Document:

exv10w3

 

Exhibit 10.3

AMENDMENT No. 2 TO AMENDED AND RESTATED

LETTER AGREEMENT DCT-022/03

This Amendment No. 2 to Amended and Restated Letter Agreement DCT-022/03, dated as of March 14,
2008 (“Amendment No. 2”) relates to the Amended and Restated Letter Agreement DCT-022/03 (the
“Letter Agreement”) between Embraer -Empresa Brasileira de Aeronáutica S.A. (“Embraer”) and US
Airways Group, Inc. (“Buyer”) dated June 13, 2006 as amended from time to time (collectively
referred to herein as “Agreement”). This Amendment No. 2 is between Embraer and Buyer,
collectively referred to herein as the “Parties”.

This Amendment No. 2 sets forth additional agreements between Embraer and Buyer with respect to the
matters set forth herein.

Except as otherwise provided for herein, all terms of the Letter Agreement shall remain in full
force and effect. All capitalized terms used in this Amendment No. 2, which are not defined herein
shall have the meaning given in the Letter Agreement. In the event of any conflict between this
Amendment No. 2 and the Letter Agreement the terms, conditions and provisions of this Amendment
No. 2 shall control.

WHEREAS, Embraer and Buyer entered into the Amended and Restated Purchase Agreement DCT — 021/03
dated June 13, 2006 (“Purchase Agreement”) and further entered into Amendment No. 4 to the Purchase
Agreement on March 14, 2008 (“Amendment 4 to Purchase Agreement”);

WHEREAS, pursuant to Amendment 4 to Purchase Agreement, Embraer and Buyer agreed to revised the
Additional Aircraft Delivery Schedule and Option Aircraft Delivery Schedule; and

WHEREAS, in connection with Amendment 4 to Purchase Agreement, Embraer and Buyer agree to enter
into certain amendments and modifications to the Letter Agreement;

NOW, THEREFORE, for good and valuable consideration which is hereby acknowledged Embraer and Buyer
hereby agree as follows:

	1.	 	Confirmation of the Additional Aircraft:
	 
	 	 	Article 21 of the Letter Agreement shall be revised on the fourth line of such article by
deleting the wording “ ** ” and replacing it by “ ** ”.
	 
	2.	 	Miscellaneous
	 
	 	 	All other terms and conditions of the Letter Agreement, which are not specifically amended
or modified by this Amendment No. 2, shall remain in full force and effect without any
change.

[Signature page follows]

			
	 
	 	 
	 
	**      Confidential Treatment Requested	 	 
	 
	Amendment No. 2 to Letter Agreement DCT-022/03
	 	Page 1 of 2

 

 

IN WITNESS WHEREOF, EMBRAER and BUYER, by their duly authorized officers, have entered into and
executed this Amendment No. 2 to Letter Agreement to be effective as of the date first written
above.

	 	 	 	 	 	 	 
	EMBRAER – Empresa Brasileira de	 	US Airways Group, Inc.
	Aeronáutica S.A.	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Mauro Kern Junior
	 	By:
	 	/s/ Thomas T. Weir
	 

	 	 
	 	 	 	 
	Name:

	 	Mauro Kern Junior
	 	Name:
	 	Thomas T. Weir
	Title:

	 	Executive Vice President
	 	Title:
	 	Vice President and Treasurer
	 
	 	 	 	 	 	 
	By:

	 	/s/ Jose Luis D. Molina
	 	Date:
	 	March 14, 2008
	 

	 	 	 	 	 	 
	Name:

	 	Jose Luis D. Molina
	 	Place:
	 	Tempe, Arizona USA
	Title:

	 	Vice President Contracts	 	 	 	 
	Date:

	 	March 14, 2008	 	 	 	 
	Place:

	 	S. Jose Dos Campos, Brazil	 	 	 	 
	 
	 	 	 	 	 	 
	Witness:

	 	/s/ Julieta Diederichsen
	 	Witness:
	 	/s/ David Lin
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	Julieta Diederichsen
	 	Name:
	 	David Lin
	 
	 	 	 	 	 	 

 

Amendment No. 2 to Letter Agreement DCT-022/03

Page 2 of 2exv10w1

 

EXHIBIT
10.1

SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this “Agreement”) is dated as of April 23, 2008,
between Enova Systems, Inc., a California corporation (the “Company”), and each purchaser
identified on the signature pages hereto (each, including its successors and assigns, a
“Purchaser” and collectively, the “Purchasers”).

     WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506
promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the Company, 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 each Purchaser 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 have the meanings set forth in this Section 1.1:

     “Acquiring Person” shall have the meaning ascribed to such term in Section 4.5.

     “Action” shall have the meaning ascribed to such term in Section 3.1(j).

     “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 405 under the Securities Act.

     “Board of Directors” means the board of directors of the Company.

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

     “Closing” means the closing of the purchase and sale of the Shares pursuant to
Section 2.1.

     “Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all conditions precedent
to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Shares have been satisfied or waived.

     “Closing Statement” means the Closing Statement in the form Annex A
attached hereto.

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     “Commission” means the United States Securities and Exchange Commission.

     “Common Stock” means the common stock of the Company, no par value, and any
other class of securities into which such securities may hereafter be reclassified or
changed into.

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

     “Company Counsel” means Reed Smith LLP, with offices located at Two Embarcadero
Center, Suite 2000, San Francisco, CA 94111.

