NOTE PURCHASE AGREEMENT dated as of December 29, 2006 by and between BERLINER COMMUNICATIONS, INC. and THOSE INVESTORS SET FORTH IN SCHEDULE A SENIOR SUBORDINATED SECURED CONVERTIBLE NOTES AND COMMON STOCK PURCHASE WARRANTS

 

Exhibit 4.1

dated as of December 29, 2006
by and between
BERLINER COMMUNICATIONS, INC.
and
THOSE INVESTORS SET FORTH IN SCHEDULE A
 
SENIOR SUBORDINATED SECURED CONVERTIBLE NOTES
AND
COMMON STOCK PURCHASE WARRANTS

 

 

BERLINER COMMUNICATIONS, INC.
SENIOR SUBORDINATED SECURED CONVERTIBLE NOTES
and
COMMON STOCK PURCHASE WARRANTS
TABLE OF CONTENTS
         
    Page
1. DEFINITIONS
     1  
 
        
2. PURCHASE AND SALE; PURCHASE PRICE
     8  
(a) Purchase
     8  
(b) Form of Payment
     8  
(c) Closing
     8  
 
        
3. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE BUYERS
     8  
(a) Purchase for Investment
     8  
(b) Accredited Investor
     9  
(c) Reoffers and Resales
     9  
(d) Company Reliance
     9  
(e) Information Provided
     9  
(f) Absence of Approvals
     10  
    10  
(h) Buyer Status
     10  
 
        
4. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE COMPANY
     10  
(a) Organization and Authority
     10  
(b) Qualifications
     11  
(c) Capitalization
     11  
(d) Concerning the Shares and the Common Stock
     12  
(e) Corporate Authorization
     12  
(f) Non-contravention
     12  
(g) Approvals, Filings, Etc.
     13  
(h) Information Provided
     13  
(i) Conduct of Business
     13  
(j) SEC Filings
     14  
(k) Absence of Certain Proceedings
     14  
(l) Financial Statements; Liabilities
     14  
(m) Material Losses
     15  

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    Page
(n) Absence of Certain Changes
     15  
(o) Intellectual Property
     15  
(p) Internal Accounting Controls
     16  
(q) Compliance with Law
     17  
(r) Properties
     17  
(s) Labor Relations
     17  
(t) Insurance
     17  
(u) Tax Matters
     17  
(v) Investment Company
     17  
(w) Absence of Brokers, Finders, Etc.
     18  
(x) No Solicitation
     18  
(y) ERISA Compliance
     18  
(z) Rights Agreement; Interested Stockholder
     18  
(aa) Xxxxxxxx-Xxxxx Act
     18  
 
        
5. CERTAIN COVENANTS
     19  
(a) Transfer Restrictions
     19  
(b) Restrictive Legends
     19  
(c) Reporting Status
     20  
(d) Form D
     20  
(e) State Securities Laws
     21  
(f) Limitation on Certain Actions
     21  
(g) Use of Proceeds
     21  
(h) Best Efforts
     21  
(i) Debt Obligation
     21  
(j) Limitation on Certain Transactions
     21  
(k) Right of the Buyers to Participate in Future Transactions
     21  
 
        
6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL
     23  
 
        
7. CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE
     24  
 
        
8. REGISTRATION RIGHTS
     26  
(a) Mandatory Registration
     26  
(b) Obligations of the Company
     27  
(c) Obligations of the Buyers and Other Investors
     29  
(d) Rule 144
     30  
(e) Piggy-Back Registrations
     31  
 
        
9. INDEMNIFICATION AND CONTRIBUTION
     31  
(a) Indemnification
     31  
(b) Contribution
     33  
(c) Other Rights
     33  
 
        
10. MISCELLANEOUS
     33  
(a) Governing Law
     33  

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    Page
(b) Headings
     34  
(c) Severability
     34  
(d) Notices
     34  
(e) Counterparts
     34  
(f) Entire Agreement; Benefit
     34  
(g) Waiver
     35  
(h) Amendment
     35  
(i) Further Assurances
     35  
(j) Assignment of Certain Rights and Obligations
     35  
(k) Expenses
     36  
(l) Xxxxxxxxxxx
     00  
(x) Xxxxxxxx
     00  
(x) Public Statements, Press Releases, Etc.
     37  
(o) Construction
     38  
ANNEXES
     
ANNEX I
  Form of Senior Subordinated Secured Convertible Note
ANNEX II
  Form of Common Stock Purchase Warrant
ANNEX III
  Form of Security Agreement
ANNEX IV
  Form of Additional Warrant
ANNEX V
  Form of Opinion

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          THIS NOTE PURCHASE AGREEMENT, dated as of December 29, 2006 (this “Agreement”), by and between BERLINER COMMUNICATIONS, INC., a Delaware corporation (the “Company”), with headquarters located at 00 Xxxxxx Xxxx, Xxxxxxx Xxxx, Xxx Xxxxxx, 00000, and THOSE INVESTORS SET FORTH IN SCHEDULE A (each a “Buyer” and together the “Buyers”).
W I T N E S S E T H:
          WHEREAS, each Buyer wishes to purchase from the Company and the Company wishes to sell to each Buyer, upon the terms and subject to the conditions of this Agreement, a promissory note of the Company having the aggregate principal amount set forth on Schedule A of this Agreement opposite each Buyer’s name and in connection with which the Company shall issue to each Buyer warrants to purchase shares of Common Stock (such capitalized term and all other capitalized terms used in this Agreement having the meanings provided in Section 1);
          NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
          1. DEFINITIONS
          (a) As used in this Agreement, the terms “Agreement”, “Buyer”, “Buyers” and “Company” shall have the respective meanings assigned to such terms in the introductory paragraph of this Agreement.
          (b) All the agreements or instruments herein defined shall mean such agreements or instruments as the same may from time to time be supplemented or amended or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and of this Agreement.
          (c) The following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
          “Additional Financing” shall have the meaning ascribed thereto in Section 7(i) of this Agreement.
          “Advisory Fee” means $100,000 payable in cash and the Additional Warrant.
          “Additional Warrant” means the warrant in the form of Annex III hereto.
          “Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with the subject Person.

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          “Blackout Period” means the period of up to 25 Trading Days (whether or not consecutive) during any period of 365 consecutive days after the date the Company notifies the Investors that they are required, pursuant to Section 8(c)(4), to suspend offers and sales of Registrable Securities as a result of an event or circumstance described in Section 8(b)(5), provided; however, that the Blackout Period shall be extended to include any period beginning upon the Company’s receipt of notice from the SEC that any amendment to its Registration Statement is being reviewed and ending on the date that the SEC has cleared such amended Registration Statement for use by the Investors to conduct resales of the Registrable Securities if, during such period, the Company shall promptly respond to all SEC comments and inquiries. The Company shall be deemed to have promptly responded to all SEC comments and inquiries if they respond within the time period, if any, specified by the SEC in any correspondence addressed to the Company in such matters, without regard to any extension request by the Company with respect thereto.
          “Business Day” means any day other than a Saturday, Sunday or a day on which commercial banks in The City of New York are authorized or required by law or executive order to remain closed.
          “Charter Amendment” shall have the meaning set forth in Section 4(d).
          “Claims” means any losses, claims, damages, liabilities or expenses, including, without limitation, reasonable fees and expenses of legal counsel (joint or several), incurred by a Person.
          “Closing Date” means 10:00 a.m., New York City time, on December 29, 2006 or such other mutually agreed to time.
          “Code” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder and published interpretations thereof.
          “Common Stock” means the Common Stock, par value $.00002 per share, of the Company.
          “Common Stock Equivalent” means any warrant, option, subscription or purchase right with respect to shares of Common Stock, any security convertible into, exchangeable for, or otherwise entitling the holder thereof to acquire, shares of Common Stock or any warrant, option, subscription or purchase right with respect to any such convertible, exchangeable or other security.
          “Control” (including, with correlative meaning, the terms “Controlled by” and “under common Control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise.
          “Conversion Shares” means the shares of Common Stock issuable upon conversion of the Notes.

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          “Encumbrances” means all mortgages, deeds of trust, claims, security interests, liens, pledges, leases, subleases, charges, escrows, options, proxies, rights of occupancy, rights of first refusal, preemptive rights, covenants, conditional limitations, hypothecations, prior assignments, easements, title retention agreements, indentures, security agreements or any other encumbrances of any kind.
          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder and published interpretations thereof.
          “Event of Default” shall have the meaning provided in the Notes.
          “Guaranty” means the Guaranty of BCI Communications, Inc. in the form attached hereto as Annex VI.
          “Indebtedness” shall have the meaning provided in the Notes.
          “Indemnified Party” means the Company, each of its directors, each of its officers who signs the Registration Statement, each Person, if any, who Controls the Company, any underwriter and any other stockholder selling securities pursuant to the Registration Statement or any of its directors or officers or any Person who Controls such stockholder or underwriter.
          “Indemnified Person” means the Buyers and each other Investor who beneficially owns or holds Registrable Securities and each other Investor who sells such Registrable Securities in the manner permitted under this Agreement, the directors, if any, of such Investor, the officers or persons performing similar functions, if any, of the Buyers and any such Investor, each Person, if any, who Controls a Buyer or any such Investor, any underwriter (as defined in the 0000 Xxx) acting on behalf of an Investor who participates in the offering of Registrable Securities of such Investor in accordance with the plan of distribution contained in the Prospectus, the directors, if any, of such underwriter and the officers, if any, of such underwriter, and each Person, if any, who Controls any such underwriter.
          “Inspector” means any attorney, accountant or other agent retained by an Investor for the purposes provided in Section 8(b)(9).
          “Intellectual Property” means all franchises, patents, trademarks, service marks, tradenames (whether registered or unregistered), copyrights, corporate names, licenses, trade secrets, proprietary software or hardware, proprietary technology, technical information, discoveries, designs and other proprietary rights, whether or not patentable, and confidential information (including, without limitation, know-how, processes and technology) created or wholly owned by the Company and material to the operation and conduct of the business of the Company or any Subsidiary.
          “Investor” and “Investors” means the Buyer or Buyers, as the case may be, and any transferee or assignee who agrees to become bound by the provisions of Sections 5(a), 5(b), 8, 9, and 10 of this Agreement.

