{"id":43571,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/securities-purchase-agreement-cardsecure-inc-and-24-7-media.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"securities-purchase-agreement-cardsecure-inc-and-24-7-media","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/securities-purchase-agreement-cardsecure-inc-and-24-7-media.html","title":{"rendered":"Securities Purchase Agreement &#8211; CardSecure Inc. and 24\/7 Media Inc."},"content":{"rendered":"<pre>\n                         SECURITIES PURCHASE AGREEMENT\n                         -----------------------------\n\n\n     SECURITIES  PURCHASE  AGREEMENT (this 'Agreement') dated as of December 29,\n1998 by and between  CardSecure,  Inc., a Delaware  corporation (the 'Company'),\nand 24\/7 Media, Inc., a Delaware corporation, (the 'Investor').\n\n\n     THE PARTIES HEREBY AGREE AS FOLLOWS:\n\n     1. Purchase and Sale of Preferred Shares.\n\n          1.1 Sale and  Issuance.  Subject to the terms and  conditions  of this\nAgreement,  the  Investor  agrees to purchase  at the  Closing  (as  hereinafter\ndefined), and the Company agrees to sell and issue to the Investor 50,000 shares\nof Series B Convertible  Voting  Preferred  Stock, par value $.01 per share (the\n'Series B Shares'), of the Company, and a $500,000 convertible secured note (the\n'Note') of the Company  attached hereto as Exhibit A, at the aggregate  purchase\nprice of $1,000,000.\n\n          The Series B Shares  shall have the powers,  rights,  preferences  and\nprivileges  set forth in the Series B Certificate of  Designations,  Preferences\nand Rights of even date  herewith  attached  hereto as Exhibit B (the  'Series B\nCertificate of Designations').\n\n          The Series B Shares sold to the Investor pursuant to this Agreement or\nissuable  upon the  conversion  of the Note are  hereinafter  referred to as the\n'Shares';  the  common  stock,  par value $.01 per share,  of the  Company  (the\n'Common Shares') issuable upon conversion of the Shares are hereinafter referred\nto as the 'Conversion  Shares'.  The Shares,  the Note and the Conversion Shares\nare hereinafter collectively referred to as the 'Securities'.\n\n          1.2 Use of  Proceeds  From  Investment.  The  Company  shall  use the\nproceeds from the sale of the Shares as set forth in Section 6.1 hereof.\n\n          1.3 Closing.  The purchase and sale of the Securities shall take place\nat the offices of Proskauer Rose LLP, 1585  Broadway,  New York, New York 10036,\nat 1:00  p.m.,  on  December  29,  1998,  or at such other time and place as the\nCompany and the Investor  mutually agree (which time and place are designated as\nthe  'Closing').  At the Closing,  the Company shall deliver to the Investor the\nexecuted Note and a certificate  representing  the Shares to be purchased by the\nInvestor  registered in the name of the Investor against delivery to the Company\nby the Investor of a wire transfer in the amount of the aggregate purchase price\ntherefor.\n\n     2.  Representations  and Warranties of the Company.  The Company represents\nand  warrants  to,  and  agrees  with the  Investor  except  as set forth on the\nSchedule of Exceptions furnished to the Investor and attached hereto as Schedule\n1, which exceptions shall be deemed to be  representations  and warranties as if\nmade hereunder, as follows:\n\n\n                                        1\n\n\n\n\n\n          2.1 Organization,  Good Standing and  Qualification.  The Company is a\ncorporation duly  incorporated,  validly existing and in good standing under the\nlaws of the State of Delaware. The Company has all requisite power and authority\nto carry on its business as now conducted  and as proposed to be conducted.  The\nCompany is duly  qualified to transact  business and is in good standing in each\njurisdiction  where the  character of the property  owned or leased by it or the\nnature of its activities makes such  qualification  necessary,  except where the\nfailure  to do so  qualify  would  not have a  material  adverse  effect  on the\nBusiness (as defined below). The Company is a newly formed  corporation  engaged\nin the business of general  Internet  commerce-based  Website hosting  services,\nWebsite graphic design and development,  domain name  registration and internet-\nrelated merchant account  services (the  'Business').  The Company is a party to\nthe  Contribution  Agreement in the form of Exhibit E attached  hereto.  Annexed\nhereto as Exhibit C, and Exhibit D,  respectively,  are true and complete copies\nof the  Certificate  of  Incorporation  and By-Laws of the  Company,  each as in\neffect on the date hereof.\n\n          2.2   Capitalization.   After  giving   effect  to  the   transactions\ncontemplated by this Agreement,  and immediately after the Closing,  the capital\nstock of the Company,  as authorized by the Certificate of  Incorporation,  will\nconsist of:  (i)10,000,000  Common Shares, of which 25,000 shares will be issued\nand outstanding, 100,000 shares will be reserved for issuance upon conversion of\nShares,  and  100,000  shares will be reserved  for  issuance to key  employees,\nofficers  and  directors  of,  and  consultants  to,  the  Company  under  stock\nincentives  that have been granted or are  available for grant by the Company as\nset forth in Part 2.2(a) of Schedule 1 (collectively,  the 'Stock  Incentives');\nand (ii)  1,000,000  preferred  shares,  of which (A)  100,000  shares have been\ndesignated  as Series A Preferred  shares  ('Series A Shares'),  25,000 of which\nhave been  issued to the  persons  named in Part 2.2(b) of Schedule 1 hereof and\nare governed by the  Certificate of  Designations,  Preferences and Rights dated\nDecember  28, 1998 set forth on Exhibit N hereto (the 'Series A  Certificate  of\nDesignations')  and (B) 200,000 shares have been  designated as Series B Shares,\n50,000 of which are being issued to the Investor  hereunder  and 50,000 of which\nare issuable upon conversion of the Note. The rights, privileges and preferences\nof the Common Shares,  the Series A Shares and the Series B Shares are as stated\nin the  Certificate of  Incorporation,  the Series A Certificate of Designations\nand the Series B Certificate of  Designations.  Except for the Stock  Incentives\nspecified above and the conversion rights of the Note and issued and outstanding\nSeries A Shares and Series B Shares, as of the Closing, the Company will not (i)\nhave  outstanding  any capital  stock or other  securities  convertible  into or\nexchangeable  for any shares of its capital stock and, except for the preemptive\nrights  contained  in the  Stockholders'  Agreement  in the  form of  Exhibit  F\nattached hereto (the 'Stockholders'  Agreement'),  no Person will have any right\nto subscribe for or to purchase (including  conversion or preemptive rights), or\nany Options (as defined below) for the purchase of, or any agreements  providing\nfor the issuance  (contingent or otherwise) of, any calls,  commitments or other\nclaims  of any  character  relating  to,  any  capital  stock  or any  stock  or\nsecurities  convertible  into or  exchangeable  for  any  capital  stock  of the\nCompany;  (ii) have any capital  stock,  equity  interests  or other  securities\nreserved for issuance  for any  purpose;  or (iii) be subject to any  obligation\n(contingent  or  otherwise)  to  repurchase  or otherwise  acquire or retire any\nshares of its capital stock or any convertible securities,  rights or options of\nthe type  described in the  preceding  clause (i).  'Option' with respect to any\nPerson means any security, right, subscription, warrant, option, 'phantom' stock\nright or other Contract (as defined in Section 2.9 hereof) that gives\n\n\n                                        2\n\n\n\n\n\nthe right  directly or  indirectly  to (i) purchase or  otherwise  receive or be\nissued any shares of capital  stock of such  Person or any  security of any kind\nconvertible  into or exchangeable or exercisable for any shares of capital stock\nof such Person or (ii) receive or exercise any benefits or rights similar to any\nrights  enjoyed by or accruing to the holder of shares of capital  stock of such\nPerson,  including  any  rights to  participate  in the equity or income of such\nPerson or to  participate in or direct the election of any directors or officers\nof such Person or the manner in which any shares of capital stock of such Person\nare voted.  All issued and outstanding  Common Shares have been duly and validly\nissued and are fully paid and  nonassessable  and were issued in accordance with\nthe  registration  or  qualification  provisions of the  Securities  Act and any\napplicable state securities laws or pursuant to valid exemptions therefrom.  All\nof the  Series B Shares  and  Conversion  Shares,  when  issued as  contemplated\nhereby,  will be validly  issued and fully  paid and  nonassessable  and will be\nissued in accordance with the  registration or  qualification  provisions of the\nSecurities Act and any  applicable  state  securities  laws or pursuant to valid\nexemptions  therefrom.  The delivery of a  certificate  or  certificates  at the\nClosing  representing  the Shares in the  manner  provided  in Section  1.3 will\ntransfer to each  Investor  good and valid title to the Shares free and clear of\nall  liens,   pledges,   assessments,   leases,   security  interests,   claims,\nencumbrances,  or other restrictions of any kind (collectively,  'Liens'),except\nas set  forth  in the  Stockholders'  Agreement.  To the best  knowledge  of the\nCompany,  there are no agreements among the Company's  shareholders with respect\nto the  voting or  transfer  of the  Company's  capital  stock,  other  than the\nagreements  relating to transfer contained in the Stockholders'  Agreement,  and\nthe Registration  Rights Agreement in the form of Exhibit G attached hereto (the\n' Registration Rights  Agreement').  Part 2.2(b) of Schedule 1 hereto includes a\ncomplete and correct list of the name of each of the Company's  shareholders and\nthe  number of shares of  capital  stock  (and  class or  series)  owned by such\nPerson.\n\n          2.3   Authority;   Execution   and   Delivery;   Requisite   Consents,\nNonviolation.  The Company has, and as of the Closing will have,  all  requisite\npower and  authority  to  execute,  deliver  and  perform  this  Agreement,  the\nStockholders'  Agreement,  the  Registration  Rights  Agreement,  the  Series  B\nCertificate of Designations,  the Note, the Security  Agreement,  the Technology\nLicense  Agreement and each other document or instrument  executed by it, or any\nof its  officers,  in  connection  herewith or therewith  or pursuant  hereto or\nthereto  (this  Agreement,  together  with all of the  foregoing  documents  and\ninstruments,  are  sometimes  collectively  referred  to herein as the  'Company\nDocuments'), and to consummate the transactions contemplated hereby and thereby.\nThe name of each officer and director of the Company on the date hereof, and the\nposition  with the  Company  held by each,  are listed on Part 2.3 of Schedule 1\nhereto. The execution,  delivery and performance of this Agreement and the other\nCompany Documents and the consummation of the transactions  contemplated  hereby\nand thereby have been duly and validly authorized by all necessary action on the\npart of the Company and its  stockholders.  This Agreement and each of the other\nCompany  Documents  that has been executed as of the date hereof is, and each of\nthe Company  Documents will be as of the Closing,  duly and validly executed and\ndelivered by the Company and constitute the legal,  valid and binding obligation\nof the Company,  enforceable  against the Company in accordance  with its terms,\nexcept as the enforceability thereof may be limited by bankruptcy, insolvency or\nother similar laws affecting the  enforceability of creditors' rights in general\nor by general principles of equity.  