     “Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith.

     “Discussion Time” shall have the meaning ascribed to such term in Section
3.2(f).

     “Effective Date” means the date that the initial Registration Statement filed
by the Company pursuant to the Registration Rights Agreement is first declared effective by
the Commission.

     “Evaluation Date” shall have the meaning ascribed to such term in Section
3.1(r).

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

     “FWS” means Feldman Weinstein & Smith LLP with offices located at 420 Lexington
Avenue, Suite 2620, New York, New York 10170-0002.

     “GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

     “Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa).

     “Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).

     “Legend Removal Date” shall have the meaning ascribed to such term in Section
4.1(c).

     “Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.

     “Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).

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     “Material Permits” shall have the meaning ascribed to such term in Section
3.1(m).

     “Per Share Purchase Price” equals $3.91, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar transactions of
the Common Stock that occur after the date of this Agreement.

     “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 informal investigation or partial proceeding, such as a
deposition), whether commenced or threatened.

     “Purchaser Party” shall have the meaning ascribed to such term in Section 4.8.

     “Registration Rights Agreement” means the Registration Rights Agreement, dated
the date hereof, among the Company and the Purchasers, in the form of Exhibit A
attached hereto.

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

     “Required Approvals” shall have the meaning ascribed to such term in Section
3.1(e).

     “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” shall have the meaning ascribed to such term in Section 3.1(h).

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

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

     “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or reservation
of borrowable shares of Common Stock). 

     “Subscription Amount” means, as to each Purchaser, the aggregate amount to be
paid for Shares purchased hereunder as specified below such Purchaser’s name on the

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signature page of this Agreement and next to the heading “Subscription Amount,” in
United States dollars and in immediately available funds.

     “Subsidiary” means any subsidiary of the Company as set forth on Schedule
3.1(a), and shall, where applicable, include any subsidiary of the Company formed or
acquired after the date hereof.

     “Trading Day” means a day on which the principal Trading Market is open for
trading.

     “Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American Stock Exchange,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange or the OTC Bulletin Board.

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

     “Transfer Agent” means Computershare, the current transfer agent of the
Company, with a mailing address of 350 Indiana Street, Suite 800, Golden CO 80401, and a
facsimile number of (303) 262-0700, and any successor transfer agent of the Company.

ARTICLE II.

PURCHASE AND SALE

     2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set
forth herein, substantially concurrent with the execution and delivery of this Agreement by the
parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to
purchase, up to an aggregate of $5,000,000 of Shares. Pending the occurrence of the Closing, each
Purchaser’s Subscription Amount shall be deposited into an Escrow account (“Escrow Account”)
maintained by Benchmark Bank, a Texas chartered bank, with offices at 5700 Legacy Drive, Suite 10,
Plano, TX 75024 (“Escrow Agent”) pursuant to an Escrow Agreement dated April, 2008 between the
Company, Stonegate Securities, Inc. and the Escrow Agent. Proceeds shall be released from the
Escrow Account on the Closing Date. The Company shall deliver to each Purchaser its respective
Shares, and the Company and each Purchaser shall deliver the other items set forth in Section 2.2
deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of FWS (or remotely via the
exchange of documents and signatures) or such other location as the parties shall mutually
agree.

2.2 Deliveries. (a) On or prior to the Closing Date, the Company shall deliver
or cause to be delivered to each Purchaser the following:

     (i) this Agreement duly executed by the Company;

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     (ii) a legal opinion of Company Counsel, substantially in the form of
Exhibit B attached hereto;

     (iii) a copy of the irrevocable instructions to the Transfer Agent instructing
the Transfer Agent to deliver, on an expedited basis, a certificate evidencing a
number of Shares equal to such Purchaser’s Subscription Amount divided by the Per
Share Purchase Price, registered in the name of such Purchaser; and

     (iv) the Registration Rights Agreement duly executed by the Company.

     (b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:

     (i) this Agreement duly executed by such Purchaser;

     (ii) such Purchaser’s Subscription Amount by wire transfer to the Escrow Agent;
and

     (iii) the Registration Rights Agreement duly executed by such Purchaser.

     2.3 Closing Conditions. 

     (a) The obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:

     (i) the accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchasers contained herein;

     (ii) all obligations, covenants and agreements of each Purchaser required to be
performed at or prior to the Closing Date shall have been performed;

     (iii) the American Stock Exchange shall have approved the Listing of Additional
Shares application for the Shares; and

     (iv) the delivery by each Purchaser of the items set forth in Section 2.2(b) of
this Agreement.

     (b) The respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:

     (i) the accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained herein;

     (ii) all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;

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     (iii) the American Stock Exchange shall have approved the Listing of Additional
Shares application for the Shares;

     (iv) the delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;

     (v) there shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and

     (vi) from the date hereof to the Closing Date, trading in the Common Stock
shall not have been suspended by the Commission or the Company’s principal Trading
Market (except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not
have been established on securities whose trades are reported by such service, or on
any Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material adverse change in, any
financial market which, in each case, in the reasonable judgment of each Purchaser,
makes it impracticable or inadvisable to purchase the Shares at the Closing.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

     3.1 Representations and Warranties of the Company. Except as set forth in the SEC
Reports or Disclosure Schedules, which SEC Reports and Disclosure Schedules shall be deemed a part
hereof and shall qualify any representation or otherwise made herein to the extent of the
disclosure contained in the SEC Reports or corresponding section of the Disclosure Schedules, the
Company hereby makes the following representations and warranties to each Purchaser:

     (a) Subsidiaries. All of the direct and indirect subsidiaries of the Company
are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of
the capital stock or other equity interests of each Subsidiary free and clear of any Liens,
and all of 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 to
subscribe for or purchase securities. If the Company has no subsidiaries, then all other
references to the Subsidiaries or any of them in the Transaction Documents shall be
disregarded.