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          “Knowledge” Where any representation or warranty contained in this Agreement is expressly qualified by reference to the knowledge of the Person, such reference shall be deemed to mean the actual knowledge or information of any Person as to the matters that are the subject of such representations and warranties, or such knowledge which any of them would have obtained after reasonable inquiry into the matter concerned. It is agreed between the parties that “reasonableness” (as used in the foregoing sentence) shall require that one or more of the Persons with the responsibility to make an inquiry hereunder discuss the matter at issue with a manager-level employee who has primary responsibility for such matter.
          “Margin Stock” shall have the meaning provided in Regulation U of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 221).
          “Market Price” shall have the meaning to be provided or provided in the Note.
          “Nasdaq” means the Nasdaq Global Market, Global Select Market or the Nasdaq Capital Market.
          “NASD” means the National Association of Securities Dealers, Inc.
          “1934 Act” means the Securities Exchange Act of 1934, as amended.
          “1933 Act” means the Securities Act of 1933, as amended.
          “Notes” means the Senior Subordinated Secured Convertible Notes of the Company issued to the Buyers in the form attached as Annex I.
          “Person” means any natural person, corporation, partnership, limited liability company, trust, incorporated organization, unincorporated association or similar entity or any government, governmental agency or political subdivision.
          “Prospectus” means the prospectus forming part of the Registration Statement at the time the Registration Statement is declared effective and any amendment or supplement thereto (including any information or documents incorporated therein by reference).
          “Purchase Price” means the purchase price for the Notes set forth on Schedule A of this Agreement.
          “QIB” means a qualified institutional buyer as defined in Rule 144A.
          “Record” means all pertinent financial and other records, pertinent corporate documents and properties of the Company subject to inspection for the purposes provided in Section 8(b)(9).
          “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a Registration Statement or Statements in compliance with the 1933 Act and

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pursuant to Rule 415, and the declaration or ordering of effectiveness of such Registration Statement by the SEC.
          “Registrable Securities” means (1) the Shares, (2) if the Common Stock is changed, converted or exchanged by the Company or its successor, as the case may be, into any other stock or other securities on or after the date hereof, such other stock or other securities which are issued or issuable in respect of or in lieu of the Shares and (3) if any other securities are issued to holders of the Common Stock (or such other shares or other securities into which or for which the Common Stock is so changed, converted or exchanged as described in the immediately preceding clause (2)) upon any reclassification, share combination, share subdivision, share dividend, merger, consolidation or similar transaction or event, such other securities which are issued or issuable in respect of or in lieu of the Common Stock.
          “Registration Default Period” means the period during which any Registration Event occurs and is continuing.
          “Registration Event” means the occurrence of any of the following events:
     (i) the Company fails to file with the SEC the Registration Statement on or before the date by which the Company is required to file the Registration Statement pursuant to Section 8(a)(1),
     (ii) the Registration Statement covering Registrable Securities is not declared effective by the SEC on or before the Required Effective Date,
     (iii) after the SEC Effective Date, sales cannot be made pursuant to the Registration Statement (including without limitation by reason of a stop order of any untrue statement of a material fact or omission of a material fact in the Registration Statement, or the Company’s failure to update the Registration Statement) but except as excused pursuant to Section 8(b)(5), other than closure of the trading markets for the Common Stock,
     (iv) after the date on which securities of the Company are listed or included for quotation on a Trading Market, the Common Stock generally or the Registrable Securities specifically are not listed or included for quotation on a Trading Market, or trading of the Common Stock is suspended or halted for a period exceeding 5 days on the Trading Market which at the time constitutes the principal market for the Common Stock, or
     (v) the Company fails, refuses or is otherwise unable timely to issue Conversion Shares upon conversion of the Notes in accordance with the terms of the Notes or Warrant Shares upon exercise of the Warrants in accordance with the terms of the Warrants, or certificates therefor as required under the Transaction Documents or the Company fails, refuses or is otherwise unable timely to transfer any Shares as and when required by the Transaction Documents.

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          “Registration Period” means the period from the SEC Effective Date to the earlier of (A) the date that is three (3) years after the Closing Date, (B) such date after which each Investor may sell all of its Registrable Securities without registration under the 1933 Act pursuant to Rule 144 (k), or (D) the date on which the Investors beneficially own, in the aggregate, less than ten percent (10%) of the Registrable Securities.
          “Registration Statement” means a registration statement on Form S-1, Form SB-2, Form S-3 or such other form as may be available to the Company to be filed with the SEC under the 1933 Act relating to the Registrable Securities and which names the Investors as selling stockholders.
          “Regulation D” means Regulation D under the 1933 Act.
          “Repurchase Event” shall have the meaning to be provided or provided in the Note.
          “Required Effective Date” means June 15, 2007.
          “Required Information” means, with respect to each Investor, all information regarding such Investor, the Registrable Securities held by such Investor or which such Investor has the right to acquire and the intended method of disposition of the Registrable Securities held by such Investor or which such Investor has the right to acquire as shall be required by the 1933 Act to effect the registration of the resale by such Investor of such Registrable Securities.
          “Rule 144” means Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time provide a “safe harbor” exemption from registration under the 1933 Act so as to permit a holder to sell securities of the Company to the public without being deemed an “underwriter” for purposes of the 1933 Act.
          “Rule 144A” means Rule 144A under the 1933 Act or any successor rule thereto.
          “SEC” means the Securities and Exchange Commission.
          “SEC Effective Date” means the date the Registration Statement is declared effective by the SEC.
          “SEC Filing Date” has the meaning set forth in Section 8(a).
          “SEC Reports” means the Company’s (1) Annual Report on Form 10-K for the year ended June 30, 2006, (2) Schedule 14A filed with the SEC on October 25, 2006, (3) Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, (4) Current Reports on Form 8-K filed with the SEC on October 16, 2006, September 22, 2006, September 13, 2006, August 4, 2006 and July 26, 2006, and (5) all other periodic and other reports filed by the Company with the SEC pursuant to the 1934 Act subsequent to September 30, 2006, and prior to the date hereof, in each case as filed with the SEC and including the information and documents (other than exhibits) incorporated therein by reference.

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          “Securities” means, collectively, the Notes, the Shares and the Warrants.
          “Security Agreement” means the Security Agreement attached hereto as Annex III.
          “Senior Lender” shall mean Presidential Financial Corporation of Delaware Valley.
          “Shares” means the Conversion Shares and the Warrant Shares.
          “Sigma” means Sigma Opportunity Fund, LLC.
          “Sigma Advisors” means Sigma Capital Advisors, LLC, the managing member of Sigma.
          “Subsidiary” means any corporation or other entity of which a majority of the capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Company.
          “Trading Day” means at any time a day on which any of a national securities exchange, Nasdaq, or such other securities market as at such time constitutes the principal securities market for the Common Stock is open for general trading of securities.
          “Trading Market” means the Over-The-Counter Bulletin Board, the American Stock Exchange, Inc., the Nasdaq, or the New York Stock Exchange, Inc.
          “Transaction Documents” means, collectively, this Agreement, the Securities, the Security Agreement, the Guaranty and the other agreements, instruments and documents contemplated hereby and thereby.
          “Violation” means:
          (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading,
          (ii) any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading,

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          (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any state securities law or any rule or regulation under the 1933 Act, the 1934 Act or any state securities law, or
          (iv) any breach or alleged breach by any Person other than the Buyers of any representation, warranty, covenant, agreement or other term of any of the Transaction Documents.
          “Warrants” means the Common Stock Purchase Warrants in the form attached hereto as Annex II.
          “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants and the Additional Warrants.
          2. PURCHASE AND SALE; PURCHASE PRICE.
          (a) Purchase. Upon the terms and subject to the conditions of this Agreement, each Buyer hereby agrees to purchase from the Company, and the Company hereby agrees to sell to each Buyer, on the Closing Date, a Note in the principal amount set forth on Schedule A of this Agreement opposite each Buyer’s name and having the terms and conditions as set forth in the form of the Note attached hereto as Annex I for the Purchase Price. In connection with the purchase of the Notes by the Buyers, the Company shall issue to each Buyer at the closing on the Closing Date Warrants initially entitling the holder to purchase one-half of a share of Common Stock for each $1.00 principal amount of the Note purchased by Buyer.
          (b) Form of Payment. Payment by the Buyers of the Purchase Price to the Company on the Closing Date shall be made by wire transfer of immediately available funds to:
Interchange Bank
000 Xxxxxxxxx
Xxxxxxx Xxxx, XX 00000
ABA No.: 000000000
For Credit to:
Berliner Communications, Inc.
00 Xxxxxx Xxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Account number:                     
          (c) Closing. The issuance and sale of the Notes and the issuance of the Warrants and the Additional Warrants shall occur on the Closing Date at Moomjian, Waite, Wactlar & Xxxxxxx, LLP, 000 Xxxxxxx Xxxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000. At the closing, upon the terms and subject to the conditions of this Agreement, (1) the Company shall issue and deliver to the Buyers the Notes and the Warrants and to Sigma Advisors the Additional Warrants against payment by the Buyers to the Company of an amount equal to the Purchase Price and (2)

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the Buyers shall pay to the Company an amount equal to the Purchase Price against delivery by the Company to the Buyers of the Notes and the Warrants and to Sigma Advisors of the Additional Warrants.
          3. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE BUYERS.
          Each Buyer, severally and not jointly, represents and warrants as to itself to, and covenants and agrees with, the Company as follows:
          (a) Purchase for Investment. The Buyer is purchasing the Note and acquiring the Warrants for its own account for investment and not with a view towards the public sale or distribution thereof within the meaning of the 1933 Act; and in the event that the Buyer shall acquire any Shares prior to the SEC Effective Date of a Registration Statement covering the resale of such Shares, such acquisition by the Buyer shall be for its own account for investment and not with a view towards the public sale or distribution thereof within the meaning of the 1933 Act prior to the SEC Effective Date; and the Buyer has no intention of making any distribution, within the meaning of the 1933 Act, of the Shares except in compliance with the registration requirements of the 1933 Act or pursuant to an exemption therefrom;
          (b) Accredited Investor. The Buyer is an “accredited investor” as that term is defined in Rule 501 of Regulation D under the 1933 Act;
          (c) Reoffers and Resales. The Buyer will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Securities unless registered under the 1933 Act, pursuant to an exemption from registration under the 1933 Act or in a transaction not requiring registration under the 1933 Act;
          (d) Company Reliance. The Buyer understands that (1) the Note is being offered and sold and the Warrants are being issued to the Buyer, (2) upon conversion of the Notes, the Conversion Shares will be issued to the Buyer and (3) upon exercise of the Warrants, the Warrant Shares will be sold to the Buyer, in each such case in reliance on one or more exemptions from the registration requirements of the 1933 Act, including, without limitation, Regulation D, and exemptions from state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein, in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire or receive an offer to acquire the Securities;
          (e) Information Provided. The Buyer and its advisors, if any, have requested, received and considered all information relating to the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and information relating to the offer and sale of the Note and the Warrants and the offer of the Conversion Shares and the Warrant Shares deemed relevant by them ( assuming the accuracy and completeness of the SEC Reports and the Company’s responses to the Buyer’s requests); the