The execution,  delivery and performance of\nthis Agreement and the other Company Documents  (including,  without limitation,\nthe Stockholders' Agreement, the\n\n\n                                        3\n\n\n\n\n\nRegistration Rights Agreement, the Note, the Security Agreement and the Series B\nCertificate  of   Designations),   the   consummation  by  the  Company  of  the\ntransactions contemplated hereby and thereby (including, without limitation, the\noffer,  sale and delivery by the Company of the Securities) will not (a) require\nthe consent,  license, permit, waiver,  approval,  authorization or other action\nof, by or with respect to, or  registration,  declaration  or filing  with,  any\ncourt or governmental  authority,  department,  commission,  board,  arbitrator,\nbureau, agency or instrumentality,  or other political subdivision,  domestic or\nforeign  ('Governmental  Authority')  or  any  other  individual,   partnership,\ncorporation,  unincorporated  organization  or  association,  limited  liability\ncompany,  trust or other  entity  (collectively,  a  'Person');  (b)  violate or\nconflict  with any provision of the Series A Certificate  of  Designations,  the\nSeries B Certificate of Designations, the Certificate of Incorporation or of the\nBy-Laws of the Company as in effect  immediately  prior to and immediately after\nthe execution and delivery of this Agreement;  or (c) constitute a default under\n(with or without  notice or lapse of time or both),  violate or  conflict  with,\ngive rise to a right of termination, cancellation,  acceleration or modification\nunder or result in a loss of a material  benefit  under,  any Law (as defined in\nSection  2.14  below),  Scheduled  Contract  (as  defined in Section 2.9 below),\nrights  relating to  Intellectual  Property  (as defined in Section 2.10 below),\nPermit (as defined in Section  2.14 below) or Order (as defined in Section  2.13\nbelow) to which the Company is a party or by which the Company or its properties\nare  bound or give to any  Person  any  additional  rights  or  entitlements  to\nincreased,  additional,  accelerated  or guaranteed  payments under or result in\ncreation  or  imposition  of any Lien upon the  Company or any of its assets and\nproperties.\n\n          2.4 Subsidiaries.\n\n          The  Company  does not,  and  prior to the  Closing  will not,  own or\ncontrol,  directly or  indirectly,  any  partnership  interests,  stock or other\nequity  interests in any  partnership,  corporation or other entity or Person or\nany  voting  rights  or right to  control  the  policies  and  direction  of any\npartnership, corporation or other entity.\n\n          2.5 Financial Information.\n\n               (a)  The  Company  has  previously   delivered  to  the  Investor\nunaudited  balance  sheets  as of  September  30,  1998 and  certain  historical\nstatements of operations for the period ended September 30, 1998 of the Business\nof the Company (including its predecessor entity) (the 'Financial Information'),\nattached hereto as Exhibit H. Such Financial  Information has been prepared from\nthe books and records of the  Business of the  Company,  and present  fairly the\nfinancial  position and the results of operations of the Business of the Company\nin accordance with GAAP, subject to customary year or period end adjustments and\naccruals and the absence of notes thereto, as at and for the periods indicated.\n\n               (b) Except as disclosed in the Financial Information, the Company\nhas  no  liabilities  or  obligations,   absolute  or  contingent,   except  (i)\nobligations  and  liabilities  incurred  in the  ordinary  course  of  business,\nconsistent with past practice,  since the date of the Financial Statement,  (ii)\nobligations which are not required to be reflected in the Financial Information,\nwhich  individually  and in the  aggregate  are not  material  to the  financial\ncondition or operating results of\n\n\n                                        4\n\n\n\n\n\nthe Company.  Except as disclosed in the Financial  Information,  the Company is\nnot a guarantor or indemnitor of any  obligations of any Person (i) for borrowed\nmoney, (ii) evidenced by notes, bonds, debentures or similar instruments,  (iii)\nfor the deferred  purchase price of goods or services (other than trade payables\nor accruals  incurred in the ordinary  course of  business),  (iv) under capital\nleases and (v) in the  nature of  guarantees  of the  obligations  described  in\nclauses (i)  through  (iv)  ('Indebtedness')  of any other  Person.  The Company\nmaintains  and will  continue  to  maintain  a  standard  system  of  accounting\nestablished and administered in accordance with GAAP.\n\n\n          2.6 Certain Changes or Events.  Since September 30, 1998, the Business\nhas been operated only in the ordinary course,  consistent with past practice of\nthe Business,  and in addition to, and not in limitation of the  foregoing:  (i)\nthere has been no change in the condition of the Business, except for changes in\nthe ordinary  course of business  consistent  with past practice  which have not\nbeen, in the aggregate,  materially adverse to the Business; (ii) there has been\nno revocation or change in any contract or permit or right to do business,  and,\nto the best knowledge of the Company,  no change of Laws which has resulted,  or\ncould  reasonably  be expected to result,  in a material  adverse  change in the\ncondition  of the  Business;  (iii) the Company has not  authorized  or made any\ndistributions of, or declared or paid any dividends, upon or with respect to any\nof the capital  stock of the  Company,  or other equity  interests,  nor has the\nCompany redeemed, purchased or otherwise acquired, or issued or sold, any of its\ncapital stock or other equity  interests;  (iv) the Company has not entered into\nany transaction with a value in excess of $50,000 or other material transaction,\nother than in the ordinary course of business and consistent with past practice;\n(v) the Company has not incurred any indebtedness for borrowed money or made any\nloans or advances to any person except for convertible  debentures  incurred and\nsubsequently  converted to Common  Shares of the Company on or prior to the date\nhereof; (vi) there has been no waiver by the Company of a valuable right or of a\nmaterial debt owed to it,  including any right or  indebtedness  with a value in\nexcess of $50,000;  (vii) the Company has not failed to satisfy or discharge any\nLien; (viii) there has not been any damage,  destruction or loss, whether or not\ncovered by insurance, materially and adversely affecting the assets, properties,\nfinancial condition,  operating results,  prospects of the Business;  (ix) there\nhas not been any material  change in any  compensation  arrangement  (including,\nwithout  limitation,  benefits) or agreement  with any employee or consultant of\nthe  Company;  (x) there has not been any sale,  assignment  or  transfer of any\npatents,  trademarks,  copyrights,  trade  secrets  or other  intangible  assets\nrelated to the Business;  (xi) there has not been any resignation or termination\nof  employment  of any key officer or employee or  consultant of the Company and\nthe  Company  does not  know of the  impending  resignation  or  termination  of\nemployment of any such officer, employee or consultant;  (xii) there has been no\nchange in the  accounting  or tax  methods or  procedures  of the Company or any\nother  transaction  involving or development  affecting the Business outside the\nordinary course of business consistent with past practice;  and (xiii) there has\nbeen no agreement or  commitment by the Company to do or perform any of the acts\ndescribed in this Section 2.6.\n\n          2.7 Tangible  Personal  Property.  The Company is in possession of and\nhas good and marketable  title to or has valid  leasehold  interests in or valid\nrights  under  contracts  to use, all  tangible  personal  property  used in the\nconduct of its business, including all tangible personal\n\n\n                                        5\n\n\n\n\n\nproperty  reflected on the Financial  Information and tangible personal property\nacquired  since the date of such  Financial  Information,  other  than  property\ndisposed of since such date in the ordinary  course of business  consistent with\npast  practice and the terms of this  Agreement and the Company  Documents.  All\nsuch tangible  personal property is free and clear of all Liens, and is adequate\nand suitable for the conduct by the Company of the business presently  conducted\nand  presently  proposed to be conducted by it, and is in good working order and\ncondition, ordinary wear and tear excepted, and its use complies in all material\nrespects with all applicable laws.\n\n          2.8 Real  Property.  (a) Part 2.8(a) of Schedule 1 contains a true and\ncorrect  list of (i) each  parcel of real  property  leased by the  Company  (as\nlessor or lessee) and (ii) all Liens relating to or affecting any parcel of real\nproperty referred to in clause (i).\n\n               (b) The Company own no real property.\n\n               (c) The Company has a valid and  subsisting  leasehold  estate in\n     and the right to quiet enjoyment of the real  properties  leased by it, for\n     the full term of the lease thereof. Each lease referred to in clause (i) of\n     paragraph (a) above is a legal, valid and binding agreement, enforceable in\n     accordance  with its terms, of the Company and of each other Person that is\n     a party  thereto,  and  except as set forth in Part  2.8(b) of  Schedule  1\n     hereto,  there is no,  and the  Company  has not  received  notice  of any,\n     default (or any condition or event which,  after notice or lapse of time or\n     both, would constitute a default) thereunder.\n\n               (d) The  Company  has  delivered  to the  Investor  prior  to the\n     execution  of  this  Agreement  true  and  complete  copies  of all  leases\n     (including any amendments and renewal letters).\n\n               (e) Except as disclosed in Part 2.8(c) of Schedule 1 hereto,  the\n     improvements  on the real property  identified in Part 2.8(a) of Schedule 1\n     hereto are in good operating  condition and in a state of good  maintenance\n     and repair,  ordinary wear and tear excepted, are adequate and suitable for\n     the purposes for which they are presently  being used and, to the knowledge\n     of the Company,  there are no  condemnation  or  appropriation  proceedings\n     pending or threatened against any of such real property or the improvements\n     thereon.\n\n          2.9  Contracts.  The  Company is not a party to, nor is the Company or\nany of its  assets or  properties  bound  by,  or  subject  to,  any  contracts,\nagreements,  notes,  instruments,  franchises,  leases,  licenses,  commitments,\narrangements or understandings,  written or oral (collectively,  'Contracts') of\nthe following types, except for those (the 'Scheduled Contracts') listed in Part\n2.9 of Schedule 1 hereto:\n\n               (a) any Contracts  pursuant to which the Company or another party\n     thereto is obligated to pay in excess of fifty thousand dollars ($50,000);\n\n\n\n                                        6\n\n\n\n\n\n               (b) any  Contracts  pursuant  to which the Company  acquired  the\n     right to use any  Intellectual  Property (as defined in Section 2.10 below)\n     or  information  that is material to or  necessary  in the  business of the\n     Company  [(excluding  'shrink  wrap'  licenses)],  or pursuant to which the\n     Company has granted to others the right to use, or which otherwise  relates\n     to, its Intellectual Property;\n\n               (c) any  Contracts  (other than advances of expenses to employees\n     in the ordinary course of business)  involving  Indebtedness,  loans,  loan\n     agreements,   debt  securities,   mortgages,   deeds  of  trust,   security\n     agreements, suretyships or guarantees;\n\n               (d) any Contracts  between the Company,  on the one hand, and any\n     of its  officers,  directors,  employees,  stockholders  or any  direct  or\n     indirect Affiliates thereof (each, a 'Principal Owner'), on the other;\n\n               (e) any deferred compensation agreements,  bonus, pension, profit\n     sharing, stock option and incentive plans or arrangements, hospitalization,\n     medical and  insurance  plans,  agreements  and  policies,  retirement  and\n     severance  plans and other  employee  compensation  policies and agreements\n     affecting employees or consultants of the Company;\n\n               (f) any  partnership,  joint  venture,  shareholders'  or similar\n     Contracts with any Person;\n\n               (g) any Contracts which restrict the Company from freely engaging\n     in  business,   disclosing  confidential  or  proprietary  information,  or\n     competing anywhere;\n\n               (h) any other  Contracts  which  otherwise  are  material  to the\n     Business;\n\n          True, correct and complete copies of all Scheduled Contracts have been\nmade available to the Investor. All of the Scheduled Contracts are in full force\nand effect and constitute  legal,  valid and binding  obligations of the Company\nand, to the best  knowledge of the Company,  the other parties  thereto;  to the\nbest of the knowledge of the Company,  no  circumstances  exist which would give\nrise to an Action  (as  defined in Section  2.13)  against or by the  Company in\nconnection  with any  Scheduled  Contract  or any  default  thereunder;  and the\nvalidity,  effectiveness and continuation of any Scheduled Contracts will not be\nadversely affected by the transactions contemplated by this Agreement or require\nthird party consents or notices.