     (b) Organization and Qualification. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, 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

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violation nor default of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is 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 have or
reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results
of operations, assets, business, prospects or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its obligations under
any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”)
and no Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

     (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 hereunder and thereunder.
The execution and delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and no further action is
required by the Company, the Board of Directors or the Company’s stockholders in connection
therewith other than in connection with the Required Approvals. Each Transaction Document
to which it is a party has been (or upon delivery will have been) duly executed by the
Company and, when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by
applicable law.

     (d) No Conflicts. The execution, delivery and performance by the Company of
the Transaction Documents, the issuance and sale of the Shares and the consummation by it to
which it is a party of the other transactions contemplated hereby and 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 organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the creation of any Lien upon
any of the properties or assets of the Company or any Subsidiary, 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) or other understanding 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 affected, or (iii) subject to the Required

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Approvals, conflict with or 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 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 filings required pursuant to Section 4.4 of
this Agreement, (ii) the filing with the Commission of the Registration Statement, (iii)
application(s) to each applicable Trading Market for the listing of the Shares for trading
thereon in the time and manner required thereby, (iv) the filing of Form D with the
Commission and such filings as are required to be made under applicable state securities
laws and (v) the consent of Investec Bank (UK) Limited (collectively, the “Required
Approvals”).

     (f) Issuance of the Shares. The Shares are duly authorized and, when issued
and paid for in accordance with the applicable Transaction Documents, will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction Documents.

     (g) Capitalization. Schedule 3.1(g) sets forth (a) the authorized
capital stock of the Company on the date hereof; (b) the number of shares of capital stock
issued and outstanding, (c) the number of shares of capital stock issuable pursuant to the
Company’s stock plans; and (d) the number of shares of capital stock issuable pursuant to
securities exercisable for, or convertible into or exchangeable for any shares of capital
stock of the Company. Schedule 3.1(g) shall also include the number of shares of
Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date
hereof. The Company has not issued any capital stock since its most recently filed periodic
report under the Exchange Act, other than issued under the Company’s stock plans by the
Company or pursuant to the exercise of stock options granted under the Company’s stock plan,
and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of
the date of the most recently filed periodic report under the Exchange Act. 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 that have not
been effectively waived as of the Closing Date. Except as set forth on Schedule 3.1(g)
or a result of the purchase and sale of the Shares, 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 exercisable 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
Common Stock Equivalents. The issuance and sale of the Shares will not obligate the Company
to issue shares of Common Stock or

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other securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion, exchange or
reset price under any of such securities. All of the outstanding shares of capital stock of
the Company are validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares was issued
in violation of any preemptive rights or similar rights to subscribe for or purchase
securities. No further approval or authorization of any stockholder, the Board of Directors
or others is required for the issuance and sale of the Shares. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the Company’s
capital stock to which the Company is a party or, to the knowledge of the Company, between
or among any of the Company’s stockholders.

     (h) SEC Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the Company under
the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (the foregoing materials, including
the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension, except where the failure to file on a timely basis could not have or
reasonably be expected to result in a Material Adverse Effect (including, for this purpose
only, any failure to qualify to register the Shares for resale on Form S-3 or which would
prevent any Purchaser from using Rule 144 to resell any Shares). As of their respective
dates, the SEC Reports filed since January 1, 2006 complied in all material respects with
the requirements of the Securities Act and the Exchange Act, as applicable, 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 the light of the circumstances under which they were made, not
misleading. The Company has never been an issuer subject to Rule 144(i) under the
Securities Act. 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 United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or the
notes thereto and except that unaudited financial statements may not contain all footnotes
required by GAAP, 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, immaterial, year-end audit adjustments.

     (i) Material Changes; Undisclosed Events, Liabilities or Developments. Since
the date of the latest audited financial statements included within the SEC Reports, except
as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i)
there has been no event, occurrence or development that has had or that could

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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 and accrued
expenses 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 disclosed in filings made with the Commission, (iii) the Company has not altered its
method of accounting, (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 and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to existing Company
stock plans or director equity issuances. Except for the issuance of the Shares
contemplated by this Agreement or as set forth on Schedule 3.1(i), no event,
liability or development has occurred or exists with respect to the Company or its
Subsidiaries or their respective business, properties, operations or financial condition,
that would be required to be disclosed by the Company under applicable securities laws at
the time this representation is made or deemed made that has not been publicly disclosed at
least 1 Trading Day prior to the date that this representation is made.

     (j) Litigation. There is no action, suit, inquiry, notice of violation,
proceeding or, to the knowledge of the Company, any investigation pending or threatened
against or affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of any of
the Transaction Documents or the Shares or (ii) could, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor, to the knowledge of the Company, any director or
officer thereof, 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.
There has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any current or
former director or officer of the Company. 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) Labor Relations. No material labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the Company which could
reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s relationship
with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is
a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive covenant in
favor of any third party, and, to the knowledge of the Company, the continued employment of
each such executive officer

10

 

does not subject the Company or any of its Subsidiaries to any liability with respect
to any of the foregoing matters. The Company and its Subsidiaries are in compliance with
all U.S. federal, state, local and foreign laws and regulations relating to employment and
employment practices, terms and conditions of employment and wages and hours, except where
the failure to be in compliance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

     (l) 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
any order of any court, arbitrator or governmental body or (iii) is or has been in violation
of any statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its business and all
such laws that affect the environment, except in each case as could not have or reasonably
be expected to result in a Material Adverse Effect.