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Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company concerning the terms of the offering of the Securities and the business, properties, operations, condition (financial or other), results of operations and prospects of the Company and its Subsidiaries and have received satisfactory answers to any such inquiries; without limiting the generality of the foregoing, the Buyer has had the opportunity to obtain and to review the SEC Reports; in connection with its decision to purchase the Note and to acquire the Warrants, the Buyer has relied exclusively upon (i) the SEC Reports, (ii) the representations, warranties, covenants and agreements of the Company set forth in this Agreement and to be contained in the other Transaction Documents, as well as any (iii) investigation of the Company completed by the Buyer or its advisors; the Buyer understands that its investment in the Securities involves a high degree of risk; and the Buyer understands that the offering of the Note, the Warrants and the Additional Warrants is being made to the Buyer as part of an offering without any minimum or maximum amount of the offering (subject, however, to the right of the Company at any time prior to execution and delivery of this Agreement by the Company, in its sole discretion, to accept or reject an offer by the Buyer to purchase the Note and to acquire the Warrants or the Additional Warrants);
          (f) Absence of Approvals. The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities;
          (g) Note Purchase Agreement. The Buyer has all requisite power and authority, corporate or otherwise, to execute, deliver and perform its obligations under this Agreement and the other agreements executed by the Buyer in connection herewith and to consummate the transactions contemplated hereby and thereby; and this Agreement has been duly and validly authorized, duly executed and delivered by the Buyer and, assuming due execution and delivery by the Company, is a valid and binding agreement of the Buyer enforceable in accordance with its terms, except as the enforceability hereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally and general principles of equity, regardless of whether enforcement is considered in a proceeding in equity or at law; and
          (h) Buyer Status. The Buyer is not a “broker” or “dealer” as those terms are defined in the 1934 Act nor is it required to be registered with the SEC pursuant to Section 15 of the 1934 Act.
          4. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE COMPANY.
          The Company represents and warrants to, and covenants and agrees with, the Buyers as follows:
          (a) Organization and Authority. The Company and each of the Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and (i) each of the Company and the Subsidiaries has all

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requisite corporate power and authority to own, lease and operate its properties and to carry on its business as described in the SEC Reports and as currently conducted, and (ii) the Company has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to be executed and delivered by the Company in connection herewith, and to consummate the transactions contemplated hereby and thereby. The Company does not have any equity investment in any other Person other than the Subsidiaries listed in Schedule 4(a) hereto.
          (b) Qualifications. The Company and each of the Subsidiaries are duly qualified to do business as foreign corporations and are in good standing in all jurisdictions where failure so to qualify could have a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and the Subsidiaries, taken as a whole.
          (c) Capitalization. As of the date hereof, (1) The authorized capital stock of the Company consists of (A) 20,000,000 shares of Common Stock, of which 17,035,357 shares are issued and outstanding, and (B) 2,000,000 shares of Preferred Stock, $.00002 par value, none of which are issued and outstanding. Schedule 4(c) hereto discloses all outstanding options or warrants for the purchase of, or rights to purchase or subscribe for, or securities convertible into, exchangeable for, or otherwise entitling the holder to acquire, Common Stock or other capital stock of the Company, or any contracts or commitments to issue or sell Common Stock or other capital stock of the Company or any such options, warrants, rights or other securities.
          (2) The Company has duly reserved from its authorized and unissued shares of Common Stock the full number of shares required for (A) all options, warrants, convertible securities, exchangeable securities, and other rights to acquire shares of Common Stock which are outstanding and (B) all shares of Common Stock and options and other rights to acquire shares of Common Stock which may be issued or granted under the stock option and similar plans which have been adopted by the Company or any Subsidiary; and, immediately following the Closing Date, after giving effect to any antidilution or similar adjustment arising by reason of issuance of the Notes, the Warrants and the Additional Warrants, the total number of shares of Common Stock reserved and required to be reserved from the authorized and unissued shares of Common Stock for purposes of all such options, warrants, convertible securities, other rights, and stock option and similar plans (excluding the Notes, the Warrants and the Additional Warrants) will be 2,872,956. Each outstanding class or series of securities of the Company for which any such antidilution adjustment will occur is identified on Schedule 4(c) attached hereto, together with the amount of such antidilution adjustment for each such class or series. The outstanding shares of Common Stock of the Company and outstanding options, warrants, rights, and other securities entitling the holders to purchase or otherwise acquire Common Stock have been duly and validly authorized and issued. None of the outstanding shares of Common Stock or options, warrants, rights, or other such securities has been issued in violation of the preemptive rights of any securityholder of the Company. The offers and sales of the outstanding shares of Common Stock of the Company and options, warrants, rights, and other securities were at all relevant times either registered under the 1933 Act and applicable state securities laws or exempt from such requirements. Except for as set forth on Schedule 4(c) attached hereto, no holder of any of the Company’s securities has any rights, “demand,” “piggy-back” or otherwise,

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to have such securities registered by reason of the intention to file, filing or effectiveness of the Registration Statement.
          (d) Concerning the Shares and the Common Stock. Upon the approval of the Company’s stockholders of an amendment to the Company’s certificate of incorporation to increase the number of shares of authorized common stock from twenty million (20,000,000) shares to 100,000,000 shares (the “Charter Amendment”), the Shares will be duly authorized and the Conversion Shares, when issued upon conversion of the Notes, and the Warrant Shares, when issued upon exercise of the Warrants and the Additional Warrants, will be duly and validly issued, fully paid and non-assessable and will not subject the holder thereof to personal liability solely by reason of being such holder. There are no preemptive or similar rights of any stockholder of the Company or any other Person to acquire any of the Shares or the Warrants. Upon approval of the Charter Amendment, the Company will duly reserve 4,377,273 shares of Common Stock (subject to antidilution adjustment and adjustment for stock splits, combinations, and the like) for issuance upon conversion of the Notes and exercise of the Warrants, and such shares shall remain so reserved, and the Company shall from time to time reserve such additional shares of Common Stock as shall be required to be reserved pursuant to the Notes and Warrants and the Additional Warrants, so long as the Notes and Warrants and the Additional Warrants are outstanding. The Company will effect the Charter Amendment on or before the SEC Filing Date. The Common Stock is currently traded on the National Association of Securities Dealers Over-The-Counter Bulletin Board, and the Company knows of no reason that the Shares would be ineligible for continued quotation on such Trading Market in the reasonably foreseeable future.
          (e) Corporate Authorization. This Agreement and the other Transaction Documents to which the Company is or will be a party have been duly and validly authorized by the Company; this Agreement has been duly executed and delivered by the Company and, assuming due execution and delivery by each Buyer, this Agreement is, and the Notes, the Warrants and the Additional Warrants, and the other Transaction Documents, will be when executed and delivered by the Company, valid and binding obligations of the Company enforceable in accordance with their respective terms, except as the enforceability hereof or thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally and general principles of equity, regardless of whether enforcement is considered in a proceeding in equity or at law.
          (f) Non-contravention. The execution and delivery of the Transaction Documents by the Company and any Subsidiary and the consummation by the Company of the issuance of the Securities as contemplated by this Agreement and consummation by the Company any Subsidiary of the other transactions contemplated by the Transaction Documents do not and will not, with or without the giving of notice or the lapse of time, or both, (i) result in any violation of any term or provision of the certificate of incorporation (including all certificates of designation) or bylaws of the Company or any Subsidiary, (ii) conflict with or result in a breach by the Company or any Subsidiary of any of the terms or provisions of, or constitute a default under, or result in the modification of, or result in the creation or imposition of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any Subsidiary pursuant to, or affect the validity or enforceability of or the ability of the

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Company or any Subsidiary to perform its obligations under the Transaction Documents pursuant to, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or any of their respective properties or assets are bound or affected, (iii) violate or contravene any applicable law, rule or regulation or any applicable decree, judgment or order of any court, United States federal or state regulatory body, administrative agency or other governmental body having jurisdiction over the Company or any Subsidiary or any of their respective properties or assets, in any such case which would be reasonably likely to have a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and the Subsidiaries, taken as a whole, or the validity or enforceability of, or the ability of the Company to perform its obligations under, the Transaction Documents, or (iv) have any material adverse effect on any permit, certification, registration, approval, consent, license or franchise necessary for the Company or any Subsidiary to own or lease and operate any of its properties and to conduct any of its business or the ability of the Company or any Subsidiary to make use thereof.
          (g) Approvals, Filings, Etc. No authorization, approval or consent of, or filing with, any United States or foreign court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market, or the stockholders of the Company, or any other Person, is required to be obtained or made by the Company or any Subsidiary for (x) the execution, delivery and performance by the Company of the Transaction Documents, (y) the issuance and sale of the Securities as contemplated by this Agreement and the terms of the Notes, the Warrants and the Additional Warrants and (z) the performance by the Company of its obligations under the Transaction Documents, other than (1) registration of the resale of the Shares under the 1933 Act as contemplated by Section 8, (2) as may be required under applicable state securities or “blue sky” laws, (3) filing of one or more Forms D with respect to the Securities as required under Regulation D, (4) as may be required in connection with the Charter Amendment, and (5) the approval of the Senior Lender (which has been received prior to Closing).
          (h) Information Provided. The SEC Reports, the Transaction Documents and the instruments delivered by the Company to the Buyers in connection with the closing on the Closing Date do not and will not on the date of execution and delivery of this Agreement nor on the Closing Date contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading, it being understood that for purposes of this Section 4(h), any statement contained in such information shall be deemed to be modified or superseded for purposes of this Section 4(h) to the extent that a statement in any document included in such information which was prepared and furnished to the Buyers on a later date or filed with the SEC on a later date modifies or replaces such statement, whether or not such later prepared or filed statement so states.
          (i) Conduct of Business. Except as set forth on Schedule 4(i), since June 30, 2006, neither the Company nor any Subsidiary has (i) incurred any material obligation or liability (absolute or contingent) other than in the ordinary course of business; (ii) canceled, without payment in full, any material notes, loans or other obligations receivable or other debts

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or claims held by it other than in the ordinary course of business; (iii) sold, assigned, transferred, abandoned, mortgaged, pledged or subjected to lien any of its material properties, tangible or intangible, or rights under any material contract, permit, license, franchise or other agreement; (iv) conducted its business in a manner materially different from its business as conducted on such date; (v) declared, made or paid or set aside for payment any cash or non-cash distribution on any shares of its capital stock; or (vi) consummated, or entered into any agreement with respect to, any transaction or event which would constitute a Repurchase Event. The Company and each Subsidiary owns, possesses or has obtained all governmental, administrative and third party licenses, permits, certificates, registrations, approvals, consents and other authorizations necessary to own or lease (as the case may be) and operate its properties, whether tangible or intangible, and to conduct its business or operations as currently conducted, except such licenses, permits, certificates, registrations, approvals, consents and authorizations the failure of which to obtain would not have a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and the Subsidiaries, taken as a whole.
          (j) SEC Filings. For the preceding twelve months, the Company has timely filed all reports required to be filed under the 1934 Act and any other material reports or documents required to be filed with the SEC.
          (k) Absence of Certain Proceedings. Other than as set forth in Schedule 4(k), there is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body or governmental agency pending or, to the knowledge of the Company or any Subsidiary, threatened against or affecting the Company or any Subsidiary, in any such case wherein an unfavorable decision, ruling or finding would have a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and the Subsidiaries, taken as a whole, or the transactions contemplated by the Transaction Documents or which could adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, the Transaction Documents; the Company does not have pending before the SEC any request for confidential treatment of information and, to the best of the Company’s knowledge, no such request will be made by the Company prior to the SEC Effective Date; and to the best of the Company’s knowledge there is not pending or contemplated any, and there has been no, investigation by the SEC involving the Company or any current or former director or officer of the Company.
          (l) Financial Statements; Liabilities. The financial statements included in the SEC Reports present fairly the financial position, results of operations and cash flows of the Company and the Subsidiaries, at the dates and for the periods covered thereby, have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods covered thereby, and include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows of the Company and the Subsidiaries at the dates and for the periods covered thereby. Except as and to the extent disclosed, reflected or reserved against in the financial statements of the Company and the notes thereto included in the SEC Reports, neither the Company nor any Subsidiary has any liability, debt or obligation, whether accrued, absolute, contingent or otherwise, and whether due or to become due which, individually or in the