\n\n          2.10 Intellectual Property.\n\n               (i) Set forth on Part  2.10(a)  of  Schedule  1 hereto is a true,\n     correct and complete list of all patents, patent applications,  trademarks,\n     service   marks,   tradenames,   trademark   registrations,   service  mark\n     registrations, copyrights and licenses trade names, and any applications or\n     registrations  for any of the foregoing  (collectively,  the  'Intellectual\n     Property')  of any kind in which the  Company  has an  interest or which is\n     otherwise  used in, or relates to the Business.  Part 2.10(b) of Schedule 1\n     hereto contains a true, correct and\n\n\n                                        7\n\n\n\n\n\n     complete  list of all  material  licenses  or  agreements  (other  than the\n     Company's standard form of web site affiliate  agreements)  relating to the\n     rights of the Company to any of the  Operating  IP  (defined  below) or any\n     trade  secret  material of the Company or the Business  (the  'Intellectual\n     Property Licenses').\n\n               (ii) With  respect  to any  Intellectual  Property,  brand  name,\n     computer software or program, technology,  know-how or process or copyright\n     (collectively (including without limitation the Intellectual Property), the\n     'Operating  IP') or trade  secret  that is used in or that  relates  to the\n     Business, the Company owns or has the exclusive right to use such Operating\n     IP or trade secret in the Business free and clear of all Liens. The Company\n     owns or has the  exclusive  right to use all Operating IP and trade secrets\n     that are  necessary  to the  Business  as now  conducted  or proposed to be\n     conducted.\n\n               (iii) Each of the Intellectual  Property  Licenses  constitutes a\n     legal,  valid,  binding and  enforceable  obligation in accordance with its\n     terms against the Company,  and, to the best knowledge of the Company, each\n     other Person party thereto,  and to the best knowledge of the Company is in\n     full force and effect.  The Company has performed all obligations  required\n     to have  been  performed  by it  under  each of the  Intellectual  Property\n     Licenses  to which it is a party.  Neither  the  Company  nor,  to the best\n     knowledge of the Company, any other party thereto is in default thereunder,\n     nor, to the best  knowledge  of the  Company,  is there any event that with\n     notice or lapse of time, or both,  would  constitute a default  thereunder.\n     The Company has not  received any notice that any other party to any of the\n     Intellectual  Property  Licenses intends to cancel,  terminate or refuse to\n     renew the same or to exercise  or decline to  exercise  any option or other\n     right  thereunder  (other  than in the  ordinary  course of  business).  No\n     licenses, sublicenses, covenants or agreements have been granted or entered\n     into by the  Company  in respect  of any of the  Operating  IP or any trade\n     secret of the  Company,  except  the  Intellectual  Property  Licenses.  No\n     director, officer, shareholder,  employee or other Affiliate of the Company\n     owns, directly or indirectly,  in whole or in part, any of the Operating IP\n     or any  trade  secret  used  by or  relating  to the  Company.  None of the\n     officers, employees, consultants,  distributors, agents, representatives or\n     advisors of the Company  have entered  into any  agreement  relating to the\n     Company's business regarding know-how, trade secrets,  assignment of rights\n     in inventions, or prohibition or restriction of competition or solicitation\n     of  customers,  or any other  similar  restrictive  agreement  or covenant,\n     whether written or oral, with any Person other than the Company.  There are\n     no  restrictions  on the direct or indirect  transfer  of any  Intellectual\n     Property  or  license to use the  Intellectual  Property,  or any  interest\n     therein,  held  by the  Company  or the  Subsidiary  of  such  Intellectual\n     Property.\n\n               (iv) The  consummation of the  transactions  contemplated  hereby\n     will not alter or impair the rights of the Company to any of the  Operating\n     IP,  to any  trade  secret  material  to the  Company,  or under any of the\n     Intellectual Property Licenses.\n\n               (v) No claim with respect to the  Operating  IP, any trade secret\n     or any  Intellectual  Property  License  is  currently  pending or has been\n     asserted or overtly threatened\n\n\n                                        8\n\n\n\n\n\n     by any Person,  nor does the Company know of any grounds for any claim, (A)\n     to the effect that any  operation  or  activity  of the  Company  presently\n     occurring or contemplated infringes or misappropriates any United States or\n     foreign copyright,  patent, trademark, service mark or trade secret; (B) to\n     the  effect  that  any  other  Person  infringes  on  the  Operating  IP or\n     misappropriates any trade secret or know-how or other proprietary rights of\n     the Company;  (C) challenging the ownership,  validity or  effectiveness of\n     any of the  Operating  IP or  any  trade  secret  of  the  Company;  or (D)\n     challenging  the license of the Company  to, or other  legally  enforceable\n     right under, any Operating IP or the Intellectual Property Licenses.\n\n               (vi) The Company is not aware of any  presently  existing  United\n     States or foreign  patents or any patent  applications  which, if issued as\n     patents, would be infringed by any activity contemplated by the Company.\n\n          2.11 Labor Union Activities;  Employee  Relations.  No employee of the\nCompany  is  represented  by any  labor  union  or  covered  by  any  collective\nbargaining  agreement  with  the  Company,  nor,  to the best  knowledge  of the\nCompany, has any labor union sought to represent any employee of the Company. To\nthe best  knowledge  of the  Company,  no  officer  or key  employee  intends to\nterminate  his  employment  with the  Company.  The Company has  complied in all\nmaterial  respects with all applicable Laws relating to the employment of labor,\nincluding  without  limitation,  those  relating to wages,  hours and collective\nbargaining.  No unfair labor  practice  complaint  or sex or age  discrimination\nclaim has been brought  against the Company before the National Labor  Relations\nBoard or any other Governmental Authority.\n\n          2.12 ERISA. There are no employee benefit plans (as defined in Section\n3(3) of the Employee  Retirement Income Security Act of 1974 ('ERISA')) covering\nformer or current  employees of the Company,  or under which the Company has any\nobligation or liability.  The Company has not incurred any liability under Title\nIV  of  ERISA,   including  any  liability  to  the  Pension  Benefit   Guaranty\nCorporation. Part 2.12 of Schedule 1 hereto lists all material plans, contracts,\nbonus and commission arrangements,  profit-sharing, savings, stock option plans,\ninsurance,  deferred compensation,  or other similar fringe or employee benefits\ncovering  former or current  employees of the Company or under which the Company\nhas any obligation or liability (each, a 'Benefit Arrangement').\n\n          2.13 Litigation. There is no action, suit, proceeding,  investigation,\naudit,  arbitration or governmental  approval process  (collectively,  'Action')\npending or, to the best knowledge of the Company,  threatened against,  relating\nto or affecting the Company or any of the  properties or assets of the Business,\nnor,  to the best  knowledge  of the  Company,  is there  any basis for any such\nAction.  Neither the Company nor any of its assets or  properties  is subject to\nany order, judgment, writ, injunction, decree, ruling or decision (collectively,\nan 'Order')  of any  Governmental  Authority.  There is no Action by the Company\ncurrently pending or which the Company intends to initiate.\n\n\n\n                                        9\n\n\n\n\n\n          2.14  Compliance with Laws;  Permits.  The Company has not violated or\nfailed to comply with, in any material  respect,  any statute,  law,  ordinance,\nrule, regulation or policy of any Governmental Authority (collectively,  'Laws')\nto which it or any properties or assets of the Business is subject.  The Company\nhas all permits, licenses, orders, certificates, authorizations,  registrations,\nfranchises,  and  approvals of any  Governmental  Authority  (collectively,  the\n'Permits')  that are  material  to the  conduct  of the  Business  as  presently\nconducted and as proposed to be conducted,  including without limitation,  those\nrequired by Environmental Laws; all such Permits are, and as of the Closing will\nbe,  valid,  binding and in full force and effect;  no  violations or notices of\nfailure to comply have been  issued or recorded in respect of any such  Permits.\nThe  Company  is in  compliance  in all  material  respects  with the  terms and\nconditions of all such Permits. The Company has not violated or failed to comply\nwith its certificate of incorporation or by-laws.\n\n          2.15  Taxes.  All  federal,  state,  city,  county,  local and foreign\nincome,  franchise,  sales, use and value added tax returns and reports, and all\nother  material  tax returns and reports  required to be filed by the Company in\nthose or in any other  jurisdiction  (collectively,  'Returns') have been timely\nfiled. All such Returns are true, correct and complete in all material respects.\nAll taxes, assessments, fees, interest, penalties and other charges with respect\nthereto  (collectively,  'Taxes') due or claimed to be due from the Company have\nbeen  paid  except to the  extent  reserved  against  on the  Interim  Financial\nStatements.\n\n          2.16 Books and Records.  The books of account,  ledgers and records of\nthe Company have been made  available to the Investor  prior to the execution of\nthis  Agreement.  The  minutes and minute  books of the Company  provided to the\nInvestor prior to the date hereof  constitute a true,  complete and correct copy\nof the entire  minutes  and minute  books of the  Company and contain a true and\ncomplete record of all actions taken at all meetings and by all written consents\nin lieu of meetings of  stockholders,  the boards of directors and committees of\nthe board of directors of the Company.