.

 

15

 

4.9                                 Listing of Securities. 
The Company agrees, (i) if the Company applies to have the Common Stock
traded on any other Trading Market, it will include in such application the
Shares, and will take such other action as is necessary or desirable to cause
the Shares to be listed on such other Trading Market as promptly as possible,
and (ii) it will take all action reasonably necessary to continue the listing
and trading of its Common Stock on a Trading Market and will comply in all
material respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market.

 

4.10                           Use of Proceeds. 
The Company will use the net proceeds from the sale of the Securities
hereunder for general corporate purposes.

 

4.11                           Lock-Up Agreements. 
The Company will use its commercially reasonable efforts to obtain prior
to the Closing Date agreements from each of Harry Gruber, Allen Gruber and
Dennis Berman under which each such individual shall agree not to sell or
otherwise dispose of shares of Common Stock owned or controlled by him during
the period commencing on the Closing Date and ending on the later to occur of
(i) August 31, 2004 and (ii) the Effective Date (as that term is defined
in the Registration Rights Agreement).

 

ARTICLE V.

CONDITIONS PRECEDENT TO CLOSING

 

5.1                                 Conditions Precedent to the
Obligations of the Investors to Purchase Securities. 
The obligation of each Investor to acquire Securities at the Closing is
subject to the satisfaction or waiver by such Investor, at or before the
Closing, of each of the following conditions:

 

(a)                                  Representations
and Warranties.  The representations
and warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing as though made
on and as of such date, except that representations and warranties that are
qualified by materiality shall be true and correct as of the date when made and
as of the Closing as though made on and as of such date;

 

(b)                                 Performance.  The Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied or
complied with by it at or prior to the Closing;

 

(c)                                  No
Injunction.  No statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of
the transactions contemplated by the Transaction Documents;

 

(d)                                 Adverse
Changes.  Since the date of
execution of this Agreement, no event or series of events shall have occurred
that reasonably could have or result in a Material Adverse Effect;

 

16

 

(e)                                  No
Suspensions of Trading in Common Stock; Listing.  Trading in the Common Stock shall not have been suspended by the
Commission or any Trading Market (except for any suspensions of trading of not
more than one Trading Day solely to permit dissemination of material
information regarding the Company) at any time since the date of execution of
this Agreement, and the Common Stock shall have been at all times since such
date listed for trading on a Trading Market; 

 

(f)                                    Company
Deliverables.  The Company shall
have delivered the Company Deliverables in accordance with Section 2.2(a);
and

 

(g)                                 Timing.  The Closing shall have occurred no later
than July 19, 2004.

 

5.2                                 Conditions Precedent to the
Obligations of the Company to sell Securities. 
The obligation of the Company to sell Securities at the Closing is
subject to the satisfaction or waiver by the Company, at or before the Closing,
of each of the following conditions:

 

(a)                                  Representations
and Warranties.  The representations
and warranties of each Investor contained herein shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made on and as of such date;

 

(b)                                 Performance.  Each Investor shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by such Investor at or prior to the Closing;

 

(c)                                  No
Injunction.  No statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of
the transactions contemplated by the Transaction Documents; 

 

(d)                                 Investors
Deliverables.  Each Investor shall
have delivered its Investors Deliverables in accordance with
Section 2.2(b); and

 

(e)                                  Timing.  The Closing shall have occurred no later
than July 19, 2004.

 

ARTICLE VI.

MISCELLANEOUS

 

6.1                                 Fees and Expenses. 
Each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of the Transaction Documents.  The Company shall pay all stamp and other taxes and duties levied
in connection with the sale of the Shares.

 

6.2                                 Entire Agreement. 
The Transaction Documents, together with the Exhibits and Schedules
thereto, contain the entire understanding of the parties with respect to the
subject 

 

17

 

matter hereof and supersede all prior
agreements, understandings, discussions and representations, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.

 

6.3                                 Notices. 
Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via facsimile (provided the sender
receives a machine-generated confirmation of successful transmission and
reasonably promptly following such transmission sends such notice or
communication via U.S. mail or overnight courier) at the facsimile number
specified in this Section prior to 6:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than
6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given.  The address for
such notices and communications shall be as follows:

 

	
  If to the
  Company:

  	
  Kintera, Inc.

  
	
   

  	
  9605 Scranton
  Road, Suite 240

  
	
   

  	
  San Diego,
  California 92121

  
	
   

  	
  Facsimile No.:

  
	
   

  	
  Telephone No.:
  (858) 795-3000

  
	
   

  	
  Attention: Chief
  Financial Officer

  
	
   

  	
   

  
	
  With a copy to:

  	
  Gray Cary

  
	
   

  	
  4365 Executive Drive, Suite 1100

  
	
   

  	
  San Diego, CA 92121

  
	
   

  	
  Facsimile No.:  (858) 677-1401

  
	
   

  	
  Attention:  Scott Stanton,
  Esq.

  
	
   

  	
   

  
	
  If to an
  Investor:

  	
  To the address
  set forth under such Investor’s name

  on the signature pages hereof;

  

 

or such other
address as may be designated in writing hereafter, in the same manner, by such
Person.