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aggregate, are material to the Company and the Subsidiaries, taken as a whole. Since June 30, 2006, neither the Company nor any Subsidiary has incurred any liability, debt or obligation of any nature whatsoever which, individually or in the aggregate are material to the Company and the Subsidiaries, taken as a whole, other than those incurred in the ordinary course of their respective businesses. A detailed description and the amount of the Indebtedness of the Company and Subsidiaries that will be outstanding on the Closing Date appear on Schedule 4(l) attached hereto.
          (m) Material Losses. Since June 30, 2006, neither the Company nor any Subsidiary has sustained any loss or interference with its business or properties from fire, flood, hurricane, accident or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, which loss or interference could be material to the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and the Subsidiaries, taken as a whole.
          (n) Absence of Certain Changes. Since June 30, 2006, there has been no material adverse change and no material adverse development in the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and the Subsidiaries, taken as a whole. The Company has not received any notice that any customer intends, and to its knowledge no customer intends, to cease doing business with the Company or decrease in any material respect the amount of business that it does with the Company. Since June 30, 2006, the Company has not (i) declared or paid any dividends, (ii) sold any assets outside of the ordinary course of business consistent with past practice, (iii) had capital expenditures outside of the ordinary course of business consistent with past practice, (iv) engaged in any transaction with any Affiliate in which the amount involved exceed $60,000 except as set forth in the SEC Reports or (v) engaged in any other transaction outside of the ordinary course of business consistent with past practice. Except as set forth in Schedule 4(n), neither the Company nor any Subsidiary has taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company is not as of the date hereof, and after giving effect to the Additional Financing and the transactions contemplated hereby to occur on the Closing Date, Insolvent (as defined below). For purposes of this Section 4(n), “Insolvent” means (i) the present fair saleable value of the Company’s assets as a going concern is less than the amount required to pay the Company’s total indebtedness, contingent or otherwise, (ii) the Company is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) the Company intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) the Company has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
          (o) Intellectual Property. Except as set forth on Schedule 4(o): (1) the Company holds all Intellectual Property, free and clear of all Encumbrances and restrictions on use or transfer, whether or not recorded, and has sole title to and ownership of or has the full, exclusive right to use, for the life of the proprietary right all Intellectual Property; (2) the use of the Intellectual Property by the Company or any Subsidiary does not, to the knowledge of the

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Company after due inquiry, violate or infringe on the rights of any other Person; (3) neither the Company nor any Subsidiary has received any notice of any conflict between the asserted rights of others and the Company or any Subsidiary with respect to any Intellectual Property; (4) the Company and the Subsidiaries are in compliance with all terms and conditions of their agreements relating to the Intellectual Property; (5) neither the Company nor any Subsidiary is or has been a defendant in any action, suit, investigation or proceeding relating to infringement or misappropriation by the Company or any Subsidiary of any Intellectual Property; (6) neither the Company nor any Subsidiary has been notified of any alleged claim of infringement or misappropriation by the Company or any Subsidiary of any Intellectual Property; (7) the Company has no knowledge of any claim of infringement or misappropriation by the Company or any Subsidiary of any Intellectual Property; (8) to the knowledge (after due inquiry) of the Company, none of the products the Company and the Subsidiaries are researching, developing, propose to research and develop, make, have made, use, or sell, infringes or misappropriates any Intellectual Property right of any third party; (9) none of the trademarks and service marks used by the Company or any Subsidiary, to the knowledge of the Company after due inquiry, infringes the trademark or service xxxx rights of any third party; (10) neither the Company nor any Subsidiary has entered into any agreement to indemnify any other person against any charge of infringement of any Intellectual Property; (11) none of the research and development results and other know-how relating to the Company’s or the Subsidiaries’ respective businesses, the value of which to the Company or the Subsidiaries is contingent upon maintenance of the confidentiality thereof, has been disclosed to any Person other than Persons bound by written confidentiality agreements; and (12) the Company owns directly, or possesses adequate rights to use, all intellectual property used in or relating to the business of the Company as currently conducted except where the failure to own or possess such rights could not have a material adverse effect on the business, properties or operations of the Company and its Subsidiaries.
          (p) Internal Accounting Controls. To the best of its knowledge and belief, the Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the 0000 Xxx) that are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure.

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          (q) Compliance with Law. Neither the Company nor any Subsidiary is in violation of or has any liability under any statute, law, rule, regulation, ordinance, decision or order of any governmental agency or body or any court, domestic or foreign, except where such violation or liability would not individually or in the aggregate have a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and the Subsidiaries, taken as a whole; and neither the Company nor any Subsidiary is aware of any pending investigation which would reasonably be expected to lead to such a claim.
          (r) Properties. Each of the Company and the Subsidiaries has good title to all property, real and personal (tangible and intangible), and other assets owned by it, free and clear of all security interests, pledges, charges, mortgages, liens or other encumbrances, except as set forth on Schedule 4(r). The leases, licenses or other contracts or instruments under which the Company and each Subsidiary leases, holds or is entitled to use any property, real or personal, which individually or in the aggregate are material to the Company and the Subsidiaries, taken as a whole, are valid, subsisting and enforceable. Neither the Company nor any Subsidiary has received notice of any material violation of any applicable law, ordinance, regulation, order or requirement relating to its owned or leased properties. Neither the Company nor any Subsidiary has any mortgage, lien, pledge, security interest or other charge or encumbrance on any of its assets or properties except as listed in Schedule 4(r) attached hereto.
          (s) Labor Relations. No material labor problem exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company or any Subsidiary. The Company has provided Sigma with the names of each of the employees of the Company and each Subsidiary, his or her title or position, his or her current salary and any additional compensation arrangements with such person (e.g. as to raises, bonuses, etc.). The Company has 13 employees who earned in excess of $100,000 in total compensation in calendar year 2006.
          (t) Insurance. The Company and the Subsidiaries maintain insurance against loss or damage by fire or other casualty and such other insurance, including but not limited to, general liability insurance, in such amounts and covering such risks as the Company believes are commercially reasonable.
          (u) Tax Matters. Except as set forth on Schedule 4(u), each of the Company and the Subsidiaries has filed all federal, state and local income and franchise tax returns required to be filed and has paid all taxes shown by such returns to be due, and no tax deficiency has been determined adversely to the Company or any Subsidiary which has had (nor does the Company or any Subsidiary have any knowledge of any tax deficiency which, if determined adversely to the Company or any Subsidiary, might have) a material adverse effect on the business, properties, operations, condition (financial or other), results of operations, or prospects of the Company and the Subsidiaries, taken as a whole.
          (v) Investment Company. Neither the Company nor any Subsidiary is an “investment company” within the meaning of such term under the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.

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          (w) Absence of Brokers, Finders, Etc. Except for Punk Xxxxxx and Company, no broker, finder or similar Person is entitled to any commission, fee or other compensation by reason of action taken by or on behalf of the Company in connection with the transactions contemplated by this Agreement, and the Company shall pay, and indemnify and hold harmless each Buyer from, any claim made against any Buyer by any Person for any such commission, fee or other compensation.
          (x) No Solicitation. No form of general solicitation or general advertising was used by the Company or, to the best of its knowledge, any other Person acting on behalf of the Company, in respect of the Securities or in connection with the offer and sale of the Securities. Other than securities issued to Punk Xxxxxx and Company, neither the Company nor, to its knowledge, any Person acting on behalf of the Company has, either directly or indirectly, sold or offered for sale to any Person any of the Securities or, within the six months prior to the date hereof, any other similar security of the Company except as contemplated by this Agreement; and neither the Company nor any Person authorized to act on its behalf will sell or offer for sale any promissory notes, warrants, shares of Common Stock or other securities to, or solicit any offers to buy any such security from, any Person so as thereby to cause the issuance or sale of any of the Securities to be in violation of any of the provisions of Section 5 of the 1933 Act.
          (y) ERISA Compliance. Each of the Company and the Subsidiaries is in compliance in all material respects with all presently applicable provisions of ERISA; no “reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Company or any Subsidiary would have any liability; neither the Company nor any Subsidiary has incurred or expects to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (ii) Sections 412 or 4971 of the Code; and each “pension plan” for which the Company or any Subsidiary would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.
          (z) Rights Agreement; Interested Stockholder. The Company has not adopted a shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company. All necessary and proper action has been taken by the Company and its Board of Directors such that the execution, delivery and performance of the Transaction Documents and the purchase, sale and issuance of the Securities will not cause any Buyer to become an “interested stockholder” under Section 203 of the Delaware General Corporation Law.
          (aa) Xxxxxxxx-Xxxxx Act. The Company is in compliance with the requirements of the Xxxxxxxx-Xxxxx Act of 2002 applicable to it, and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof.