\n\n          2.17 Environmental Matters. The Business, assets and properties of the\nCompany  are and have  been  operated  and  maintained  in  compliance  with all\napplicable federal, state, city, county and local environmental  protection laws\nand  regulations  and  occupational  health  and  safety  laws  and  regulations\n(collectively,  the 'Environmental  Laws'). No event has occurred which, with or\nwithout the passage of time or the giving of notice, or both, would constitute a\nnon-compliance  by the  Company  with,  or a  violation  by the  Company of, the\nEnvironmental Laws.\n\n          2.18 Transactions with Affiliates.  The Company has not had any direct\nor indirect  dealings with any Principal Owner of the Company or with any of his\nAffiliates,  associates  (as  such  term is  defined  in Rule  12b-2  under  the\nSecurities  Exchange  Act of 1934,  as  amended)  or  relatives  (or  affiliates\nthereof) nor does the Company  beneficially  own,  directly or  indirectly,  any\ninvestment  assets of any such current or former  Principal  Owner of either the\nCompany  or  any of its  Affiliates,  associates  or  relatives  (or  affiliates\nthereof).  The  Company  does not have any  obligation  to or claim  against any\nPrincipal Owner of the Company,  or any of his or its affiliates,  Associates or\nrelatives,  and no such  Person  has any  obligation  to or  claim  against  the\nCompany. All products,  services or benefits provided to the Company by any such\nPerson, or provided by the Company to any such\n\n\n                                       10\n\n\n\n\n\nPerson,  are set forth on Part 2.18 of  Schedule 1 hereto and are  provided at a\ncharge equal to the fair market value of such products, services or benefits. To\nthe best knowledge of the Company, no Principal Owner of the Company, nor any of\nits Affiliates,  associates or relatives, has any direct or indirect interest of\nany kind in any business or entity which is competitive with the Company or with\nwhich the Company has a business relationship.\n\n          2.19  Registration  Rights.  Except as  provided  in the  Registration\nRights  Agree ment,  no Person has,  and as of the Closing no Person shall have,\ndemand,  'piggy-back,'  or  other  rights  to  cause  the  Company  to file  any\nregistration  statement  under  the  Securities  Act of 1933,  as  amended  (the\n'Securities Act') relating to any securities of the Company.\n\n          2.20  No  Brokers  or  Finders.  Neither  the  Company  nor any of its\nAffiliates (nor any investment banker, financial advisor,  attorney,  accountant\nor other  Person  retained  by or acting for or on behalf of the  Company or any\nsuch  Affiliate)  (i) has entered into any agreement  that conflicts with any of\nthe transactions contemplated by this Agreement or any of the Company Documents,\nor (ii) has entered  into any  agreement or had any  discussions  with any third\nparty regarding any transaction  involving the Company which could result in the\nInvestor or any officer, director,  manager, employee, agent or Affiliate of the\nInvestor  being  subject to any claim for  liability  to said  third  party as a\nresult of entering into this Agreement or the Company  Documents or consummating\nthe  transactions  contemplated  hereby or thereby.  No agent,  broker,  finder,\ninvestment banker, financial advisor or other similar Person will be entitled to\nany  fee,  commission  or  other  compensation  in  connection  with  any of the\ntransactions  contemplated  by this  Agreement  or the Company  Documents on the\nbasis of any act or statement  made or alleged to have been made by the Company,\nany of its respective Affiliates,  or any investment banker,  financial advisor,\nattorney,  accountant or other Person  retained by or acting for or on behalf of\nthe Company or any such Affiliate.\n\n          2.21 Disclosure.  In connection with the purchase of the Securities by\nthe Investor as contemplated  hereby,  the Company has disclosed to the Investor\nall material facts and information known to the Company  concerning the Company,\nits condition  and the  Securities,  and in this  Agreement or otherwise has not\nmade any untrue  statement  of a material  fact or omitted to state any material\nfact necessary in order to make the statements  contained herein or in any other\nCompany Documents not misleading.\n\n          2.22 Proprietary  Information and Employee Issues. The Company,  after\nreasonable  investigation,  is not aware that any of its employees,  officers or\nconsultants are in violation of the for of  Non-Competition  and  Non-Disclosure\nand Developments Agreement in the form attached hereto as Exhibit I and the form\nof  Non-Disclosure  and  Developments  Agreement in the form attached  hereto as\nExhibit  J, and the  Company  will  use its best  efforts  to  prevent  any such\nviolation.\n\n          2.23 Exemption from  Registration;  Restrictions  on Offer and Sale of\nSame or Similar  Securities.  Assuming the representations and warranties of the\nInvestor set forth in Sections  3.3, 3.4, and 3.6 hereof are true and correct in\nall material  respects,  the offer and sale to the Investor of the Securities is\nexempt from the registration requirements of the Securities Act. Neither\n\n\n                                       11\n\n\n\n\n\nthe Company nor any Person  authorized  to act on behalf of the Company  has, in\nconnection with the offer and sale of the Securities  engaged in (A) any form of\ngeneral  solicitation or general advertising (as those terms are used within the\nmeaning of Rule 501(c) under the  Securities  Act),  (B) any action  involving a\npublic offering within the meaning of section 4(2) of the Securities Act, or (C)\nany action that would require the  registration  under the Securities Act of the\noffering and sale of the  Securities  pursuant to this Agreement and the Company\nDocuments or that would violate  applicable state securities or 'blue sky' laws.\nThe  Company has not made and will not prior to the  Closing  make,  directly or\nindirectly,  any offer or sale of the Securities or of securities of the same or\na similar class as the Securities if as a result  thereof the  Securities  could\nfail to be entitled  to  exemption  from the  registration  requirements  of the\nSecurities  Act. As used herein,  the terms 'offer' and 'sale' have the meanings\nspecified in Section 2(3) of the Securities Act.\n\n          2.24  Series B Shares.  The  Series B Shares  shall  have the  powers,\nrights,  preferences  and  privileges  set forth in the Series B Certificate  of\nDesignations.\n\n          2.25 The Note.  The Note,  in the form  attached  hereto as  Exhibit A\nhereto,  constitutes  a legal,  valid,  binding and  enforceable  obligation  in\naccordance with its terms against the Company;  the Company has good,  valid and\nmarketable  title  to all of the  assets  listed  as  collateral  (the  'Secured\nAssets') in the Security  Agreement,  in the form attached  hereto as Exhibit L,\nbetween the  Company  and the  Investor  of even date  herewith  (the  'Security\nAgreement');  and the Note coveys on the Investor a valid  security  interest in\nthe Secured Assets.\n\n          2.26 Acknowledgment  Regarding Investor's Purchase of Securities.  The\nCompany  acknowledges  and  agrees  that the  Investor  is acting  solely in the\ncapacity  of arm's  length  purchaser  with  respect to this  Agreement  and the\ntransactions  contemplated  hereby.  The Company further  acknowledges  that the\nInvestor is not acting as a financial advisor or fiduciary of the Company (or in\nany  similar  capacity)  with  respect to this  Agreement  and the  transactions\ncontemplated  hereby  and any  advice  given  by the  Investor  or any of  their\nrespective  representatives  or agents in connection with this Agreement and the\ntransactions contemplated hereby is merely incidental to the Investor's purchase\nof the  Securities.  The Company  further  represents  to the Investor  that the\nCompany's  decision to enter into this  Agreement  has been based  solely on the\nindependent  evaluation  of the  Company  and its  representatives.  The Company\nfurther,  acknowledges and agrees that the Investor has made no  representations\nor  promises  to the  Company  other than as set forth  herein or in the Company\nDocuments.\n\n     3. Representations, Warranties, and Covenants of the Investor. The Investor\nhereby represents and warrants to the Company as follows:\n\n          3.1 Organization. The Investor is, and as of the Closing will be, duly\norganized,  validly  existing  and  in  good  standing  under  the  laws  of its\njurisdiction of organization.\n\n          3.2 Authorization.  The Investor has, and as of the Closing will have,\nall  requisite  power  and  authority  to  execute,  deliver  and  perform  this\nAgreement, the Stockholders' Agreement and the Registration Rights Agreement and\nto consummate the transactions of the Investor\n\n\n                                       12\n\n\n\n\n\ncontemplated hereby and thereby. The execution, delivery and performance of this\nAgreement,  the Stockholders'  Agreement and the Registration  Rights Agreement,\nand the consummation by the Investor of the transactions contemplated hereby and\nthereby,  have been duly and validly  authorized by all necessary  action on the\npart of the  Investor.  This  Agreement,  the  Stockholders'  Agreement  and the\nRegistration  Rights  Agreement  have been duly  executed  and  delivered by the\nInvestor and constitutes its legal,  valid and binding  obligation,  enforceable\nagainst the Investor in accordance with its terms,  except as the enforceability\nthereof may be limited by bankruptcy, insolvency or other similar laws affecting\nthe  enforceability of creditors' rights in general or by general  principles of\nequity.\n\n          3.3 Offering Exemption.  The Investor  understands that the Securities\nof the Company being  purchased  hereunder  have not been  registered  under the\nSecurities  Act, nor qualified under any foreign or state  securities  laws, and\nthat  they are  being  offered  and sold  pursuant  to an  exemption  from  such\nregistration and qualification  based in part upon the  representations  of such\nInvestor contained herein.\n\n          3.4 Knowledge and  Experience;  Ability to Bear  Economic  Risks.  The\nInvestor has such  knowledge and  experience  in financial and business  matters\nsuch that it is capable  of  evaluating  the merits and risks of the  investment\ncontemplated  by this  Agreement  and the  Investor is able to bear the economic\nrisk  of its  investment  in the  Company  (including  a  complete  loss  of its\ninvestment). The Investor is an 'accredited investor' as that term is defined in\nRegulation D promulgated  under the Securities  Act.  During  negotiation of the\ntransactions  contemplated herein, the Investor and its representative have been\nafforded full and free access to corporate books, financial statements, records,\ncontracts,  documents and other information concerning the Company and have been\nafforded  the  opportunity  to ask  questions  of  the  Company's  officers  and\ndirectors  concerning the Company's business,  operations,  financial condition,\nassets and liabilities and other relevant  matters as they have deemed necessary\nor desirable  and the Investor  believes that it has been provided with all such\ninformation  as has been  requested.  The foregoing does not limit or modify the\nrepresentations  or  warranties  made by the  Company in Article 2 hereof or the\nright of the Investor to rely thereon.\n\n          3.5 Limitations on Disposition.  The Investor understands that it must\nbear the economic  risk of this  investment  indefinitely  unless the  Company's\nSecurities  are  registered  pursuant to the Securities Act or an exemption from\nsuch registration is available, and unless the disposition of such Securities is\nqualified under applicable state or foreign securities laws or an exemption from\nsuch qualification is available,  and that, except as provided in this Agreement\nor the Registration  Rights Agreement,  the Company has no obligation or present\nintention of so registering the Securities.\n\n          3.6 No Intended  Resale.  