 

6.4                                 Amendments; Waivers; No Additional
Consideration.  No provision of this Agreement may be waived
or amended except in a written instrument signed by the Company and the
Investors holding a majority of the Shares. 
No waiver of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right.  No consideration shall be
offered 

 

18

 

or paid to any Investor to amend or consent
to a waiver or modification of any provision of any Transaction Document unless
the same consideration is also offered to all Investors who then hold Shares.

 

6.5                                 Construction. 
The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.  The language used in
this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be
applied against any party.  This
Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement or any of the
Transaction Documents.

 

6.6                                 Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns.  Other than in connection with a merger, consolidation, sale of
all or substantially all of the Company’s assets or other similar change in
control transaction, the Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investors. Any
Investor may assign any or all of its rights under this Agreement to any Person
to whom such Investor assigns or transfers any Securities, provided such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions hereof that apply to the “Investors.”

 

6.7                                 No Third-Party Beneficiaries. 
This Agreement is intended for the benefit of the parties hereto and
their respective successors and permitted assigns and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.7 (as to each Investor Party).  Notwithstanding anything herein to the
contrary, Apex Capital, LLC may enforce the rights of its affiliates under this
Agreement.

 

6.8                                 Governing Law. 
All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of California,
without regard to the principles of conflicts of law thereof.  Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the California Courts.  Each party hereto hereby irrevocably submits
to the exclusive jurisdiction of the California Courts for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such California Court, or that
such Proceeding has been commenced in an improper or inconvenient forum.  Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any 

 

19

 

right to serve process in any manner
permitted by law.  Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.  If either party shall commence a Proceeding
to enforce any provisions of a Transaction Document, then the prevailing party
in such Proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Proceeding.

 

6.9                                 Survival. 
The agreements and covenants contained herein shall survive the Closing
and the delivery of the Shares.  The
representations and warranties shall survive until the second anniversary of
the Closing.

 

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

 

6.11                           Severability. 
If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

6.12                           Rescission and Withdrawal Right. 
Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) the Transaction Documents, whenever any
Investor exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within
the periods therein provided, then such Investor may rescind or withdraw, in
its sole discretion from time to time upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to
its future actions and rights.

 

6.13                           Replacement of Securities. 
If any certificate or instrument evidencing any Securities is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be issued in
exchange and substitution for and upon cancellation thereof, or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt
of evidence reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable indemnity, if requested.  The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities.  If a replacement certificate or instrument
evidencing any Securities is requested due to a mutilation thereof, the Company
may require delivery of such mutilated certificate or instrument as a condition
precedent to any issuance of a replacement.

 

20

 

6.14                           Remedies. 
In addition to being entitled to exercise all rights provided herein or
granted by law, including recovery of damages, each of the Investors and the
Company will be entitled to specific performance under the Transaction Documents.  The parties agree that monetary damages may
not be adequate compensation for any loss incurred by reason of any breach of
obligations 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.

 

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

 

6.16                           Independent Nature of Investors’
Obligations and Rights.  The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. 
The decision of each Investor to purchase Securities pursuant to the
Transaction Documents has been made by such Investor independently of any other
Investor.  Nothing contained herein or
in any Transaction Document, and no action taken by any Investor pursuant
thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Investor
acknowledges that no other Investor has acted as agent for such Investor in
connection with making its investment hereunder and that no Investor will be
acting as agent of such Investor in connection with monitoring its investment
in the Securities or enforcing its rights under the Transaction Documents.  Each Investor shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose.  The Company acknowledges that each of the Investors has been
provided with the same Transaction Documents for the purpose of closing a
transaction with multiple Investors and not because it was required or
requested to do so by any Investor.  The
Company’s obligations to each Investor under this Agreement are identical to
its obligations to each other Investor other than such differences resulting
solely from the number of Shares purchased by each Investor, but regardless of
whether such obligations are memorialized herein or in another agreement
between the Company and an Investor.  

 

6.17                           Limitation of Liability. 
Notwithstanding anything herein to the contrary, the Company
acknowledges and agrees that the liability of an Investor arising directly or
indirectly, 

 

21

 

under any Transaction Document of any and
every nature whatsoever shall be satisfied solely out of the assets of such
Investor, and that no trustee, officer, other investment vehicle or any other
Affiliate of such Investor or any investor, shareholder or holder of shares of
beneficial interest of such a Investor shall be personally liable for any
liabilities of such Investor.

 

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOLLOW]

 

22

 

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

 

	
   

  	
  KINTERA, INC.

  
	
   

  	
   

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOR INVESTORS FOLLOW]

 

 

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

 

	
   

  	
  NAME OF INVESTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AUTHORIZED SIGNATORY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Investment
  Amount: $

  	
   

  
	
   

  	
   

  
	
   

  	
  Tax ID No.:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  c/o:

  	
   

  
	
   

  	
   

  
	
   

  	
  Street:

  	
   

  
	
   

  	
   

  
	
   

  	
  City/State/Zip:

  	
   

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
   

  
	
   

  	
  Tel:

  	
   

  
	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DELIVERY INSTRUCTIONS

  
	
   

  	
  (if different from above)

  
	
   

  	
  c/o:

  	
   

  
	
   

  	
   

  
	
   

  	
  Street:

  	
   

  
	
   

  	
   

  
	
   

  	
  City/State/Zip:

  	
   

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
   

  
	
   

  	
  Tel:

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