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          5. CERTAIN COVENANTS.
          (a) Transfer Restrictions. The Buyers acknowledge and agree that (1) the Notes, the Warrants and the Additional Warrants have not been and are not being registered under the provisions of the 1933 Act or any state securities laws and, except as provided in Section 8, the Shares have not been and are not being registered under the 1933 Act or any state securities laws, and that the Notes, the Warrants and the Additional Warrants may not be transferred unless the Buyer desiring to make such transfer shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the Notes, the Warrants or the Additional Warrants to be transferred may be transferred without such registration or unless transferred in accordance with Rule 144A to a QIB; (2) no sale, assignment or other transfer of the Notes, the Warrants and the Additional Warrants or any interest therein may be made except in accordance with the terms hereof and thereof; (3) the Shares may not be resold by any Buyer unless the resale has been registered under the 1933 Act or is made pursuant to an applicable exemption from such registration and the Company shall have received the opinion of counsel provided for in the second to last sentence of this Section 5(a); (4) any sale of Shares under a Registration Statement shall be made only in compliance with the terms of this Section 5(a) and Section 8 (including, without limitation, Section 8(c)(5)); (5) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if the exemption provided by Rule 144 is not available, any resale of the Securities under circumstances in which the seller, or the Person through whom the sale is made, may be deemed to be an underwriter, as that term is used in the 1933 Act, may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (6) the Company is under no obligation to register the Securities (other than registration of the resale of the Shares in accordance with Section 8) under the 1933 Act or, except as provided in Section 5(d) and Section 8, to comply with the terms and conditions of any exemption thereunder. Prior to the time particular Shares are eligible for resale under Rule 144(k), no Buyer may transfer the Shares in a transaction which does not constitute a transfer thereof pursuant to the applicable Registration Statement in accordance with the plan of distribution set forth therein or in any supplement to the related Prospectus unless the Buyer shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, that such Shares may be so transferred without registration under the 1933 Act. Nothing in any of the Transaction Documents shall limit the right of a holder of the Securities to make a bona fide pledge thereof to an institutional lender and the Company agrees to cooperate with any Investor who seeks to effect any such pledge by providing such information and making such confirmations as reasonably requested.
          (b) Restrictive Legends. (1) The Buyers acknowledge and agree that the Notes shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the Notes):
This Note has not been registered under the Securities Act of 1933, as amended (the “Act”), or any state securities laws. This Note has been acquired for investment only and may not be sold, transferred or assigned unless (1) resale is registered under the Act, (2) the Company has received an opinion of counsel reasonably satisfactory in form, scope

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and substance to the Company that such registration is not required or (3) sold, transferred or assigned to a QIB pursuant to Rule 144A.
          (2) The Buyers further acknowledge and agree that the Warrants and the Additional Warrants shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the Warrants and the Additional Warrants):
This Warrant has not been registered under the Securities Act of 1933, as amended (the “Act”), and may not be sold, transferred or assigned unless (1) the resale hereof is registered under the Act, (2) the Company has received an opinion of counsel reasonably satisfactory in form, scope and substance to the Company that such registration is not required or (3) sold, transferred or assigned to a QIB pursuant to Rule 144A.
          (3) The Buyers further acknowledge and agree that until such time as the Shares have been registered for resale under the 1933 Act as contemplated by Section 8 or are eligible for resale under Rule 144(k) under the 1933 Act, the certificates for the Shares, may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the Shares):
The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”). The securities have been acquired for investment and may not be resold, transferred or assigned in the absence of an effective registration statement for the securities under the Act or an opinion of counsel that registration is not required under the Act.
          (4) Once the Registration Statement required to be filed by the Company pursuant to Section 8 has been declared effective or particular Shares are eligible for resale pursuant to Rule 144(k) under the 1933 Act, thereafter (1) upon request of a Buyer the Company will substitute certificates without restrictive legend for certificates for any such Shares issued prior to the SEC Effective Date or prior to the time of such eligibility, as the case may be, which bear such restrictive legend and remove any stop-transfer restriction relating thereto promptly, but in no event later than three days after surrender of such certificates by the Buyer, and (2) the Company shall not place any restrictive legend on certificates for Conversion Shares issued upon conversion of the Notes or on any Warrant Shares issued upon exercise of the Warrants and the Additional Warrants or impose any stop-transfer restriction thereon.
          (c) Reporting Status. During the Registration Period, the Company shall timely file all reports required to be filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination.
          (d) Form D. The Company agrees to file one or more Forms D with respect to the Securities as required under Regulation D to claim the exemption provided by Rule 506 of Regulation D and to provide a copy thereof to the Buyers promptly after such filing.

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          (e) State Securities Laws. On or before the Closing Date, the Company shall take such action as shall be necessary to qualify, or to obtain an exemption for, the offer and sale of the Securities to the Buyers as contemplated by the Transaction Documents under such of the securities laws of jurisdictions in the United States as shall be applicable thereto. Notwithstanding the foregoing obligations of the Company in this Section 5(e), the Company shall not be required (1) to qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 5(e), (2) to subject itself to general taxation in any such jurisdiction, (3) to file a general consent to service of process in any such jurisdiction, (4) to provide any undertakings that cause more than nominal expense or burden to the Company or (5) to make any change in its charter or by-laws which the Company determines to be contrary to the best interests of the Company and its stockholders. The Company shall furnish the Buyers with copies of all filings, applications, orders and grants or confirmations of exemptions relating to such securities laws on or before the Closing Date.
          (f) Limitation on Certain Actions. From the date of execution and delivery of this Agreement by the parties hereto to the date of issuance of the Notes, the Company (1) shall comply with Article II of the Notes as if the Notes were outstanding, (2) shall not take any action which, if the Notes were outstanding, (A) would constitute an Event of Default or, with the giving of notice or the passage of time or both, would constitute an Event of Default or (B) would constitute a Repurchase Event or, with the giving of notice or the passage of time or both, would constitute a Repurchase Event.
          (g) Use of Proceeds. The Company represents and agrees that: (1) it does not own or have any present intention of acquiring any Margin Stock; (2) the proceeds of sale of the Notes will be used as set forth on Schedule 5(g); (3) none of the proceeds from the sale of the Notes or Warrant Shares will be used, directly or indirectly (A) to pay any existing debt obligations other than as may be consented to in writing by Sigma, (B) to make any loan to or investment in any other Person other than as may be consented to in writing by Sigma or (C) for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any Margin Stock or for the purpose of maintaining, reducing or retiring any indebtedness which was originally incurred to purchase or carry any stock that is currently a Margin Stock or for any other purpose which might constitute the transactions contemplated by this Agreement a “purpose credit” within the meaning of such Regulation U of the Board of Governors of the Federal Reserve System; and (4) neither the Company nor any agent acting on its behalf has taken or will take any action which might cause this Agreement or the transactions contemplated hereby to violate Regulation T, Regulation U or any other regulation of the Board of Governors of the Federal Reserve System or to violate the 1934 Act, in each case as in effect now or as the same may hereafter be in effect.
          (h) Best Efforts. Each of the parties shall use its best efforts timely to satisfy each of the conditions to the other party’s obligations to sell and purchase the Notes set forth in Section 6 or 7, as the case may be, of this Agreement on or before the Closing Date.
          (i) Debt Obligation. So long as any portion of the Notes are outstanding, the Company shall cause its books and records to reflect the Notes as a debt of the Company in its unpaid principal amount, shall cause its financial statements to reflect the Notes as a debt of the

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Company in such amount as shall be the greatest amount permitted in accordance with generally accepted accounting principles and, whenever appropriate, as a valid debt obligation of the Company for money borrowed.
          (j) Limitation on Certain Transactions. Beginning as of the date of this Agreement and until the effective date of the Registration Statement, without the prior written consent of Sigma (which consent may be withheld in Sigma’s sole discretion), the Company shall not issue or sell or agree to issue or sell any securities in a capital raising transaction, unless such securities will not be, and are not, registered for sale or resale under the 1933 Act until on or after the effective date of the Registration Statement, provided that the limitation of this Section 5(j) shall not apply to securities issued pursuant to (a) the Company’s duly adopted employee or director bona fide share and options plans, or (b) the exercise or conversion of Common Stock Equivalents that are outstanding on the date of this Agreement.
          (k) Right of the Buyers to Participate in Future Transactions. For a period of two years after the Closing Date, the Buyers will have the right to participate in any sales of any of the Company’s securities in a capital raising transaction on the terms and conditions set forth in this Section 5(k). During such period, the Company shall give ten Business Days advance written notice to the Buyers prior to any non-public offer or sale of any of the Company’s capital stock or any Common Stock Equivalents in a capital raising transaction by providing to the Buyer a term sheet containing all significant business terms of such a proposed transaction. The Buyers shall have the right to participate in such proposed transaction and to purchase an aggregate of 50 percent of such securities (each such Buyer having the right to purchase their pro rata share of such securities based upon their beneficial ownership of Common Stock underlying the Notes and Warrants and the Additional Warrants) which are the subject of such proposed transaction for the same consideration and on the same terms and conditions as contemplated for such third-party sale (or such lesser portion thereof as specified by the Buyers). If a Buyer elects to exercise its rights hereunder it must deliver written notice to the Company within five Business Days following receipt of the notice and term sheet from the Company, which notice from such Buyer shall be contingent upon receipt of satisfactory definitive documents for such transaction from the Company. If, subsequent to the Company giving notice to the Buyers hereunder but prior to the Buyers exercising their rights to participate (or the expiration of the five-day period without response from the Buyers or the rejection of such offer for such financing by the Buyers), the terms and conditions of the proposed third-party sale are changed in any material manner from that disclosed in the comprehensive term sheet provided to the Buyers, the Company shall be required to provide a new notice and comprehensive term sheet reflecting such revised terms to the Buyers hereunder and the Buyers shall have the right, which must be exercised within five Business Days of such new notice and such revised term sheet, to exercise their rights to purchase the securities on such changed terms and conditions as provided hereunder. To the extent that the Buyers do not exercise their rights hereunder with respect to a proposed transaction with the Company, then the Company may proceed with such proposed transaction on the same terms and conditions as notice to the Buyers with the Buyers that have elected to participate in such proposed transaction, provided that if such proposed transaction is not consummated within 90 days following the Company’s notice hereunder, then the right of participation hereunder shall again apply to the Buyers for such proposed transaction. The rights and obligations of this Section 5(k) shall in no way diminish

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the other rights of the Buyers pursuant to this Section 5.
          (l) Reservation of Common Stock. On or before the SEC Filing Date, the Company shall have reserved a sufficient number of authorized shares to provide for the issuance of Shares upon the full conversion of the Notes and exercise of the Warrants and the Additional Warrants.
          (m) Appointment of Director. So long as any of the Notes purchased by Sigma remain outstanding in the name of Sigma or Sigma beneficially owns at least 5% of the Common Stock of the Company, calculated in accordance with Section 13(d) of the 1934 Act and Regulation 13D-G thereunder, Sigma shall have the right to nominate a director to the Company’s Board of Directors, with Sigma’s initial director designee to be Xxxx Xxxx. The Company shall use its best efforts to cause such nominee, as well as all reasonably suited future designees, to be elected to the Board of Directors of the Company.
          (n) Financial Information. From and after the Closing Date, the Company shall deliver to Buyers such financial and other information regarding the Company and its business as Buyers may reasonably request.
          (o) Additional Financing. Sigma and its affiliates, partners and/or designees shall have the right, on or prior to February 15, 2007, to invest an additional $1 million on the same terms as provided in this Agreement. In addition, on or prior to January 15, 2007, the Company shall obtain the written commitment (subject to conventional qualifications and conditions precedent typically set forth in financing commitment letters issued by working capital lenders) of a financing source reasonably satisfactory to Sigma to provide senior financing to the Company on terms reasonably satisfactory to Sigma in an amount not less than $2 million nor more than $10 million (it being understood and acknowledged by Buyers that such financing would (A) be senior in right of payment to the Note, subject to the right of Sigma to receive regularly scheduled payments on the Note and other amounts due under the Transaction Documents in accordance with their terms until such time as an event of default has occurred under such senior financing, and (B) be secured by a first priority security interest in all of the Company’s and its Subsidiaries’ assets, including all accounts receivable, inventory and all proceeds thereof, and Buyers would have a security interest in such assets that is subordinated to the security interest granted to such financing source). In the event that the Company does not obtain such commitment on or prior to such date, Sigma, its affiliates, partners and/or designees shall have the right to invest a further $2 million on or prior to February 15, 2007 on the same terms as provided in this Agreement and the Company shall not, without the prior written consent of Sigma, engage in discussions with any third party with respect to any alternative financing until on or after February 15, 2007.
          6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
          The Buyers understand that the Company’s obligation to sell the Notes and issue the Warrants and the Additional Warrants to the Buyers pursuant to this Agreement is conditioned upon satisfaction of the following conditions precedent on or before the Closing Date (any or all of which may be waived by the Company in its sole discretion):