The Investor is acquiring the  Securities of\nthe Company purchased  hereunder for its own account for investment and not with\na view  towards  the  resale,  transfer or  distribution  thereof,  nor with any\npresent intention of distributing such Securities,  in each case in violation of\nthe Securities  Act. The Investor has not agreed to give any Person any interest\nor right in the  Securities.  The  Securities are being acquired by the Investor\nfor investment for its own\n\n\n                                       13\n\n\n\n\n\naccount and not with a view to the resale or  distribution  thereof in violation\nof applicable securities laws.\n\n          3.7 Legends.\n\n               (a) The Investor understands that the certificates evidencing the\nSecurities will bear the following legends:\n\n          'THE SECURITIES  REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE\n          SECURITIES  ACT OF 1933,  AS AMENDED (THE  'SECURITIES  ACT'),  OR ANY\n          STATE SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST THEREIN\n          MAY BE OFFERED,  SOLD OR OTHERWISE  TRANSFERRED IN THE ABSENCE OF SUCH\n          REGISTRATION   OR  AN  APPLICABLE   EXEMPTION   THEREFORM  UNDER  SUCH\n          SECURITIES ACT OR SUCH LAWS AND THE RULES AND REGULATIONS  THEREUNDER.\n          THE HOLDER OF THIS SECURITY  AGREES FOR THE BENEFIT OF THE ISSUER THAT\n          (A)  THIS  SECURITY  MAY  BE  OFFERED,   SOLD,  PLEDGED  OR  OTHERWISE\n          TRANSFERRED ONLY PURSUANT TO AN EXEMPTION FROM REGISTRATION  UNDER THE\n          SECURITIES  ACT OR PURSUANT  TO AN  EFFECTIVE  REGISTRATION  STATEMENT\n          UNDER  THE  SECURITIES  ACT IN  EACH  CASE,  IN  ACCORDANCE  WITH  ANY\n          APPLICABLE  SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B)\n          THE HOLDER  WILL,  AND EACH  SUBSEQUENT  HOLDER IS  REQUIRED  TO, BOTH\n          NOTIFY ANY  PURCHASER  OF THIS  SECURITY  OF THE  RESALE  RESTRICTIONS\n          REFERRED  TO IN (A) ABOVE AND  DELIVER  TO THE  ISSUER AN  OPINION  OF\n          COUNSEL  STATING  THAT  ANY  PURPORTED  TRANSFER  IS VALID  UNDER  THE\n          SECURITIES ACT.\n\n          TRANSFER  OF  THE  SECURITIES   REPRESENTED  BY  THIS  CERTIFICATE  IS\n          RESTRICTED BY A  STOCKHOLDERS'  AGREEMENT,  DATED DECEMBER 29, 1998, A\n          COPY OF  WHICH  IS ON  FILE  AT THE  OFFICE  OF THE  CORPORATION.  ANY\n          PURPORTED TRANSFER IN VIOLATION OF THIS AGREEMENT IS VOID AND WILL NOT\n          BE RECOGNIZED BY THE CORPORATION OR ITS TRANSFER AGENT.'\n\n               (b) The Securities  shall not be required to bear such legends if\nan opinion of counsel reasonably satisfactory to the Company is delivered to the\nCompany to the effect that neither the legends nor the  restrictions on transfer\ncontained  in this  Agreement  are required to insure  compliance  with the Act.\nWhenever,  pursuant to the preceding  sentence,  any  certificate for any of the\nSecurities is no longer required to bear the foregoing legend,  the Company may,\nand if  requested  by the holder  thereof,  shall,  issue to the holder,  at the\nCompany's expense, a new certificate not bearing the foregoing legends.\n\n\n\n                                       14\n\n\n\n\n\n          3.8 Public  Announcements.  Except as otherwise  required by law or by\nthe  applicable  rules of (or any  agreement of the parties or their  affiliates\nwith) the SEC,  any stock  exchange or the Nasdaq  Stock  Market,  the  Investor\nagrees  that  there  will prior to the  Closing  be no press  releases  or other\nstatements  with  respect to this  Agreement  or the  transactions  contemplated\nhereby and that they will receive the consent of the Company  before issuing any\npress  release or  otherwise  making any public  statement  with respect to this\nAgreement and the transactions contemplated hereby.\n\n\n     4. Conditions of Investor's  Obligations at Closing.  The obligation of the\nInvestor to purchase the Securities at the Closing is subject to the fulfillment\nto the  Investor's  satisfaction,  in its  sole  discretion,  prior to or at the\nClosing,  of each of the  following  conditions  (each of which may be waived in\nwhole or in part by the Investor in its sole discretion):\n\n          4.1  Representations  and Warranties.  Each of the representations and\nwarranties  made by the Company in this  Agreement  shall be true and correct in\nall  material  respects  on and as of the date of the  Closing  as  though  such\nrepresentation  or warranty was made on and as of the date of the  Closing,  and\nany representation or warranty made as of a specified date earlier than the date\nof the Closing shall also have been true and correct in all material respects on\nand as of such earlier date.\n\n          4.2  Performance.  The Company shall have  performed and complied with\nall  agreements,  covenants,  and conditions  required by this Agreement and the\nother  Company  Documents to be performed or complied  with by it prior to or at\nthe Closing.\n\n          4.3 Stock  Certificates,  the Note,  Etc. At the Closing,  the Company\nshall have tendered to the Investor (i) certificates representing the Shares, in\ngenuine and  unaltered  form,  duly  endorsed  in blank,  with  requisite  stock\ntransfer tax stamps,  if any,  attached in accordance  with Sections 1.1 and 1.3\nhereof,  in form and substance  satisfactory  to such Investor and sufficient to\ntransfer to and vest in such Investor  good and valid title to the Shares,  free\nand clear of any Lien and (ii) the Note,  in genuine and  unaltered  form,  duly\nexecuted, in form and substance satisfactory to the Investor.\n\n          4.4 No Material  Adverse  Change.  There shall not have  occurred  any\nmaterial adverse change in the condition of the Company or the Business.\n\n          4.5 Consents. The Company shall have obtained all consents,  approvals\nor waivers from Governmental  Authorities and third Persons (including,  without\nlimitation,  those  with  respect  to  Scheduled  Contracts)  necessary  for the\nexecution,  delivery and  performance  of this  Agreement  and the other Company\nDocuments and the transactions  contemplated  hereby and thereby,  each of which\nshall be in full force and effect,  in form and substance  satisfactory  to each\nInvestor and shall not impose any  limitations or  restrictions on any Investor.\nWithout limiting the generality of the foregoing, each of the Company's existing\nshareholders shall have waived any\n\n\n                                       15\n\n\n\n\n\npreemptive  right,  right  of  first  offer  and any  similar  rights  any  such\nshareholder may have to purchase any of the Securities.\n\n          4.6 No  Litigation.  There  shall not be any  Action of or before  any\nGovernmental  Authority or other Person  pending or  threatened  with respect to\nthis Agreement,  the other Company  Documents or the  transactions  contemplated\nhereby or thereby or which might  materially  adversely  affect the condition of\nthe Company or which could  reasonably  be  expected  to  otherwise  result in a\nmaterial  diminution of the benefits of the  transactions  contemplated  by this\nAgreement or any of the Related  Agreements (as defined in Section 4.10) to such\nInvestor.\n\n          4.7   Compliance   Certificate.   The  Investor  shall  have  received\ncertificates  dated as of the day of the Closing executed by the Chief Executive\nOfficer of the Company certifying that the conditions specified in Sections 4.1,\n4.2, 4.4 through 4.6, and 4.8 have been fulfilled.\n\n          4.8  Directors.  Those  persons  listed  on  Schedule  2 hereto  on or\nimmediately following the Closing shall constitute the entire Board of Directors\nof the Company.\n\n          4.9 Related Agreements.  The Company Documents and the Non-Competition\nAgreements (collectively, the 'Related Agreements') shall have been executed and\ndelivered by each of the parties thereto and shall be in full force and effect.\n\n          4.10 Proceedings and Documents. All proceedings in connection with the\ntransactions  contemplated hereby and all documents and instruments  incident to\nsuch  transactions  shall be  satisfactory in substance and form to the Investor\nand its counsel,  and the  Investor  shall have  received  all such  counterpart\noriginals or  certified  or other  copies of such  documents as the Investor may\nreasonably request.\n\n          4.11 Secretary's Certificate.  The Company shall have delivered to the\nInvestor a certificate of the Secretary of the Company  certifying as to (i) the\nCertificate  of  Incorporation,  Series B Certificate  of  Designations  and the\nBy-Laws of the Company as in effect as of the Closing;  (ii) the  resolutions of\nthe Board of Directors  and, to the extent  required,  the  shareholders  of the\nCompany,   authorizing  and  approving  all  matters  in  connection  with  this\nAgreement,  the  Registration  Rights  Agreement,  the Series B  Certificate  of\nDesignations and the Stockholders' Agreement, and the transactions  contemplated\nhereby and  thereby;  (iii) the duly  elected  officers  of the  Company and the\nincumbency  of such  officers,  and  attaching  a  certificate  as to the  legal\nexistence and good  standing of the Company  issued by the Secretary of State of\nthe State of Delaware;  and (iv) a  certificate  from the  Secretary of State or\nother  appropriate  official  in each  jurisdiction  in  which  the  Company  is\nqualified  or  admitted  to do  business  to the effect that the Company is duly\nqualified or admitted and in good standing in such jurisdiction.\n\n          4.12  Qualification  of Securities.  The Company shall have caused the\nSecurities to be registered or qualified under  applicable blue sky laws of such\njurisdictions  in the United  States as shall be  reasonably  required to comply\nwith  all  applicable  laws in  connection  with the  transactions  contemplated\nhereby.\n\n\n                                       16\n\n\n\n\n\n          4.13  Filing of Series B  Certificate  of  Designations.  The Series B\nCertificate  of  Designations  shall have been filed  with and  accepted  by the\nSecretary of State of the State of Delaware.\n\n          4.14  Payment of Investor  Expenses.  The Company  shall have paid the\nexpenses of the Investor in accordance with Section 7.1 hereof.\n\n          4.15 Technology License Agreement. The Company shall have executed and\ndelivered a Technology  License Agreement in the form attached hereto as Exhibit\nM.\n\n          If at the  Closing  the Company  fails to tender to the  Investor  the\ndocuments specified herein which are required to be delivered to the Investor at\nthe Closing or if at the Closing any of the conditions specified in this Section\n4 shall not have been  fulfilled to the  Investor's  satisfaction,  the Investor\nshall,  at its  election,  be  relieved of all  further  obligations  under this\nAgreement except those set forth in Section 3.8.\n\n\n     5. Conditions of the Company's  Obligations at Closing.  The obligations of\nthe Company to the Investor under this Agreement are subject to the fulfillment,\nprior to or at the Closing, of each of the following  conditions,  each of which\nmay be waived in whole or in part by the Company in its sole discretion:\n\n          5.1 Representations and Warranties. The representations and warranties\nof the  Investor  contained in this  Agreement  shall be true and correct in all\nmaterial  respects  on and as of the date of the Closing as if made on and as of\nsuch date.\n\n          5.2 Payment of Purchase  Price.  The Investor  shall have delivered to\nthe Company the purchase price specified in Section 1.1 hereof.\n\n          5.3 No  Litigation.  There  shall not be any  Action of or before  any\nGovernmental  Authority or other Person  pending or  threatened  with respect to\nthis Agreement or the transactions contemplated hereby.\n\n          5.4 Proceedings and Documents.  All proceedings in connection with the\ntransactions  contemplated hereby and all documents and instruments  incident to\nsuch transactions shall be reasonably  satisfactory in substance and form to the\nCompany  and  its  counsel,  and  the  Company  shall  have  received  all  such\ncounterpart  originals or certified or other copies of such  documents as it may\nreasonably request.