     (m) 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 reasonably be
expected to result in a Material Adverse Effect (“Material Permits”), and neither
the Company nor any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.

     (n) Title to Assets. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and marketable title in all
personal property owned by them that is material to the business of the Company and the
Subsidiaries, 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 and Liens
for the payment of federal, state or other taxes, the payment of which is neither delinquent
nor subject to penalties. Any real property and facilities held under lease by the Company
and the Subsidiaries are held by them under valid, subsisting and enforceable leases with
which the Company and the Subsidiaries are in compliance.

     (o) Patents and Trademarks. To the Company’s knowledge, the Company and the
Subsidiaries have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights as described in the SEC
Reports as necessary or material for use in connection with their respective businesses and
which the failure to so have could have a Material Adverse Effect (collectively, the
“Intellectual Property Rights”). Neither the Company nor any Subsidiary has
received a

11

 

notice (written or otherwise) that any of the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any Person. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable and there is
no existing infringement by another Person of any of the Intellectual Property Rights. The
Company and its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where failure to
do so could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

     (p) 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 in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance coverage. Neither
the Company nor any Subsidiary has any reason to believe that it will not be able to renew
its 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 without a
significant increase in cost.

     (q) 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 (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, in each
case in excess of $120,000 other than for: (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements under any stock plan of the
Company.

     (r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in material
compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it
as of the Closing Date. The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management’s general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The Company has
established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and designed such disclosure controls and procedures to
ensure that information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the

12

 

Commission’s rules and forms. The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end of the
period covered by the Company’s most recently filed periodic report under the Exchange Act
(such date, the “Evaluation Date”). The Company presented in its most recently
filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations
as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the
Company’s internal control over financial reporting (as such term is defined in the Exchange
Act) that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.

     (s) Certain Fees. Except for 5% of the gross proceeds of this offering and 2%
of the aggregate total of Shares issued in this offering payable to Stonegate Securities,
Inc., no brokerage or finder’s fees or commissions are or will be payable by the Company to
any broker, financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by the Transaction
Documents. The Purchasers shall have no obligation with respect to any fees or with respect
to any claims 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 the Transaction
Documents. .

     (t) Private Placement. Assuming the accuracy of the Purchasers representations
and warranties set forth in Section 3.2, no registration under the Securities Act is
required for the offer and sale of the Shares by the Company to the Purchasers as
contemplated hereby. The issuance and sale of the Shares hereunder does not contravene the
rules and regulations of the Trading Market.

     (u) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Shares, will not be or be an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not become subject to the
Investment Company Act of 1940, as amended.

     (v) Registration Rights. Other than each of the Purchasers, no Person has any
right to cause the Company to effect the registration under the Securities Act of any
securities of the Company.

     (w) Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration. The
Company has not, in the 12 months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the effect that
the Company is not in compliance with the listing or maintenance requirements of such
Trading Market. The Company is, and has no reason

13

 

to believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.

     (x) Application of Takeover Protections. The Company and the Board of
Directors have 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 Purchasers as a result of the
Purchasers and the Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s issuance of
the Shares and the Purchasers’ ownership of the Shares.

     (y) Disclosure. Except with respect to the material terms and conditions of
the transactions contemplated by the Transaction Documents, the Company confirms that
neither it nor any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or might
constitute material, non-public information. The Company understands and confirms that the
Purchasers will rely on the foregoing representation in effecting transactions in securities
of the Company. All disclosure furnished by or on behalf of the Company to the Purchasers
regarding the Company, its business and the transactions contemplated hereby, including the
Disclosure Schedules to this Agreement, is true and correct and does 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. The press releases disseminated by the Company during the twelve months
preceding the date of this Agreement at the time of each release did not contain any untrue
statement of a material fact or omit 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 and when made, not misleading. The Company acknowledges and agrees
that no Purchaser makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in Section 3.2
hereof.

     (z) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Shares to be integrated with prior
offerings by the Company for purposes of (i) the Securities Act which would require the
registration of any such securities under the Securities Act, or (ii) any applicable
shareholder approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated. 

     (aa) Solvency. Based on the consolidated financial condition of the Company as
of the Closing Date, after giving effect to the receipt by the Company of the proceeds from
the sale of the Shares hereunder: (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the Company’s

14

 

existing debts and other liabilities (including known contingent liabilities) as they
mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on
its business as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business conducted by the
Company, and projected capital requirements and capital availability thereof, and (iii) the
current cash flow of the Company, together with the proceeds the Company would receive, were
it to liquidate all of its assets, after taking into account all anticipated uses of the
cash, would be sufficient to pay all amounts on or in respect of its liabilities when such
amounts are required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and amounts of cash
to be payable on or in respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the
Closing Date. Schedule 3.1(aa) sets forth as of the date thereof all outstanding secured
and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other
than trade accounts payable incurred in the ordinary course of business), (y) all
guaranties, endorsements and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the Company’s balance sheet
(or the notes thereto), except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of business; and (z)
the present value of any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default
with respect to any Indebtedness.