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          (a) On the Closing Date, no legal action, suit or proceeding shall be pending or threatened which seeks to restrain or prohibit the transactions contemplated by this Agreement; and
          (b) The representations and warranties of the Buyers contained in this Agreement shall have been true and correct on the date of this Agreement and on the Closing Date as if made on the Closing Date and on or before the Closing Date the Buyers shall have performed all covenants and agreements of the Buyers required to be performed by the Buyers on or before the Closing Date.
          7. CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE.
          The Company understands that each Buyer’s obligation to purchase a Note and acquire the Warrants and the Additional Warrants is conditioned upon satisfaction of the following conditions precedent on or before the Closing Date (any or all of which may be waived by each Buyer in their sole discretion):
          (a) On the Closing Date, no legal action, suit or proceeding shall be pending or threatened which seeks to restrain or prohibit the transactions contemplated by this Agreement;
          (b) The representations and warranties of the Company contained in this Agreement shall have been true and correct on the date of this Agreement and shall be true and correct on the Closing Date as if given on and as of the Closing Date (except for representations given as of a specific date, which representations shall be true and correct as of such date and, except for the approvals and filings referred to in clause (2) of Section 4(g), which shall have been obtained or made, on or before the Closing Date), and on or before the Closing Date the Company shall have performed all covenants and agreements of the Company contained herein or in any of the other Transaction Documents required to be performed by the Company on or before the Closing Date;
          (c) No event which, if the Note were outstanding, (1) would constitute an Event of Default or which, with the giving of notice or the passage of time, or both, would constitute an Event of Default shall have occurred and be continuing or (2) would constitute a Repurchase Event or which, with the giving of notice or the passage of time, or both, would constitute a Repurchase Event shall have occurred and be continuing;
          (d) The Company shall have delivered to the Buyers a certificate, dated the Closing Date, duly executed by its Chief Executive Officer or Chief Financial Officer, to the effect set forth in subparagraphs (a), (b), and (c) of this Section 7;
          (e) The Company shall have delivered to Buyers the Security Agreement substantially in the form attached as Annex III.

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          (f) The Company shall have delivered to the Buyers a certificate, dated the Closing Date, of the Secretary of the Company certifying (1) the Certificate of Incorporation and By-Laws of the Company as in effect on the Closing Date, (2) all resolutions of the Board of Directors (and committees thereof) of the Company relating to this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby and (3) such other matters as reasonably requested by the Buyer;
          (g) On the Closing Date, the Buyers shall have received an opinion of Xxxxxxx Xxxxx, LLP, counsel for the Company, dated the Closing Date, addressed to the Buyers, in form, scope and substance reasonably satisfactory to the Buyers, substantially in the form attached as Annex V;
          (h) The Company shall have delivered to the Buyers the waiver and consent to the transactions contemplated hereby of the Senior Lender;
          (i) On the Closing Date, (i) trading in securities on the New York Stock Exchange, Inc., the American Stock Exchange, Inc. or Nasdaq shall not have been suspended or materially limited and (ii) a general moratorium on commercial banking activities in the State of New York shall not have been declared by either federal or state authorities.
          (j) On the Closing Date, Sigma Capital Advisors, LLC (“Sigma Advisors”) and the Company shall have entered into an advisory services agreement in form and substance satisfactory to Sigma Advisors providing for payment of the Advisory Fee and the issuance of the Additional Warrants.
          (k) The Company shall have caused to be delivered to the Buyers, in form and substance satisfactory to Buyers, a majority written stockholder’s consent whereby Old Berliner Communications, Inc., the majority shareholder of the Company, approves the Charter Amendment and approval of the Board of Directors of the Company of the Charter Amendment.
          (l) The Company shall have caused BCI Communications, Inc. to have delivered to Buyers the Guaranty substantially in the form attached as Annex VI.

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          8. REGISTRATION RIGHTS.
          (a) Mandatory Registration. (1) The Company shall prepare and, as expeditiously as possible, but in no event later than March 15, 2007 (the “SEC Filing Date”), file with the SEC a Registration Statement which covers the resale by the Buyers of (A) a number of shares of Common Stock equal to the maximum number of Conversion Shares issuable upon conversion of the Notes, and (B) a number of shares of Common Stock equal to the number of Warrant Shares issuable upon exercise of the Warrants and the Additional Warrants, in each such case as Registrable Securities, and which Registration Statement shall state that, in accordance with Rule 416 under the 1933 Act, the Registration Statement also covers such indeterminate number of additional shares of Common Stock as may become issuable upon conversion of the Notes or exercise of the Warrants and the Additional Warrants to prevent dilution resulting from stock splits, stock dividends or similar transactions.
          (2) Prior to the SEC Effective Date, and during any time subsequent to the SEC Effective Date when the Registration Statement for any reason is not available for use by any Investor for the resale of any Registrable Securities, the Company shall not file any other registration statement or any amendment thereto with the SEC under the 1933 Act or request the acceleration of the effectiveness of any other registration statement previously filed with the SEC, other than (A) any registration statement on Form S-8 and (B) any registration statement or amendment which the Company is required to file, or as to which the Company is required to request acceleration, pursuant to any obligation in effect on the date of execution and delivery of this Agreement.
          (3) If a Registration Event occurs, then the Company will make payments to each Buyer as partial liquidated damages for the minimum amount of damages to each Buyer by reason thereof, and not as a penalty, at the rate of 2% per month of the Purchase Price paid by each Buyer pursuant to this Agreement (excluding the Purchase Price with respect to Shares already sold or which may be sold pursuant to Rule 144(k)), for each calendar month of the Registration Default Period (pro rated for any period less than 30 days); provided that in no event shall the Company be required to pay any such amount for periods after the date that is six months after the Required Effective Date. Each such payment shall be due and payable within five (5) days after the end of each calendar month of the Registration Default Period until the termination of the Registration Default Period and within five (5) days after such termination. Such payments shall be in partial compensation to the Buyers, and shall not constitute the Buyers’ exclusive remedy for a breach of the Company’s obligations under this Section 8. The Registration Default Period shall terminate upon (u) the filing of the Registration Statement in the case of clause (i) of the definition of “Registration Event”; (v) the SEC Effective Date in the case of clause (ii) of the definition of “Registration Event”; (w) the ability of each Buyer to effect sales pursuant to the Registration Statement in the case of clause (iii) of the definition of “Registration Event”; (x) the listing or inclusion and/or trading of the Common Stock on a Trading Market, as the case may be, in the case of clause (iv) of the definition of “Registration Event”; (y) the delivery of such shares or certificates in the case of clause (v) of the definition of “Registration Event”; and (z) in the case of the events described in clauses (ii) and (iii) of the definition of “Registration Event”, the earlier termination of the Registration Period and in each such case any Registration Default Period that commenced by reason of the occurrence of such

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event shall terminate if at the time no other Registration Event is continuing. Amounts payable as partial liquidated damages hereunder shall cease when the Buyer no longer holds any of the Notes, the Warrant or Registrable Securities.
          (b) Obligations of the Company. In connection with any registration of the Registrable Securities, the Company shall:
          (1) use its best efforts to cause the Registration Statement to become effective as promptly as possible, and no later than the Required Effective Date, and to keep the Registration Statement effective at all times during the Registration Period (other than during any Blackout Period). The Company shall submit to the SEC, within three Business Days after the Company learns that no review of the Registration Statement will be made by the staff of the SEC or that the staff of the SEC has no further comments on the Registration Statement, as the case may be, a request for acceleration of effectiveness of the Registration Statement to a time and date not later than 48 hours after the submission of such request. The Company represents and warrants to the Investors that (a) the Registration Statement (including any amendments or supplements thereto and prospectuses contained therein), at the time it is first filed with the SEC, at the time it is ordered effective by the SEC and at all times during which it is required to be effective hereunder (and each such amendment and supplement at the time it is filed with the SEC and at all times during which it is available for use in connection with the offer and sale of the Registrable Securities) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (b) the Prospectus, at the time the Registration Statement is declared effective by the SEC and at all times that the Prospectus is required by this Agreement to be available for use by any Investor and, in accordance with Section 8(c)(4), any Investor is entitled to sell Registrable Securities pursuant to the Prospectus, shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading;
          (2) use its best efforts to prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective, and the Prospectus current, at all times during the Registration Period, and, during the Registration Period (other than during any Blackout Period during which the provision of Section 8(b)(5) is applicable), comply with the provisions of the 1933 Act applicable to the Company in order to permit the disposition by the Investors of all Registrable Securities covered by the Registration Statement;
          (3) furnish to Investors whose Registrable Securities are included in the Registration Statement and such Investors’ respective legal counsel, promptly after the same is prepared and publicly distributed, filed with the SEC or received by the Company, (1) electronic copies of the Registration Statement and any amendment thereto and the Prospectus and each amendment or supplement thereto, (2) electronic copies of each letter written by or on behalf of the Company to the SEC or the staff of the SEC and each item of correspondence from the SEC or the staff of the SEC relating to the Registration Statement (other than any portion of any thereof which contains information for which the Company has sought confidential treatment), each of which the Company hereby determines to be confidential information and which each

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investor hereby agrees to keep confidential as a confidential Record in accordance with Section 8(b)(9) and (3) such number of hard copies of the Prospectus and all amendments and supplements thereto and such other documents, as such Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor;
          (4) use its best efforts to qualify and maintain the qualification of the Registrable Securities for sale by the Investors under the securities or blue sky laws of such jurisdictions as any Investor holding Registrable Securities reasonably requests; provided, however, that the Company shall not be required in connection therewith or as a condition thereto (I) to qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 8(b)(4), (II) to subject itself to general taxation in any such jurisdiction, (III) to file a general consent to service of process in any such jurisdiction, (IV) to provide any undertakings that cause more than nominal expense or burden to the Company or (V) to make any change in its charter or by-laws which the Board of Directors of the Company determines to be contrary to the best interests of the Company and its stockholders;
          (5) as promptly as practicable after becoming aware of such event or circumstance, notify each Investor of the occurrence of any event or circumstance of which the Company has knowledge (x) as a result of which the Prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (y) which requires the Company to amend or supplement the Registration Statement due to the receipt from an Investor or any other selling stockholder named in the Prospectus of new or additional information about such Investor or selling stockholder or its intended plan of distribution of its Registrable Securities or other securities covered by such Registration Statement, and use its best efforts promptly to prepare a supplement or amendment to the Registration Statement and Prospectus to correct such untrue statement or omission or to add any new or additional information, and deliver a number of copies of such supplement or amendment to each Investor as such Investor may reasonably request;
          (6) as promptly as practicable after becoming aware of such event, notify each Investor who holds Registrable Securities being offered or sold pursuant to the Registration Statement of the issuance by the SEC of any stop order or other suspension of effectiveness of the Registration Statement at the earliest possible time;
          (7) permit the Investors who hold Registrable Securities being included in the Registration Statement (or their designee) and their counsel at such Investors’ sole expense to review and have a reasonable opportunity to comment on the Registration Statement and all amendments and supplements thereto at least two Business Days (or such shorter period as may reasonably be specified by the Company) prior to their filing with the SEC;
          (8) make generally available to its security holders as soon as practical, but not later than 90 days after the close of the period covered thereby, an earning statement (in form complying with the provisions of Rule 158 under the 0000 Xxx) covering a 12-month period