\n\n          5.5 Consents. The Company shall have obtained all consents,  approvals\nor waivers from Governmental  Authorities and third Persons (including,  without\nlimitation,  those  with  respect  to  Scheduled  Contracts)  necessary  for the\nexecution,  delivery and  performance  of this  Agreement  and the other Company\nDocuments and the transactions  contemplated  hereby and thereby,  each of which\nshall be in full force and effect, in form and substance satisfactory to each\n\n\n                                       17\n\n\n\n\n\nInvestor and shall not impose any  limitations or  restrictions on any Investor.\nWithout limiting the generality of the foregoing, each of the Company's existing\nshareholders  shall have waived any preemptive  right,  right of first offer and\nany  similar  rights  any  such  shareholder  may  have to  purchase  any of the\nSecurities.\n\n          5.6 Related Agreements.  The Company Documents and the Non-Competition\nAgreements (collectively, the 'Related Agreements') shall have been executed and\ndelivered by each of the parties thereto and shall be in full force and effect.\n\n          5.7 Proceedings and Documents.  All proceedings in connection with the\ntransactions  contemplated hereby and all documents and instruments  incident to\nsuch  transactions  shall be  satisfactory in substance and form to the Investor\nand its counsel,  and the  Investor  shall have  received  all such  counterpart\noriginals or  certified  or other  copies of such  documents as the Investor may\nreasonably request.\n\n          5.8  Qualification  of  Securities.  The Company shall have caused the\nSecurities to be registered or qualified under  applicable blue sky laws of such\njurisdictions  in the United  States as shall be  reasonably  required to comply\nwith  all  applicable  laws in  connection  with the  transactions  contemplated\nhereby.\n\n          5.9  Filing of Series B  Certificate  of  Designations.  The  Series B\nCertificate  of  Designations  shall have been filed  with and  accepted  by the\nSecretary of State of the State of Delaware.\n\n          5.10 Technology License Agreement. The Company shall have executed and\ndelivered a Technology  License Agreement in the form attached hereto as Exhibit\nM.\n\n          If at the  Closing  the  Investor  fails to tender to the  Company the\npayment or documents  specified herein which are required to be delivered to the\nCompany  at  the  Closing  by  the  Investor  or if at  the  Closing  any of the\nconditions  with  respect to an Investor  specified  in this Section 5 shall not\nhave been fulfilled to the Company's  satisfaction,  provided the Company is not\nin breach  hereunder,  the Company  shall,  at its election,  be relieved of all\nfurther obligations to such Investor under this Agreement.\n\n     6. Certain Covenants.\n\n          6.1  Use of  Proceeds  From  Investment.  The  Company  shall  use the\nproceeds from the sale of the Shares to eliminate the obligations of the Company\nset forth on  Exhibit K attached  hereto and for  working  capital  and  general\npurposes.\n\n          6.2 Financial and Business Information.\n\n               (a) Monthly and Quarterly  Statements.  The Company shall deliver\nto the Investor,  as soon as practicable,  and in any event within 30 days after\nthe close of each month of\n\n\n                                       18\n\n\n\n\n\neach fiscal year of the  Company in the case of monthly  statements  and 45 days\nafter the close of each of the first three  fiscal  quarters of each fiscal year\nof the Company in the case of quarterly statements,  true and complete copies of\nthe  consolidated  balance sheets,  and the related  consolidated  statements of\nincome,  stockholders' equity and cash flows of the Company (which, for purposes\nof this  Article 6, shall  include  all  affiliates  controlled  by the  Company\ndirectly or indirectly  through one or more  intermediaries  including,  without\nlimitation,   any  Person  in  which  the  Company,   directly  or   indirectly,\nbeneficially  owns more than fifty percent  (50%) of either the equity  interest\nin, or the voting  control of such Persons,  whether or not existing on the date\nhereof) as at the close of such month or quarter  and  covering  operations  for\nsuch  month or  quarter,  as the case may be, and the  portion of the  Company's\nfiscal year ending on the last day of such month or  quarter,  setting  forth in\neach case in  comparative  form the  figures  for the  comparable  period of the\nprevious fiscal year and accompanied by a narrative description of the Company's\nbusiness and results of operations for such month or quarter. All such financial\nstatements shall be prepared in accordance with GAAP (except for the omission of\nnormal  year-end  adjustments  and footnote  disclosures)  consistently  applied\nthroughout  the  periods  involved,  shall be true and  correct in all  material\nrespects and shall fairly present the financial  condition,  income,  changes in\nstockholders'  equity and cash flow of the Company on a consolidated  basis,  as\napplicable,  as of the respective  dates thereof and for the respective  periods\ncovered thereby.  Each financial  statement delivered by the Company pursuant to\nthis Section 6.1(a) shall be certified by the Company's chief executive officer,\npresident, treasurer or chief financial officer.\n\n               (b) Annual Statements. The Company shall deliver to the Investor,\nas soon as practicable after the end of each fiscal year of the Company,  and in\nany  event  within  90  days  thereafter,   true  and  complete  copies  of  the\nconsolidated and consolidating  balance sheets of the Company at the end of such\nyear and the consolidated and consolidating statements of income,  stockholders'\nequity and cash flows of the Company for such year,  setting  forth in each case\nin comparative  form the figures for the previous fiscal year, all in reasonable\ndetail and accompanied by an opinion thereon of a firm of independent  certified\npublic  accountants of recognized  national standing selected by the Company and\nreasonably  acceptable  to the  Investor,  which  opinion  shall state that such\nfinancial statements fairly present the financial condition,  income, changes in\nstockholders'  equity and cash flow of the Company on a consolidated  basis,  as\napplicable,  and  have  been  prepared  in  accordance  with  GAAP  and that the\nexamination of such accountants in connection with such financial statements has\nbeen  made  in  accordance  with  generally  accepted  auditing  standards,  and\naccordingly  included  such  tests of the  accounting  records  and  such  other\nauditing  procedures as were  considered  necessary in the  circumstances.  Each\nfinancial  statement  delivered by the Company  pursuant to this Section  6.1(b)\nshall  be  certified  by  the  Company's  chief  executive  officer,  president,\ntreasurer or chief financial officer.\n\n               (c) Certificate of No Default.  Simultaneously  with the delivery\nof the Financial  Statements  referred to in Section 6.1(a) and (b), the Company\nshall deliver to the Investor a certificate of the Company's Chief Executive and\nChief Financial Officer certifying that no default,  misrepresentation or breach\nor event  which  with  notice or lapse of time or both  would  become a default,\nmisrepresentation  or breach  under any  Scheduled  Contract  or other  material\nContract,\n\n\n                                       19\n\n\n\n\n\nincluding without  limitation under this Agreement or any Company Document,  has\noccurred or is  continuing or if any such event has occurred and is continuing a\nfull description thereof.\n\n               (d) Audit  Reports.  The Company  shall  deliver to the Investor,\npromptly  upon  receipt  thereof,  one copy of each other  financial  report and\ninternal control letter  submitted to the Company by independent  accountants in\nconnection  with any annual,  interim or special audit made by them of the books\nof the Company, as well as any responses of the Company thereto.\n\n               (e) Other  Reports.  The Company  shall  deliver to the Investor,\npromptly upon their becoming  available,  one copy of each financial  statement,\nreport, notice or proxy statement sent by the Company to stockholders generally,\nof each  financial  statement,  report,  notice or proxy  statement  sent by the\nCompany to the SEC or any successor  agency,  if applicable,  of each regular or\nperiodic  report  and  any   registration   statement,   prospectus  or  written\ncommunication  (other than transmittal  letters) in respect thereof filed by the\nCompany  with,  or received by such Person in  connection  therewith  from,  any\nsecurities  exchange or the SEC or any  successor  agency,  of any press release\nissued by the Company,  and of any material of any nature whatsoever prepared by\nthe SEC or any successor  agency thereto or any state blue sky or securities law\ncommission which relates to or affects in any way the Company or the Business.\n\n               (f)  Requested  Information.  The Company  shall  deliver to each\nInvestor,  with reasonable promptness,  such other documents,  reports, data and\ninformation as from time to time may be reasonably requested by the Investor.\n\n               (g) Access. The Company shall permit  representatives  designated\nby  the  Investor,  upon  reasonable  prior  notice  to the  Company  and at the\nInvestor's  expense, to visit and inspect each of the Company's  properties,  to\nexamine  their  respective  corporate  and  financial  records  (and make copies\nthereof or extracts  therefrom),  to discuss their respective affairs,  finances\nand  accounts  with  the  Company's  directors,   officers,  key  employees  and\naccountants, all at such reasonable times as may be requested by the Investor.\n\n               (h) Other  Information.  The Company shall provide,  from time to\ntime,  such  additional  information  regarding  the  Company  as  any  Investor\nreasonably may request, including without limitation, any information or reports\nrequired  by  reason  of  reporting  or  regulatory  requirements  to which  the\nInvestor, or any Person having an interest in the Investor is subject.\n\n          6.3 Exemption from  Investment  Company Act. The Company shall conduct\nits business so that the Company shall not become an 'investment company' within\nthe meaning of the Investment Company Act of 1940, as amended.\n\n          6.4 Accounting and Reserves. The Company shall maintain a standard and\nuniform  system of  accounting  and shall  keep  proper  books and  records  and\naccounts  in  which  full,  true  and  correct  entries  shall  be  made  of its\ntransactions,  all in accordance with generally accepted  accounting  principles\napplied on a consistent  basis through all periods,  and shall set aside on such\nbooks  for  each  fiscal  year  all  such  proper  reserves  for   depreciation,\nobsolescence, amortization, bad\n\n\n                                       20\n\n\n\n\n\ndebts and other  purposes in connection  with its  operations as are required by\nsuch principles so applied.\n\n          6.5  Confidentiality.  Each of the Company and the Investor  agrees to\nmaintain,  and  to  cause  its  agents  and  representatives  to  maintain,  the\nconfidentiality  of the terms and  conditions of this  Agreement and the Related\nAgreements (as defined in 4.9) and all documents or information  executed and\/or\ndelivered in connection with the transactions contemplated by this Agreement and\nthe Related  Agreements  (whether furnished before, on or after the date hereof)\nand to use such  information  and documents only in connection  with  evaluating\nand\/or monitoring the transaction  contemplated  hereby.  