     (bb) Tax Status. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse Effect, the
Company and each Subsidiary has filed all necessary federal, state and foreign income and
franchise tax returns and has paid or accrued all taxes shown as due thereon, and the
Company has no knowledge of a tax deficiency which has been asserted or threatened against
the Company or any Subsidiary.

     (cc) No General Solicitation. Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Shares by any form of general
solicitation or general advertising. The Company has offered the Shares for sale only to
the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under
the Securities Act.

     (dd) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of
the Company, any agent or other person acting on behalf of the Company, has: (i) directly or
indirectly, used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully
any contribution made by the Company (or made by any person acting on its behalf of which
the Company is aware) which is in violation of law or (iv) violated in

15

 

any material respect any provision of the Foreign Corrupt Practices Act of 1977, as
amended.

     (ee) Accountants. The Company’s accounting firm is set forth on Schedule
3.1(ee) of the Disclosure Schedules. To the knowledge and belief of the Company, such
accounting firm: (i) is a registered public accounting firm as required by the Exchange Act
and (ii) shall express its opinion with respect to the financial statements to be included
in the Company’s Annual Report for the year ending December 31, 2007.

     (ff) No Disagreements with Accountants and Lawyers. There are no disagreements
of any kind presently existing, or reasonably anticipated by the Company to arise, between
the Company and the accountants and lawyers formerly or presently employed by the Company
which could affect the Company’s ability to perform any of its obligations under any of the
Transaction Documents, and the Company is current with respect to any fees owed to its
accountants and lawyers.

     (gg) Acknowledgment Regarding Purchasers’ Purchase of Shares. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Purchaser is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated thereby and any advice given by
any Purchaser or any of their respective representatives or agents in connection with the
Transaction Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of the Shares. The Company further represents to each Purchaser that
the Company’s decision to enter into this Agreement and the other Transaction Documents has
been based solely on the independent evaluation of the transactions contemplated hereby by
the Company and its representatives.

     (hh) Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f)
and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the
Purchasers have been asked by the Company to agree, nor has any Purchaser agreed, to desist
from purchasing or selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Shares for any specified
term; (ii) that past or future open market or other transactions by any Purchaser,
specifically including, without limitation, Short Sales or “derivative” transactions, before
or after the closing of this or future private placement transactions, may negatively impact
the market price of the Company’s publicly-traded securities; (iii) that any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a party,
directly or indirectly, presently may have a “short” position in the Common Stock and (iv)
that each Purchaser shall not be deemed to have any affiliation with or control over any
arm’s length counter-party in any “derivative” transaction. The Company further understands
and acknowledges that (y) one or more Purchasers may engage in hedging activities at various
times during the period that the Shares are outstanding, and (z) such hedging activities (if
any) could reduce the value of the existing

16

 

stockholders’ equity interests in the Company at and after the time that the hedging
activities are being conducted. The Company acknowledges that such aforementioned hedging
activities do not constitute a breach of any of the Transaction Documents.

     (ii) Regulation M Compliance. The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or
to result in the stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of any of the Shares, (ii) sold, bid for, purchased, or,
paid any compensation for soliciting purchases of, any of the Shares, or (iii) paid or
agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than in the case of clauses (ii) and (iii), compensation
paid to the Company’s placement agent in connection with the placement of the Shares.

     (jj) Form S-3 Eligibility. The Company is eligible to register the resale of
the Shares for resale by the Purchaser on Form S-3 promulgated under the Securities Act.

     3.2 Representations and Warranties of the Purchasers. Each Purchaser, for
itself and for no other Purchaser, hereby represents and warrants as of the date hereof and
as of the Closing Date to the Company as follows: Organization; Authority. Such
Purchaser is an entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization with full right, corporate or partnership

 power and
authority to enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of the Transaction Documents and performance by such Purchaser of the
transactions contemplated by the Transaction Documents have been duly authorized by all
necessary corporate or similar action on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and when delivered
by such Purchaser in accordance with the terms hereof, will constitute the valid and legally
binding obligation of such Purchaser, enforceable against it in accordance with its terms,
except: (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be limited by applicable
law.

     (b) Own Account. Such Purchaser understands that the Shares are “restricted
securities” and have not been registered under the Securities Act or any applicable state
securities law and is acquiring the Shares as principal for its own account and not with a
view to or for distributing or reselling such Shares or any part thereof in violation of the
Securities Act or any applicable state securities law, has no present intention of
distributing any of such Shares in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with any other
persons to distribute or regarding the distribution of such Shares (this representation and
warranty not limiting such Purchaser’s right to sell the Shares pursuant to the Registration Statement
or otherwise in compliance with applicable federal and state

17

 

securities laws) in violation of the Securities Act or any applicable state securities law.
Such Purchaser is acquiring the Shares hereunder in the ordinary course of its business.

     (c) Purchaser Status. At the time such Purchaser was offered the Shares, it
was, and as of the date hereof it is either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is
not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

     (d) Experience of Such Purchaser. Such Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the prospective
investment in the Shares, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the Shares and, at the
present time, is able to afford a complete loss of such investment.

     (e) General Solicitation. Such Purchaser is not purchasing the Shares as a
result of any advertisement, article, notice or other communication regarding the Shares
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.