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beginning not later than the first day of the Company’s fiscal quarter next following the SEC Effective Date of the Registration Statement;
          (9) use its best efforts to cause all the Registrable Securities covered by the Registration Statement as of the SEC Effective Date to be listed or quoted on the principal securities market on which securities of the same class or series issued by the Company are then listed or traded;
          (10) provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities at all times;
          (11) cooperate with the Investors who hold Registrable Securities being offered pursuant to the Registration Statement to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates to be in such denominations or amounts as the Investors may reasonably request and registered in such names as the Investors may request; and, not later than the SEC Effective Date, the Company shall cause legal counsel selected by the Company to deliver to the Investors whose Registrable Securities are included in the Registration Statement opinions of counsel in form and substance as is customarily given to underwriters in an underwritten public offering;
          (12) during the Registration Period, the Company shall not bid for or purchase any Common Stock or any right to purchase Common Stock or attempt to induce any Person to purchase any such security or right if such bid, purchase or attempt would in any way limit the right of the Investors to sell Registrable Securities by reason of the limitations set forth in Regulation M under the 1934 Act; and
          (13) take all other reasonable actions necessary to expedite and facilitate disposition by the Investors of the Registrable Securities pursuant to the Registration Statement relating thereto.
          (c) Obligations of the Buyers and Other Investors. In connection with the registration of the Registrable Securities, the Investors shall have the following obligations:
          (1) It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company the Required Information and shall execute such documents in connection with such registration as the Company may reasonably request.
          (2) Each Investor by such Investor’s acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder, unless such Investor has notified the Company of such Investor’s election to exclude all of such Investor’s Registrable Securities from the Registration Statement;

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          (3) Each Investor agrees that it will not effect any disposition of the Registrable Securities except as contemplated in the Registration Statement or as otherwise is in compliance with applicable securities laws and that it will promptly notify the Company of any material changes in the information set forth in the Registration Statement regarding such Investor or its plan of distribution; each Investor agrees (a) to notify the Company in writing in the event that such Investor enters into any material agreement with a broker or a dealer for the sale of the Registrable Securities through a block trade, special offering, exchange distribution or a purchase by a broker or dealer and (b) in connection with such agreement, to provide to the Company in writing the information necessary to prepare any supplemental prospectus pursuant to Rule 424(c) under the 1933 Act which is required with respect to such transaction;
          (4) Each Investor acknowledges that there may occasionally be times as specified in Section 8(b)(5) or 8(b)(6) when the Company must suspend the use of the Prospectus until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the SEC, the Company has prepared a supplement to the Prospectus or the Company has filed an appropriate report with the SEC pursuant to the 1934 Act. Each Investor hereby covenants that it will not sell any Registrable Securities pursuant to the Prospectus during the period commencing at the time at which the Company gives such Investor notice of the suspension of the use of the Prospectus in accordance with Section 8(b)(5) or 8(b)(6) and ending at the time the Company gives such Investor notice that such Investor may thereafter effect sales pursuant to the Prospectus, or until the Company delivers to such Investor or files with the SEC an amended or supplemented Prospectus; and
          (5) In connection with any sale of Registrable Securities which is made by an Investor pursuant to the Registration Statement (A) if such sale is made through a broker, such Investor shall instruct such broker to deliver the Prospectus to the purchaser or purchasers (or the broker or brokers therefor) in connection with such sale, shall supply copies of the Prospectus to such broker or brokers and shall instruct such broker or brokers to deliver such Prospectus to the purchaser in such sale or such purchaser’s broker; (B) if such sale is made in a transaction directly with a purchaser and not through the facilities of any securities exchange or market, such Investor shall deliver, or cause to be delivered, the Prospectus to such purchaser; and (C) if such sale is made by any means other than those described in the immediately preceding clauses (A) and (B), such Investor shall otherwise use its reasonable best efforts to comply with the prospectus delivery requirements of the 1933 Act applicable to such sale.
          (d) Rule 144. With a view to making available to each Investor the benefits of Rule 144, the Company agrees:
          (1) so long as any Investor owns Registrable Securities, promptly upon request of such Investor, to furnish to such Investor such information as may be necessary to permit such Investor to sell Registrable Securities pursuant to Rule 144 without registration and otherwise reasonably to cooperate with such Investor and
          (2) if at any time the Company is not required to file reports with the SEC pursuant to Section 13 or 15(d) of the 1934 Act, to use its best efforts, upon the request of an Investor, to make publicly available other information so long as is necessary to permit

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publication by brokers and dealers of quotations for the Common Stock and sales of the Registrable Securities in accordance with Rule 15c2-11 under the 1934 Act.
          (e) Piggy-Back Registrations. If at any time the Company shall determine to prepare and file with the SEC a Registration Statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, the Company shall send to each Investor who is entitled to registration rights under this Section 8(e) written notice of such determination and, if within ten (10) days after receipt of such notice, such Investor shall so request in writing, the Company shall include in such Registration Statement all or any part of the Registrable Securities such Investor requests to be registered, except that if, in connection with any underwritten public offering for the account of the Company the managing underwriter(s) thereof shall impose a limitation on the number of shares of Common Stock which may be included in the Registration Statement because, in such underwriter(s)’ judgment, such limitation is necessary to effect an orderly public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Securities with respect to which such Investor has requested inclusion hereunder. Any exclusion of Registrable Securities shall be made pro rata among the Investors seeking to include Registrable Securities, in proportion to the number of Registrable Securities sought to be included by such Investors; provided, however, that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities the holders of which are not entitled by right to inclusion of securities in such Registration Statement; and provided further, however, that, after giving effect to the immediately preceding proviso, any exclusion of Registrable Securities shall be made pro rata with holders of other securities having the right to include such securities in the Registration Statement, based on the number of securities for which registration is requested except to the extent such pro rata exclusion of such other securities is prohibited under any written agreement entered into by the Company with the holder of such other securities prior to the date of this Agreement, in which case such other securities shall be excluded, if at all, in accordance with the terms of such agreement. No right to registration of Registrable Securities under this Section 8(e) shall be construed to limit any registration required under Section 8(a) hereof. Notwithstanding any other provision of this Agreement, if any Registration Statement required to be filed pursuant to Section 8(a) of this Agreement shall have been ordered effective by the SEC and the Company shall have maintained the effectiveness of such Registration Statement as required by this Agreement and if the Company shall otherwise have complied in all material respects with its obligations under this Agreement, then the Company shall not be obligated to register any Registrable Securities on such Registration Statement referred to in this Section 8(e).
          9. INDEMNIFICATION AND CONTRIBUTION.
          (a) Indemnification. (1) To the extent not prohibited by applicable law, the Company will indemnify and hold harmless each Indemnified Person against any Claims to which any of them may become subject under the 1933 Act, the 1934 Act or otherwise, insofar

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as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any Violation or any of the transactions contemplated by this Agreement. Subject to the restrictions set forth in Section 9(a)(3) with respect to the number of legal counsel, the Company shall reimburse the Investors and each such Controlling Person, promptly as such expenses are incurred and are due and payable, for any documented reasonable legal fees or other documented and reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 9(a)(1) shall not apply to: (I) a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information relating to an Indemnified Person furnished in writing to the Company by such Indemnified Person or an underwriter for such Indemnified Person expressly for use in connection with the preparation of any Registration Statement or any such amendment thereof or supplement thereto; (II) any Claim arising out of or based on any statement or omission in any Prospectus, which statement or omission was corrected in any subsequent Prospectus that was delivered to the Indemnified Person prior to the pertinent sale or sales of Registrable Securities by such Indemnified Person; and (III) amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors.
          (2) In connection with the Registration Statement, each Investor agrees to indemnify and hold harmless, to the same extent and in the same manner set forth in Section 9(a)(1), each Indemnified Party against any Claim to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim arises out of or is based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement or any amendment thereof or supplement thereto; and such Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 9(a)(2) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor; provided, further, however, that the Investor shall be liable under this Section 9(a)(2) for only that amount of all Claims in the aggregate as does not exceed the amount by which the proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement exceeds the amount paid by such Investor for such Registrable Securities. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 9(a)(2) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in such preliminary prospectus was corrected on a timely basis in the related Prospectus, as then amended or supplemented.
          (3) Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 9(a) of notice of the commencement of any action (including any governmental action), such Indemnified Person or Indemnified Party shall, if a Claim in respect

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thereof is to be made against any indemnifying party under this Section 9(a), deliver to the indemnifying party a notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel reasonably satisfactory to the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding, in which case the indemnifying party shall not be responsible for more than one such separate counsel, and one local counsel in each jurisdiction in which an Action is pending, for all Indemnified Persons or Indemnified Parties, as the case may be. The failure to deliver notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 9(a), except to the extent that the indemnifying party is prejudiced in its ability to defend such action. The indemnification required by this Section 9(a) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable.
          (b) Contribution. To the extent any indemnification by an indemnifying party as set forth in Section 9(a) above is applicable by its terms but is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 9(a) to the fullest extent permitted by law. In determining the amount of contribution to which the respective parties are entitled, there shall be considered the relative fault of each party, the parties’ relative knowledge of and access to information concerning the matter with respect to which the claim was asserted, the opportunity to correct and prevent any statement or omission and any other equitable considerations appropriate under the circumstances; provided, however, that (a) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 9(a), (b) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any other Person who was not guilty of such fraudulent misrepresentation and (c) the aggregate contribution by any seller of Registrable Securities shall be limited to the amount by which the proceeds received by such seller from the sale of such Registrable Securities exceeds the amount paid by such Investor for such Registrable Securities.
          (c) Other Rights. The indemnification and contribution provided in this Section shall be in addition to any other rights and remedies available at law or in equity.
          10. MISCELLANEOUS.
          (a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