The provisions of this\nsubsection  shall not apply to information or to particular  conditions or terms\nof the  above  referenced  documents  (i) if the  party  seeking  to  make  such\ndisclosure  shall have obtained the prior written  consent of the other party to\nthe disclosure of such information,  conditions or terms, (ii) that are required\nto be disclosed during the course of any litigation or arbitration  which may be\nbrought by either party related to the provisions of any of the above referenced\ndocuments, (iii) that are or become generally available to the public other than\nas a result of actions taken by the party seeking to make such disclosure or its\nagents and  representatives,  (iv) that are required to be disclosed pursuant to\nand in  accordance  with any law,  rule or  regulation  applicable  to the party\nseeking to make such  disclosure,  or (v) that are  disclosed  to the  Company's\ndirectors,  officers, employees and agents, and representatives of the Company's\nadvisors  who need to know the  information  for the  purpose  of  evaluating  a\npossible transaction and who agree to keep the information confidential.\n\n          Notwithstanding the foregoing, if a party is requested or required (by\noral questions, interrogatories,  requests for information or document subpoena,\ncivil  investigative   demand  or  similar  process)  to  disclose  any  of  the\nabove-referenced  information or documents,  such party will promptly notify the\nother  party of such  request so that such other  party may seek an  appropriate\nprotective  order or waive  compliance  with the provisions  hereof.  If, in the\nabsence of a protective order or the receipt of a waiver  hereunder,  a party is\nnonetheless,  in the opinion of its counsel,  compelled to disclose any terms or\nconditions of the  above-references  information or documents to any tribunal or\nelse stand liable for contempt or suffer  other  censure or penalty,  such party\nmay disclose such information to such tribunal without liability hereunder.\n\n          The obligations in this Section 6.5 shall survive  termination of this\nAgreement.\n\n          6.6 Ordinary  Course  Obligations.  As long as any Series B Shares are\noutstanding, the Company agrees to:\n\n               (a)  Promptly  pay  and  discharge,  or  cause  to  be  paid  and\ndischarged when due and payable, all lawful taxes, assessments, and governmental\ncharges or levies imposed upon the income, profits,  property or Business of the\nCompany; provided,  however, that any such tax, assessment,  charge or levy need\nnot be paid if the validity  thereof shall  currently be contested in good faith\nby appropriate  proceedings and if the Company shall have set aside on its books\nadequate  reserves with respect thereof and provided  further,  that the Company\nwill pay all such  taxes,  assessments,  charges  or levies  forthwith  upon the\ncommencement of proceedings to foreclose any\n\n\n                                       21\n\n\n\n\n\nLien that may have attached as security therefor.  The Company will promptly pay\nor cause to be paid when due, or in conformance  with customary trade terms, all\nother Indebtedness, defined earlier, incident to the operations of the Company;\n\n               (b)  Keep  its  properties  in good  repair,  working  order  and\ncondition,  reasonable  wear and tear  excepted,  and from time to time make all\nneedful  and  proper  repairs,   renewals,   replacements,   and  additions  and\nimprovements  thereto;  and  the  Company  will at all  times  comply  with  the\nprovisions  of all material  leases and Scheduled  Contracts and other  material\nContracts  to which any of them is a party or under  which any of them  occupies\nproperty so as to prevent any loss or forfeiture thereof or thereunder;\n\n               (c)  Duly  observe  and  conform  to all  valid  requirements  of\ngovernmental  authorities  Governmental  Authorities  relating to the conduct of\ntheir business or to their property or assets;\n\n               (d)  Maintain in full force and effect its  corporate  existence,\nrights  and  franchises  and all  licenses  and  other  rights  to use  patents,\nprocesses,  licenses,  trademarks, trade names, or copyrights owned or possessed\nby it and deemed by the Company to be  necessary  material to the conduct of the\nBusiness;\n\n               (e) Cause each  employee,  officer or  consultant to enter into a\nNon-Disclosure and Developments Agreement;\n\n               (f) Keep true  records and books of accounts in which full,  true\nand correct  entries will be made of all dealings or transactions in relation to\nthe  Business  and affairs in  accordance  with  generally  accepted  accounting\nprinciples applied on a consistent basis.\n\n          6.7 Taxes Relating to this  Agreement.  The Company will pay all Taxes\n(other  than  Federal,  State or local  income  taxes)  which may be  payable in\nconnection  with the execution and delivery of this Agreement or the issuance of\nthe Securities and the initial sale of the Securities hereunder or in connection\nwith any  modification  of the  Securities  and will save the Investor  harmless\nwithout  limitation as to time against any and all  liabilities  with respect to\nall such Taxes.  The  obligations  of the  Company  under this  paragraph  shall\nsurvive any  redemption,  repurchase or acquisition of Securities by the Company\nand the termination of this Agreement.\n\n          6.8  Replacement  of  Instruments.  Upon  receipt  by the  Company  of\nevidence reasonably  satisfactory to it of the ownership of and the loss, theft,\ndestruction or mutilation of any certificate or instrument evidencing any of the\nSecurities,  and (a) in the case of loss,  theft or  destruction,  of  indemnity\nreasonably  satisfactory  to it (provided  that,  if the owner of the same is an\ninstitutional  investor,  its own  agreement of indemnity  shall be deemed to be\nsatisfactory), or (b) in the case of mutilation, upon surrender and cancellation\nthereof,  the Company,  at its expense,  will execute,  register and deliver, in\nlieu thereof, a new certificate or instrument for an equal number of Securities.\n\n\n\n                                       22\n\n\n\n\n\n          6.9 Corporate Existence; Approvals. The Company shall cause to be done\nall things necessary to preserve and keep in full force and effect the corporate\nexistence  of the  Company  and all  necessary  approvals  and  licenses  of any\nGovernmental  Authority  and comply with all Laws  applicable to the Company and\ncomply with all  agreements  to which the Company is a party,  the  violation of\nwhich could reasonably be expected to result in a material adverse change in the\nBusiness or condition of the Company.\n\n          6.10 Taxes.  The Company  shall  cause to be paid and  discharged  all\nobligations  when due and all Taxes  imposed upon the Company or upon its assets\nand properties or upon any part thereof, before the same shall become in default\nand before  late or default  charges  accrue,  as well as all lawful  claims for\nlabor,  materials and supplies which,  if unpaid,  might become a Lien upon such\nproperty or any part thereof,  provided,  however, that the Company shall not be\nrequired to cause to be paid and discharged any such obligation, Tax or claim so\nlong as the validity  thereof  shall be  contested in good faith by  appropriate\nproceedings and the Company shall set aside on its books adequate  reserves,  in\naccordance with GAAP, with respect to such obligation, Tax or claim so contested\nand provides that the applicable  property is not at risk of being  forfeited or\nforeclosed.\n\n          6.11  Insurance.  The Company  shall keep  adequately  insured by duly\nlicensed  insurers all assets and  properties of the Company,  and also keep the\nCompany  adequately  insured at all times with  responsible  insurance  carriers\nagainst  liability  on account of damage to  persons or  property  and under all\napplicable  workers'  compensation  laws.  All such  insurance  shall be in such\namounts and with such coverage as is consistent with coverage usually carried by\ncorporations of a similar size engaged in the same or similar business similarly\nsituated and as is satisfactory to each Investor.\n\n          6.12 Notice of Certain  Events.  The Company shall promptly notify the\nInvestor in writing of the commencement of any action or proceeding to which the\nCompany is a party  where the  amount in  controversy  is in excess of  $50,000,\nsingularly or cumulatively,  for all claims arising from a single  incident,  to\nwhich the Company may be a party and (ii) of any default under any  Indebtedness\nwith a principal  amount of at least $50,000 or event or condition  which,  with\nnotice or lapse of time or both,  would constitute such a Default under any such\nIndebtedness,  specifying  the nature and extent thereof and the action (if any)\nwhich is proposed to be taken with respect thereto.\n\n          6.13  Maintenance  of  Properties.  The  Company  shall  maintain  and\npreserve all of the assets and properties of the Company  necessary or useful in\nthe proper conduct of its business in good working order and condition, ordinary\nwear and tear excepted.\n\n          6.14 Director and Officer Insurance.  The Company shall keep in effect\nall provisions in its  certificate of  incorporation  and by-laws  providing for\nexculpation of director and officer liability and  indemnification  of directors\nand officers of the Company to the fullest extent  permitted by applicable  Law,\nwhich  provisions  shall not be amended  except as required by applicable law or\nexcept as approved by the Board of Directors  of the Company.  At all times that\nthe  Stockholders'  Agreement  is in  effect,  the  Company  shall  cause  to be\nmaintained director's and\n\n\n                                       23\n\n\n\n\n\nofficer's liability insurance covering the directors and officers of the Company\non terms substantially no less advantageous to the directors and officers of the\nCompany than such insurance in effect on the date hereof.\n\n          6.15 Further  Assurances.  The Company shall take such further actions\nand  otherwise  assist and  cooperate  with the  Investor  required  to make any\nfilings or obtain any approvals with or from any Governmental Authority.\n\n          6.16  Non-Disclosure  and Developments  Agreements.  The Company shall\ncause each of its employees and  consultants  to enter into  Non-Disclosure  and\nDevelopments  Agreement  in the form  attached  hereto as  Exhibit  I, and shall\ncondition the  participation of any employee or consultant in the Incentive Plan\non such employee's or consultant's execution of such agreement.\n\n\n     7. Miscellaneous.\n\n          7.1 Expenses.  The Company shall pay all stamp,  documentary and other\ntaxes  which may be payable  in  connection  with the  execution,  delivery  and\nperformance of this Agreement,  and the purchase and sale of the Securities.  In\naddition, at the Closing, the Company shall pay up to $50,000 towards reasonable\nout-of-pocket fees and expenses incurred by the Investor in connection with this\nAgreement  and  the  transactions   contemplated   hereby   including,   without\nlimitation,  the  reasonable  fees and  expenses  of counsel  for the  Investor,\nincluding any legal fees and expenses relating to any future waiver,  consent or\namendment  (whether  or not any such  future  action  is given or  consummated).\nFurther, at the Closing,  the Company shall pay up to $30,000 towards reasonable\nout-of-pocket  fees and expenses of Brobeck,  Phleger &amp; Harrison LLP, counsel to\nthe Founders. Upon the surrender by any Investor of any certificate for Series B\nShares or  Conversion  Shares to the Company or a transfer  agent of the Company\nfor exchange for  instruments  of other  denominations  or registered in another\nname or names, the Company will cause such new instruments to be issued and will\npay the cost of delivering to or from the office of such Investor from or to the\nCompany or its transfer agent, duly insured, the surrendered  instrument and any\nnew  instruments  issued in  substitution  or  replacement  for the  surrendered\ninstrument.\n\n          7.2 Indemnification.  