     (f) Short Sales and Confidentiality Prior To The Date Hereof. Other than
consummating the transactions contemplated hereunder, such Purchaser has not, nor has any
Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or
indirectly executed any purchases or sales, including Short Sales, of the securities of the
Company during the period commencing from the time that such Purchaser first received a term
sheet (written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder until the date
hereof (“Discussion Time”). Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers
manage separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the representation set forth above shall only apply
with respect to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Shares covered by this Agreement. Other than to other
Persons party to this Agreement, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the existence and
terms of this transaction).

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions. (a) The Shares may only be disposed of in
compliance with state and federal securities laws. In connection with any transfer of
Shares other than pursuant to an effective registration statement or Rule 144, to the
Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in
Section 4.1(b),

18

 

the Company may require the transferor thereof to provide to the Company an
opinion of counsel selected by the transferor and reasonably acceptable to the Company, 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 Shares under the
Securities Act. As a condition of transfer, any such transferee shall agree in writing to
be bound by the terms of this Agreement and the Registration Rights Agreement and shall have
the rights of a Purchaser under this Agreement and the Registration Rights Agreement.

     (b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1,
of a legend on any of the Shares in the following form:

THIS SECURITY HAS 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 ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED
BY SUCH SECURITIES.

     The Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security
interest in some or all of the Shares to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by
the provisions of this Agreement and the Registration Rights Agreement and, if required
under the terms of such arrangement, such Purchaser may transfer pledged or secured Shares
to the pledgees or secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of the pledgee, secured party
or pledgor shall be required in connection therewith. Further, no notice shall be required
of such pledge. At the appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of Shares may reasonably
request in connection with a pledge or transfer
of the Shares, including, if the Shares are subject to registration pursuant to the
Registration Rights Agreement, the preparation and filing of any required prospectus
supplement

19

 

under Rule 424(b)(3) under 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) hereof), (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 Shares pursuant to Rule 144, (iii) if such
Shares are eligible for sale under Rule 144, without the requirement for the Company to be
in compliance with the current public information required under Rule 144 as to such Shares
and without volume or manner-of-sale restrictions, 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 Commission). The Company shall cause its counsel
to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required
by the Transfer Agent to effect the removal of the legend hereunder. The Company agrees
that following the Effective Date or at such time as such legend is no longer required under
this Section 4.1(c), it will, no later than three Trading Days following the delivery by a
Purchaser to the Company or the Transfer Agent of a certificate representing Shares issued
with a restrictive legend (such third Trading Day, the “Legend Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate representing such shares
that is free from all restrictive and other legends. The Company may not make any notation
on its records or give instructions to the Transfer Agent that enlarge the restrictions on
transfer set forth in this Section 4. Certificates for Shares subject to legend removal
hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the
account of the Purchaser’s prime broker with the Depository Trust Company System as directed
by such Purchaser.

     (d) Nothing herein shall limit such Purchaser’s right to pursue actual damages for the
Company’s failure to deliver certificates representing any Shares as required by the
Transaction Documents, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief.

     (e) Each Purchaser, severally and not jointly with the other Purchasers, agrees that
such Purchaser will sell any Shares pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements, or an exemption
therefrom, and that if Shares are sold pursuant to a Registration Statement, they will be
sold in compliance with the plan of distribution set forth therein, and acknowledges that
the removal of the restrictive legend from certificates representing Shares as set forth in
this Section 4.1 is predicated upon the Company’s reliance upon this understanding.

     4.2 Furnishing of Information. If the Common Stock is not registered under Section
12(b) or 12(g) of the Exchange Act on the date hereof, the Company agrees to cause the Common Stock
to be registered under Section 12(g) of the Exchange Act on or before the 120th calendar
day following the date hereof. Until all of the Shares may be sold pursuant to Rule 144, without
the requirement for the Company to be in compliance with the current public information requirement
under Rule 144, the Company covenants to maintain the registration of

20

 

the Common Stock under
Section 12(b) or 12(g) of the Exchange Act and 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.

     4.3 Integration. The Company
shall not 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 Shares in a manner that would require the registration under the Securities Act of the
sale of the Shares to the Purchasers or that would be integrated with the offer or sale of the
Shares to the Purchasers for purposes of the rules and regulations of any Trading Market such that
it would require shareholder approval prior to the closing of such other transaction unless
shareholder approval is obtained before the closing of such subsequent transaction.

     4.4 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New York
City time) on the Business Day after the date hereof, shall issue a press release describing the
material terms of the transactions contemplated hereby, and by the fourth Trading Day immediately
following the Closing Date, issue a Current Report on Form 8-K, disclosing the material terms of
the transactions contemplated hereby, and including the Transaction Documents as exhibits thereto.
The Company shall not publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the
prior written consent of such Purchaser, except (a) as required by federal securities law in
connection with (i) any registration statement contemplated by the Registration Rights Agreement,
(ii) the filing of any SEC Report, and (iii) the filing of final Transaction Documents (including
signature pages thereto) with the Commission and (b) to the extent such disclosure is required by
law or Trading Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure permitted under this clause (b).

     4.5 Shareholder Rights Plan. No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person”
under any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such
plan or arrangement, in either case solely by virtue of receiving Shares under the Transaction
Documents or under any other written agreement between the Company and the Purchasers; provided,
however, that no such Purchaser owns any equity in the Company prior to its purchase of the Shares
hereunder.