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          (b) Headings. The headings, captions and footers of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
          (c) Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction.
          (d) Notices. Any notices required or permitted to be given under the terms of this Agreement shall be in writing and shall be sent by mail, personal delivery, telephone line facsimile transmission, electronic mail, or courier and shall be effective five days after being placed in the mail, if mailed, or upon receipt, if delivered personally, by telephone line facsimile transmission, electronic mail, or by courier, in each case addressed to a party at such party’s address (or telephone line facsimile transmission number or email address) shown in the introductory paragraph or on the signature page of this Agreement or such other address (or telephone line facsimile transmission number or email address) as a party shall have provided by notice to the other party in accordance with this provision. In the case of any notice to the Company, such notice shall be addressed to the Company at its address shown in the introductory paragraph of this Agreement, Attention: Chief Executive Officer (telephone line facsimile number 201-794-8974), and a copy shall also be given to: Xxxxxx X. Xxxxxxx (telephone line facsimile transmission number 214-659-4890); in the case of notice to the Buyers, such notice shall be addressed to the Buyers at their addresses shown on Schedule A hereto, and in the case of any notice to the Buyers, a copy shall be given to: Moomjian, Waite, Wactlar & Xxxxxxx, LLP, 000 Xxxxxxx Xxxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000 (telephone line facsimile transmission number (000) 000-0000).
          (e) Counterparts. This Agreement may be executed in counterparts and by the parties hereto on separate counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument. A telephone line facsimile transmission of this Agreement bearing a signature on behalf of a party hereto shall be legal and binding on such party. Although this Agreement is dated as of the date first set forth above, the actual date of execution and delivery of this Agreement by each party is the date set forth below such party’s signature on the signature page hereof. Any reference in this Agreement or in any of the documents executed and delivered by the parties hereto in connection herewith to (1) the date of execution and delivery of this Agreement by a Buyer shall be deemed a reference to the date set forth below the Buyer’s signature on the signature page hereof, (2) the date of execution and delivery of this Agreement by the Company shall be deemed a reference to the date set forth below the Company’s signature on the signature page hereof and (3) the date of execution and delivery of this Agreement, or the date of execution and delivery of this Agreement by the Buyers and the Company, shall be deemed a reference to the later of the dates set forth below the signatures of the parties on the signature page hereof.
          (f) Entire Agreement; Benefit. This Agreement, including the Annexes and Schedules hereto, and the transactions contemplated hereby, including the letter dated December

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29, 2006 from Sigma to the Company, constitutes the entire agreement between the parties hereto with respect to the subject matter hereof. There are no restrictions, promises, warranties, or undertakings, other than those set forth or referred to herein. This Agreement, including the Annexes, supersedes all prior agreements and understandings, whether written or oral, between the parties hereto with respect to the subject matter hereof. This Agreement and the terms and provisions hereof are for the sole benefit of only the Company, the Buyers and their respective successors and permitted assigns.
          (g) Waiver. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, or any course of dealing between the parties, shall not operate as a waiver thereof or an amendment hereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or exercise of any other right or power.
          (h) Amendment. (1) No amendment, modification, waiver, discharge or termination of any provision of this Agreement on or prior to the Closing Date nor consent to any departure by the Buyer or the Company therefrom on or prior to the Closing Date shall in any event be effective unless the same shall be in writing and signed by the party to be charged with enforcement, and in any such case shall be effective only in the specific instance and for the purpose for which given.
          (2) No amendment, modification, waiver, discharge or termination of any provision of this Agreement after the Closing Date nor consent to any departure by the Company therefrom after the Closing Date shall in any event be effective unless the same shall be in writing and signed (x) by the Company if the Company is to be charged with enforcement or (y) by a majority in interest of the Buyers, if the Buyers are to be charged with enforcement, based upon the aggregate principal amount of the Notes then outstanding, and in any such case shall be effective only in the specific instance and for the purpose for which given.
          (3) No course of dealing between the parties hereto shall operate as an amendment of this Agreement.
          (i) Further Assurances. Each party to this Agreement will perform any and all acts and execute any and all documents as may be necessary and proper under the circumstances in order to accomplish the intents and purposes of this Agreement and to carry out its provisions.
          (j) Assignment of Certain Rights and Obligations. The rights of an Investor under Sections 5(a), 5(b), 8, 9, and 10 of this Agreement shall be automatically assigned by such Investor to any transferee of all or any portion of such Investor’s Registrable Securities (or all or any portion of the Notes or the Warrants and the Additional Warrants) only if: (1) such Investor agrees in writing with such transferee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment, (2) the Company is, within a reasonable time after such transfer, furnished with notice of (A) the name and address of such transferee and (B) the securities with respect to which such rights and

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obligations are being transferred, (3) immediately following such transfer or assignment the further disposition of Registrable Securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws, and (4) at or before the time the Company received the notice contemplated by clause (2) of this sentence the transferee agrees in writing with the Company to be bound by all of the provisions contained in Sections 5(a), 5(b), 8, 9, and 10 hereof. Upon any such transfer, the Company shall be obligated to such transferee to perform all of its covenants under Sections 5(a), 5(b), 8, 9, and 10 of this Agreement as if such transferee were the Buyer. In connection with any such transfer the Company shall, at its sole cost and expense, promptly after such transfer take such actions as shall be reasonably acceptable to the transferring Investor and such transferee to assure that the Registration Statement and related Prospectus for which the transferring Investor is a selling stockholder are available for use by such transferee for sales of the Registrable Securities in respect of which such rights and obligations have been so transferred. Transfer of the Note shall be limited as provided therein and transfer of the Warrants and the Additional Warrants shall be limited as provided therein.
          (k) Expenses. The Company shall be responsible for its expenses (including, without limitation, the legal fees and expenses of its counsel), incurred by it in connection with the negotiation and execution of, and closing under, and performance of, this Agreement. Whether or not the closing occurs, the Company shall be obligated to pay the legal fees and expenses and out-of-pocket due diligence expenses of Sigma, not in excess of $60,000.00, in connection with the negotiation and execution of, and closing under, this Agreement. At closing, Sigma shall withhold $60,000.00 from the Purchase Price payable to the Company for application to its fees and expenses as set forth in the next sentence and $100,000 for payment to Sigma Advisors as part of the Advisory Fee. Within 30 days after closing, Sigma shall provide a detailed accounting of the fees and expenses of Sigma for which the Company is responsible hereunder, and shall pay to the Company any difference between the amount withheld and the actual fees and expenses incurred. All reasonable expenses incurred in connection with registrations, filings or qualifications pursuant to Sections 5(d), 5(e), 5(g) and 8 of this Agreement shall be paid by the Company, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees and the fees and disbursements of counsel for the Company and the Investors but excluding (a) fees and expenses of investment bankers retained by any Investor and (b) brokerage commissions incurred by any Investor. The Company shall pay on demand all expenses incurred by the Buyers after the Closing Date, including reasonable attorneys’ fees and expenses, as a consequence of, or in connection with (1) the negotiation, preparation or execution of any amendment, modification or waiver of any of the Transaction Documents, (2) any default or breach of any of the Company’s obligations set forth in any of the Transaction Documents, and (3) the enforcement or restructuring of any right of, including the collection of any payments due, the Buyers under any of the Transaction Documents, including any action or proceeding relating to such enforcement or any order, injunction or other process seeking to restrain the Company from paying any amount due the Buyers. Except as otherwise provided in this Section 10(k), each of the Company and the Buyers shall bear their own expenses in connection with this Agreement and the transactions contemplated hereby.
          (l) Termination. (1) Each Buyer shall have the right to terminate this Agreement by giving notice to the Company at any time at or prior to the Closing Date if:

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     (A) the Company shall have failed, refused, or been unable at or prior to the date of such termination of this Agreement to perform any of its obligations hereunder required to be performed prior to the time of such termination;
     (B) any condition to such Buyer’s obligations hereunder is not fulfilled at or prior to the time such condition is required to be satisfied; or
     (C) the closing shall not have occurred on a Closing Date on or before December 31, 2006, other than solely by reason of a breach of this Agreement by such Buyer.
Any such termination shall be effective upon the giving of notice thereof by such Buyer. Upon such termination, such Buyer shall have no further obligation to the Company hereunder and the Company shall remain liable for any breach of this Agreement or the other documents contemplated hereby which occurred on or prior to the date of such termination.
          (2) The Company shall have the right to terminate this Agreement by giving notice to the Buyers at any times at or prior to the Closing Date if the closing shall not have occurred on a Closing Date on or before December 31, 2006, other than solely by reason of a breach of this Agreement by the Company, so long as the Company is not in breach of this Agreement at the time it gives such notice. Any such termination shall be effective upon the giving of notice thereof by the Company. Upon such termination, neither the Company nor the Buyers shall have any further obligation to one another hereunder, except for the Company’s liability for the Buyers’ expenses as provided in Section 10(k).
          (m) Survival. The respective representations, warranties, covenants and agreements of the Company and the Buyers contained in this Agreement and the documents delivered in connection with this Agreement shall survive the execution and delivery of this Agreement and the other Transaction Documents and the closing hereunder and delivery of and payment for the Notes and issuance of the Warrants and the Additional Warrants, and shall remain in full force and effect regardless of any investigation made by or on behalf of the Buyers or any Person Controlling or acting on behalf of the Buyers or by the Company or any Person Controlling or acting on behalf of the Company for a period ending on the later of (x) the date which is six years after the Closing Date and (y) the date which is two years after the Company shall have paid in full all amounts due from the Company under the Transaction Documents and performed in full all of its obligations under the Transaction Documents.
          (n) Public Statements, Press Releases, Etc. The Company and the Buyers shall have the right to approve before issuance any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of the Buyers, to make any press release or other public disclosure with respect to such transactions as is required by applicable law or applicable requirements of any stock market on which securities of the Company are listed for trading (although the Buyers shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release and shall be provided with a copy thereof).

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          (o) Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
[Remainder of This Page Intentionally Left Blank]

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers or other representatives thereunto duly authorized on the respective dates set forth below their signatures hereto.
         
  BERLINER COMMUNICATIONS, INC.
 		  
  By:   /s/ Xxxxxxx X. Xxxxxxxx    
  Name:  Xxxxxxx X. Xxxxxxxx   
  Title: Chief Executive Officer   
 
         
  SIGMA OPPORTUNITY FUND, LLC
 		  
  By:   SIGMA CAPITAL ADVISORS, LLC    
     
  By:   /s/ Xxxx Xxxx    
    Name:   Xxxx Xxxx   
    Title:   Manager   
 
  Date: December 29, 2006

Address:

          c/o Sigma Capital Advisors, LLC
          000 Xxxxx Xxxxxx
          Xxxxx 0000
          Xxx Xxxx, Xxx Xxxx 00000

Facsimile No.: (000) 000-0000
 		  

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Schedule A
                 
    Purchase Price/   Warrant Shares Initially Issuable
Name and Address
   Principal Amount of Note   Upon Exercise of Warrants
Sigma Opportunity Fund, LLC
   $ 3,000,000       1,500,000  
c/o Sigma Capital Advisors, LLC
                
000 Xxxxx Xxxxxx
                
Xxxxx 0000
                
Xxx Xxxx, Xxx Xxxx 00000
                
Telephone: 000-000-0000
                
Facsimile: 212-937-3558
                
E-mail Address:
                
xxxxx@xxxxxxx.xxx
                

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Filed: January 5th, 2007
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