The Company agrees to indemnify the Investor and\neach officer, director,  employee, agent, partner,  shareholder and Affiliate of\nthe  Investor  (collectively,  the  'Indemnified  Parties')  for,  and hold each\nIndemnified Party harmless from and against,  any and all damages,  fines, fees,\npenalties,   diminution   of   value,   deficiencies,   losses   and   expenses,\n(collectively,  'Losses') including,  without limitation,  interest,  reasonable\nexpenses  of  investigation,  court  costs,  reasonable  fees  and  expenses  of\nattorneys,  accountants  and other  experts or other  expenses of  litigation or\nother proceedings or of any claim, default or assessment (such fees and expenses\nto include without limitation,  all fees and expenses of attorneys,  incurred in\nconnection with (i) the investigation or defense of any claims by any Person who\nis not party to this  Agreement (a 'Third Party') or (ii) asserting or disputing\nany rights under this Agreement  against any party hereto or otherwise)  arising\nout of or suffered or incurred in connection with any of the following,  whether\ninvolving a claim by a Person that is a party hereto or a Third  Party:  (a) any\nmisrepresentation or any\n\n\n                                       24\n\n\n\n\n\nbreach of any warranty made by the Company herein or in any of the other Company\nDocuments,  (b) any breach or  non-fulfillment of any covenant or agreement made\nby the Company herein or in any of the other Company  Documents,  (c) the status\nof the  Investor  as a holder of  securities  of the  Company,  or (d) any claim\nrelating  to or  arising  out of a  violation  of  applicable  federal  or state\nsecurities  laws by the Company in  connection  with the sale or issuance of the\nSecurities by the Company to the Investor.\n\n          7.3 Right to Rely.  Notwithstanding any right of the Investor (whether\nor not exercised) to investigate  the affairs of the Company or any right of any\nparty  (whether  or  not   exercised)  to   investigate   the  accuracy  of  the\nrepresentations and warranties of the other party contained in this Agreement or\nthe waiver of any condition to Closing,  the Company,  on the one hand,  and the\nInvestor,  on the other, have the right to rely fully upon the  representations,\nwarranties, covenants and agreements of the other contained in this Agreement.\n\n          7.4  Survival.   All   representations,   warranties,   covenants  and\nagreements  contained in or made pursuant to this  Agreement or contained in any\ncertificate delivered pursuant to this Agreement,  shall remain operative and in\nfull force and effect,  regardless of any investigation  made by or on behalf of\nany party hereto,  and shall survive the transfer and payment for the Securities\nand the consummation of the transactions contemplated hereby.\n\n          7.5 Successors and Assigns.  This Agreement shall inure to the benefit\nof and be binding upon the successors and assigns of each of the parties hereto.\n\n          7.6 Entire  Agreement;  Amendment and Waiver.  This  Agreement and the\ndocuments  referred  to  herein,  including,  without  limitation,  the  Company\nDocuments,  constitute  the  entire  understanding  of the  parties  hereto  and\nsupersedes all prior letters of intent,  agreements or understandings among such\nparties relating to the subject matter hereof.\n\n          7.7 Applicable  Law. The laws of the State of California  shall govern\nthe  interpretation,  validity and  performance of the terms of this  Agreement,\nregardless of the law that might be applied under its principles of conflicts of\nlaw.\n\n          7.8 Notices. All notices and other communications  provided for herein\nshall be dated and in writing and shall be deemed to have been duly given (x) on\nthe  date  of  delivery,  if  delivered  personally  or by  telecopier,  receipt\nconfirmed,  (y)  on  the  second  following  business  day,  if  delivered  by a\nrecognized  overnight courier service,  or (z) seven days after mailing, if sent\nby registered or certified mail, return receipt requested,  postage prepaid,  in\neach case, to the party to whom it is directed at the  following  address (or at\nsuch other  address as any party  hereto  shall  hereafter  specify by notice in\nwriting to the other parties hereto):\n\n\n\n                                       25\n\n\n\n\n\n               (i)  If to the Company, to it at the following address:\n\n                    CardSecure, Inc.\n                    c\/o 24\/7 Media, Inc.\n                    1250 Broadway\n                    27th Floor\n                    New York, New York 10001\n                    Attn: General Counsel\n                    Fax (212) 760-1081\n\n                    With a copy to:\n\n                    CardSecure, Inc.\n                    1035 East Hillsdale Blvd.\n                    Suite 205\n                    Foster City, California 94404\n                    Attn: Chief Executive Officer\n                    (Fax): (650) 358-0683\n\n               (ii) If to the Investor, to it at the following address:\n\n                    24\/7 Media, Inc.\n                    1250 Broadway, 27th Floor\n                    New York, New York 10001\n                    Attention: General Counsel\n                    Fax: (212) 760-1081\n\n                    with a copy to:\n\n                    Proskauer Rose LLP\n                    1585 Broadway\n                    New York, New York 10036-8299\n                    Attention: Ronald R. Papa, Esq.\n                    Fax: (212) 969-2900\n\n\n          7.9 Counsel to Founders.  Each of the parties hereto acknowledges that\nBrobeck,  Phleger &amp; Harrison  LLP has acted as counsel only to Joseph E. Shatara\nand Michael J.  Sculley,  as founders of the Company.  Furthermore,  the Company\nacknowledges that it has been advised by Brobeck, Phleger &amp; Harrison LLP to seek\nseparate  counsel  regarding tax matters,  all matters in which the Founders may\nhave differing  interests  from the Company or the  Investors,  and this Section\n7.9.  The Company  acknowledges  that  Brobeck,  Phleger &amp; Harrison  LLP has not\nprovided any tax advice  regarding the  transaction  contemplated  hereby or any\nother transaction.\n\n\n                                       26\n\n\n\n\n\n\n          7.10  Brokerage.  Each party hereto will  indemnify  and hold harmless\neach Investor and each officer, director,  employee, agent, partner, shareholder\nand Affiliate of each of the  foregoing  against and in respect of any claim for\nbrokerage,  finders' fees or other commissions  relative to this Agreement or to\nthe  transactions   contemplated   hereby,  based  in  any  way  on  agreements,\narrangements or  understandings  made or claimed to have been made by such party\nwith any third party.\n\n          7.11   Severability.   Each  provision  of  this  Agreement  shall  be\ninterpreted  in such manner as to be effective and valid under  applicable  law,\nbut if any provision of this Agreement is held to be prohibited or invalid under\napplicable  law, such provision  will be ineffective  only to the extent of such\nprohibition or invalidity, without invalidating the remainder of this Agreement.\n\n          7.12 Descriptive Headings. The section and other headings contained in\nthis  Agreement are for  convenience  of reference only and shall not affect the\nmeaning or interpretation of this Agreement.\n\n          7.13  Counterparts;  Signatures  by Facsimile.  This  Agreement may be\nexecuted  in two or more  counterparts,  each of  which  when  so  executed  and\ndelivered  shall be deemed to be an original and all of which  together shall be\ndeemed to be considered  one and the same  agreement and shall become  effective\nwhen  counterparts  have been  signed by each party and  delivered  to the other\nparty.  This Agreement,  once executed by a party, may be delivered to the other\nparties hereto by facsimile transmission of a copy of this Agreement bearing the\nsignature of the parties so delivering this Agreement.\n\n          7.14 Further Assurances.  Each party shall do and perform, or cause to\nbe done and performed,  all such further acts and things,  and shall execute and\ndeliver all such other agreements,  certificates,  instruments and documents, as\nthe other  party may  reasonably  request  both  before and after the Closing in\norder to carry out the intent and  accomplish the purposes of this Agreement and\nthe consummation of the transactions contemplated hereby.\n\n          7.15 Knowledge. When used herein, the phrase 'to the knowledge of' any\nPerson,  'to the best  knowledge  of' any  Person,  'known' to any Person or any\nsimilar phrase,  means (i) with respect to any Person who is an individual,  the\nactual knowledge of such Person,  and (ii) with respect to any other Person, the\nactual knowledge of any of the directors,  officers,  members, general partners,\nstockholders  or other similar  Persons in a similar  position or having similar\npowers and duties.\n\n     8. Certain Definitions.\n\n               (a)  'Affiliate'  of a Person  means a Person  that  directly  or\nindirectly,  through one or more intermediaries,  controls, is controlled by, or\nis under common control with, the first mentioned Person.\n\n\n\n                                       27\n\n\n\n\n\n               (b) 'Qualified Public Offering' shall mean a sale of Common Stock\nby the Company that satisfies each of the following conditions:  (i) the sale of\nthe Common Stock is effected in an underwritten  public offering  pursuant to an\neffective  registration  statement under the Securities Act of 1933, as amended,\nother than a registration  relating solely to a transaction under Rule 145 under\nsuch  Act (or any  successor  thereto)  or to an  employee  benefit  plan of the\nCompany;  (ii) such Common  Stock upon  issuance is listed on the New York Stock\nExchange or included for trading in the Nasdaq National Market System; (iii) the\noffering  price to the public is not less than $30.00 per share of Common Stock,\nadjusted for stock splits,  stock dividends,  other stock  combinations or other\nlike events;  and (iv) the sale of Common Stock results in at least  $10,000,000\nof gross proceeds to the Company, or, when considered together with all previous\nunderwritten  public offerings of the Company  satisfying  clauses (i), (ii) and\n(iii) above, at least $20,000,000 of aggregate gross proceeds to the Company.\n\n\n\n\n\n                                       28\n\n\n\n\n\n          IN WITNESS WHEREOF, the parties have executed this Agreement as of the\ndate first above written.\n\n                                                     THE COMPANY:\n                         \n                                    CARDSECURE, INC.\n\n\n                                    By:  \/s\/ Michael J. Sculley\n                                         ----------------------\n                                             Name:  Michael J. Sculley\n                                             Title: Chief Financial Officer\n\n\n\n                                    THE INVESTOR:\n\n                                    24\/7 MEDIA, INC.\n\n\n                                    By:  \/s\/ Mark E. Moran\n                                         -----------------\n                                             Name:  Mark E. Moran\n                                             Title: Senior Vice President\n\n\n\n                                       29\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6536],"corporate_contracts_industries":[9503],"corporate_contracts_types":[9622,9627],"class_list":["post-43571","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-247-media-inc","corporate_contracts_industries-services__advertising","corporate_contracts_types-planning","corporate_contracts_types-planning__purchase"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43571","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43571"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43571"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43571"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43571"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}