     4.6 Non-Public Information. Except with respect to the material terms and conditions
of the transactions contemplated by the Transaction Documents, including this Agreement, or as
expressly required by any applicable securities law, the Company covenants and agrees that neither
it, nor any other Person acting on its behalf, will provide any Purchaser or its agents or counsel
with any information that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality
and use of such information. The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the Company.

21

 

     4.7 Use of Proceeds. Except as set forth on Schedule 4.7 attached hereto, the
Company shall use the net proceeds from the sale of the Shares hereunder for working capital
purposes and shall not use such proceeds for: (a) the satisfaction of any portion of the Company’s
debt (other than payment of trade payables in the ordinary course of the Company’s business and
prior practices), (b) the redemption of any Common Stock or Common Stock Equivalents or (c) the
settlement of any outstanding litigation.

     4.8 Indemnification of Purchasers. Subject to the provisions of this Section 4.8,
the Company will indemnify and hold each Purchaser and its directors, officers, shareholders,
members, partners, employees and agents (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any other title), each
Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members,
partners or employees (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a lack of such title or any other title) of such controlling
persons (each, a “Purchaser 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 that any
such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a Purchaser in any capacity,
or any of them or their respective Affiliates, by any stockholder of the Company who is not an
Affiliate of such Purchaser, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such Purchaser’s
representations, warranties or covenants under the Transaction Documents or any agreements or
understandings such Purchaser may have with any such stockholder or any violations by the Purchaser
of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross
negligence, willful misconduct or malfeasance). If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right
to assume the defense thereof with counsel of its own choosing reasonably acceptable to the
Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of such separate counsel (which
if such opinion is disputed by the Company may be litigated hereunder), a material conflict on
any material issue between the position of the Company and the position of such Purchaser Party, in
which case the Company shall be responsible for the reasonable fees and expenses of no more than
one such separate counsel. The Company will not be liable to any Purchaser Party under this
Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the
extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s gross
negligence, willful misconduct or breach of any of the representations, warranties, covenants or
agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents.

22

 

     4.9 Listing of Common Stock. The Company hereby agrees to use its reasonable best
efforts to maintain the listing of the Common Stock on a Trading Market, and as soon as reasonably
practicable following the Closing (but not later than the earlier of the Effective Date and the
first anniversary of the Closing Date) to list all of the Shares on such Trading Market. The
Company further agrees, if the Company applies to have the Common Stock traded on any other Trading
Market, it will then include in such application all of the Shares, and will take such other
reasonable action as is necessary to cause all of the Shares to be listed on such other Trading
Market as promptly as possible. The Company will then take all action reasonably necessary to
continue the listing and trading of its Common Stock on a Trading Market and will comply in all
respects with the Company’s reporting, filing and other obligations under the bylaws or rules of
the Trading Market. Equal Treatment of Purchasers. No consideration (including any
modification of any Transaction Document) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the Transaction Documents unless the
same consideration is also offered to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right granted to each Purchaser by
the Company and negotiated separately by each Purchaser, and is intended for the Company to treat
the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert
or as a group with respect to the purchase, disposition or voting of Shares or otherwise.

     4.11 Short Sales and Confidentiality After The Date Hereof. Each Purchaser, severally
and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on
its behalf or pursuant to any understanding with it, will execute any Short Sales during the period
commencing with the Discussion Time and ending at such time the transactions contemplated by this
Agreement are first publicly announced as described in Section 4.4. Each Purchaser, severally and
not jointly with the other Purchasers, covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company as described in Section 4.4,
such Purchaser will maintain the confidentiality of the existence and terms of this transaction and
the information included in the Transaction Documents and the Disclosure Schedules.
Notwithstanding the foregoing, no Purchaser makes any representation, warranty or covenant hereby
that it will not engage in Short Sales in the securities of the Company after the time that the
transactions contemplated by this Agreement are first publicly announced as described in Section
4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and
the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio managers managing other portions
of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the
portion of assets managed by the portfolio manager that made the investment decision to purchase
the Shares covered by this Agreement.

     4.12 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with
respect to the Shares as required under Regulation D and to provide a copy thereof, promptly upon
request of any Purchaser. The Company shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for, or to qualify the Shares for, sale to
the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

23

 

     4.13 Delivery of Shares After Closing. The Company shall deliver, or cause to be
delivered, the respective Shares purchased by each Purchaser to such Purchaser within 3 Trading
Days of the Closing Date.

ARTICLE V.

MISCELLANEOUS

     5.1 Termination. This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between
the Company and the other Purchasers, by written notice to the other parties, if the Closing has
not been consummated on or before April 30, 2008; provided, however, that no such
termination will affect the right of any party to sue for any breach by the other party (or
parties).

     5.2 Fees and Expenses. The Company shall deliver, prior to the Closing, a completed
and executed copy of the Closing Statement, attached hereto as Annex A. Except as
expressly set forth in the Transaction Documents to the contrary, 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 this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and
other taxes and duties levied in connection with the delivery of any Shares to the Purchasers.

     5.3 Entire Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and
schedules.

     5.4 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 at the facsimile number set forth on the signature pages attached hereto prior to 5:30
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
set forth on the signature pages attached hereto on a day that is not a Trading Day or later than
5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd 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 set forth on the signature pages attached hereto.

     5.5 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the Company and the
Purchasers holding at least 67% of the Shares then outstanding or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought. 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 any party to
exercise any right hereunder in any manner impair the exercise of any such right.

24

 

     5.6 Headings. 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.

     5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of each
Purchaser (other than by merger, reorganization, etc.). Any Purchaser may assign any or all of its
rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Shares in
compliance with applicable state and federal securities laws, provided such transferee agrees in
writing to be bound, with respect to the transferred Shares, by the provisions of the Transaction
Documents that apply to the “Purchasers.”

     5.8 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 4.8.

     5.9 Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of the Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal 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,
directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of
Manhattan 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
any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or 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 right to serve process in any
other manner permitted by law. If either party shall commence an action or proceeding to enforce
any provisions of the Transaction Documents, then the prevailing party (by judgment) in such action
or 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 action or
proceeding.

     5.10 Survival. The representations and warranties contained herein shall survive the
Closing and the delivery of the Shares.

25

 

     5.11 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 or by e-mail delivery of a “.pdf” format data file, 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 or “.pdf” signature
page were an original thereof.

     5.12 Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

     5.13 Replacement of Shares. If any certificate or instrument evidencing any Shares is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof (in the case of mutilation), 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. The applicant for a new
certificate or instrument under such circumstances shall also pay any reasonable third-party costs
(including customary indemnity) associated with the issuance of such replacement Shares.

     5.14 Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Purchasers 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 contained in the Transaction Documents and hereby agrees to waive and not to assert in
any action for specific performance of any such obligation the defense that a remedy at law would
be adequate.

     5.15 Payment Set Aside. To the extent that the Company makes a payment or payments to
any Purchaser pursuant to any Transaction Document or a Purchaser 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.

26

 

     5.16 Independent Nature of Purchasers’ Obligations and Rights. The obligations of
each Purchaser under any Transaction Document are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the performance or
non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing
contained herein or in any other Transaction Document, and no action taken by any Purchaser
pursuant thereto, 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 the Transaction Documents. Each Purchaser 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
Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in their review and negotiation of the
Transaction Documents. For reasons of administrative convenience only, Purchasers and their
respective counsel have chosen to communicate with the Company through FWS. FWS does not represent
all of the Purchasers but only Stonegate Securities, Inc., the placement agent in the transaction.
The Company has elected to provide all Purchasers with the same terms and Transaction Documents for
the convenience of the Company and not because it was required or requested to do so by the
Purchasers.

     5.17 Liquidated Damages. The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing obligation of the
Company and shall not terminate until all unpaid partial liquidated damages and other amounts have
been paid notwithstanding the fact that the instrument or security pursuant to which such partial
liquidated damages or other amounts are due and payable shall have been canceled.

     5.18 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not be a Business Day,
then such action may be taken or such right may be exercised on the next succeeding Business Day.

     5.19 Construction. The parties agree that each of them and/or their respective counsel
has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal
rule of construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of the Transaction Documents or any
amendments hereto.

     5.20 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION
BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE
GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND
EXPRESSLY WAIVES FOREVER TRIAL BY JURY. 

27

 

(Signature Pages Follow)

28

 

          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.

	 	 	 	 	 	 	 
	ENOVA SYSTEMS, INC.	 	 	 	Address for Notice:
	 
	 	 	 	 	 	 
	By:

	 	 	 	 	 	Fax:
	 

	 	 

Name:
	 	 	 	 
	 

	 	Title:	 	 	 	 
	With a copy to (which shall not constitute notice):	 	 	 	 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

29

 

[PURCHASER SIGNATURE PAGES TO ENA SECURITIES PURCHASE AGREEMENT]

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

	 	 	 
	 
	 	 
	Name of Purchaser:
	 	 
	 

	 	 
	 
	 	 
	Signature of Authorized Signatory of Purchaser:
	 	 
	 

	 	 
	 
	 	 
	Name of Authorized Signatory:
	 	 
	 

	 	 
	 
	 	 
	Title of Authorized Signatory:
	 	 
	 

	 	 
	 
	 	 
	Email Address of Authorized Signatory:
	 	 
	 

	 	 
	 
	 	 
	Fax Number of Authorized Signatory:
	 	 
	 

	 	 
	 
	 	 
	Address for Notice of Purchaser:
	 	 

Address for Delivery of Shares for Purchaser (if not same as address for notice):

Subscription Amount: $                                        

Shares:                                         

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

30

 

Annex A

CLOSING STATEMENT

Pursuant to the attached Securities Purchase Agreement, dated as of the date hereto, the purchasers
shall purchase up to $5,000,000 of Common Stock from Enova Systems, Inc., a California corporation
(the “Company”). All funds will be wired into an account maintained by the Company. All
funds will be disbursed in accordance with this Closing Statement.

Disbursement Date: [                     ___, 2008

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	I. PURCHASE PRICE
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Gross Proceeds to be Received
	 	$	 	 
	 
	 	 	 	 	 	 
	II. DISBURSEMENTS
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Stonegate Securities, Inc.
	 	$	 	 
	 

	 	Feldman Weinstein & Smith LLP
	 	$	15,000	 
	 

	 	 	 	$	 	 
	 

	 	 	 	$	 	 
	 

	 	 	 	$	 	 
	 
	 	 	 	 	 	 
	Total Amount Disbursed:

	 	 	 	$	 	 
	 
	 	 	 	 	 	 
	WIRE INSTRUCTIONS:
	 	 	 	 	 	 

To:                                         

To:                                         

31

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